Elon Musk challenges management thinking

Elon Musk's purchase of the social network Twitter raises many difficult political questions: Is it right for the richest man in the world to own such an important forum for public debate as Twitter? Is his decision to get rid of so many employees within days of acquiring the company fair and legal? There are also strategic questions: Can Twitter make money by moving from an ad-based business model to a subscription-based one?

But it must be said that beyond all this, the changes that Mr. Musk is implementing in the company represent an extremely clear test of the effectiveness of a particular management style. Obviously, the way Musk defines effective work, the decision-making process and the role of the CEO is clearly contrary to the basic tenets of modern management culture and the theory of business administration (MBA).

His treatment of the company's employees is a clear example of his countercultural approach. For a man focused on the innovative future, Musk is a very old-fashioned boss. He does not like and does not welcome remote work. Immediately after taking over as CEO, he sent out an email to Twitter employees demanding that they work in the office at least 40 hours a week. He suggested on his Twitter feed that anyone who thinks office work is archaic should “consider whether they should look for a job elsewhere.”

Even if the dismissal of so many employees at the same time complies with the law, he does this using extremely harsh methods: people are blocked from corporate IT accounts and informed about the end of their careers in the company by an impersonal email. As a result, one day half of the employees announce their resignation. Those who decide to stay will face a tough adaptation. Insiders say one of Mr. Musk's first actions at the company was to eliminate the company's monthly "rest days."

Contrary to everything described above, in accordance with the latest trends in the theory of business administration, the model of a modern manager is a sympathetic boss with a modest ego, who takes into account the opinions of his subordinates, creates for them a romantic, creative atmosphere and provides them with the opportunity to act independently and make their own decisions. Looks like Mr. Musk didn't do his homework well.

At the same time, his critics must admit that the approach “here’s God (that is, Mr. Musk), and here’s the threshold” has worked and been effective before. In his other companies, such as Tesla and SpaceX, Musk also did not show much empathy and philanthropy. However, he demonstrated exceptional leadership qualities - an unbending commitment to the future of humanity - from the popularization of electric vehicles to the colonization of Mars. It is not known whether he will be able to find such inspiring ideas for Twitter. His vision of the social network as a “digital town square” where free speech flourishes is, as always, inspiring in his case. But this time, he's not fighting clumsy competitors. He is tasked with restoring the profitability and financial performance of an existing business in which not only engineering but also public judgment and politics are important components.

The way Musk makes decisions also defies conventional wisdom. Relatively little research has been conducted on executive decision-making processes. But a Harvard Business School study published in 2020 asked 262 graduates of the school how they go about developing strategy.

The paper's authors found a wide range of approaches, with some managers acting intuitively and others using highly formalized processes. However, the study found that managers who use more structured processes tend to lead larger, faster-growing firms (it is unclear how the causal relationship works in this case). They also tend to make decisions more slowly. But Mr. Musk and his supporters are in a different camp: They believe that decision-making should be fast, informal and aggressive.

He is unorthodox in other ways, too. Peter Drucker, one of the oldest thinkers in the field of management, described the CEO as the person in the organization who connects the outside world and the internal workings of the company. “No one else in the firm is able to unite these views,” Mr. Drucker wrote.

Mr. Musk isn't bridging that gap so much as he's blurring the distinction between the inside and outside of a company. His personal brand and wealth are inextricably linked to the other companies he runs. On Twitter, he goes even further, tossing out product ideas on his own feed, polling his audience for their opinions and offering real-time commentary on how things are going. And all Twitter users - former employees, people who founded the company, politicians and experts - publicly discuss what they should do and how to organize the work of the social network. And there is simply no discussion within the company.

You could argue that Mr. Musk is a special case, just like this deal. When he first announced his intention to buy Twitter, he explicitly said that he was not going to do it for economic reasons. It must be admitted that the story of the billionaire owner of a social network has little in common with the problems that worry the salaried executives of most public companies. That may be true, but if Mr. Musk achieves another success in his latest endeavor by being tough on his employees, ignoring meetings with PowerPoint sessions, and communicating through memes, management theory and business administration will have to be put to the test some revision.

Based on materials from The Economist. Elon Musk's challenge to management thinking 

Illustration created DALL·E