• Meet David
  • Bio
  • An Interview with David K. Hurst (2006)
• About the Book
  • The New Ecology of Leadership
  • The New Ecology of Leadership: Author’s Q&A
  • Table of Contents
  • Book Excerpt
• Speaking
  • What You Can Expect – a Customized Learning Experience
  • A Sample of Presentation Topics
  • Endorsements
• Blog
• Education
  • Leading Forth
  • My Approach to Consulting
  • Strategy
  • Leadership
  • Change
• Writings
  • Articles
    • Academic Articles
    • Popular Articles
  • Books
    • Crisis & Renewal
    • Interview for Crisis and Renewal
    • Learning from the Links
    • Diary of a Reformed Duffer
  • Book Reviews
    • Best Books Essays
    • Book Reviews

Blog

← Older posts Newer posts →

Shareholder Value – Part II: “Down with Shareholder Value”

In Saturday’s New York Times, Joe Nocera wrote a column entitled “Down With Shareholder Value”. In it he traced briefly the rise of the concept and then suggested that we are at the “dawn of a new movement”, although it was unclear to him whether it will have any legs. At the same time he referred to a recent article by Justin Fox and Professor Jay W. Lorsch in the Harvard Business Review. They asked “What Good Are Shareholders?” and examined the shareholders’ role as providers of money, information and discipline. Established firms typically finance their investments from retained earnings or borrowings and, while young companies need shareholders’ support, the authors concluded that funding is provided less by shareholders than by the market as a whole, driven by the needs of fickle, short-term “renters” of the stock. The short-term focus of the stock market also ensures that it does not function very well as either a provider of information or discipline.

I wrote comments on both Nocera’s column and the Fox and Lorsch article. What follows is an amalgam of the two:

Continue reading →

Posted in Change, General, Leadership | Tagged Anglo-Saxon capitalism, creation, destruction, ecology, fire, forest, Harvard Business Review, Jay Lorsch, Joe Nocera, Justin Fox, lodgepole pine, Neil Sheehan, New York Times, shareholder value model, Vietnam War, World War II | Comments Off on Shareholder Value – Part II: “Down with Shareholder Value”

Is “Shareholder Value” a Myth or a Tool for Corporate Euthanasia?

I have been reading Lynn Stout’s The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations and The Public. It is a short, highly readable book, written with the objective of demolishing what Professor Stout calls the “shareholder value myth”. She is the Distinguished Professor of Corporate and Business Law at Cornell Law School and makes a powerful case against the “ideology” of shareholder value. First, she demonstrates that it is not a requirement of U.S. law; second, she shows how it misinterprets corporate economics, and lastly she examines the evidence that it is effective in increasing returns to shareholders. The evidence on returns is inconclusive but it becomes clear that a firm’s adoption of the shareholder value model can destroy the commitment of its employees to the enterprise.

In The New Ecology of Leadership I single out the baleful influence of neoclassical economics on the field of management and the shareholder value model (SHV) that accompanied it as the most powerful catalyst for the decline of innovation and creativity in organizations.

Continue reading →

Posted in Change, General, Leadership | Tagged bankruptcy, boards, corporate law, directors, Dodge v. Ford, ecological perspective, innovation, liquidation, Lynn Stout, Mitt Romney, principal-agent, purpose, shareholder value model | 2 Comments

Recipe for Ruin: Nothing Lasts Unless It Is Incessantly Renewed

Over the weekend a comment on a management blog referred to a piece by management writer Steve Denning in Forbes magazine. Entitled “The Key Missing Ingredient in Leadership Today”, it argued that real leadership is all about transforming systems, not sustaining them. In making his provocative arguments, Denning referred to another view of leadership by William Deresiewicz entitled “Solitude and Leadership” based on a lecture delivered to West Point Military Academy in 2009. Deresiewicz himself is a former Professor of English at Yale, who draws his inspiration for writing from literature. In his lecture he turned to Joseph Conrad’s Heart of Darkness for an understanding of bureaucracy, invoking also Francis Ford Coppola’s movie Apocalypse Now, the plot of which was based on Conrad’s book.  Both the lecture and the blog made for stimulating reading but I found myself unable to agree with much of Denning’s blog. What follows is the comment I made on Forbes:

Continue reading →

Posted in Change, General, Leadership | Tagged Apocalypse Now, bureaucracy, coercive bureaucracy, complex systems, context, creativity, crisis, Denning, Deresiewicz, destruction, discipline, ecological perspective, enabling bureaucracy, Forbes, Francis Ford Coppola, freedom, Heart of Darkness, hierarchy, identity, innovation, Joseph Conrad, know-how, know-what, means and ends, modular, narrative, power, renewal, ruin, Toyota Production System, West Point | Comments Off on Recipe for Ruin: Nothing Lasts Unless It Is Incessantly Renewed

Tattoos That Fit: Barclays, LIBOR, Culture and Regulation

The questioning of Barclays Bank’s Bob Diamond by the U.K. Parliamentary Committee on the LIBOR rate fixing scandal a couple of weeks ago was riveting. The unflappable Diamond deflected the MPs queries with a practised ease despite mounting evidence of an informal industry-wide collusion, designed to suit the needs of traders and bankers, rather than the rest of us. The session highlight was when one frustrated MP asked Diamond whether he could recall the three bedrock principles of the Quakers who founded the bank in 1690. As the former Barclay’s boss sat stone-faced, the MP recited them – “Honesty, integrity, and plain-dealing. I could offer to tattoo them across on your knuckles if you prefer.”

Continue reading →

Posted in General | Tagged Anglo-Saxon capitalism, banking, Barclays, Bob Diamond, community, complex systems, context, culture, ecological process, gift economy, integrity, LIBOR, management ethics, Quakers, rate-fixing, regulation, Society of Friends, values | Comments Off on Tattoos That Fit: Barclays, LIBOR, Culture and Regulation

Why Walmart is Like a Forest: Excerpt from The New Ecology of Leadership published in Strategy+Business

An excerpt from The New Ecology of Leadership has just been published in Strategy+Business.  It draws the parallels between the growth of the Walmart stores and forest succession, suggesting that it is fundamentally an ecological process. You can read the excerpt here.

Continue reading →

Posted in Change, General | Tagged bribery, context, ecology, forest succession, stores, The New Ecology of Leadership, Walmart | Comments Off on Why Walmart is Like a Forest: Excerpt from The New Ecology of Leadership published in Strategy+Business

Renewal in the West: Nature Bats Last

This year the annual fire season has come early to the Western regions of North America. In the southern mountains it has been prompted by a reduced snowpack, low rainfalls, blistering heat and low humidity. In the north, where the drought is absent, warmer winters have encouraged huge infestations of the mountain pine beetle, which attacks and kills older trees in the predominantly lodgepole pine forests. The result is standing firewood that burns fiercely once ignited. The situation has been aggravated by decades of fire-suppression, during an era when foresters did not understand the renewing role of fire in these ecosystems. For the lodgepole pine is a fire-dependent species that relies on fire to renew itself. The trees have serotinous cones that they drop to the ground. It takes a temperature of above 113°F (45°C) to melt the resin that holds the cone scales shut. The pine nuts, which are viable for ten years, are then released into a nutritious bed of ash that has been cleared of most competitors. If fire is kept out of the system for too long, however, the resulting conflagrations can be fierce and deadly, both to the forest and those who live in it.

It was the cycle of birth, growth, destruction and renewal in lodgepole pine forests that first suggested itself as a metaphor for organizational change. This ecocycle, as it came to be called, underpins both Crisis & Renewal and The New Ecology of Leadership. Today’s blog consists of an extract from The New Ecology of Leadership and its introduction of the readers to the role of wildfire:

Continue reading →

Posted in Change, General | Tagged California wildfire, Cedar Fire, chaparral, destruction, ecocycle, ecological perspective, fire, fire season 2012, fire-dependent, human community, lodgepole pine, mountain pine beetle, nature bats last, San Diego, Santa Ana wind, serotiny, Western forest | Comments Off on Renewal in the West: Nature Bats Last

In Praise of Ecological Rationality: The Return of Practical Wisdom to Management

This is the title of the article of mine published last week by the European Financial Review. It begins like this:

Just over fifty years ago in America a concerted attempt was made to professionalize the field of management and set it on the path toward becoming a science in the mould of economics. Executives and their war stories were expelled from the academy and gradually replaced with freshly-minted PhDs in functional disciplines, like finance, accounting, production, marketing, statistics and so on. Business experience was no longer regarded as necessary for researchers, as the hunt began for context-free management principles. The “gold-standard” for management rationality was instrumental and oriented towards the pursuit of effective means to achieve desirable ends. The economists called them “rational-agents”. Management, it was hoped, could aspire to become a profession, like the law or medicine.

Initially this emphasis on the functional disciplines seemed to serve the business schools and their clients well. America was the only large industrial economy to come through World War II with its infrastructure intact. The widely anticipated post-War slump failed to materialize and a baby and consumer boom ensued. The war had spurred numerous technological developments that now began to play their way out into the consumer sector. The priorities of the largest American corporations were growth, economies of scale and the production of more of the same.

This does not mean that all was smooth sailing in the management academy. Periodic oscillations between “left” and “right” wing views of human nature have been a feature of the field since the beginning of the 20th century and the emergence of a formal “scientific” approach in the late 1950s did not change this. There was constant friction between the proponents of “rigour” and the champions of “relevance”. Indeed the field has recently been described as a “battleground” between radically different views of human nature….

To continue reading the article, go to the European Financial Review. My blog continues below with some further thoughts on the relationship between theory and practice:

Continue reading →

Posted in General, Leadership | Tagged ba, both...and, ecocycle, ecological rationality, either/or, European Financial Review, existentialist, functional disciplines, functions, Haridomos Tsoukas, hermeneutist, Immanuel Kant, John Dewey, Jorgen Sandberg, Martin Heidegger, means and ends, phenomenologist, practical rationality, practical wisdom, Rene Descartes, Richard Feynman, rigor and relevance, scientifi rationality, theory and practice, William James, Yogi Berra | Comments Off on In Praise of Ecological Rationality: The Return of Practical Wisdom to Management

Obama and Romney: Prisoners of the System?

I spent Thursday and Friday of last week at a conference in Las Vegas where I was speaking. The meeting was put on by the Applied Finance Group (AFG), a financial consulting company who create sophisticated corporate valuation models for their customers. Their clients consist of some of the smartest users of financial models in the USA. Most of them are financial advisors but some are consultants, who help corporate executives understand how the financial markets look at their firms and what the keys to valuation are.

The presentations ranged from the political to the highly technical. My topic was “Creative Destruction: an Ecological Perspective” and it was very well received. A speaker of libertarian persuasions had gone before me and proclaimed that “The best way to create jobs is to destroy them!” so my ecological take was a helpful examination of the process. I showed how fast destruction is and how slow and diffuse the processes of creation are. The result is that the incentives in the American economy are lop-sided, favouring destruction over creation. In addition, the new digital technologies don’t create many jobs. Instagram, for which Facebook just paid $1 Billion has a dozen employees! Where are the future jobs going to come from?

The most interesting aspect of the conference, however, was the political perspective. As one might expect, the political views of the participants leaned to the right and several speakers referred to the blessed memories of St. Ronald (Reagan) and Milton Friedman. Expressed attitudes toward Obama ranged from negative to vitriolic, but even those toward Mitt Romney were lukewarm at best. “Anyone but Obama” seemed to be the mantra, coupled with a pessimism that “anyone” could do anything constructive once elected. Continue reading →

Posted in Change, General, Leadership | Tagged addiction, Barack Obama, Clinton incrementalism, Congress, corruption, creative destruction, dependency, East Coker, ecological perspective, economic rents, Facebook, flat tax, gift economy, House of Representatives, Instagram, Lawrence Lessig, Milton Friedman, Mitt Romney, Republic Lost, Ronald Reagan, rootstriker, Senate, social traps, sunset clause, The New Ecology of Leadership, Thoreau, TS Eliot | Comments Off on Obama and Romney: Prisoners of the System?

Seeing The World With New Eyes

A few weeks ago I put on a seminar in New York City, kindly hosted by Kaihan Krippendorf. Kaihan is a management strategist, speaker and author who helps organizations “outthink” their competition. He is also an expert blogger for Fast Company. I met him via Columbia University Press who asked him to review The New Ecology of Leadership and he also kindly wrote an endorsement for the jacket cover. For the seminar Kaihan assembled a group of people with most diverse backgrounds. There were actors, storytellers, executives and lawyers who all shared an interest in organizations and new ways of looking at them. After the introductions I gave a thirty-minute presentation that Kaihan filmed. You can see an excerpt here.

The session went very well and we had some excellent discussion about how the ecocycle applied to various organizations in different situations. I gave away a couple of books as prizes for the best stories and we repaired to a local watering hole to continue the conversation. One of the attendees, Karen Morris, had already read The New Ecology of Leadership, liked it very much and kindly offered to write a review of it for Amazon. It has just appeared there. I got today’s blog title from it and the rest of this blog is devoted to it. Thanks Karen!

Continue reading →

Posted in Change, General | Tagged Marcel Proust, naive, new eyes, The New Ecology of Leadership | Comments Off on Seeing The World With New Eyes

Catch 22: The Anatomy of a Social Trap

Joseph Heller’s best-selling, satirical novel, Catch-22, gets it name from the self-contradicting circular logic that the book’s protagonist, Captain John Youssarian encounters while on active service as a B-25 bombardier during World War II. This was the logic that prevented anyone from avoiding combat missions. As the narrator in the book puts it:

“There was only one catch and that was Catch-22, which specified that a concern for one’s safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn’t, but if he were sane he had to fly them. If he flew them he was crazy and didn’t have to; but if he didn’t want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.” (p. 56, ch. 5) (thanks Wikipedia)

Catch 22 is, of course a variation on the ancient liar’s paradox, the written assertion that “this statement is false”. If the statement is true it’s false and if it’s false it is really true. One ends up in an endless loop. A more complex dynamic is what Gregory Bateson called a “double-bind”’ in which a person or a group gets two or more messages that contradict one another. Typically the messages are at different levels so that a text is contradicted by the context. A correct response at one level is wrong at the other level and vice versa. You are “damned if you do and damned if you don’t”. The concept of the double bind was first used to understand the dynamics of schizophrenia but double binds are now seen in many forms of control.

Continue reading →

Posted in Change, General | Tagged complex systems, fund returns, pension funds, public service, social traps, sustainability | Comments Off on Catch 22: The Anatomy of a Social Trap ← Older posts Newer posts →