“a tremendous whack”

“If you have an important point to make, don’t try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time – a tremendous whack.” This statement is attributed to Winston Churchill, whose mother was an American.

“… an idiot could lead”

“I’m looking for companies which an idiot could lead.” Warren Buffett. May 2015.

Buffett is an American investor, businessman and philanthropist. With an estimated $72.7 billion he is estimated to be the third-wealthiest person in the world. 

The majority of that wealth is in Berkshire-Hathaway, the  investment firm he founded and leads. Stocks in Berkshire are the most expensive in the world.

His formula for successful investing: He looks to buy stocks in companies that are so successful that an idiot could run them. For sooner or later one will. Buffett has a few basic rules. One is investing in companies whose business model is immediately and intuitively understood.

Strategy Consultants

The approaches used by strategy consultants – also known as management consultants – are advanced versions of those taught in business schools: data-driven analysis with some degree of attention given to the non-quantifiable human factor. The goal is the standardization of best practices within client companies, drawing also on insights gained from other clients.

The management consulting sector has grown dramatically since the 1930s, when the Glass-Steagall Banking Act was passed, limiting affiliations between commercial banks and securities firms. Management consulting grew out of the demand for advice on finance, strategy and organization. In 1980, only five consulting companies existed, and each had 1,000 consultants worldwide. By the 1990s, however, more than thirty firms entered the market each with at least 1,000 management consultants.

In 1993, McKinsey had 151 directors. This figure dramatically increased to 400 by 2009. From 1993 to 2004, McKinsey revenues more than doubled with 20 new offices and twice as many employees. McKinsey grew from 2,900 to 7,000 consultants scattered across 82 offices in more than 40 countries. In 1963, Boston Consulting Group had two consultants. By 1970 1980, 1990, 2000 BCG had 100, 249, 676, 2370 and 4800 consultants on its payroll respectively.

The Lords of Strategy

Written in 2010 by Walter Kiechel, former managing editor at Fortune magazine and editorial director of Harvard Business Publishing, best-selling The Lords of Strategy describes the history of ideas in the field of management strategy over the past forty years through the rise of the strategy consulting firms McKinsey, BCG and Bain, as well as notable business schools.

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A reviewer – Jeffrey Swystun – wrote on amazon.com that Kiechel “sees the best strategy consultants as objective intellectuals who see patterns of evidence and put them through conceptual frameworks to produce pragmatic insights“.

A Love-Hate Relationship

Americans have a love-hate relationship with theory. On the one side the U.S. has many world-renowned institutions of science and higher learning. Americans are proud of the great scientists and thinkers the country has produced.

On the other hand Americans are skeptical of theory, which for them is almost by definition a separation from reality, from experience. The more education a person has, the fear is, the more detached, impractical, and inexperienced they are.

The “ivory tower” is a figure of speech that describes a state of privileged seclusion from the facts and practicalities of the real world. Some intellectuals are often perceived to be living in an “ivory tower,” detached from real world experiences.

Personal Experience

Although Americans strive to be analytical, objective, scientific, what most persuades them is experience. For Americans experience is fact, real data, empirical, irrefutable. Theory, logic, rigorous analysis are seldom more convincing than hearing a person say: “I was there. I saw it with my own eyes” or “We tried the approach and it worked”.

Empiricism is the theory that all knowledge is derived from sense-experience. As a philosophy, it emerged with the rise of experimental science and was developed in the 17th and 18th centuries by thinkers such as John Locke, George Berkeley, and David Hume. The idiom “seeing is believing” signals the belief that people can only really believe what they experience personally.

“Man on the street“

Americans believe that complexity is only truly understood when it can be explained to the man on the street, meaning to the non-expert. To persuade in the American context means to use clear, transparent, straightforward language, spoken and understood by those of average education.

This is not a form of dumbing-down, but effective communication. Put differently, Americans believe that if you cannot make the complex understandable, then you have not mastered that complexity.

Legal Case Method

The case method utilized in business schools is also used in American law schools. It relies on the principle that the most effective way to learn American law is to scrutinize judicial opinions which have become the law.

Law school cases allow students to discern a legal rule, prompting students to test their knowledge in simulated situations. This sensitivity towards facts and reliance on previous judicial rulings is deeply imbedded in the legal system in the United States.

Business Case Method

Most American business schools base their teaching on case studies, a method which goes back over one hundred years. Business cases are descriptions of actual business situations.

Information is presented about a company: products, markets, competition, financial structure, sales, management, employees, as well as other factors influencing success. The length of business cases ranges from five to fifty pages. Case studies are based on experience.

Business Schools

American business schools offer degrees in business administration. The focus is primarily on analyzing quantifiable factors. The predominant subjects are finance, accounting, statistics. The methods are data-driven, structured and rigorous. The goal is to be as scientific as possible.

As of 2012 there were 662 business schools in the United States. Out of 436 schools reporting, over 168,000 students were enrolled in Master’s in Business Administration (MBA) programs in 2012 alone. From 2008-2009, 347,985 Bachelor’s degrees, 168,375 Master’s Degrees and 2,123 Ph.D.s were conferred in Business and Management. Many Americans believe in the the discipline of business administration.