Corporate mind-space

According to a popularly quoted article printed in the The New York Times Magazine

The Social Responsibility of Business is to Increase its Profits

This may seem like a sensible statement from the vantage of the company’s investors, however thinking this all day long would probably be a depressing proposition for the company’s employees. In fact it is likely that internalising this corporate raison d’être would very quickly lead to the motivational collapse of even the most hardened company woman or man.

Subsequently people have the need to believe in a higher purpose in their daily tasks other than financially rewarding the company’s shareholders.

In response to this existential need, companies deliberately or unwittingly create an internal mind-space which incorporates all of the abilities and the motivational drives that its staff must possess and feel in order to progress the company’s success.

Within this corporate mind-space

  • The staff must believe that what they are doing is fundamentally “good”. That is, they must believe that they are involved in something of intrinsic worth and of fundamental value.

And

  • The staff must believe that what they are doing is “important”. That is, they must believe that they are involved in doing something which if not done will have a deleterious effect.

Once company staff believe that what they are doing is both “good” and also “important” they can become passionate about their work. If a “good” result is achieved this may bring them happiness so that they will strive towards this outcome. If a negative event transpires they may take this to heart and anxiously work to prevent such an occurrence.

Activity Value Importance
Mining coal Power factories and trains If not done, factories will lose power and trains will be unable to run
Providing drinking water The townspeople will have drinking water If not done, the townspeople will go thirsty
Securing a website against cyber-attacks Customers will have an enjoyable online shopping experience If not done, customers will not be able to shop online

 

Dichotomy and leadership

We are therefore confronted with a dichotomy between the purpose of the company as viewed by its shareholders (which is to increase profits), and the purpose of the company as it professes to its employees (which is to improve society).

In other words, we encounter a contradiction between the external face of the corporation, whose purpose is to offer goods and / or services in the most lucrative manner possible, and the internal “let’s pretend we don’t get paid for working here and are here for the universal good” feeling that must pervade the office space in order to motivate the company’s staff and coalesce them into a working unit.

Furthermore, because every company exists in the external commercial world and also contains its own internal world of personal endeavour, there must be at least one person or possibly a group of people within the company who are able to view everything within the company from both perspectives. Without this ability it would be impossible to translate external commercial pressures into direction within the company’s internal life. Conversely, it would be impossible to align the internal staff motive with the external commercial reality.

Formally the CEO is tasked with the ability to simultaneously maintain this dual paradigm and juggle both viewpoints in their mind, whereby to find the sweet-spot that maximises  the interaction between external commercial pressure and personal striving within the company. In reality however, the CEO may be part of a group of people who jointly translate the different functional areas of the business between the external and the internal paradigms. The CEO will have the “speaking part” within this group, however.

(The further staff are from the upper echelons of management the less they need be aware of the external commercial reality that the company faces. Successive layers of management may be tasked with the gradual transformation of external pressures into internal emotional drivers.)

Hence it would seem that

  • The fate of the entire corporate balance-sheet is in the hands of the individual or group that translates the real-world “commercial speak” into the internal company motivational parlance.
  •  Any misalignment of these contradictory but interdependent viewpoints will spell disaster for the company’s investors or for the morale of the company staff.

Is it reasonable to expect that senior management can maintain this razor-edge balance indefinitely, especially when the technological, socio-demographic and market environment in which companies operate today can change so rapidly?

The world within

Traditionally, corporations, even very powerful ones, do not last longer than one or two hundred years. For example, the Dutch East India Company which for a while was more powerful than some European governments, was founded in 1602 and became bankrupt in the late 1700’s.

As the BBC pointed out in 2012

The past few years have seen previously unthinkable corporate behemoths – from financial firms such as Lehman Brothers to iconic car manufacturers such as Saab – felled by economic turmoil or by unforgiving customers and tough rivals.

Is there a fundamental reason that corporations cannot last forever, or will we see a future that contains 1000 year old “Microsoft”s and “Oracle”s that will become indelibly entrenched in the world’s economy and work-style, like the God Emperor of Dune?

The Smartest Guys in the Room is a book (and later a movie) which describes the factors that led to the collapse of Enron. The title of the book hints at a syndrome in which people demur to the opinion of the person who is perceived to be “the smartest guy in the room”, regardless of whether the advice being advocated would stand up to objective scrutiny by a company outsider.

This type of introverted thinking is the classical reason why corporations fail, an extreme example of this mindset is the “I think film’s coming back” comment attributed to a Kodak executive during the death throes of the industry icon.

The question seems to be, is it possible to identify structural organisational flaws that lead to this type of myopia or is every large corporation ultimately doomed to become a runaway behemoth hurtling towards the edge of a Dilbert’esque reality cliff?

Laws such as the Sarbanes–Oxley Act ensure there is a realistic feed-back loop between the real financial performance of a company and the stock exchange’s evaluation of the company by providing meaningful data that is available for external appraisal and evaluation. However no law can control the development of an internal attitude that is at odds with realities that do not immediately affect the company’s share price.

Paradoxically it would seem that the more successful a company is, the more it is in danger of having the luxury of defining its own internal reality, which may later prove its undoing in true Decline and Fall of the Roman Empire style.

“This is the way we do it” and “She / he thinks the way we do” may seem like happy sounds as long as external factors align with the internally ripened mindset, but may more begin to resemble the sound of a runaway train when the world changes and leaves the “happy” paradigm behind.

Is it healthy for a company to promulgate its own way of thinking to employees, and is the alternative internal dissonance which would make the running of a large corporation unmanageable?

(This blog is Part 1 in a series on People and Corporate knowledge, TBC…)