The author seems confused about what constitutes competence vs incompetence. In my opinion the budgeting problem can most easily be understood through the lens of bounded rationality: senior management often has no idea what kind of budget is required to meet certain objectives, so can’t really separate the case where a frugal manager truly needs more budget and the one where a self-interested manager just wants a bigger budget to show off. In my book this is due to senior management’s incompetence, not competence.
An ability to operate reasonably effectively under the constraints of bounded rationality is an ingredient of competence.
You seem to define managerial competence as making the right decisions, and thus file bad decisions under incompetence. I believe this definition to be intuitive but useless for practical purposes. Instead, I define managerial competence as an ability to set and achieve goals, and claim that a few undesirable conditions commonly observed in the workplace are a natural consequence of managerial competence according to this fairly uncontroversial definition.
While I sort of agree with the premise, isn’t that a fairly low bar?
From the organisations perspective it doesn’t matter if the goal is achieved with 5 or 300 people, as long as it is achieved, but it feels wasteful to me.
I’d also kind of require the goals that are achieved to be the ‘right’ goals to qualify it as competence.
It’s hard to call a general that leads his army orderly into a trap competent.
> An ability to operate reasonably effectively under the constraints of bounded rationality is an ingredient of competence.
Sure, and that’s a reasonable argument for the claim that the less senior manager with the budget is competent if she refuses to reduce it, because she understands that it will not be increased again after the crisis is over.
But it’s not a good reason to call the senior manager who doesn’t understand the situation “competent”. The root cause of problem is that her rationality is too bounded, which I would prefer to call “incompetence”.
> But it’s not a good reason to call the senior manager who doesn’t understand the situation “competent”.
I'm not so sure that this is actually true... It certainly seems like a certain flavor/kind of "competency", for a manager to wander into unfamiliar territory, or come across an unfamiliar topic, and to have the wherewithal to then say, "well I don't understand why we have a $10M budget, and I don't understand what will happen if we reduce it to a $6M, gee my rationality is extremely bounded... but I know enough about management in general, to know that making big changes is risky, and all my underlings keep telling me that cutting budget to $6M is a terrible idea --> therefore, despite my too-bounded rationality, I will be competent enough to realize that not changing anything is the safer path (even if I don't fully understand why, and even if I have no crystal ball to predict next year's budget process)"
Maybe you would just call that having "self-awareness of their own bounds"? And if you have self-awareness than maybe that automatically disqualifies you from being "too bounded"? But absent arbitrary semantic rules like that, the ability to make wise choices with imperfect understanding or large gaps in knowledge, is itself a demonstrable and valuable skill that some people have, others can learn, and also some that will utterly fail to ever grok.
