I write about radical management, leadership, innovation & narrative
My take is that for the last 150 years, Western culture has been in the grip of left-brain thinking, and manipulating people like things. This made sense as long as there were huge economic gains that came from it. So the bean counters, the accountants, the economists, the green eyeshade people were on top of the world. They were good at counting things. The economics was on their side. They were masters of the universe. They were perfectly adapted to this way of running the world.
But then something happened. The gains from running the world this way stopped coming. The bean counters didn’t notice that the economic foundation for the approach had collapsed. The problem was covered up with “financial engineering” and accounting tricks with debt. The result is that we end up with the poignant world described in a Financial Times article on the death of the American dream.
It’s a picture of general decline and no way out. Business schools, textbooks, consultants, are all pressing ahead with cost cutting, downsizings, outsourcing and so on, as if nothing has changed. Because the returns get smaller and smaller, there is a lot of desperate flailing going on. Executive turnovers is accelerating. Life expectancy of firms in the Fortune 500 has declined from 50 years to 15 years, and is heading toward 5 years, if nothing changes. Mind-boggling statistics. So mind-boggling in fact, that leading business journals seem reluctant to discuss it, even though statistics come from a huge study from a reliable source.
It’s important to note what’s wrong with bean counting. It’s not that counting is wrong. Counting is good. We desperately need to know what’s working and what isn’t. The problem with the bean counters is what’s being counted. It’s a focus on solely counting things, rather than dimensions of life related to people. It’s perfectly possible to measure dimensions like client delight and employee satisfaction, but the bean counters focus solely on counting the beans.
The bean counting is the consequence of a view of the world as consisting of “things” to be manipulated, rather than people to be interacted with and conversed with and responded to. The new economics counts the people dimensions as well as the beans.
And guess what? Even in conventional bean-counting terms, radical management turns out to be two- to four-times more productive than traditional management with its focus on scalable efficiency and treating customers and employees as things to be manipulated. The gains that come when this is done firm-wide, as at Apple [AAPL], or Amazon [AMZN] or Salesforce.com [CRM] are extraordinary, as can be seen from the long-term shifts in share price.
New ways of measurement have emerged that measure what’s truly important to a firm’s future, namely, whether it is delighting its clients as a whole, as well as whether the individual units of the firm are contributing that goal. See my five-part series of articles starting here.
So there is a revolution under way to run the world differently. Those who master it will prosper. Those who don’t will go the other way. The new way is much more amenable to holistic Eastern thinking and so it may be that China, India will be powers in the future. Some of the best exponents are in Scandinavia, where the values are already in place. In the USA, it’s hard to say how long it will take. The country has tremendous capacity to adapt. But the forces of stasis are so entrenched that it won’t be easy.
From a longer historical perspective, it will happen, inexorably, because of the economics. Resistance is futile. But it could take decades, before people finally accept that everything they believed to be eternally true was merely a temporary set of measures that worked for a limited period of time in a particular social and economic context.