The Unified Theory of Management

Here it is:

Rapid feedback from objective reality is the most reliable way to make good decisions, but feedback from reality often feels bad and will frequently be avoided.

This explains:

• Why agile teams work faster to create value compared to waterfall teams

• Why management feedback works to improve performance for employees who take feedback well (and why so many don’t take it well)

• Why SpaceX is more effective than ULA or NASA at building rockets

• Why moral hazards grow in complex systems

• Why large organizations spend millions of dollars developing something useless

• Why startups succeed against incumbents

Beyond explaining the past, this theory has predictive power. One can predict:

• Will that company reorg lead to greater success? It will only work if everyone is getting feedback on whether or not they’re making good decisions. If not, there is no way to know when the company is on a bad path.

• Will a politician’s plan to solve a problem work? It depends on if they’re focused on the inputs or the outputs. If the mayor says he’ll solve the city’s homeless problem but only focuses on offering services, that plan is doomed to fail. There is no feedback on whether or not it actually works.

If you’re not accurately measuring your outcome and altering your plan as a result, you will not achieve your goals.

Feedback is hardest to use when it threatens an existing plan, role, or investment. Resistance does not always reflect bad intent: new metrics can be unpleasant or disruptive because they expose uncomfortable tradeoffs or create consequences for established roles. Leaders can make change easier by defining the purpose of the feedback, involving the people affected, and modeling a willingness to revise their own decisions.

Limitations

This isn’t a call to test every minor idea with focus groups before starting any big project. Sometimes you have to believe you’re right, take a big leap, and let the market tell you whether or not you were correct. You may not be able to build product sense or design sense into a management theory. It’s the classic innovator’s dilemma, and large industry-leading organizations will only survive when they get this balance right.

In the words of Arie de Geus, “The ability to learn faster than your competitors may be the only sustainable competitive advantage.”