If a manager or management team doesn’t have information-handling capacity at least as great as the complexity of the thing they’re in charge of, control is not possible and eventually, the system will become unregulated.

There are two obvious ways to fail here. The translation and error-correction mechanism might be inadequate, or the managers might intentionally distort the signals in order to follow priorities of their own. The tragedy of senior management is that it can drift into either of these failure modes without realising; if either problem arises, it arises in their information and communication environment, so they won’t notice it. It’s the problem identified by Niccolò Machiavelli — a prince who is not wise cannot be well advised, and a manager who doesn’t have access to excess analytical capacity won’t be able to tell when something has gone wrong with their subordinates. But maintaining that spare management capacity is expensive.

And this story repeats itself through the history of management science; almost every classic of the literature seems to have described a way of adapting systems to a more complicated world, and then to have become obsolete itself. If you look past the slogans and think about what things like ‘management by objectives’, ‘focus on core competences’ and so on actually mean, they are all different ways of advising executives to restructure their businesses so that they don’t generate complexity faster than it can be managed.

When things go wrong with management consultancy, it’s more likely to be because the consultants are tackling a new problem and there isn’t anyone in the company who knows the answer. The consultants get commissioned because they advertise themselves as brains for hire; a company can cut overhead costs by having fewer middle managers performing staff functions in the ordinary course of business and buying in brain power when confronted with a difficult question. When you write this idea down in black and white, it’s pretty easy to see why it won’t work except by pure luck.

The reason is invariably a failure to respect the complexity of the problem. Management problems are complex, high-variety questions, Rubik’s Cubes rather than rows of blocks. In order to solve them, you need to make decisions about how to represent the problem in such a way that you can simplify it and solve it, without losing vital details that will blow your solution apart as soon as it’s implemented.

We’ve already seen how accounting systems can act as an information-reducing filter. It follows from this that the greater the emphasis placed on accounting-based targets set by the CEO, the greater the filtering effect.