There is nothing quite so useless as doing with great efficiency something that should not be done at all.

– Peter Drucker

screen_shot_2013-04-14_at_8.56.25_pm_0In today’s America it is axiomatic that the concept that applying corporate principles to organizational governance is good and appropriate. It is applied without question and used to justify all manner of mismanagement. The reality is that corporate governance principles are somewhere between inappropriate to completely incompetent for managing research institutions. I’d argue that they are ruining the economy itself because the current “principles” are oriented toward the benefit of the few people at the top of the food chain.

Doing the right thing is more important than doing the thing right.

– Peter Drucker

The cornerstone of corporate governance is the maximization of shareholder value. Almost every business decision flows from the application of this principle. This principle greatly benefits a select few and often costs other stakeholders greatly. Over time, the shareholder class and the management of businesses have merged into the same thing. Business is now managed to enrich its management. It is basic cwolf_wall_street4-620x412onflict of interest, and society as a whole is paying the price. The business principles being used are bad for the businesses as they are used as sources of money that is systematically siphoned off to compensate “shareholders”.

All of this is at the cost of the long-term health of the companies, the jobs for the employees and the communities they are in. The shareholders don’t care because they have already had their payday.

 Management is doing things right. Leadership is doing the right things

-Peter Drucker

The consequence is that we are over-managed and under-led. These principles are slowly destroying our National system of research laboratories. Whether it is the department of energy or defense, or NASA or NOAA, we are strangling our research through systematic misapplication of management principles that only benefit a few. Take community service like the United Way as an example. Institutions will manage an employee-giving program and then have the institution take credit for the good.

All the while they systematically suppress the employees wages and increase executive compensation. They benchmark themselves to corporations to justify everything, and no one even blinks.

I worry that this process will continue until we have a crisis. Our destruction of our research capability in the name of applying business principles may finally end 2959234with disaster. Our dominance of science and research is ending. Europe and China are overtaking the United States. Our government seems to be in denial of this, but it is more obvious all the time. A large part of the blame can be laid at the feet of the misapplication of corporate governance to research institutions.