The Nietzsche School of Management

Friedrich Nietzsche, german philosopher, 1844-1900

When all is said and done, business executives are essentially in the explanation business. If they can accurately identify and explain problems—such as declining market share, deteriorating employee morale, or a falling share price—they are well on their way to figuring out if the issue can be fixed. As a result, anything that helps them do this contributes to the practice of management.

Enter Friedrich Wilhelm Nietzsche.

Born on October 15, 1844, the German philosopher was a brutally uncompromising and fiercely independent thinker who questioned everything and accepted nothing before losing his mind to untreated syphilis or a tumour in 1889, reportedly after witnessing a commercial horse that refused to move being viciously whipped by an enraged merchant. The influence of Nietzsche’s intellectual investigations on management has long been overshadowed by his influence on generations of theologians, philosophers, psychologists, poets, novelists, and playwrights. And if truth be told, Nietzsche’s relentless pursuit of the truth would have driven any management committee into a state of craziness that ended in paralyzing division and indecision. But when it comes to understanding the explanation process, Nietzsche’s thinking was brilliant. And the insights that he published in this area are as valuable as any lesson that modern business schools have to offer corporate executives, especially when navigating an unexpected pandemic during the so-called Age of Disruption, which has exposed deep flaws related to equity, diversity, and inclusion in organizations and society alike.

In 1889, a year before being committed to an asylum, Nietzsche published Twilight of the Idols, or, How to Philosophize with a Hammer, which, as noted in an introduction to this work by University of California Professor Tracy Strong,  is “about the accounts of the world that humans want to give to themselves in order to keep themselves from seeing the world (and themselves) as it is.”

The following Twilight quote is long, but it is a gem worthy of any executive’s attention:

With the unknown, one is confronted with danger, discomfort, and care; the first instinct is to abolish these painful states. First principle: any explanation is better than none. Because it is fundamentally just our desire to be rid of an unpleasant uncertainty, we are not very particular about how we get rid of it: the first interpretation that explains the unknown in familiar terms feels so good that one “accepts it as true”….  The “why” shall, if at all possible, result not in identifying the cause for its own sake, but in identifying a cause that is comforting, liberating, and relieving. A second consequence of this need is that we identify as a cause something already familiar or experienced, something already inscribed in memory. Whatever is novel or strange or never before experienced is excluded.

Business school translation:  When faced with a problem, we all (including executives) prefer quick and easy to complex and nuanced explanations. We especially like explanations that require little effort, immediately relieve the stress and pain we feel because of the problem, and confirm our preconceptions.

What executive has not felt the immediate blast of pleasure and relief that comes from getting a problem quickly off the desk? But in business (and in life generally), quick and easy explanations are often incorrect, which is why plans based on them usually yield unsatisfying results. And when problems are left unfixed, the issues they create often get worse. As a result, the pursuit of pleasure and relief in problem solving becomes the bane of good decision making.

Take, for an oversimplified example, a corporation with plunging sales. Because sales pay the corporation’s salaries, not to mention operating expenses and finance charges, this problem is a serious concern for managers who understand the short step from not paying your bills to filing for bankruptcy.

Sales performance, of course, depends a lot on marketing, so a stressed-out CEO looking to explain a decline in revenue could decide that ineffective marketing is the issue and with blinding clarity move to blame and replace the vice president responsible for this area. Voila! The CEO immediately feels better. But while blaming and replacing the head of marketing in this scenario is a quick and easy fix to a plausible cause of the problem, the CEO’s relief can be short-lived thanks to the any-explanation-is-better-than-none Nietzsche phenomenon.

“Simply put, even executives who manage with the best of intentions need to accept the unpleasant fact that their decision-making processes can be corrupted by Nietzsche’s any-explanation-is-better-than-none phenomenon.”

In fact, the departed marketing executive could have been doing a great job mitigating the impact of other negative forces. Macroeconomics. Competitive landscape. Market conditions. Technology. Regulations. Corporate reputation. If any combination of these or other things is the real cause of the plunging sales, bringing in a new marketing executive will not turn things around. Instead, the company will have lost valuable time by misidentifying the issue, and sales will undoubtedly continue to plunge. Meanwhile, the CEO now has the additional problem of integrating a new member into an executive team unnerved by a questionable termination that was justified by a half-baked explanation for the plunging sales.

Simply put, even executives who manage with the best of intentions need to accept the unpleasant fact that their decision-making processes can be corrupted by Nietzsche’s any-explanation-is-better-than-none phenomenon. Here are some suggestions that can help prevent decision makers from concluding that they understand a problem when reality says they are not even close.

First, slow things down. Perhaps this isn’t always the case, but most of the time when a problem hits, executives have more time than they think they have available to contemplate what actions to take. When under pressure, our brains play tricks, and one of them is the appearance of hyper-urgency, which reinforces our preference for a quick and easy solution. And doing things wrong in the service of urgency ends up costing all concerned more time and often real money. So slow things down, allowing yourself the time required to gain an accurate perspective and understand the context. This enables resources to be marshalled and analysis organized while crucially giving stakeholders, including employees and investors, confidence in your leadership. Control, not panic, solves problems.

On the subject of slowing things down, I encourage executives to complement our management learnings from Nietzsche by reading Nobel Laureate Daniel Kahneman’s 2011 Thinking, Fast and Slow and Michael Lewis’s 2016 The Undoing Project: A Friendship That Changed Our Minds. The former is a fascinating examination of the engine of human thinking; the latter is the equally fascinating story of Kahneman’s research on decision making with his long-time collaborator Amos Tversky—which is credited with giving birth to behavioural economics.  No executive can read these books and come away without added insight into dealing with problems.

Second, support constructive dissent. Corporate cultures dictate how people act and speak. And when it comes to problem solving, an awful lot depends on just how comfortable an organization’s people feel about respectfully challenging other viewpoints held up and down the corporate ladder. On this front, leadership needs to set the tone. This requires more than just being open to contrary opinions. It requires authentically and vigorously encouraging people to voice them. Then you need to listen. Keep in mind that nobody is learning when they are talking, and so the more you talk, the less you learn. Too much talking and not enough listening also discourages the voicing of valuable insights by others.

Third, build a diverse executive team. Diversity plays a big role in seeing problems from every angle. Gender diversity is important and gets lots of coverage but so is diversity across age, ideology, attention to detail, professional and academic training, work and life experience, temperament, and leadership style.

Fourth, engage outsiders. No matter how strong an executive team, it cannot avoid a degree of insularity. Outsiders must be used carefully, but they can bring a freshness of viewpoint that you just cannot get from a group of insiders.

Finally, question your motive. When contemplating a problem, specifically ask yourself if a desire to be rid of it has led you astray. Be honest with yourself, and make sure you haven’t wrongly concluded that any answer is better then none. Even when you think you have nailed a decision, be prepared to slow down, listen, and think again when someone says you are in too big a hurry to be rid of a problem.

The challenges of today’s world require leaders who can channel their inner Nietzsche. In other words, when feeling really good about your understanding of a problem, you might just want to ask yourself whether you’ve missed anything that will end up making you feel really bad.

About the Author

John S. McCallum is Professor of Finance at the I. H. Asper School of Business, University of Manitoba, and former Chairman of Manitoba Hydro. Contact John.McCallum@umanitoba.ca.

3 responses on “The Nietzsche School of Management

  1. David Kroll

    Greetings John,
    I used to be of the ‘urgency mentality’ when presented with a problem. Now, if it is not bleeding or on fire, it is not urgent. It certainly needs to be addressed but not immediately. When a problem/issue first arises, first thing to do is take a big step back and ask “Is this a problem with process or an anomaly?” If it is a problem with process, get it fixed. If it is an anomaly, that can’t be fixed. Anomalies can be identified in a strategic plan, but, I know of no way for which they can be planned.

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