Benjamin Franklin understood that enlightened and ethical business practices produce more profit when he advised, “Do well by doing good.” Over the history of American capitalism other entrepreneurs have prospered through application of this principle. A short video featuring Harvard Business School historian Nancy Koehn makes the point that earlier entrepreneurs were driven by their own personal philosophy; that doing “good” for their people means that their business will do very well.
But it wasn’t until the 1960s that modern management science began to teach students that they can create stable wealth by doing “good” for their employees, their customers, and their communities.
Today there is excellent data, both qualitative and quantitative, that a company’s successful relationship with people is positively related to its financial performance.
Maslow, Drucker, McGregor, and Nash is not a law firm. MDMN is an acronym I created to serve as a reference point for this discussion on modern marketing and management science.
Abraham Maslow, through his books and teachings brought us Management Psychology. Maslow, the father of modern management states: “The good society is one in which virtue pays.”
Peter Drucker’s 39 books have been translated into more than thirty languages; “I became an immediate convert–Maslow’s evidence is overwhelming. But to date very few people have paid much attention.” — Peter Drucker, 1999
“He (Maslow) wrote Eupsychian Management to bring McGregor and me down to earth.” — Peter Drucker, 1995
Douglas McGregor, Ph.D. in psychology from Harvard University was a Management professor at the MIT Sloan School of Management. His 1960 book The Human Side of Enterprise, had a profound influence on education practices; “The ingenuity of the average worker is sufficient to outwit any system of controls devised by management.”
“Any attempt by management to enforce behavior that is contrary to human nature is preordained to fail. Conversely, management methods that compliment human nature are sure to provide wealth and well being for all concerned.”
John Nash, In “A Beautiful Mind,” Nash is at a bar with a group of friends when he begins to develop the theory of what is now called Nash equalibria, the idea that won him the Nobel Prize and the respect of his colleagues and loved ones, despite his schizophrenia.
At the bar, he and his friends begin to compete for a beautiful blonde in a group of five women. “If we all go for the blonde,” Nash says, “we block each other; not a single one of us is going to get her…and we insult the other girls. But, what if no one goes for the blonde? We don’t get in each others’ way, and we don’t insult the other girls. It’s the only way to win….the best result comes from everyone in the room doing what’s best for himself and for the group.”
The two most important conclusions are gleaned from John Nash’s equations;
1. More profit is created through cooperation than through competition.
2. Nice guys finish first.
For more background we suggest becoming familiar with the works of Peter Drucker, “The Essential Drucker.” Abraham Maslow “Maslow On Management” (originally titled Eupsychian Management) as well as Douglas McGregor’s “Managing the Human Side of Enterprise.” And find out why John Nash won the Nobel Prize for Economics in 1994.
While these ideas were slow to catch on, today’s upper echelon management professionals strive to find creative applications for these principles. At Best Self USA we do Executive Coaching. We have noticed that many business professionals are unfamiliar with modern management science.
One can hardly complete a business course on the college level without being introduced to the difference between the “X” and “Y” theories of management, as well as Maslow’s needs hierarchy, these classes do not provide adequate familiarization with modern management science, nor do they really explain Maslow in relationship to management.
Most courses fail to adequately convey the idea that profits are maximized when respect for the “human side of enterprise” is obvious. Maybe an additional problem is that students of business do the same thing with their subjects as I did with Algebra. I did what I needed to graduate and have never worked another algebra problems for the rest of my life.
We have created a research paper tracking the history and guiding principles of modern management science and published it free of charge at: http://excellentexecutive.blogspot.com/ I hope this helps remind business people of their college days, and encourages them to use proven profit enhancement principles based on “good guys finish first.”