By David Creelman

It is an article of faith in economics that good businesses survive while bad ones fail. Consider a highly competitive business like restaurants: if a restaurant is inefficient or not in tune with customer needs, surely it will die while the good restaurants survive.

This line of thinking leads us to believe that only well-managed companies will survive. Hence by now, after 150 years of industrial capitalism, the vast majority of companies must have excellent management practices.

In your experience, are most companies models of excellent management? 

Arguing in the affirmative
If we are brave, we can make the argument that most companies display excellent management. For example we can argue that complaints about bad management are misguided because people only see the flaws and not the strengths.  Canadians complain endlessly about the incompetence of their governments, whereas objectively it is one of the better governed countries in the world. So, maybe companies — like some countries — are well run but we just don’t know it.

There is probably some truth to the notion that complaints about management are overblown. Still I am not convinced that most organizations are well managed.

Where evolution fails
The theory of evolution is so simple and so successful in biology that it is tempting to see it as a universal phenomenon.  However, when we look at management the evidence seems to stand against the hypothesis that bad management is becoming extinct. How is it that bad management not only survives, it thrives?

One reason is that organizations are not very stable. The staff is always changing and so a good practice is easily destroyed. We have all seen carefully crafted processes thrown out when a new leader comes on board. We have all seen bad practices implemented by new managers.

Another reason is that employees do not always work to ensure the organization is well managed, they strive to do well themselves. Even if a manager knows a certain practice would make the organization more effective, if it erodes their own power, or makes them work harder, or is just less fun, then they are unlikely to pursue it.

It is also simply true that it is very hard to know what a good practice is. Organizations are very complex. Every practice has a multitude of pros and cons, short-term and long-term effects, and unexpected consequence both good and bad. Practices that appear inefficient may serve some subtle purpose; practices that seem effective may undermine an important capability. We may not know which practices should be reproduced.

So while survival of the fittest is a force for good management, the general chaos of organizational life, the pursuit of self-interest and the difficulty of knowing what is good limit its power.

Organizations are different from organisms. The structures within an organism are much more stable than in an organization. In organizations ideas can reproduce, but there is no good parallel to the gene. While we might expect to some hint of progress, there is no overwhelming force to presume good practices will survive in light of the forces that encourage bad practices.

Will things get better?
A biologist would point out that 150 years is no time at all in evolution (unless you are a bacterium). Perhaps if industrial capitalism lasts for a hundred thousand years we will find that the fittest really have survived and you won’t be able to walk into a firm that is not beautifully managed.

However, if change does come it will probably be by design rather than blind evolution. Maybe between academics, consultants and practicing managers we will find reliable ways to identify and maintain good practices while avoiding bad ones.  There is no reason to assume this will happen.  Consultants are driven first by what they can sell, not what is objectively best practice. If companies prefer to buy unrealistic quick fixes and simple formulas then that is what consultants will provide.

Where does this leave us? The important thing to recognize is that the idea that evolution automatically means businesses are getting better and better is, at best, a half-truth.  We cannot count on evolution to create good organizations for us; if we want a mechanism to improve management we need to create it ourselves.

David Creelman is CEO of Creelman Research, providing writing, research and speaking on human-capital management. He works with a variety of academics, think tanks, consultancies and HR vendors in Canada, the U.S., Japan, Europe and China. Mr. Creelman can be reached at dcreelman@creelmanresearch.com.