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Democracy, Capitalism and Donald Trump: An Ecological Perspective Part I: Midnight Reckoning

Back in November 2016 I wrote a blog in the immediate aftermath of Donald Trump’s election. As a Canadian I thought the Americans had had an awful choice to make but was just as surprised as many others were, when the man I wanted to lose beat the woman I wanted to lose.

An ecological lens suggests that it’s helpful to look at abstract systems like democracy and capitalism as dynamic ecological processes, rather than as static structures. That is, both capitalism and democracy are configurations of complex adaptive social, economic and political systems that have their own internal dynamics, analogous to those of complex adaptive ecologies, like forests and estuaries.

From this perspective successful social enterprises, both political and commercial are conceived in passion, born in communities of trust, grow through the application of reason and mature in power. Here they tend to get stuck in systemic traps, structures and routines that conserve their habits and protect their success but render them inward-looking and insensitive to the small-scale changes that presage trouble.  In economic organizations the result is decline and possibly disruption by smaller, faster enterprises wielding new technology. In political bodies the result is gridlock which, if it persists, can lead to political disruption and insurrection.

In their two perceptive books, The Broken Branch (2009) and It’s Even Worse Than It Looks (2011), political scientists, Thomas Mann and Norman Orenstein gave us a broad overview of how the gridlock emerged in the American Congress. Most importantly, they outlined the changes that led to the polarization of its members and the emergence of a quasi-parliamentary system, built upon opposition, in a constitutional republic where the separation of powers demands negotiation and compromise to get anything done.

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Posted in Change, General, Uncategorized | Tagged change, click-bait, complex systems, Demockracy, Donald Trump, ecocycle, ecological perspective, ecosystem, Lawrence Lessig, Lyn Nottage, narrative, Norman Orenstein, power, QAnon, Reading Pa., social enterprise, Sweat, systems trap, Thomas Mann | Comments Off on Democracy, Capitalism and Donald Trump: An Ecological Perspective Part I: Midnight Reckoning

Jonathan Sacks (1948-2020): Jewish Wisdom and Our Binocular Minds

“And twofold always… May God us keep 

From single vision and Newton’s sleep!”

(William Blake, Double Vision)

I read with great sadness of Rabbi Lord Sacks’ sudden, untimely passing on November 7. His writings have been a source of inspiration and really helpful ideas to me. I discovered them only a few years ago, while continuing to work on my ecological perspective on management. Sacks’ thoughts on the moral and social ecologies that underpin the ability of human beings to cooperate and work together have been especially useful. They apply at the organizational level but have been even more helpful in extending the ecological framework “up” a few systems levels from there to that of society and the state – the level that Sacks was most interested in.

Sack’s writing reaffirmed for me the dual nature of human beings in society and the benefit of a binocular mind, like that suggested by an ecological/evolutionary perspective. (The New Ecology of Leadership (2012).

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Posted in Change, General | Tagged altruism, analogy, analysis, attachment, both...and, change, community, David Brooks, detachment, dual systems, ecological perspective, either/or, ethics, existential, faith, Genesis, Gilligan, Greek, Gregory Bateson, Hillel the Elder, instrumental, Jewish wisdom.binocular mind, Jonathan Sacks, Judaic, McGilchrist, meaning, narrative, Nottage, Quaker, religion, science, selfishness, sociobiology, Soloveitchik, story, Sweat, The Great Partnership, The New Ecology of Leadership, trust, William Blake | Comments Off on Jonathan Sacks (1948-2020): Jewish Wisdom and Our Binocular Minds

Milton Friedman’s Philosophy: Invaluable at First but Deadly Afterward

2020 marks the 50^th  anniversary of Chicago economist Milton Friedman’s famous (or infamous, depending on your point-of-view) claim that the only social purpose of business is to increase profits. This doctrine proved immensely popular among corporate managers but has been increasingly challenged as being harmful to society. McGill management professor, Henry Mintzberg was an early critic and has been a consistent advocate of a broader approach to social purpose.

Victorian political commentator Walter Bagehot (1826-1877) once wrote “The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.” That describes Milton Friedman’s work – very helpful in the beginning but a hindrance subsequently.

I graduated from Chicago’s MBA program in 1972, imbued with the idea that management was all about the allocation of resources, as assessed by the Capital Asset Pricing Model (CAPM). I had majored in finance, studying with Gene Fama his newly-developed Efficient Market Hypothesis that was shaking up the world of finance. I was ready to change the world of management….

I soon found that practicing managers weren’t using theory to tell them what to do – they were using it to rationalize what they already wanted to do. Back then it was clear to young managers like me that the great post-war boom in economic activity was slackening and that the large corporations had accumulated a great deal of fat and were guided by a fuzzy sense of purpose that supported a relaxed ‘country-club’ approach by managers. We young Turks wanted to change that and make corporations more efficient. Fama and Friedman’s perspectives and theories proved invaluable in cutting through tired old stories with a powerful counter-narrative. The era of conglomerates, leveraged buyouts and private equity was launched on this new logic.

At first this new approach seemed very successful. Conglomerates thrived and their founders like “Tex” Thornton of Litton Industries, Hal Geneen of ITT and Jim Slater of Slater Walker (in the UK) became business folk heroes. The exploits of LBO firms like Kohlberg Kravis and Roberts (KKR), fueled by junk bonds, were celebrated in the press and their billionaire principals regarded as geniuses. But it didn’t last: monolithic concepts taken to their (il)logical conclusions never do. One has to take time, change and people into account: nothing lasts unless it is incessantly renewed.

It seems that enterprises (and both democracy and capitalism can be thought of as giant enterprises) are conceived in passion, born in communities of trust, grow through the application of reason and mature in power.  The young become old and success is followed by excess. Gradually control of the corporation was taken over by elites, who used concepts like Friedman’s to rationalize their actions. Ideas once used to challenge outdated attitudes were now used to justify the new, emergent status quo. In recent times in Anglo-American business the result has been the steady liquidation of productive enterprises, the creation of oligopolies and the emergence of a bloated financial sector. Value extraction has replaced value creation.

Deadly indeed, but we know the enemy and it’s not Milton Friedman: it’s us.

 

Posted in Change, General | Tagged Anglo-Saxon capitalism, argumentative theory of reason, Ayn Rand, change, complex systems, conglomerates, ecological perspective, Henry Mintzberg, innovation, leveraged buyouts, Milton Friedman, University of Chicago, Walter Bagehot | Comments Off on Milton Friedman’s Philosophy: Invaluable at First but Deadly Afterward

Austrian Economics and the Ecological Perspective

A few months ago I had the pleasure of meeting Hunter Hastings online. Hunter is an economist by training, a member of the Mises Institute and a follower of the Austrian School of economics. We got to chatting and he saw my presentation When the Science is Uncertain Turn to the Humanities, which I delivered for the I4J Leadership Group. As a result he asked me to do a podcast for the Mises institute

The podcast has now been published as Business School Fallacies: Acting Your Way To Better Thinking.

Thanks Hunter – it’s been a pleasure working with you!

Posted in Change, General, Leadership, Strategy | Tagged Austrian School, change, complex systems, ecocycle, Hayek, Mises | Comments Off on Austrian Economics and the Ecological Perspective

A Fierce Old Story: Fighting a Plague with Common Decency

Too little, too late

Only a local doctor and his colleague recognized the pattern – a plague was beginning to sweep through the population. They tried to alert the authorities, but the government was reluctant to sound the alarm. Some action was taken, but the language was optimistic and politicians downplayed the seriousness of the problem. It took a jump in the death toll before serious measures were taken: the town was sealed, and a plague officially declared. The pestilence went on to ravage the city, as usual affecting the poor the most.

From allegory to analogy

You may recognize this story outline from Albert Camus’ The Plague (1947). Anyone who has read his newly popular allegorical novel would know what to expect during a pandemic.   At the onset of the current coronavirus pandemic, when there was little data, experts conducted what can be thought of as an analogical inquiry, using the liberal arts.

They consulted historians who had studied the flu pandemic of 1918 and other plagues from the past. They looked for comparable coronaviruses, like SARS and MERS. They began to compare experiences in different countries with similar circumstances. They searched for metaphors and analogies, even fiction like The Plague for ideas that might be relevant.

Action before data

Like so many entrepreneurs, it seems clear that those countries whose leaders took early decisions to quarantine their societies, based on wise judgement, had much better experiences. They were willing to commit to action, rather than wait for the inevitable delay for data and calculation. Only once data was available could they claim to be ‘guided by science’ and ‘evidence-based’. But because of the exponential growth of the virus, a few days delay could make a huge difference.

What really matters

“There are only two or three human stories,” wrote Willa Cather, “and they go on repeating themselves as fiercely as if they had never happened before.” We are living through just such a story right now.

The universe may be made of matter, but we humans live in a world of value and significance, of ‘what matters’. Science deals with fact, narrative deals with truth. As screenwriter, Robert McKee explains, “What happens is fact, not truth. Truth is what we think about what happens.”

Leadership requires empathy and decency

This is the power of analogical inquiry. The liberal arts help us learn from the experiences of others, to feel what they felt and to think what they thought. We call the quality ‘empathy’, the essence of what it means to be alive and the critical ingredient of effective leadership – a preoccupation with “what matters”.

This is Camus’ message: the “plague”, ill-fortune and injustice in its many forms, comes and goes but never completely disappears. It is the underlying human condition, to which our response must always be one of caring – ‘common decency’ “There is no question of heroism in all this,” says Dr. Rieux, Camus’ narrator, “It’s a matter of common decency. That’s an idea that makes people smile, but the only means of fighting a plague is – common decency.”

Drucker Forum 2020

Posted in Change, General, Leadership | Tagged Albert Camus, allegory, analogical inquiry, analogy, common decency, COVID-19, evidence-based, leadership, pandemic, plague, Robert McKee, Willa Cather | Comments Off on A Fierce Old Story: Fighting a Plague with Common Decency

When the Science is Uncertain, Turn to the Humanities

On June 17, 2020 from 1pm to 2pm. Eastern Time I will be giving a TED-style talk and hosting a discussion with i4j. The password is i4jcommunity. i4j Innovation for Jobs is a global leadership forum organized by the IIIJ Foundation, a 501(c)3 non-profit organization with headquarters in Silicon Valley.

At the onset of the coronavirus pandemic, when there was little data, world experts conducted what can be thought of as an analogical inquiry, using the liberal arts. They consulted historians who had studied the Spanish flu pandemic of 1918 or the Black Death in medieval times. They look for other coronaviruses that might be comparable, like SARS and MERS. They began to compare experiences in different countries with similar circumstances. They searched for metaphors and analogies, even fiction (e.g. Albert Camus, The Plague) that might be relevant. Only once data was available could they claim to be ‘guided by science’ and ‘evidence-based’. In this presentation I suggest that analogical inquiry is at the root of all learning in conditions of uncertainty a.k.a. ‘life’. As information becomes available, abstraction and analytical thinking allow us humans to turn uncertainty into risk that can be managed. But it all begins (and ends) in uncertainty….

Posted in Change, General, Leadership, Strategy | Tagged abstraction.navigatng, analogical inquiry, change, community, complex systems, context, coronavirus, creativity, crisis, destruction, ecocycle, ecological perspective, innovation, leadership, narrative, renewal, wayfinding | Comments Off on When the Science is Uncertain, Turn to the Humanities

Forces of Nature: Understanding How Ecosystems Grow, Thrive and Regenerate

My latest article, Forces of Nature, has just been published in Strategy+Business. In it I discuss Canadian ecologist, “Buzz” Holling’s adaptive cycle and how, transformed into the ecocycle, it can help us understand the dynamics of complex adaptive systems.

Posted in Change, General, Leadership | Tagged adaptive cycle, complex, ecocycle, Holling, innovation, leadership, The New Ecology of Leadership | Comments Off on Forces of Nature: Understanding How Ecosystems Grow, Thrive and Regenerate

The Hammer and The Dance: The Case for Crushing the Coronavirus with Coercive Bureaucracy

Metaphors matter, especially in uncertain times, when the only way to frame a complex predicament is to use models from a familiar past.   The title of this blog borrows from Tomas Pueyo’s excellent article and the picture that accompanies it is a mashup of one of my ecological images and it.

When it comes to the coronavirus, war metaphors abound. British politicians summon the ‘spirit of the Blitz’, while Donald Trump describes himself as ‘a war-time President’. These bellicose approaches have rhetorical value and may help address logistical issues, but we need additional views. Ecological analogies supply a helpful lens. For, from an ecological/business perspective, the coronavirus is the ultimate entrepreneur. If the purpose of an entrepreneur is to create a customer, the coronavirus is superb! In a population without immunity every human is a potential ‘customer’.  This vulnerability is increased by globalization and global travel and aggravated by long just-in-time supply chains, tuned to efficiency rather than resilience.

What’s more, everyone infected with the coronavirus ‘recommends’ it persuasively to others, with an average of 2.4 (now estimated at 5.7) other people becoming infected. In marketing the well-known net promoter score is measured by asking customers the question, “On a scale of 0 to 10, how likely is it that you would recommend our organization (product) to a friend or colleague?” Those who score 0-6 are classified as ‘detractors’, those who measure 7-8 are ‘passives’ and those with a score of 9-10 are ‘promoters’. You add up number of responses that fall into each of the three categories and calculate the percentage that each category represents of the total. Then subtract the percentage of detractors from the promoters and the result, expressed an as integer, is your net promoter score. It ranges from +100 to -100. With all ‘customers’ very likely to ‘recommend’ it to others, the coronavirus’ net promoter score would be a perfect +100!

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Posted in Change, General, Leadership, Strategy | Tagged change, china, cities, coercive bureaucracy, community, complex systems, coronavirus, corporation, dance, destruction, Geoffrey West, Germany, hammer, herd immunity, innovation, mortality, Netherlands, Spain, Sweden, Tomas Pueyo | Comments Off on The Hammer and The Dance: The Case for Crushing the Coronavirus with Coercive Bureaucracy

Peter F. Drucker and the Society of the Future

This is a report on a Round Table discussion at the 2019 Global Peter Drucker Forum. Click here for the LinkedIn version which has hyperlinks

Panelists:

Chair: Richard Brem, Senior Advisor, Peter Drucker Society of Europe,

Peter Paschek, Management Consultant,

Timo Meynhardt, Professor for Business Psychology and Leadership, HHL Leipzig Graduate School of Management,

Verena Ringler, Curator, Erste Foundation

Aaron Barcant, Independent Researcher, Karl Polanyi Institute of Political Economy

The round table began with Richard Brem introducing the panelists and each of them summarizing why Peter Drucker’s work and vision mattered to them.

Drucker’s Vision

Drucker always argued that one’s worldview mattered to one’s understanding of one’s role and contribution in society and one’s ability to manage oneself and others. American philosopher Thomas Sowell, describes a vision as a ‘pre-analytic, cognitive act’ that helps simplify an overwhelmingly complex reality. Think of it as a walking stick that helps you travel over rugged terrain, giving you support when you need it and allowing you to probe the way ahead. A social vision gives us a sense of how the world works, of the nature of humankind, of causation and how social change happens.

As panelist Peter Paschek pointed out, Drucker described himself as a ‘conservative Christian anarchist’. While accepting the necessity of governance and government, he saw power and the yearning for power as the central problem of society, with that of managerial power and its legitimacy a particular concern. The political philosopher he admired most was Wilhelm von Humboldt, the pioneer of the modern research university, who found balance and harmony while managing the tension between continuity and change. Drucker was concerned with this balance at several levels, especially those of society and community. It was this interest that allowed him to see management as a social function, an organ of society that is responsible for the performance of institutions and gives the individual both status and function. Panelist Timo Meynhardt said that Drucker’s depth of thought and his emphasis on values – his practical wisdom – was his distinctive strength, making him a ‘companion in the darkness’.

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Posted in Change, General | Tagged Constrained Vision, Drucker Forum, future of society, Karl Polanyi, Peter Drucker, Thomas Sowell, Unconstrained Vision, Vision | Comments Off on Peter F. Drucker and the Society of the Future

True But Useless: Why So Much Management Advice Sucks (and what to do about it).

Why does so much management advice sound reasonable but turn out to be of little value? Most readers will know what I mean. Take the following guidance on how companies can ‘accelerate their agile transformation’:

1. Create a C-suite with an agile mindset
2. Hire and develop the right mix of talent
3. Foster an agile-friendly culture and organizational structure

What’s not to like? Well that’s the problem. The first test of any management advice is to ask, “Is the opposite also true?” If not, then the statement is a simple truism like each of those above. Clearly one wouldn’t want a C-suite with an anti-agile mindset nor a firm with the wrong mix of talent and so on.

Nevertheless, some truisms bear restating because they emphasize items of particular importance that should be priorities – necessary conditions, without which change efforts may fail. So we should look at this advice more closely. The problem is that each of the three sentences is a linguistic trick. It starts with a verb, which makes it sound like an action, but it’s really an achievement, a desirable outcome. This is why one can’t disagree with them. They are abstract ‘what-to-achieves’ that sound like ‘dos’ and whose abstraction makes them seem generic to all organizations. They are synonyms for success, outputs masquerading as inputs. To be truly helpful these generic ‘whats’ will have to be turned into specific ‘hows’ – how to ‘create a C-suite with an agile mindset’ in thisorganization, in our situation, with these people, right here, right now. And that’s where things get difficult. There are no facts about the future and every organization is different: history and context matter. Priorities will differ and what works in one situation may not work in another. And in the end it will likely turn out that the cluster of attitudes we call an ‘agile mindset’, like so many other ‘success factors’, is itself an emergent property, a consequence of a successful change effort, not its cause.

Organizations as Actors

Many management writers (especially consultants) gloss over these problems by writing about corporations as if they were rational decision-makers, actors in their own right, with clear goals and identifiable preferences for outcomes. Companies are said to have ‘found ways to infuse a higher-purpose calling into their culture’, they ‘leverage their core capabilities to enter new growth markets’ and ‘unleash the creative abilities of their people’.  Personifying corporations as actors in their own right may be a useful for headlines but it’s unhelpful when we are trying to understand cause-and-effect in complex systems. When The New York Times publishes a report that “Boeing Fired Its Leader” its journalists are using writers’ shorthand to report the outcome of a complex process, not to describe the decision of a lone actor.

Sometimes these corporate actors are represented as mechanically applying external rules or ‘principles’. Now change simply becomes a matter of swapping out the old principles for new ones and all will be well. Calling abstract features of successful agile organizations ‘laws’ or ‘principles’ and even ‘imperatives’ makes them sound like critical inputs but they are really outputs, usually the results of virtuous habits that have been developed over long periods of time. American Supreme Court Justice, Oliver Wendell Holmes once wrote, “The life of the law has not been logic, it has been experience”. Civil and criminal laws embody the experience of a society; most of us obey them because we are raised to do so in a law-abiding community, not because we read about the laws and ‘apply’ them. Management laws and principles are really desirable outcomes, abstract goals perhaps, but reducing them to rules and treating corporations as actors makes their achievement seem a whole lot easier; the critical management task of enabling people within the organization to work together cooperatively simply disappears. Indeed, the very definition of an ‘agile mindset’ might be when an enterprise begins to act as if it were a coherent whole, with what some have called a “shared consciousness” (See General Stanley McChrystal’s Team of Teams: New Rules of Engagement in a Complex World).

Decision-making as Conscious and Deliberate

Another way that management writers make ‘implementation’ sound easier is to imply that all decision-making in organizations either is or should be conscious and deliberate. The role of our unconscious minds as well as habits and competencies acquired over time and from hard experience are slighted in favour of premeditated choices and strategies.  This downplays the fact that when we are talking about change in an established organization, we need to understand its history and its existing technologies, habits and competencies. We need to appreciate how they help or hinder what we are trying to do and think about what is involved in changing them. This, in turn, widens our focus from just what we should start doing to what we should also stop doing.

For example, in my experience, one of the biggest obstacles to trust and cooperation in established organizations is the yoking together of the annual budgeting process and the performance management system. Many readers will be familiar with the ritual torture of preparing budgets that are linked to individual compensation. The corporate head office tries to push the numbers as high as possible, arguing for ‘stretch’ goals, while operating managers try to get them as low as possible, theoretically to maximize their income but often just to make organizational life bearable. The resulting bad-tempered, adversarial process and the accompanying zero-sum game-playing perpetuates top-down, command-and-control management cultures. It wastes a prodigious amount of time and prolongs destructive competition within the organization, damaging trust and cooperation.  One of the first things to do is to separate financial forecasting from performance management and make the latter retrospective, dependent on a comparison between our actuals and those of the competition or against what was available in the marketplace.

Similar problems exist with other tyrannical relics of the Industrial Era like manipulative Management by Objectives (MBO) schemes, mechanically applied Balanced Scorecards (BSC), and cults of RONA (Return on Net Assets). These usually focus on short-term individual performance at the expense of the long run and team learning. They typically distinguish strategy formulation from implementation, precluding the emergence of novelty. At the same time, they trail behind them constellations of oppressive Key Performance Indicators (KPIs) that breed like rabbits. Peter Drucker never said or wrote anything like “If you can’t measure it, you can’t manage it.” He argued that there were many important results in organizations that were tangible but nonmeasurable – like their ability to attract and hold able people. Most importantly, it was these nonmeasurable events that dealt with the future, whereas measurements are always about the past.

This is the first part of a much longer article published on LinkedIn

Posted in Change, General, Leadership, Strategy | Tagged abstraction, Alfred North Whitehead, altruism, Aristotle, BSC, budgets, cause-and-effect, complex adaptive systems, Daniel Boorstin, experience, gardeners, gemba, growing people, KPI, Lao-Tzu, management, Mary Parker Follett, MBO, means and ends, measurement, mindset, RONA, selfishness, Stanley McChrystal, Tao Te Ching, truisms | Comments Off on True But Useless: Why So Much Management Advice Sucks (and what to do about it). ← Older posts Newer posts →