4 Business Ideas That Changed the World: Scientific Management

There are 4 business ideas that changed the world. The crew at the Pennsylvania steelworks didn't produce as much as the man thought they would. Taylor started studies to figure out how much work should be done. Taylor analyzed the efficiency of workers by tweaking how they moved their arms, the size of their shovels, and how long they took a break. Factory owners made more pumps, steel, and ball bearings because of it. Scientific management was the birth of a management theory. Taylor was the face of the company before there were any. His drive for industrial efficiency made workers depressed, according to critics. Congress heard about it. When Harvard Business Review was founded in 1922, scientific management was the top management theory. It spread around the world and was a factor in the decision of World War II. It's baked into the workplace from call centers to restaurants. Employers wouldn't admit to it and few of us would. We are going to explore 4 business ideas that changed the world. Disruption innovation, shareholder value, and emotional intelligence are some of the most important ideas of HBR's first 100 years. This week's topic is scientific management. Nancy Koehn is a historian at Harvard Business school. Giorcelli is an economist at UCLA. They are both work and labor historians at Cornell University. I am a senior editor at Harvard Business Review. Let's begin with Nancy. When Taylor joined the workforce, how were workers managed?

That's a great question, Nancy Koehn. The answer is all over the map That is, how workers were managed and what their experience of working was in 1878, varied enormously, by industry, by place, by tradition, which still had a very important role to play in how workers and management came together to produce a good or a service. It was about goods in the 19th century. In the early years of the steel business, you had people who were interested in that industry. The price of each unit of steel goes down when more steel is made. They stumbled into economies of scale. They are trying to figure out what that means for how we put men in the steel business together with capital. You have a variety of chaotic arrangements. We don't know what it was like to be in a factory in the late 19th century because it was much more learning by doing.

What was the understanding of being productive at the time?

Nancy said that we think of productivity as how much stuff could I make. What is the efficiency of me? These ideas are not historical. They are grounded in a set of values that came out of the transition from working in an apprenticeship system to a factory job. Wage work is emerging. It's not just technology that changes, it's also social relationships that go from a place where the apprentices and the masters work side by side to produce a few high-quality shoes. As apprentices and masters they imagine that workers should drink beer and sing songs while making shoes. The world of a factory is similar to this one.

Is it possible for you to develop that further? It is difficult to imagine a time when productivity wasn't an economic principle.

Despite its importance in the modern debate, productivity is a newer concept. The businesses were not large. They would have 3 to 4 workers. The owner was able to keep an eye on their jobs. It was very easy to work side by side to produce output. The situation changed because of the industrial revolution. Railroads and telegraphs are being built by the company. It became important to assign the best task workers in order to coordinate production in different parts of the country. The idea of productivity is related to the idea of management. The bundle of practices is intended to coordinate the work of the employees in order to reach optimum productivity.

This is the world that Taylor entered. Nancy, what was the name of the man? What was it like to work for the first time?

His father was a successful lawyer who was able to live a life of leisure. Emily Annette Taylor, his mother, is a direct descendant of the voyagers. She was an activist for women's rights. He came from a patrician family with a very active mother. As a boy, he invented a machine that would wake him up when he starts to turn so he wouldn't have nightmares.

CURT NICKISCH?

This is a young man who before he goes to a party, makes a list of all the attractive girls and the unattractive girls, and decides to spend equal time with both. A young man is playing croquet and says, "Here's the geometry of this particular croquet field" I want to hit to win the game. Control is an important aspect of scientific management. He passed the Harvard admissions exams, but he has headaches and eye problems. Decides not to go to college. He will rise to management in Philadelphia in a machine tool company after taking a job as a worker. The company makes pumps. He starts to think about how to increase efficiency in labor's relationship to management and how to increase productivity in labor's relationship to machines.

What did he see at his job? What did he do to address the problems that he solved?

He knows that workers are not working as hard as they can. He wants to know how to tease out the problem and what to do about it. The apprentices that Louis was talking about are paid based on the amount of money they make. Workers are trying to do more. Most managers said after a certain point, "Well, after a certain point, you're not going to get any more." There is a sort of pay ceiling. Workers decided that they were only going to work as hard as they needed to in order to get the maximum that their boss would pay them. The problem for Frederick Taylor is how to get workers to work more. That is one of the problems. Workers don't work as hard as they could. They are working in different ways. You heard Louis speak about shops and apprenticeships in a way that was very eloquent. Many Americans are still moving from the farm to the factory. People that have never worked indoors before. If you will, you will add the uncertainty and the variation that Frederick Taylor sees. He wants to clean things up.

Experiments are being conducted to better control what workers are doing. Is that correct.

That is exactly what he begins doing. He comes up with all sorts of standard operating practice. I was going to use the word rules. Specific ways of doing things A very small number of tasks can be done in a series. It's one correct way. He is trying to reduce the standard deviation of what each worker does in a very specific way.

What experiments is he doing? He is making workers do things.

One of the things he is doing is in Midvale, where he will be spending a lot of time. The famous one is a Dutch man who was picked by Frederick Taylor to be a first class man. He does a lot of studies about how Schmidt moves pig iron, the name he gives him in his writings. He is not moving on a conveyor belt.

You bend down this way because you were shown how to do this by the person who taught you. This is where you pick it up. You take a lot of steps across the factory floor to get to this place. You rest at certain times. You rest for 90 seconds. According to Frederick Taylor, he shows him how to do that, which increases his output by three and a half folds. He moved from 12 tons a day to 47 tons a day. He goes through it all the way down to how many steps he takes, and how many times he does it before taking a break. That is what he is doing for a lot of parts of a job.

The imagination of the worker is an important part of what Nancy is saying. The readers of his theory will find his idea ofSchmidt appealing. He describes him as a first-rate man in terms of his ability, strength and hard work. "Mentally sluggish."

Nancy Koehn, right.

This person is not able to solve problems for himself. He is so stupid that the word percentage doesn't mean anything to him. It is not possible to make him work harder by giving him incentives. A manager has to guide him.

Taylor is coming up with a system to make workers do certain things. He left Midvale Ironworks in 1890 and went to work for Bethlehem Steel to increase productivity. Perhaps the first one ever to refashion himself as a management consultant was him.

MICHELA GIORCELLI: Exactly. Taylor decided to become a consulting engineer in management. A long list of prominent firms were served by Taylor in this role. The idea of scientific selection of workers was his main goal when he was working with different companies. The differential pay incentives are important to increase productivity. He spent a lot of time consulting around the country and that helped him put together the principles of scientific management that will become his most famous book.

CURTNICKISCH: Mm-hmm What did workers think about Taylor's methods?

It was exhausting working with someone else telling you what to do and how to do it.

A person is standing with a stopwatch.

You don't feel like a man? Are you a dog? Constantly, you are being looked at. It's hard to feel good about what you do, and you're listening to his watch instead of your body. Your wages could go up 50% and your productivity could go up 250%. You don't care because this is your whole life and it's not just about lugging pig iron.

CURT NICKISCH? How did factory managers and owners feel about Taylor and his work?

The answer is mixed in regards to how managers and firm owners reacted to Taylor. He had a personal piece, which was autocratic and very, very convinced. There's something naive about Frederick Taylor. He thought that there would be no need to fight about the surplus because there would be so much more labor productivity. He didn't understand why not only workers, but firm owners and managers who didn't always welcome his, it was either my way or the highway.

In terms of his attitude and sense of teaching, this is the way we will do it, he confused and he angered a lot of different kinds of managers. Also firm owners. He was certain that there was a way to go and it was his way.

CURTNICKISCH: Mm-hmm Even though workers and some of the people who employed him were resistant, this method ended up becoming a movement. When did scientific management start getting word of mouth work at other companies?

In 1903, Taylor presented the first paper at the American Society ofMechanical Engineers annual conference. Between 1904 and 1912 was when this took place. The principle of scientific management was promoted by Taylor. He gave talks at professional societies and lectured at universities. The idea of Taylorism starts to spread in the US. One of the attorneys claims that the U.S. railroads could have saved up to $1 million a day if they had introduced the scientific management principle. The hearing was covered extensively in the newspapers. Taylor had a lot of scientific management ideas. One of the main characteristics of the U.S. business model in the 20th century is the productivity drive.

Workers at an arsenal just outside Boston went on strike to protest Taylor's methods. The Harvard Business Review was located at theArsenal. I got this job after interviewing there. What took place at that strike?

One of Taylor's disciples was sent to study time motions. He has a timer. Different workers are being timed. I am sure he has a clipboard and he is writing things down when he clicks the stopwatch. The worker said he wouldn't let you time him. Management was interested in what Taylor's work could bring to productivity at the arsenal and immediately fired him. The worker was fired on the job. The other workers walked off the job. The assumption is that only a small group of elite people have that one right way. They have the power to put that one right, no matter what the experience is for workers. You think about the suddenness of this transition for many, many workers who came from Europe and other parts of the world in the late 19th and early 20th century. The idea that what you know and what you have learned on a job isn't worth anything if there's only one way to do it is abrupt Only a small group of high priests can tell you that.

The strike received a lot of attention.

Nancy Koehn, right. Congress is looking into another moment for Taylorism, to get the attention of a national audience. On Capitol Hill, it wasn't welcomed with open arms. That was very important. The chair of the committee that is investigating Taylor is worried about everything that has been said. Increasing speed is what it is all about. Many people on Capitol Hill, like Wilson, were concerned about the skills that Louis was talking about, the skills that many workers develop on the job in many different kinds of businesses and industries. If we break down every single task into small parts and say there is no room for discretion or innovation on the part of working men and women, what happens to that?

Nancy talked about labor leaders there. The backlash was caused by the labor movement.

They figured out that Nancy was talking about more than just the question of moving more pig iron. The bigger political meaning of it is for a democratic citizen. Throughout the 19th century, there was a question of how to wage work in a democracy. How can you expect to be free the rest of your time if you have to work for hours a day? How can a person who is broken and dominated be able to exercise political freedom? The president of the American Federation of Labor is Sam Gompers. He said that if the Taylor system is put into operation, it will mean great production. It means destruction as far as I know. That is the question of Taylorism You can make more things, but what is the cost? The cost of democracy is unknown. The long-term health of those workers is a topic of discussion. Gompers told congress that Taylorism was a different kind of education. The idea of educating workers to be more productive was what Gompers was all about. Managers came in with their stopwatches. They should have figured out better production processes. The insights at Toyota in the 20th century are anticipated by this. Gompers doesn't call it Toyotaism. Gompers ask what are humans for. The range of human capacities is a question. If a person becomes like a machine, what is their worth? Productivity is not a neutral idea.

Nancy Koehn said yes.

It's about the power between workers and owners in the future of America. The benefits of productivity flow are not known. Is it given to the owners of capital? Is it sent to the workers? The great debate is that one. I might get an extra beer in the weekend. I don't want to leave my house on the weekend if I'm so tired and worn out by this kind of work.

What was the upside of the congressional hearing? Is it stunting the spread of scientific management? Any publicity is good publicity.

Any publicity is good publicity, that's what I think. The committee report stated that the Taylor system and other management systems should not impose their will on the workers. There should be a mutual consensus between the workers and the managers when it comes to shop management. The committee did not make a recommendation. The Congress came up with a report that was very mild. Taylorism could be adopted not only in the U.S. but also worldwide in the future.

We are going to follow that spread after the break and discover how Taylorism came to be. The human and social costs of increased productivity have been debated for a century. We want you to stay with us.

There are 4 big ideas that changed the world. I'm a man. Taylor died in 1915 at the height of scientific management. Business schools were growing in the United States during this time. The Harvard Business Review was founded over ninety years ago. Management is taking shape and scientific management is at the top. What impact did it have on the U.S. economy?

As the 19th century became the 20th century, a large part of the high standard of living that began to take hold was due to Taylor. I don't think that's true. Scientific management has corresponding effects in certain industries and not in others. Retailing was unaffected by Taylorism. It didn't affect other industries where labor was an important part of the story. It is not clear if Taylorism had a big effect on the company between 1890 and 1950. Taylorism took hold in places where labor's contribution could be cut into small slices. Taylor was involved in a lot of things there. That is a big idea that matters. In terms of actually hiking up productivity, industry by industry, and the leading industries that created the 20th century American economy, I think we are on shaky ground. The power of the idea of scientific management is important to me. Peter Drucker is a well-known management consultant and writer. Karl Marx was displaced by Taylor in the pantheon of critical thinker in the modern age. Darwin, Freud, and Marx were included in his list. He denied. It's time to make room for Fred Taylor. Marx leaves. I don't agree with that at all. Karl Marx was aware that if Frederick Taylor came along, he would commoditize labor, diminish human creativity, and squeeze it into a machine. Marx predicted that labor would play a bigger role in industrial capitalism. Marx said that labor is a commodity. It can do what we want. We want first-class pieces of commodity likeSchmidt, and we are going to tell them how to do it. The situation is completely different compared to other productive processes like the Toyota system, Japanese capitalism, or German capitalism. Massive game-changing increases in productivity can be found in all those instances.

One surprising fan of Taylor's ideas was the revolutionary Vladimir Lenin. You can tell us more about that.

It's possible, according to Louis Hydeman. After other types of labor critics said that scientific management was just a way to sweat more labor, Lenin was very skeptical of it. Put people in sweat shots to increase their productivity but don't pay them for the full value of that increased productivity He has a different opinion. In 1917, he releases his book, The State and Revolution, which is not a good book to read if you are a romantic about Marx. If Marx imagines a future where we work a few hours a day, we fish a little, and we do philosophy, we are imagining ourselves as capitalists living off the prosperity. This is not the vision of the man. He is in line with Taylor's thinking. The state is not managed. Every worker should be working six hours a day. Four hours of work for the state followed. There were 10 hours. This is not the same idea as Marx. Labor leaders like Gompers want to see the future differently. It talks about the underlying brutality and antihumanism in certain ways.

He thought it worked. He wanted to make sure that the Soviet Union was competitive. How did Taylor's idea spread outside the US?

There were two key characteristics of Taylor's idea that could be spread outside the U.S. They were very flexible, meaning that they were not specific to give them, from size or sector. Taylor's ideas were developed after widespread consulting in different industries in different firms. Taylor's ideas were complemented by firm specific practices. Taylorism was very popular in Japan. In comparison to the US, the interpretation of the productivity drive in Japan was different. The idea of increasing productivity in Japan was mainly related to the management of waste. In a way, these were the beginning of lean production and the lean management system in Japan. In Europe, Taylorism spread. It was adopted in many countries including Britain and France.

The idea of exporting scientific management was strengthened by the industrial efficiency of the U.S. in World War II.

MICHELA GIORCELLI: Absolutely. The technical and scientific knowledge of Germany and the U.S. were very similar in the 40s. In order to win the war, the U.S. needed to be able to produce more quickly than all the other European countries. The US invested a lot in the program for the dissemination of managerial knowledge. The U.S. sponsored managerial consulting to large U.S. companies during the 1940s. Many programs were sponsored by the US after World War II. The US way of doing business was created during World War II. It was exported to Europe and Japan after World War II.

CURT NICKISCH is okay. The economy is moving away from the factory and the shop floor in the 20th century. There's more service sector. Was scientific management involved in that transition?

It's absolutely true. There is a shadow over how we think about work. In moving tons of pig iron, the urge to quantify workers, to quantify time, existed as much as it did in typing. Fry cooks and textile workers have the same movements and machines. In the gig economy, or on bikes and cars, or on computers, where workers are constantly surveilled, treated like a commodity, the descendants of Taylor's stopwatch are present. Taylor is all over the place. It builds into a sense of how to manage. In America, Theory X and Theory Y are the only alternatives to Taylorism. Gompers are people who like being engaged with their work. They learn to be proud of their work. The people respond to incentives. Percentages can be calculated by them. The Theory Y is possible to imagine because of the fact that you have several generations of mass education, both in grade school and high school. The cutoff of immigrants as well. The number of people who are born outside the US is at its lowest point in history. It is easy to imagine other Americans like yourself if you are a manager. The possibility of a new way to think about management can be seen in the story of who is like us and who is different than us. There is a sense that productivity is still the most important thing.

It's true, CURT NICKISCH. Louis talked about scientific management in modern offices and workplace. Is it possible that we're scientifically managed?

One of the more interesting aspects is how scientific management in the last 40 years has come to retail, call centers, warehouses, and restaurants. Scientific management's reach has increased as the economy has shifted. The recent unionization drives at Amazon have been undergirded by the experiences of certain workers.

How many times can you go to the bathroom?

It's absolutely true.

How much time has to pass before you return to the bathroom? How many boxes do you need? WeTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkia If you look at the surface of most call centers, you will find people with headsets managed down to the moment. They have to handle a lot of calls per 15 minutes. It's amazing. The call centers are the new thing. I think that we are managed in many different ways. Many of the occupations were not managed in the 60s. It's ability to adapt and evolve to new industries and new types of economic activity is just as important. The question of how should workers and management do what they do together has been a point of contention between management and workers. Frederick Taylor thought that scientific management left us all in the dust. It was true in 1910. That is so amazing to me. Why this question? This is the right way to go. The history of capitalism shows that there isn't a single right way. We can see that in the history of Silicon Valley. Scientific management has left a lot of other ideas in the dust.

CURT NICKISCH: I agree with you. Scientific management is viewed today in a different way. A lot of people don't know what that means.

I agree with MICHELA GIORCELLI. The idea of scientific management is not very popular today. Scientific management is seen as the program that reduces workers activity in order to increase productivity. The scientific management principle is adopted by almost all the firms. In the sense that, all the production is organized today, not only in the industry but also in services, is shaped by the idea of productivity The rise of managers' compensation that is considered key inputs for a firm's success is testimony to this. The legacy of Taylor is present in all types of businesses.

How much do we owe our understanding of being productive and efficient to you?

It's interesting. The way we think about productivity is based on Taylor. Taylor is the one who gives us a very specific idea of work. On the other side, there is a worker who is valuable and creative. The manager is a worker. This is a person who is still appreciated today. There is a worker who is not creative who is not worth anything. We should treat this person the same way we treat machines. When we look at the history of Silicon Valley, we often see the technologists and programmers who play ping pong, sit around in shorts, and have a great thought. Behind that.

They are drinking beer on the job the way they did in Taylor's time.

Exactly, that's right, Louis Hayman. Correct, they did. Behind that is a world of production that is written out in the history. The story of Woz and Apple was told in the 70s and 80s. We don't hear much about the hundreds of thousands of people who worked in Silicon Valley.

Nancy Koehn thinks of China.

When these factories were talked about, they were often referred to asRobots Building Robots. If you looked at the actual people who worked there, it was women. Women of color who are immigrants are usually the ones. We still have an imagination of work and people being worth something. They reinforce each other. What is the current meaning of this? We still think of productivity as a bifurcated thing between those who are productive and those who aren't. They are programmers with a lot of experience. They are entrepreneurial. As long as we give them time to think, they can do amazing things in a short period of time. People who can't think. There are people who aren't deserving of time and people who aren't deserving of creativity. That's the meaning of productivity for me. Who are we valued by and what do we value?

CURT NICKISCH? In this world of work, where does scientific management leave us? Now what kind of future are we talking about? Nancy, maybe we could start with you.

Nancy Koehn wants to pick up some threads, that there's a lot of humanity in science. Some people, just to echo Louis, are more important than others. Some people give more than others. Some work is more appreciated. Some people are more appreciated than others. Those are not very good eye beams to go into a century dominated by automation, artificial intelligence, and a very kind of unabashed and not terribly thoughtful embrace of all things technological. The storyline isn't pulling from many different directions. Not just morally, but also in terms of economic equality. Over the last 50 years, we have seen huge increases in inequality wealth and income. Even holding those away. It looks like the storyline doesn't end well. I believe that piece, which Gompers, Gompers was talking about, and so were other labor leaders throughout the first three decades of the 20th century. It is an important topic for all of us to discuss.

CURT NICKISCH: What's the name of the girl?

I will take a different perspective on the economy. Productivity has a lot to do with Taylorism. In the future, the idea of increasing productivity will continue. It's possible that it will change. Recent studies focused on the productivity of working from home How technology helps us work together. During the Pandemic, it allowed us to increase productivity even if we weren't in the same place. The help manage workers is still there. The way in which it is happening is changing, moving from the factory perspective to more of the work, no matter where it is done.

CURT NICKISCH: Which city is it?

Yeah, that's right, Louis Huxley. The essential question is what is the meaning of Taylor and productivity in the digital age. The question of who benefits from increased productivity is the same as it was a century ago. The promise of machines continues to liberate us from drudgery. We want to become more human in our work. We have many challenges in the 21st century. There is so much talent in the world right now, that a person can sit behind a cash register, make change, or just wrestle, hauling water back from a stream to her house. We need technology to get rid of these. We don't need it. The question about productivity is more about imagination than technology. How can we bring ourselves into the discussion about increasing our productivity so that we can focus on human potential, human relationships, and human work?

CURT NICKISCH: That's Nancy Koehn at Harvard Business School. Disruptive innovation is the next business idea that changed the world. Amy Bernstein will speak with three experts about how new entrants succeed in the marketplace, and how to hack it in your favor. It will be in the HBR IdeaCast feed after our Tuesday show. Anne Saini is the producer of this episode. Rob gives us technical assistance. Ian Fox is our audio product manager. Special thanks to the person who made it possible. The HBR IdeaCast features 4 business ideas that changed the world. I'm a man.