For more than 30 years there has been a downward trend in the household income of the vast majority of people (yes the 99%) while the income of the remaining 1% trended upward.  Fortunately for the remaining 1% benefiting from this widening income gap, the gradual decline (i.e. year-to-year incremental change) in real income among the majority of citizens went largely undetected—people didn’t realize how hot the water is getting.

Gradualism Abruptly Ended

However the greed among the 1% who created the mortgage-based casino game to feed their addiction to ever increasing monetary gain led to the disastrous 2008 financial collapse.  It punctuated what had been an insidious trend.  Accordingly what had been previously tolerated and/or unnoticed was now brought to the conscious awareness of a sizable portion of the 99%–all of a sudden it got a lot hotter.

Because of capitalism’s grounding in material self-interest maximization, this situation and situations like this are inevitable.  The insatiability of material gain—one can never have enough—and the auto-correlative nature of competition—winners are most likely to win next time—make for the perfect storm.  This is especially the case in a society wherein the wealthy has the greater voice.

Since the 1% really needs the cooperation of the 99% for their game playing to continue, it is now up to the frog.  Does the frog continue in the same body of water—continue cooperating in the same system—with only the promise from those—the 1% winners—in control of the temperature that they won’t do it again? Does the frog demand that those in control of the temperature be constrained in the changes that can be made to the temperature?  Does the frog demand that the control of the temperature be taken out of the hands of the 1%?  Does the frog demand that a different body of water—a different system—be provided that would ensure a livable environment for all to enjoy?

It seems that this debate is akin arguing whether the change in the measured distance between the deck chairs as the Titanic sinks is an effective approach for assessing the crew’s performance relative to keeping the ship afloat.  While this keeps people’s efforts on things we can readily measure—it surely keeps them busy for a while—it unfortunately turns the focus of attention away from understanding the underlying causes of the difficulty and toward the effects (things that have already happened).  Because we wish to have better results doesn’t mean we should focus on results.  For better results then the focus must be on the system of causes, the system itself!

Business Is Not the Model

Many working in business organizations, where incentives and accountability for results are normal practice argue they are measured by and accountable for results all the time.  If they don’t meet their numerical goal they are penalized or fired.  Since this is their reality the construction of the logical fallacy proceeds in concluding it then must become the teacher’s reality—if I (have to) live it so too should they.

Why is it that most people don’t like their jobs and/or really don’t like working for their boss?  Could it be that the practice of management is actually an obstacle to them actually enjoying their work?  Many business management practices are flat out wrong—they are detrimental to the human spirit.  Yet people continue to employ them widely, when it is the expression of the human spirit that is at the root of quality.

Because something is popular doesn’t necessarily mean it is the proper or correct thing to do.  It is misguided to assume popular business practices are best practices and that they are everywhere applicable.  The fact that business organizations rely on the carrot-and-stick approach to managing doesn’t make it the correct or best way to manage for a quality of the work environment and to facilitate the engagement of employees.  The reformative questions should be seeking answers to how to engage others not control others!

Ask A Different Question

Because we rely on learning more than any other animal, our need to learn is as natural to the human condition as is breathing. Taking in air to breathe and taking in knowledge for understanding are equally important to the development of a human being.   Why then are we asking questions of how best to incentivized learning?  Shouldn’t the question be what are we doing that quells the natural desire and need to learn?

In our universe what keeps things together? In a general sense what brings chaos to order?  Gravity. For without it every person and thing would be cast into space, floating aimlessly, making for quite a chaotic existence. If not for gravity then nothing would be at rest on earth.  Moreover this invisible force of attraction provides a general order to the movement of planets in our universe—making it one (whole) system.

The Gravity of Unity

In like fashion organizations need to canalize and unify people’s energy enabling it to function as one system.  Accordingly, the canalizing of human energy requires a cohesive system of beliefs and values that deeply connect people to each other and the organization. This can be accomplished with the guidance of a vision that accesses that part of us that is the same thus enabling us to relate core-to-core irrespective of our external differences.

An organization that is not functioning as one—not a unified whole—is an organization whose energy is thinly scattered and whose demise is imminent.  In short, it is a visionless organization.  That is, vision can act as an attractor facilitating and guiding people toward developing helpful relationships with others and meaningful relationships with their work.  Since an organization is a system of relationships, vision then can be the signpost to wholeness.

Tunnel Vision

It is unfortunate that many believe that it is not what the vision is, but what the vision does that makes it so important. For many having a goal is all that matters.  Accordingly most visions are in effect mission statements—what some might call BHAG (big hairy audacious goal).

As illustration consider GM’s vision, “Design, Build and Sell the World’s Best Vehicles.”  This speaks not of people but of things—yes the objects—the organization makes.  While GM’s statement offers a far-reaching noble goal it does not offer guidance to people toward developing and maintaining meaningful relationships with each other and the work.

When results-only becomes the thing then meaning is lost as everything becomes objectified.  Moreover as concern for results dominate relationships all interaction among people become mere transactions. Unavoidably, motivation turns to movement caused external authority and people become disconnected from the work.  Because engagement in the work turns superficial keeping people on task toward results guides the approach of management.

Let’s quickly revisit the effect of gravity in our world. If the gravitational force were greater, then movement would correspondingly become increasingly more difficult.  In other words, an order providing force taken to the extreme would be all consuming and confining, as what would be found in a black hole.  Black hole like conditions can manifest in organizations when ends supplant meaning and/or when order becomes control. When this happens the light of creativity is inhibited from emerging.

Therefore, because of the power that vision has, what vision is is extremely important.  Consequently, for the organization to sustain viability—which requires creative emergence—those in authority must act from, and be informed by, their humanness in order to lead with vision.

The Gravity of Insight

Vision runs far deeper than the words used to communicate it. Composing a nice sounding statement only requires skillful writing, but discovering meaning through vision requires insight.

Since it emerges from within, it requires listening to and being in touch with the unchanging aspect of our very being, looking deeply inward. Thus, having vision is more than having nice words fit together in a statement for public display; it is having the inner knowledge that there is more to us than our functional fit or the material outcomes that our activities might provide.

Clearly, seen in this light, vision does not require foresight since it is not a future end or goal. It is a beacon that points the way to a mode of being-in-the-world that brings meaning and joy, not at some future time but in the eternal present moment. Put simply, vision is as a description of the way life should now be experienced; a deeply thoughtful—almost philosophic—characterization of the ideals, values and nature of human experiences that resonate within the depths of people. As such it is a heartfelt description of a reality—which manifests as culture—people deeply care about being a part of and collaboratively contribute to realizing.

For example, Jim Goodnight, CEO of SAS Institute Inc (the leader in business analytics software and services) states, “we’ve worked hard to create a corporate culture that is based on trust between our employees and the company…a culture that rewards innovation, encourages employees to try new things and yet doesn’t penalize them for taking chances, and a culture that cares about employees’ personal and professional growth.”  At SAS the belief is “if you treat employees as if they make a difference, they will make a difference.”  Accordingly its people-centered vision reads “SAS transforms the way the world works, giving people THE POWER TO KNOW^Ò”.  Since SAS “integrates the company’s business objectives with employees’ personal needs, the first people they give the power to know are employees.

Thus, with vision as the guide, people are afforded the opportunity to experience an inner sense of significance and meaning in the organization’s work (i.e. their activities), and through these experiences, they are provided the chance to develop and express their unique potential. When people become engaged in their work then work becomes more than a series or collection of abstract or superficial activities they are carrying out for a paycheck: It becomes meaningful to life itself.  Work then is not just a job, it is a joy and the relationship one has with his/her work is not as an object acting on objects, but instead, it becomes a means for connecting us to ourselves and each other.

An organization absent of an enlivening vision—one where functional and inter-functional fit is the sole concern—expunges meaning from life in the organization.  And as meaning fades so too does intrinsic motivation—yes motivation is about meaningfulness!  Thus it is no surprise that most with management positions frequently ask how do I motivate others?  As Herzberg succinctly responded in his now classic 1968 Harvard Business Review article, give them motivating work to do!

It follows, for the organization to remain viable management in authority must contextualize people’s involvement in the functional and inter-functional aspects of the organization’s work by aligning management practice and the work within an enlivening vision.  In other words, vision provides completeness to the organizing structure by bringing an inner sense of order (and thus meaning) to the very human aspects of an organization.  In this way, an enabling or enlivening vision affords the flow of meaning throughout the system and serves as the basis for the self-reinforcing interplay of forces that provides joy in work and value to those it touches—canalizing human energy in a way that contributes positively to human progress, emergence of creativity and organizational viability.

The gravity of vision can’t be overstated, so take extra care when it comes to discovering a shared vision.

Not only is it telling of where we are as a society that there is immunity for those who perpetrated this situation—injustice persists—it is even more telling that there is immunity to change among our elected officials.  Yes the very same people who were elected to serve the collective ‘we’ of society.  Moreover, with those actively participating in Occupy Wall Street being characterized as a bunch (or is it a mob) of miscreants and malcontents deserving of disparaging remarks, by even the news journalists, is telling of a sad state of affairs.

Those protesting are asking such questions as ‘why haven’t we bailed out homeowners’ or ‘why must students be saddled with enormous debt and little to no job prospects’? It is not that Occupy Wall Street protest is diffuse and lacks a defining focus—the one thing reductionist can put their finger on—it is that its focus is the system itself.  Its focus is all encompassing of life in a society that is supposed to be of, for and by the people.

Our government officials were complicit in the crime perpetrated against the 99% by making it possible for the finance industry to act as they did—they provided the means for material self-interest (i.e. greed) to run amuck.  The signal was evident for at least 30 years with an inequality gap growing larger and larger.

Accordingly those participating in Occupy Wall Street are calling for new thinking that will lead to a better future for all, and not just a select few. So this is not about what’s in it for the (private) ‘me’ rather it is a wake-up call for our elected officials to start thinking about and working for (the public) we! They are no longer exempt from the obligation they assumed upon taking public office.

In a society that has become so consumed by ‘what’s in it for me’ this challenge to immunity can be quite disorienting to the overlords, which can be a very good thing for all.

The process of learning, particularly in primary and secondary education, is a collaborative process involving student and teacher. Teachers facilitate learning more than they produce learning.  The paraphrased Buddhist proverb when the student is ready the teacher will appear succinctly expresses this fact.  Hence placing all responsibility (and blame) on the teacher for what is learned reflects a grave lack of understanding.  Such misunderstanding places supreme importance on teacher accountability for results—exactly what we are getting from Arne Duncan and other similar thinking reformers.

Of course improving the education and preparation of teachers is an important component, but so too is the preparation of students.  Although human beings are born with a curious and inquiring mind—a need to learn—this latter issue lies squarely in the lap of students, parents and community—it is an individual/cultural/societal issue.   What can we do to feed and develop the inherent need to learn? A focus on teacher accountability for results will do little.

To get education right requires that we cease using the same level of thinking that created the problem we now face and begin to think anew.  A place to begin is to critically think about and explore the question, why educate?

The very things that would help—systems thinking, statistical thinking, theory of human development and learning theory—apparently are not part of the knowledge base of the reformers. Instead, reformers continue to apply the same level of thinking–reductionism and competitive context setting—that supports poor quality. A focus on parts will unlikely result in an improved whole (system), since performance of the system emerges from the system as a whole, from the parts in relationship.

In short those in authority must re-think and thus re-design the system, and not merely manipulate the parts in pursuit of better results. Throwing money at a problem, absent of understanding, no matter the amount is never a sound approach.

Perhaps someone should teach Arne about the process of learning, though it is not clear that he is ready.

The Hype

Statements in a recent New York Times article on job growth misrepresent the pattern in the unemployment rate, which has actually shown an overall decreasing pattern since October 2009. The statement, “August brought no increase in the number of jobs in the United States, a signal that the economy has stalled and that inaction by policy makers carries substantial risk” is using July results (9.1) as the anchor for judgment as to what happens in August as a signal of the state of the economy as represented by the unemployment rate. Looking out to August, from July, there is about a 1 in 3 chance that the August number will be lower, a 1 in 3 chance it will be higher and a 1 in 3 chance it will be unchanged. Looking at month-to-month movement is not the way to developing understanding.  Two points do not constitute a trend; all the data are relevant toward understanding the state of the system.

The Story

The story is not that August is the same as July, that there was no movement in the unemployment rate between two points.  The story here is that business has laid-off thousands of people, are squeezing huge profits from those who are employed and yet business is not willing to hire.

The story is that those in authority don’t seem to understand that consumption-production cycle rests largely on a population of consumers having an income that enables them to consume what is produced.  The author of the article astutely noted, “The problem is less that companies are laying people off than that they are not hiring.”  Being able to produce at a high profit will not keep the consumption-production cycle turning if there is no one to consume what is produced—business produces in response to demand.  In fact astute business people realize that they don’t just create and produce products/services they also create and produce demand—why else would anyone invest in advertising!  Henry Ford grew his car-making business by hiring and paying people so that they could consume what his business produced.  It is about the basics of business and not about high finance and econometric modeling.

Statistically speaking patterns of variation are revealed over time and not from one point in time to the next. When we focus our concern on month-to-month differences—or the highest or lowest month—then the pattern in the data become unimportant and imperceptible. The one point attracting our focus gets all the attention and the important (more) long-term developing patterns are believed inconsequential and thus we put them off.  Inevitably the effect of this misplaced attention is the source of a future crisis.

The Reaction

So doing what Mr. Obama has done—acting on a misunderstanding—by instructing the Environmental Protection Agency to pull back on more stringent standards on ozone emissions will do little for the consumption-production cycle.  So our air quality has a slightly better chance of getting worse, right along with the unemployment rate.  It is mere superficial action to give the appearance that something is being done in response to the unfavorable unemployment rate—the concern is for something else, not on those unemployed.  Recall it was the absence of regulation in support of unfettered profiteering that caused the recession, not the creation and enforcement of regulation.  Perhaps profiteering is keeping the situation from getting better.

It is like saying the brakes failed to stop me before hitting a tree, so I am going to put a bigger gas tank in the car.  A focus on the outcome and not the cause turns attention to the fact that the car is stopped, not why it stopped.  With this perspective of course a larger gas tank will enable the car to go—that is if the brakes don’t fail again.

The Approach

Jay approaches error correction or problem resolution following the belief that “most mistakes fall into one of three categories: planning, procedures or performance.  Accordingly Jay contends “it’s important to understand what kind of mistake has been made before you try to deal with it.”  In other words it seems that Jay first determines the category of the cause of the mistake.  Is it a planning mistake, a procedural mistake or a performance mistake?

Jay tells of a situation involving the ordering of custom shopping bags for his picture-framing business.   The plot of the story centers on ordering—more accurately double ordering—custom bags.  Jay’s bottom line summary of the situation sums it up fairly well, “It turned out that a second order of bags had been placed only six months after a previous order.”  Given that each order provides about a 3-year supply of bags, this double ordering resulted in considerable inventory on hand.

The Investigation

Jay’s investigation provides the following account:

“I asked the purchasing person how this could have happened, and she told me that our inventory manager had said we were running out. I called the salesman from the bag company who I had been doing business with for many years and asked him if he thought it was odd for us to be reordering so soon. He said he did. As a matter of fact, he said he told the buyer that it was impossible that we needed to reorder so soon and that she should check the stock again. Which she did. Once again, the guy in charge of inventory told her we were running low. They put the order through.”

Following his approach Jay asked: “Was this a planning problem? No. Was this a procedure problem? Yes. The purchasing person was fairly new and someone should have been overseeing what she was doing more carefully. Was it a performance problem? Absolutely. The inventory manager had been careless before. After being told that the order must be a mistake, he should have figured out what was happening.”

So applying the planning-procedure-performance approach Jay concluded that it was not a planning mistake but rather mistakes in procedure and performance.  So whose procedure and whose performance?  After all one does need to find those responsible.

The Solution

Making a short story shorter, Jay talked to both the purchasing and inventory persons in the presence of the operations manager about what to do when a question of this sort arises.  Inevitably both these people proved irresponsible and were replaced.  As Jay concluded “This situation was mostly the result of having the wrong people in important jobs.”  (Can’t help but ask, who hired the wrong people?)

If as Jay claimed, “responsible employees do not have to be told they messed up”, then the solution seems quite clear, don’t hire irresponsible people!  If you have irresponsible employees then you’ve made the (first) mistake!  Was it a planning, procedural or performance mistake?

A System’s Perspective

The above approach is one based on reductionism in that it seeks to break the problem into discrete identifiable parts.  Unfortunately reductionism is not appropriate here as the concern is for the functioning of the whole—the performance of the enterprise—and its affect on the constituent parts, and not merely separate parts locally transacting.

In other words a business organization is a system—a network of constituents in mutual relation—and breaking it apart into separate parts will not afford understanding of the functioning and performance of the whole.  Performance is an emergent property and thus it can’t be understood through reductionism.

Let’s flash back in time to the early stages of a new enterprise where the business hasn’t grown enough to warrant employing others to help do the work—the time before employees. Let’s estimate the probability that this mistake would have occurred if the owner or two or three partners were doing everything.  The probability is near zero.  Why?  Many would say, because they are the owners and they care.  Although the fact that they care can’t be denied—and caring does have an affect—it isn’t the primary cause for the probability being near zero.

What the most likely reason is that (before employees) they would be in possession of all the information that they need.  Further they would have an understanding of how each and every function/activity that comprises the work of the business interrelates—they understand the works as a whole.  In short, they wouldn’t decide to act one way that would negatively impact them carrying out another activity. The decisions would most likely be informed decisions with an understanding of the impact each has on the business as a whole (i.e. the system) and on each of the other functions/activities within the system.

In summary why is it unlikely?  Those doing the work understood the system and their role in it as they perform each of the activities.  Unfortunately, the very popular way of organizing—dividing the work and managing each component as if it is not integral to the whole—is so very wrong.  Yet because everyone does it it is rarely questioned or challenged; it is the way management.

Different Perspective, Different Understanding

With this perspective the first mistake was in the structuring or organizing of the work of the business itself.  It appears that the work of the organization—which begins as a whole—was divided and parceled out as tasks for individuals to carry out.  Evidence of this is the purchasing manager did the purchasing and the inventory manager did inventory; each had their own separate responsibility.  When the purchasing manager was told “when a vendor or anyone else tells us that something doesn’t seem right, we need to look into it” and the response was “when you say we, who are you referring to?” suggests a lack of appreciation for the interdependent nature of each functional activity.  That is, the activities parceled out to at least this employee are not integrated with the (interdependent) activities of others—the work lacks wholeness and jobs lack connectedness.

What we have is divided responsibility, and with divided responsibility no one is responsible for the purchasing-inventory work of the organization.  What would make this even worse would be if employees were required to meet his/her own separate numerical goals specific to his/her individual job.

Different Mistake Identified Means Different Solution

What’s needed is shared responsibility, which is determined by the way the work (of the company) is organized/structured.  Of course the work of the organization has to be divided among many people but the many jobs also have to be integrated.  The work of the company must become whole again.

Not integrating it into a cohesive whole was (quite likely) the first mistake made by those in authority.  It is a mistake of management to organize and structure the work in a way that fragments it.  This sets people up for failure since it increases uncertainty about one’s role and makes it unnecessarily difficult.

Furthermore, the fact that the purchasing person was “fairly new” and apparently not properly trained and prepared was another contributing cause of the over ordering.  Recall, Jay even noted that the “inventory manager had been careless before”! Surely he/she is not responsible for his/her own training!  This is management’s responsibility to ensure that employees have the, support, knowledge and skills necessary to successfully do the work.

So the situation involves: a) not training new employees; and b) structuring the work so that responsibility is divided. Also the solution involved talking to those who made the mistake—with the implication that they were to blame—asking them not to make the mistake again, without looking deeper and further into the system itself seeking systemic causes and rectifying.  The actions taken only ensure that this kind of mistake will happen again, irrespective of the individuals employed to work in the system.   It would be more by luck that things went well!

Management must develop and maintain the system as well as prepare people (with education and training to build knowledge and skills) so that they can be successful in supporting quality in the work of the organization.  Quoting Deming, management works on the system, the people working in the system.  Management must do their job so that others can be successful at doing theirs!

We should care because this approach when applied to anything other than locally contained situations—that is when applied to complex systems—will actually create far more problems than the solution of the moment it is intended to address.  Placing all one’s energy toward minimizing the one cause or maximizing an isolated outcome will ultimately result in the destruction of the system itself.

Wise physicians know that treating the whole person is far more helpful to a patient’s wellbeing than a single focused approach toward short-term relief.  Similarly, wise business executives know that a single-minded pursuit of profit at all costs is eventually detrimental to the viability of the business enterprise.

Reductionism is also being played out every day by the very way organizations, especially business organizations, are organized and managed.  Since most business enterprises seek the same purpose—profit maximization—it is not surprising that they are brought to order in a similar fashion.  Effectually, to exercise control, the system is reduced to (i.e. broken up into) more manageable pieces.  Adding insult to injury, each part then is required to maximize the attainment of a goal in support of profit maximization of the whole.  The common phrase associated with an effect of this practice is silos—and many know all too well the adverse effects of this.  Some of the many unintended effects include: poor communication throughout, inadequate levels of cooperation and collaboration, waste, rework, and insufficient organizational capability to support strategy.  Yet those in-authority positions continue doing this!

In regard to the problem of America’s national debt, reductionism was the approach in the problem solving recently carried out before our very eyes by the U.S. Congress. Rather than developing an understanding of the functioning of the whole and its effect on constituent parts, the approach taken involved isolating elements as if they are separate unrelated things and choosing one as both cause and solution. The impact of reductionism in this case is compounded by a narrow focus.  So with only a few arguing for a systemic approach—calling for a more complete solution—reductionism won out.

Though it appears most economists predict that the effects of this single-minded action will likely have a deleterious affect on the economy and society, the full compliment of effects cannot be precisely determined, though all of the effects will emerge.

What can be said is that reductionism is not applicable to problem solving of dynamic complex systems.  Why?  With dynamic complex systems the concern is for the functioning of the whole and its affect on the constituent parts, and not merely separate parts locally transacting.  Interdependence along with the nonlocal nature of cause and effect in systems cannot be disregarded or separated out.

Moreover doing so diminishes understanding. Because a system is a set of relationships—deeply nested interdependent relationships—every action will affect multiple relationships throughout the system. Moreover one action has multiple effects and those effects are nonlocal and nonlinear—stated simply, you can’t do just one thing. Hence understanding of the emergent properties of the system cannot be realized by breaking things apart.  Reductionism as an approach to managing systems diminishes understanding and thus reduces the soundness of decisions.

Hence it is therefore foolish, futile, and ultimately fatal to attempt to solve problems of a system applying reductionism.  Moreover, we can’t overcome the effects of reductionism in the management of a system by further application of reductionism to solve the resultant problems.  As Einstein is remembered saying, you can’t solve problems with the same level of thinking that created them!  Doing so will likely lead to destruction—greater imbalance and fragmentation—of the system, reducing everything to rubble.

The attachment to—even obsession with—our measures or metrics has led to a disregard for the real and meaningful purpose of education.  In so doing what we’ve forgotten is the fact that our measured results, to which we give unbridled importance, are just re-presentations of the effects of a system; they are mere abstractions of the concrete learning experience.

So with this blind focus of attention we are actually equating, and thus limiting, education to being an abstraction and expunging the concrete experience of learning from the system. When getting results is what matters—good grades, higher test scores—learning becomes the least of people’s concern.  Hence the concern in regards to education is not about whether it is a meaningful and humanly productive experience, but whether we get better test scores. The (human) meaning of education is lost in the process, making it quite alien to both students and teachers.

Shameful But Not Shocking

In regards to the cheating scandals in school districts throughout the country, we are seeing the effects of management-by-the-numbers—mismanagement—unfold before our eyes.  If one had knowledge of systems and their influence upon people’s behavior, this cheating would have been predicted and thus avoided.  Of course, to those absent of this knowledge it is a surprise.  Given the number of districts in which cheating has been uncovered, what we have is a systemic management problem not a teacher problem—the cheating teachers are just a symptom!

Systems thinking informs us that we can’t do just one thing; that there are multiple and unintended consequences to a single decision and that the associated actions will reverberate throughout the system.  However most administrators/managers are not knowledgeable about systems so they don’t understand the dynamically complex nature of the system over which they exercise their authority.  In short, they don’t critically think, they just do!

It is far easier to shift the blame and the burden by turning attention away from what the system is doing—and the system is management’s responsibility—toward what the teacher is doing. Holding teachers accountable for results uses fear of reprimand (the prospect of losing their livelihood) to get them to deliver what their administration wants—in this case higher test scores. Yet the teachers can only do what the system allows!

Predictably to deliver higher test scores—since the system does not support quality improvement—all that teachers could do is either fudge the numbers or rig the system (if they have the power to, which they didn’t) to deliver what is demanded.  Not surprisingly, all they could do is fudge the numbers to give the (false) impression that the desired results were being realized.

If the education system was not designed to produce the results that it was producing then we wouldn’t consistently get the results we were getting! Yet again and again the focus of the reformers and administrators is on the teacher delivering higher test scores, not the quality of the system itself.

In regards to this cheating, those in authority are complicit; they are aiding and abetting it.  We must cease creating these problems by presenting teachers with unsolvable dilemmas.

What needs to be done is educate the reformers and administrators about quality and the way to improve it.

According to the precepts of the economic system CEOs of major corporations are doing what they are expected to do, maximize their material self-interest.  As the theory goes, when people pursue their self-interest then the wealth of society is enhanced.  If you doubt that there is greater wealth in society, in light of unprecedented CEO compensation, all you have to do is look at household income growth.  Though increased growth is quite concentrated among the top 1% of households, there is little doubt that there is more wealth—it’s that just a relative few have most of it.

What Matters

In business if your performance doesn’t matter then you don’t matter!  In regards to the performance of their corporation does the top corporate executive matter? Is there a meaningful cause-and-effect relationship between the CEO and the corporation’s performance? In other words is the compensation commensurate with the CEO’s contribution to the organization’s performance?

Often the competitiveness of the organization is mentioned as a criteria when asking, has the organization been competitive under his/her leadership? We can acknowledge that poor management can be disastrous to an organization’s competitiveness as long as the other competing organizations within the industry don’t similarly suffer.  However if they do, then all will be on the (same) level playing field—no disadvantage to anyone and all will be competitive with each other.  A case in point is the former Big 3 in American auto industry. Clearly competitiveness is not a sufficiently telling or discriminating measure!

Most feel leadership matters, and so of course a leader makes a difference!  But, the conclusions from the research on this issue range from (a) the CEO role is mostly symbolic to (b) CEOs have minimal impact, particularly in large corporations.

As reported in a recent Knowledge@Wharton article, the differences in firm performance among Fortune 800 companies in a recent study showed that top executives (e.g. CEO, CFO) account for less than 5 percent of the difference in an organization’s performance. In other words, 95% of the differences in firm-to-firm performance are attributable to things other than the ‘leader of the firm’.  Abraham Carmeli and Ashler Tishler seem to support this stating, “a single person, however talented, is unlikely to possess all the managerial skills that are required for the successful operation of a complex organization” (Strategic Management Journal, December 2004, Vol. 25 No.13).

Accordingly much of the attention has turned from the top person to the top group as recent research has focused on the impact of the top management team (TMT).  However, this too has yet to be conclusive since singling out one person or singling out one group is still reductionism. A major contributing factor is that Western society’s system of orientation is grounded in reductionism and dualistic thinking which supports the pursuit of the one single cause as well as the importance of and accountability for short-term results.

Not Reducible

Organizational performance is an emergent property.  Performance of a system is the result of the interaction among all the system’s elements and the environments to which it is connected.  The more the elements and the environment are in accord the greater the performance—when interactions are complimentary or positive the systems performance is enhanced.

As illustration consider for the system we call an orchestra, music emerges from the interplay of the musicians, their instruments, the conductor and the space within which they are playing; and the better the harmony among the components the more harmonious the music.   Similarly in the systems we call business organizations, performance of the system is not and cannot be attributed to a single organizational component (e.g. CEO) or to even a linear combination of select members (TMT).

Organizational performance is an emergent property, not a summative property.  It is a system property that cannot be understood through reductionism because it emerges from the whole system.  Hence we ought not manage as if reductionism applies, using such practices as pay-for-performance and rank-and-yank.

Bottom line

Paying the top person in the hierarchy disproportionately more than all other members of the system who contribute to the emergent performance of the system is: a) a sign that one doesn’t understand the principles and dynamics of systems; b) a potential cause for a decrease in motivation and collaboration among organization members; and c) a wasteful misallocation of corporate funds.