Will Professionalism Choke Creativity?

Even if we accept that the average professional manager would be better than the non-professional, the real engine of a capitalist economy is not in the middle of the competence distribution, but in the tails. As acolytes of the political economist Joseph Schumpeter might argue, the true hero of the capitalist system is the rogue entrepreneur, who defies conventions and through a process of creative destruction reinvents them. If professional managers were solely entrusted with the management of economic enterprises, we might choke off the creative genius of people like Bill Gates and Sam Walton, who were unschooled in management but have had more impact on economic progress than the vast majority of professional managers.

But would Bill Gates and Sam Walton really have been worse off if they had complemented their entrepreneurial talents with professional management training? Or to take another example, would medicine have made more creative progress had it not been professionalized? What we know to be true is that the pace of discovery and creative progress rapidly accelerated in medicine once it became a profession. The requirement to master a body of knowledge did not stymie bold new pioneers. Indeed the existence of a common body of knowledge may actually have accelerated and spurred innovation. Professionalizing medicine has also greatly diminished the harm that could be done by untrained doctors. The harm to society that untrained managers could cause—particularly in a more complex, globalizing world—cannot be underestimated.

The persistent skeptic may yet argue, what about the stunting effect that professionalizing medicine has had on alternate forms of therapy and healing? Would the next business revolutionaries be similarly stifled under such a system? In response, we point to the growing success of alternative medicine as proof of the opportunity for entrepreneurs to challenge the existing order in an open, democratic society. Even if all management jobs were professionalized, creative destruction would always be open to any entrepreneur, whether certified or not, who could mobilize the resources to launch a venture.

It is also a matter of choice how restricted management jobs need to be. In medicine and law, entry into the profession is totally closed. In the case of medicine, hospitals will hire only licensed doctors, and the state and insurance companies will reimburse only for care provided by licensed professional doctors. The system, however, is not closed from the standpoint of consumer choice. Consumers are free to go to any medical practitioner, licensed or not, if they are willing to pay for the services themselves and bear the risk of the outcomes. (Note: The state does protect minors, who must be treated by licensed doctors because they can’t make independent choices in their own interest.)

In management, one could imagine a closed system for certain sectors—for instance, the state might restrict investment of public and state pension funds or tax-protected retirement savings to “professionally” managed public enterprises. Even in this closed system, much as in medicine, individuals could choose to invest their personal money in any enterprise (professionally managed or not). One could also imagine a much more open system, in which management positions would be attainable by individuals with varying credentials, depending on the job responsibility: none; experience only; experience plus education; MBA only; MBA plus CBP; CBP only (which might be granted to an experienced manager who passed the certification exam without having completed the MBA, as people without a law degree are allowed to pass the bar and practice in some states). In this system, the market would determine the value of a professionally certified manager relative to those with other qualifications, as it does today for MBAs. We believe that the added confidence in the intellectual capabilities of certified professionals (that they have mastered a body of knowledge and are current in their knowledge of new ideas in business) would enable them to command a premium.