Following central themes like trust and purpose that were top-of-mind most recently, sustainability is now most prevalent. However, the demand for sustainable business practices isn’t new by any means.
We need to go back 125 years to understand the inception of sustainability in management theory and answer the question: Why was sustainability greatly ignored for over a century?
We want to discuss three proponents of the early days of scientific management, a management theory on achieving operational efficiency, proposed by Frederick Taylor and elaborating on Adam Smith’s earlier understanding of the Division of Labor (in The Wealth of Nations, 1776).
During the industrial revolution, former US President Theodore ‘Teddy’ Roosevelt (1901 – 1909) argued that “The conservation of our national resources is only preliminary to the larger question of national efficiency.” He made conservation a top priority and established many new national parks, forests, and monuments to preserve its natural resources. Roosevelt struggled with dealing with the problems created by the rise of large corporations and trusts. He believed that both were a fact of economic life but that an equally powerful government should control their behavior.
Louis Brandeis, a Boston lawyer, was most notable for his actions fighting railroad monopolies, defending workplace and labor laws, creating the Federal Reserve System, and presenting ideas for the new Federal Trade Commission. Brandeis was convinced that large corporations and trusts were by their very nature bad and should be broken up by government action such as anti-trust laws so that more small corporations could take their place and produce a truly competitive economy.
In 1911 Frederick Winslow Taylor published his monograph “The Principles of Scientific Management.” Taylor argued that flaws in a given work process could be scientifically solved through improved management methods. The best way to increase labor productivity was to reduce the time to complete a task. Taylor’s methods for improving worker productivity can still be seen today at companies, in modern militaries, and even in the world of professional sports.
Contrary to common belief, Brandeis introduced the term ‘scientific management’ during a court case that involved Taylor. Taylor before used the term ‘ shop management.’
Roosevelt reached out to Brandeis to look for ways to regulate big business. While Roosevelt’s priorities were to preserve natural resources (sustainability), Brandeis looked for ways to neutralize big business in favor of more competitive competition (equitability). Brandeis reached out to Taylor to discuss how increased efficiency could serve Roosevelt’s agenda. The idea was that if businesses increased efficiency, they would produce less waste and thereby conserve material resources. Taylor’s primary objective was to increase productivity, as this would benefit profitability.
Another misconception: Henry Ford might not have applied Taylor’s management theory. Frederick Taylor even coined the term “Fordism” when he accused Ford of removing the pride that human beings took in their jobs and creating a labor force of unskilled workers who were merely cogs in the machine. The assembly line itself was introduced by Olds Motor Vehicle Company (Oldsmobile).
Roosevelt, Brandeis, and Taylor all acknowledged the benefits of increased efficiency. Be it to serve their own agendas. So how did the balance between the three objectives (sustainability, equitability, and productivity) evolve? Milton Friedman’s doctrine (1970) argued that productivity has to prevail as it increases profitability and thereby fulfills the ‘only social responsibility of business’, which is to increase shareholder’s value.
It took several decades before President Barack Obama (2009 – 2017) shifted the attention back to sustainability and equitability, only to be torpedoed again), this time by President Donald Trump (2016 – 2010). Although the battle between conservative (free market) and progressive (regulated market) forces will continue, the genie seems to be out of the bottle: sustainability and equitability are back on the map.