Do you think managers need to know their industry?

In My Humble Opinion
21

A problem with the managers knowing the industry is that they can be stuck in old ways of doing things when big changes are needed.

Isn’t it weird that Amazon is the big name in online retail–when there were all kinds of brick and mortar retailers that had massive consumer awareness, that had strong connections with suppliers, had strong logistics operations… Or that when one thinks of computers one thinks of Microsoft/Intel, Apple–but not IBM when a few decades ago IBM totally dominated the computer industry.

22

Sorry, the vendors have already had input into the problem, and there is no way an outsider could be brought in - no time, not adequate expertise, and the problem is too sensitive.

I’ve never seen this be an issue at all. You want the project to succeed to make money - both sides say that this is what their solution will accomplish. Making decisions only based on cost, say, gets you Flint.

Managers who always do the safe thing wind up fired too. I suspect at this point many people have been fired for buying IBM.

Both have

And without the proper background your gut experience is useless.

If the thing being managed is widget making, which hasn’t changed in years, I can see lack of technical background being okay. In any advanced project it is a recipe for disaster, since it is hard enough for people with good general backgrounds to make good decisions. Someone without might as well throw a coin.
The classic example is the belief by the Apple board that a skilled soda salesman could sell computers. How did that turn out? Closer to home, they put the chief AT&T accountant in charge of the AT&T computer business. When asked about his qualifications by the press, he proudly said that he could do spreadsheets. That worked out just as well.

At the CEO level you’re talking finance, so an engineer up there is about as clueless as a banker running a software division. It works both ways.

23

I don’t think they need to know it on their first day in the job, but I do think that one, it’s an advantage if they are already somewhat familiar with it (even if it’s as customers) and two, whether you do know the industry or not it’s important to start with a “learning attitude”. In any new job, as manager or subordinate or both, you’re going to learn about a new environment, perhaps a new corporate culture; if it’s a sector that’s new to you you’ll also learn things about that specific sector.

Negative sample: a big project-based company (civil works) decided to diversify into a completely different, ops-based sector (residues management and recovery). Decades later, the Big Bosses were still asking trash dumps and continuous-production factories to treat their work as if it was “projects”: “what are the phases?” “what phases? We haven’t closed the reactor in five years.” “well, what’s your startup cost and your wrapup cost?” “bloody high! We’re not closing the reactor! We’re sold 100% for the next 14 months! Any day the reactor is down is a day the trucks are not going out and we are just not closing it down if we can help it.”

Another negative sample: bosses or consultants who may know the sector or their specialty but who have a predefined map of what the process Shall Be, to the point of not hearing anything the people who actually have to do it are saying.

Positive samples: bosses who used their knowledge of sectors of which they now were clients to get better deals.
Who begin by introducing themselves to all their subordinates (no leaving out those who happen to work inconvenient shifts) and getting the same kind of basic training on company procedures that their subordinates get.
Bosses and consultants who are good at drawing parallels between different industries while remembering that there is always some distance between two parallel lines.

Some processes don’t really have that many basic options. “How centralized is our purchasing?” isn’t a sector-relevant question, it’s a company-relevant one. Other things can be extremely different: I had a client whose billing process involved between 6 and 10 invoices, of which the first ones were “orientative” and required payment of certain %s, with the rest paid on the final invoice - it is that way for their whole sector, and none of us had seen anything like that before. A manager who got there saying “we must invoice only once” would be going against the whole sector (including multiple laws at regulations), not just against “local custom”.

24

If your standard is “makes the right decision every time”, then that’s an impossible standard for any manager to meet. All managers are necessarily operating under imperfect information. The only real viable standard by which to judge managers is “do better than someone else in the same role” and often in management, perfect becomes the enemy of the good.

And yet, Lou Gerstner was a skilled biscuit seller who was widely praised for turning around IBM. Why did Pepsi->Apple so markedly fail while RJR Nabisco->IBM work out so well? I wager it has far more than just industry and domain expertise.

25

This mention of IBM raises an entirely different issue. Their managers were stuck in the “We build mainframes” mentality. So when they built their first PC, in a kind of skunkworks mode, they actually kickstarted the small computer revolution. Yes, Apple might have caused it in the long run, but it would have taken a lot longer. But IBM made some serious mistakes, the most serious may have been to cripple one generation of PCs by not using the 80386 chip, the first really capable one from Intel, because of a well-reasoned fear that it would seriously cut into their main frame business. It would and did, but that didn’t stop their competitors, chiefly Campaq, from do that. Would an inexperienced manager have avoided that bad decision? Maybe so, but I am not convinced.

As for the original question, I suppose it depends on the industry, but any place I know about needs managers who know the business. My wife was a professional translator and she worked for a company whose manager didn’t know beans about translation. So he judged his translators by the number of words they produced, the way they dressed, or how clean their desks were at 5:00 and not by the quality of their translations, which he was incapable of judging. He was replaced.

In universities, where I spent my career, most of the managers (called deans and vice presidents) were professors who couldn’t do research themselves and got into administration. Aside from the huge salaries they made (justified by the number of decisions they made, usually bad), they just didn’t understand us.

My daughter manages an office of a publisher, that is publishing scientific journals, mostly biological. Her title is Supervisory Copy Editor. She hires (and occasionally fires) copy editors, trains new ones, and is never happier when doing some copy editing herself. Her degrees are in English and Biochemistry and she understands the whole process intimately. Can anyone claim that a person who knows nothing about copy editing could do her job?

26

That’s really true; managers who are ignorant of what their underlings do are more likely to promise impossible tasks or timelines to upper management, and/or expect unrealistic things from their underlings. Plus, if the underlings come and complain/raise the red flag/protest vehemently, an ignorant manager isn’t going to have a good handle on WHY they’re doing that, and what the implications of that are.

Essentially, being at least familiar with the industry and the work being done seems to me to be a prerequisite to being successful as a manager. It’s not all that needs to be there, but a minimum knowledge should be necessary.

To some extent, the higher you go into the company, the less specific knowledge is necessary, as you’re managing people less and less, but doing more and more strategic and executive functions, which tend to be more universal. However, whatever specific knowledge is necessary, you’d better be willing and able to learn quickly and thoroughly if you want to succeed. This is doubly true of what I’d call “line” executives rather than support executives; being a CIO, CFO or VP of HR isn’t usually as industry specific as being the VP of operations or of business development.

27

I once worked at a shop that hired a new plant superintendent that knew absolutely nothing about the industry, let alone the products we produced. In my attempt to help him out, I offered to let him borrow a book describing the history of the industry and the development of the tools used. He declined my offer, saying, “A good manager doesn’t need to know anything about the industry”.

I told him, “Yeah, I guess that’s true. So, in your case, you need to find out as much about this industry as you can”.

28

I would never agree to manage anyone in an area in which I knew nothing. I might not need to be an expert on the subject matter, but if my subordinates have to explain every problem to me in the most basic terms, then (1) that’s a huge waste of time, and (2) they will all be forced to learn a skill they may or may not be able to master; that is, breaking down problems in the field into lay terminology. Much more efficient for me to obtain a working knowledge of whatever it is they’re doing.

29

I think it kind of depends.

I’m kind of a professional “manager”. I’m a manager with an MBA and PMP (Project Management Professional) certification in a management consulting firm. A lot of times, I don’t know jack-shit about the industry my client is in. What I have noticed is that as you get to the higher levels, there does tend to be a line of thought that “management” is it’s own particular thing that can exist independent of industry or technology. That is to say, being the CEO of a tech company should not be fundamentally different from being the CEO of an automotive company or box factory.

I don’t think this theory is correct. I believe there are roughly two types of management. “Operational” management and “transformative” management.

Operational management is basically watching over a herd of drones and they perform their daily tasks. For the operational manager, what the drones are doing is largely irrelevant. They can be fast food workers, factory technicians, salesmen, accountants, whatever. The role of the operational manager is basically to make sure the workers are where they are supposed to be on time and that they performing the correct tasks according to the established business processes. The operational manager largely manages to his weekly/monthly/QTR/annual metrics and reports.

Transformative management requires the ability to create something out of nothing and build, lead and inspire teams to do something they have never done before. Examples are building a startup, launching a new product line, restructuring a company or defining a new strategic direction. It is different from operational management in the same way that inventing an airplane is different from flying one.

There is an management theory called Putt’s Law, which is actually very similar to the Dilbert Principle. Basically both theories describe an “inverse hierarchy of competency” with respect to highly technical fields. What tends to happen is that the most intelligent, innovative and competent technical employees and engineers tend to stay closest to the technology, while those who aren’t tend to get pushed into sales or management. The theory being is that you want your smart people doing the critical work that has to get done while your dummies can do the easy tasks like get donuts and bother the engineers about deadlines.

I see this play out with a lot of PMP certified project managers, “Agile coaches” and the executives who hire them who think “project management” is a generic skillset but don’t really know anything about an industry. The can fill out schedules, meeting minutes, gantt charts and work breakdown structures easily enough. But they don’t understand the nuances and dependencies that are required to complete the project on time.

I’ve said this many times “Nobody ever got fired for buying IBM” both as a vendor competing against IBM and as a consultant helping a client RFP a vendor, of which IBM was one of the candidates.

Generally this rule is true. If IBM screws up, the manager can always say “it’s IBM, how could I have known they would screw up?” and his job would largely be safe. But if the same manager picked a small, relatively unknown vendor to perform the same work and they screwed up, he would have a much harder time justifying why he picked them over IBM.

30

See, I wouldn’t consider this person to be a manager, exactly. Administrator is probably a more accurate description.

My wife is a project manager and invariably has to get involved with her projects beyond her official responsibilities. Occasionally, the company hires outside PMs that have no understanding of employee benefits and are basically just making schedules and compliance spreadsheets that bear no resemblance to the realities of the projects.

31

Managers almost always need to know their industry well. The exception that comes to mind is a business in disarray where the problems aren’t directly related to the industry but instead are matters of general poor management. Good management lacking specific industry experience will be better than poor management with all the knowledge in the world about that industry. I assume good managers will be able to learn the industry they work in over time.

I can’t mention a name but I do know of a Fortune 500 company that rotates executives in it’s departments on a regular basis, every year or two, without regard for the executive’s experience in the field they are moving into. I’ve seen where that process fails. The executives remove themselves from the specifics of the issues and just stick to big numbers. That may work in some cases, but what I’ve seen is that the executives are unable to evaluate the performance of the management under them, not too mention that they seem incapable of strategic action.

32

Or, the division between Projects and Operations on one hand, between Strategy and Tactics, between different planning terms (from day-by-day to year-by-year)… the lines aren’t exactly the same ones, but there are a lot of divisions like that which do come down very close when you paint them on an organizational chart for a large-enough company.

One thing my Science teachers in MS and HS emphasized a lot is that when any technique or formula has limited applicability: as its name says, you don’t use the “gases equation” (aka “ideal gas law”; PV=nRT) to run calculations on the density of solids. But a lot of people seem to have problems with the idea that what works in one industry / company / location / level may not work everywhere.

33

I’ve managed people who I could not do there jobs and I’ve worked under managers who could not do my job.

I don’t think it’s a requirement that a manager knows thier industry. The do need to be willing to learn it if they plan on getting anywhere.

34

Their.

35

I’ll add one more thing; as a grunt-level technical or mostly technical worker, my very best managers, hands-down, have been non-technical. As in, one had no college degree, and had originally trained as a pipefitter before eventuallymoving into IT. Another had a finance degree, and the third has an English degree. All three of them were/are smart enough to know what they don’t know, and to trust the technical types. They also have better interpersonal skills than the technical managers, who almost always think they know best and meddle, micromanage or generally get in the way and start nit-picking or otherwise not letting you do your job unfettered. In other words, they judge you as much on your own idiosyncratic work process as on results, which is something the non-technical types don’t do.

36

When you go into a restaurant, you can direct the persons working there to prepare a meal for you, without knowing how to do so yourself.

You can also determine the quality of the food and service.

No one can know the details of how to do everything. Thus you hire experts for each particular task. An older person may not be able to physically do something, but can *direct *someone else to get the task done.

37

Sure, but everyone eats. Not everyone is a consumer of medical transcription software, or whatever. A person who had never eaten in a restaurant before would have no idea what to ask for or what his food should look like, so if anything your point supports the other side.

38

Mid-level management does not require a profound knowledge of the industry. They just need to know their company, or maybe even their department. The higher you go, the broader the knowledge should be. A CEO absolutely must know the industry.

To expand on the OP’s example, a good manager at Ford may not be a good manager at Honda, even though they’re in the same industry. Corporate cultures vary, even within industries. Departmental cultures may even vary within a company.

39

There is a lot of tension over this very issue in my office. The lead PM is an Agile cultist, and wants to smoosh R&D into an Agile mindset. He also doesn’t know anything about software development, and not software that is dependent on healthcare analytics. He comes from a manufacturing background. He thinks we need to all move into lock-step two-week sprints for everything, and we’ve had to explain that isn’t how R&D works because we’re not making goddamn widgets.

40

I think people are conflating “process knowledge” with “industry knowledge”. Can a manager get by without knowing the processes under his control? Not for long, IMHO. There is too high a probability that something will go awry and the manager won’t catch it. On the other hand, a manager who knows the process can successfully lead similar teams across industries. I’ve built my career doing exactly that. That said, it is a big advantage to know both process and industry. A good manager will learn the industry as quickly as possible.