The New Ecology of Leadership

A radical retake on the field of management, which stresses creativity, innovation and fair returns for all stakeholders and supplies a mental model and the management tools to do it.
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David Hurst delivers multimedia presentations and a range of customized experiences that will inform and inspire your people and help them learn from the past, master the moment and create the future.
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David's Blog

Economics as a Moral Science and the Capitalist Dilemma: An Ecological Perspective

Dala Lama

His Holiness the Dalai Lama

As I mentioned last week, Kenneth Boulding was and is my favourite economist and I was reminded again of his work when I came across a New York Times article on capitalism and the Dalai Lama. In it His Holiness suggests that wielding capitalism for good requires a deep moral awareness. Over forty years ago, in his 1968 address to the American Economic Association Boulding outlined his view why economics, like all sciences, could never be value-free for long. In the subsequent article, entitled “Economics as a Moral Science”, he wrote that science is a learning process that ran into two broad difficulties as it proceeded. The first of these was a “generalized Heisenberg principle”: “When we are trying to obtain knowledge about a system by changing its inputs and outputs of information, these…will change the system itself… (sometimes) radically”. The second difficulty is related – that science does not investigate an objective, unchanging world but actually creates the world it is investigating: it moves from pure knowledge to control. At this stage values at all levels in the society become critical.

When it came to economics, Boulding saw it as recording the results of a learning process that involves three systems – threat, exchange and integrative. Threat is the use of power: “Do something nice for me or I will do something nasty to you”. Exchange, as its name suggests, is “Do this for me and I will do that for you”. The integrative system is all about relationships: “Do this for me because of the quality of our relationship”. These triadic sortings are very common in the social sciences. Boulding mentioned the compulsory, contractual and familistic categories of sociologist Pitirim Sorokin and in The New Ecology of Leadership I listed eight others. These ranged from philosopher John Dewey’s impulse, intelligence, habit to management academic Jeffrey Pfeffer’s emergent, rational, constrained, all of which informed the trio of passion, reason and power in the ecocycle.

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Don’t Throw the Past Away


Kenneth Boulding (1910-1993)

The late Kenneth Boulding, environmental advisor to JFK and one of my favourite economists, once said that “Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad – or an economist.” I used that quote last week to open my talk to a particularly rambunctious group of Rotarians in Kamloops BC. I went on to suggest that this topic – the future of material growth on an increasingly crowded planet must become the central question in the 21st Century. This is despite that fact that mainstream economics seems incapable of grappling with it. The message was very well received and during the question period we had a discussion of the need to find new concepts of nonmaterial wealth of the kind one finds in community relationships – a topic that is close to the hearts of Rotarians everywhere. There were also intellectuals around; I was especially pleased when one of the Rotarians complained to me at the end, “You didn’t mention my favourite poet, William Blake.” I knew exactly where she was coming from, as I am a longtime fan of literary critic Northrop Frye’s writings and artist, poet and religious mystic William Blake (1757-1827) was a favourite of his too.

A central thread running through my activities in Kamloops was “sustainability” as later that day I went on to talk to an MBA class as well as an undergraduate HR conference on “Bridging the Generation Gap”. The ecological perspective proved especially useful in the latter session. The title of my topic was “Don’t Throw the Past Away” and I used the ecological perspective to highlight the way in which many countries in the West discard the elders in society so that that they play little or no role in nurturing the next generations. This dynamic is apparent in almost all the advertising one sees from the investment industry, which plays up retirement as a time of total self-indulgence and complete relaxation and implies that retired people have no useful role to play in society. No wonder they get discarded!

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The Nature of Uncertainty: Hunting Black Swans

black swan

No Black Swans?

This past week I gave the opening keynote at the 2014 Conference Board meeting on Enterprise Risk Management. It gave me an opportunity to bring an ecological perspective to risk and uncertainty as well as allowing me to promote The New Ecology of Leadership, which was featured in the program. I really like these occasions when I am challenged to use the ecological mental model to understand a new area as I learn both about the new area as well as get to understand the mental model better. I also get to meet other people working in related fields. In this case I was particularly pleased to meet Guntram Werther, a professor of strategic management at The Fox School of Business at Temple University. He is a critic of Nassim Taleb’s “strong form” view of so-called “black swan” events, arguing that many such events are forecastable using holistic, “syncretic” thinking. This consists of “…proper situational awareness, insightful lessons from history, multiple perspectives, cognitive shifting, intuition and insight into multiplayer intentions, their implications and shifting contexts and other information-integrating logics.” I believe that an ecological mental model is one way of going about such thinking.

I used Michael Mauboussin’s definition of uncertainty as “when you don’t know what’s going to happen and you don’t know what the probability distribution looks like”, which means that risk is “when you don’t know what’s going to happen but you do know what the probability distribution looks like”. I suggested that it was instructive to look at nature as a “manager” of uncertainty and the evolution of systems that handle uncertainty without conscious direction by:

  • Always developing multiple options
  • Creating contexts for growth
  • Allowing the best fitted to emerge
  • Testing the system continually

At the same time I repeated statistician George Box’s comment that “Models, of course, are never true, but fortunately it is only necessary that they be useful.”

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Exploring Leadership Using Metaphors

Last week I spent a day-and-a-half with a group of senior managers from a large global company discussing leadership. The company faces all the challenges one might expect it to face – globalization, digitization, cross-cultural difficulties and so on in a VUCA world i.e. one that is Volatile, Uncertain, Complex and Ambiguous.

Puzzle without a box

A Puzzle Without a Picture

Our topic was leadership and our medium was metaphor. A few weeks ago I blogged about the role and power of metaphors in management and the original meaning of the word – from the Greek meta (beyond) and pherein (carry). Our detailed sub-topics were “setting direction”, “building alignment” and “creating commitment” and we began by outlining the challenges the company faces using the well-known instrument Visual Explorer, developed by David Horth and Chuck Palus at the Center for Creative Leadership (CCL). It consists of hundreds of images from which participants are typically asked to select one that connects with their challenge.  They then discuss their images in their teams and present their thinking to the group as a whole. The image on the left represents a typical choice; the company’s challenge is like putting together a complex puzzle without the picture on the box to guide the people. An excellent discussion then ensued about who had the picture or whether the puzzle that is the future comes in a box with a picture at all!

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Learning: The Power of Simulations

Last week I facilitated a day-long course on the “Fundamentals of Finance for Decision Making” as part of the DeGroote Executive Education program. I was using the Apples & Oranges simulation from the Swedish company, Celemi. I say “facilitated”, rather than “taught” because the essence of Celemi’s approach is for coaches to create contexts for learning, not for teachers to teach.  Today, with educators talking about “flipping the classroom”, the physical simulations from Celemi show the power of having people together physically and how to use that time and context to the greatest advantage. The results cannot be matched by any lecture-type formats.

I began working with Apples & Oranges about fifteen years ago, when I was designing and delivering executive development programs in Hong Kong and China. In my opinion it is the finest vehicle bar none for managers to learn the basics of finance and accounting. Teams of four work around a simulation board for a whole day, following the fortunes of a company as it conducts business for three years. The teams track half a dozen value streams and are active in the process of transforming value from one category to another. When they make mistakes they help each other get back on track. Raw materials become work-in-process with the addition of labour, which is then transformed into finished goods. Invoices become accounts receivable and receivables become cash, which it becomes clear is the hub value category for the business; “profits are fiction – cash is reality”.

At the end of each three-period year every team member prepares financial statements – profit and loss and balance sheet, with special attention to the role of cash and the impact of decision-making on cash. During the course of the three years they perform a management turnaround – increasing the velocity of working capital – they conduct a growth strategy, once again with special attention to the impact of these moves on cash. They come to understand the complexity of integrating and judging the effects of multiple improvement programs. Since I last worked with Apples & Oranges Celemi have updated the simulation and made it much more powerful. Today one can customize it do deal with the issues faced by single organizations and can discuss advanced financial concepts like Economic Value Added (EVA) and how to calculate a Weighted Average Cost of Capital.

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