Managers as plumbers
THE WEEK|November 08, 2020
Managers as plumbers
Managers are increasingly working in volatile environments. This requires that they focus on the big picture and pay attention to detail. As MBA graduates enter the real world, theoretical knowledge equips them to think through the problems at hand. But, they also learn which analytical models and theories do not give much guidance.
There are two major reasons why there should be attention to detail. First, it turns out that managers are busy people and rarely have the time or inclination to focus on details. They tend to decide on how to address problems based on intuition, without much regard for rigorous scientific evidence. Second, details and analytical models that a manager considers uninteresting are in fact very important in determining the impact of a firm’s action, while some of the theoretical issues that b-school education conditions them to worry about most may not be that relevant.

Therefore, managers need to adopt the mindset of a plumber (a term coined for the new-age economist by Esther Duflo, co-recipient of 2019 Nobel Memorial Prize in Economic Sciences). As Duflo suggests, plumbers try to predict what may work in the real world, mindful that tinkering and adjusting will be necessary as our models give us little theoretical guidance on what (and how) details will matter.

Let us look at an example where the manager donned the plumber’s hat. Every digital marketing class teaches the effectiveness of search advertising (placing online ads in search engine results). Managers in the eBay advertising team were spending millions of dollars on search ads. Then, one day, eBay allowed the search advertising team to tinker and experiment with the process. They found that most search ads had little effect on sales. This saved eBay millions of dollars.


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November 08, 2020