The economic theory we follow has as its dominant precept the maximization of material wealth. Accordingly, economic enterprises are expected to not only have material gain as a goal, but they are to pursue unlimited growth. As a measure of effectiveness, business executives are expected to demonstrate that today’s gain is more than yesterday’s. Accordingly, those in authority monetize all aspects of the company; even the very people of the organization are objectified and treated quite impersonally.
Although W. Edwards Deming emphatically spoke of the need for a new economics, rarely did anyone truly listen to—and even fewer understood—his message. Many saw it as mere statistical technique. Further most of those who tried to apply his philosophy colonized it so that it fit the framework of their paradigm—keeping any chance of it succeeding near zero. Accordingly, in the hopes of enhancing their material gain, many managers adopted and misused a method or two—waste reduction and six-sigma are the most popular. In so doing they committed the crime of hackwork that Deming often warned against. [Hackwork is when one fails to acknowledge his or her limitations and attempts to become creative with something he/she doesn’t understand.]
Although an organization may become larger in size and/or realize more profit, it does not mean that it has improved. The focus of improvement is not growth—it is not about becoming larger—but rather it is about meaningful work and a new focus of business practice. Improvement (in quality) comes when we learn more about our customers, suppliers, processes, and ourselves in support of our effort to enhance the value provided to people through the conduct of business. While growth may result from improvement, improvement cannot be implied from growth.
Growth is a by-product or consequence of doing something else. When we set growth as the objective, we turn away from the very things we need in order to maintain our health. We become so consumed by the outcome that we forget about the process of business. Toyota’s recent difficulties provide an excellent example of confusing means and ends.
As those in authority continually strive to maximize growth—month-to-month and quarter-to-quarter—they become consumed by the quantitative measures of business. Correspondingly, they foolishly convince themselves and others that they are in control, when all they are doing is keeping score. Meeting quarterly profit goals does not guarantee long run viability.
When the concern is for maximal growth the focus unavoidably turns toward the magnitude of things of outer value in relation to the past—profit, market share, shareholder value, etc. This causes leaders to manage by looking backward, and to disregard how the choices they make impact the organization’s prospects in the future. A narrow focus of attention could very likely bring about a considerable amount of disorder and self-destruction. The recent economic collapse caused by the narrow focus of Wall Street banks perfectly illustrates this point. Those seemingly in control were blinded by the thought of their anticipated immediate gain. Their demise would surely have been the outcome had the U.S. government not thrown a lifesaver to those drowning in the turbulence of their own wake—a turbulence caused by their unfettered self-serving pursuit of material gain. How many organizations have realized tremendous growth only to come tumbling down?
What is central to progress is an organization sustaining its viability, not its growth. Viability is basic to the idea of progress, for it includes not only learning in support of improvement, but it also encompasses the enhancement of the likelihood of (having) a future.
Moreover, because organizations are reciprocally interdependent with society and the environment, viability necessarily requires ethical, social and environmental responsibility—the focus of leaders cannot be narrowly fixated. It seems clear that the quarterly race results by which business leaders are measured (i.e. is this quarter better than last and better than someone’s arbitrary expectation) supports this destructive fixation.
In short progress requires having a belief in the future; believing that there can be a future that is not merely prefigured by the past. When the future is not merely the next quarter, but extends well beyond the next reporting period, a concern for viability becomes essential. Accordingly one cannot truly embrace the ideas of viability and progress without having the insight to understand the power of the human spirit. It requires making a commitment to cultivating and developing the capabilities of people throughout the organization—seeing this as an investment not an expense.
But to fully appreciate why such a commitment is essential requires understanding how conducting business in a manner consistent with a material self-interest based system of economics cannot support—that it is even counter to—our development as people. We must critically thinking about the underlying precepts of our current system to reveal how detrimental it is to our collective wellbeing and the viability of a business enterprise.
How would such a change in understanding impact leadership?