Daniel Pink claims that management is an outdated technology. He stresses the importance of engagement and self-direction.
Check the other excellent resources at the Let Go and Lead website.
Daniel Pink claims that management is an outdated technology. He stresses the importance of engagement and self-direction.
Check the other excellent resources at the Let Go and Lead website.
Management students study the eras of their discipline including classical, human relations, scientific management etc. What is emerging for me is a more epochal change in management – the transition from self-serving capitalism to conscious capitalism.
It is always hard to define a starting point for massive change, but, as will be explained, I will go with 1962. Here’s John Mackey, CEO of Whole Foods explaining the basics of conscious capitalism.
Self-serving capitalism is based on greed. Altruistic motives are also there, but they are subjugated by the profit motive. Some underlying assumptions, revealed in business discourse, frame its mode of operation:
U.S. company Enron has come to personify the worst of self-serving capitalism. If you are unfamiliar with the Enron story here is a link to the documentary trailer.
Before determining the origins of conscious capitalism consider that the father of capitalism, Adam Smith, wrote two books about economic philosophy, The Wealth of Nations, but also A Theory of Moral Sentiments. The latter argued that sympathy, a proper regard for others, is the basis of a civilised society. Conscious capitalism was still-born as business focused more on the “invisible hand” of the marketplace.
Dr Paul Ray has identified an emerging sub-culture – the cultural creative. He defines them in this video.
In the U.S. cultural creative are fast becoming a dominant segment of society. In his extensive research quantifying this demographic, Dr Paul Ray noted that they are to found in many other countries, but they often under-estimate the size of the demographic, as they are mostly invisible in the media.
The growth of the cultural creative demographic in the U.S. 
Dr Ray identifies 1962 as the dawn of the demographic. Rachel Carson published Silent Spring and Betty Friedan The Feminine Mystique – the former signaling the start of environmentalism and the latter reframing women’s role in society.
In Megatrends 2010, Patricia Aburdene identifies cultural creative a the demographic that drives conscious capitalism.
A significant milestone along the road towards conscious capitalism was Edward Freeman’s articulation of stakeholder theory in Strategic Management: A Stakeholder Approach.
From self-interested capitalism to conscious capitalism
The concept of the stakeholder displaced the singular focus on returning profits to a businesses financiers, to the more balanced and sustainable stakeholder approach.
Engagement processes are at the leading edge of sustainability. The Regeneration Roadmap is an initiative of Globescan and SustainAbility aiming to achieve sustainable development within the next generation. Their focus is on the private sector to drive a lot of change. This video features global thought leaders articulating the road to sustainability. As you watch, notice how pivotal engagement is a agency for change.
Gro Harlem Brundtland, a past Norwegian Prime Minister and Director General of the World Health Organisation. She is currently a Special Envoy on Climate Change for the United Nations. She places engagement at the heart of change.
Personal engagement, personal commitment and building confidence with other people and other nations is the only way to move forward.
The video reinforces the need to generate positive discourse around sustainability, articulate a vision of a sustainable planet and create a culture to embed sustainability as a way of life.
For more videos by these gifted thinkers go to the Regeneration Roadmap website.
In 2005, when New Zealand won hosting rights for the 2011 Rugby World Cup the negotiators had promised the event would be supported by a stadium of 4½ million – New Zealand’s population. They were confident – rugby is embedded into New Zealand culture and for many New Zealanders it is an integral part of who we are. The All Blacks are established as a strong rugby brand, both domestically and internationally.
Economically, New Zealand is marginal as a host country as the population doesn’t support large stadia and the New Zealand Rugby Union is facing a significant financial loss.
image credit: Daily Mail, U.K.
But the World Cup has been a massive success because of the engagement of the nation. In the days leading up to the tournament’s opening flash mob haka happened around New Zealand and other parts of the world. And here’s cell phone video of “flash waiata” as a group of young men make their way to the Fan Zone. The opening ceremony was stunning. For me, even more impressive was the co-ordination of fireworks, container cranes, an orchestra, pipe band, singers and musicians at multiple locations around the Auckland waterfront in a stunning follow up to the opening ceremony. The lyrics of the song “All lit up”, (7.50 minutes into the opening ceremony video) delivered by a choir at the top of a high rise, accompanied by the New Zealand Symphony Orchestra, speaks to me of a cultural shift in our nation:
I used to try not to stand out.
I used to try not to talk too loud.
Now every one can see
What’s come over me
I’m all lit up…
And fans turned out to neutral games in cities around the country and adopted teams to support.
The success of the tournament is based on the effective collaboration of a multitude of partners, including the International Rugby Board, the national and local rugby boards, national and local government, and many others. The organisers have forged a network of collaborators and created a range of events to support the tournament. The synergy between the core rugby events and a diverse range of other events throughout the country helped to build excitement, energy and a sense of connection. The Real New Zealand Festival, co-ordinated events throughout the country.
Visitors to the country have been fulsome in their praise of the event and the hospitality experienced in New Zealand.
From an engagement perspective, what lessons can we learn?
1. Create the story
Rugby is part of the DNA of our nation. The story was already there to be told. We won the inaugural World Cup in 1987, but despite being usually ranked number one in the world, we were unable to secure another win. Stories create meaning. Our impending win is not just about winning a sports tournament – it’s about national redemption. While that might appear a little melodramatic, the lesson for business is that the story generates meaning and motivation. The best businesses engage the hearts of their employees in support of a mission they get to own themselves.
2. Draw on pride
We are a small nation, but we are great at rugby. Three of the four semi-final head coaches are kiwis. Our pride is embedded in the results of the games and also in the quality of our organisation of the tournament and our hospitality. Excessive pride begets arrogance, but moderate doses of pride engage the hearts in a positive manner.
3. Create a stage to draw the diverse together
From an historical perspective, rugby has been a venue for cultural engagement. Rugby provided a cultural space for the two founding cultures of the modern New Zealand nation, Mäori and Pakeha (Europeans, mostly British) to literally rub shoulders and play together. Later arrivals from the Pacific Islands have also been integrated into the game. During decades of the downside of colonisation and assimilation, rugby has continued to provide a space for Mäori culture, with the iconic haka, the bilingual expression of our national anthem and, in this tournament, the diverse expressions of Mäori culture in events and ceremonies.
The integration of rugby and other events throughout the country has juxtaposed sports events with diverse events featuring food, drama, fashion, hunting, music and many others.
Contrast this with the perennial business problem of departmental silos. I don’t want to elaborate with examples, but the challenge is to create the stage, or create spaces for engagement with both internal and external stakeholders.
4. Ride the waves of culture change
Culture builds over time. But it isn’t a steady incline. Events provide surges of cultural influence. The combination of the success of this tournament, the quality of events, especially the opening ceremony and our inevitable victory on Sunday night instils a sense of self-belief and optimism. While we need to be realistic, at the same time, if we ride this cultural wave we can make some gains as a nation. The stories of the cup victory will become part of our cultural fabric.
Wise leaders will recognise the waves of cultural change, highlight them and celebrate them.
5. Learn from a great team
This is possibly the greatest All Black team. After our untimely exit from the previous world cup, the services of the much-maligned coaching team were retained for another four years. They appear to have produced a team environment that is supportive, but also stretches individual capabilities. There is a tangible sense of camaraderie and players ably support one another on the field. They have countered criticisms of the past by being able to change tactics on the field, with evidence of a high degree of cohesiveness between the players.
Go the mighty All Blacks.
image credit: nzbrtours.com
The evidence for the vital role of staff engagement continues to mount. The July/August 2011 Harvard Business Review includes a series of articles on collaboration. Yochai Benkler’s article The Unselfish Gene explores the fundamentals of human nature, challenging concepts of rational self-interest promulgated for so long. Scientists, psychologists and economists are now stating that people are less selfish than previously assumed. There is also “neural and, possibly genetic evidence of a human predisposition to co-operate”.
These findings support Jeremy Rifkin’s vision of an empathic civilisation, based on our inherent capacity to empathise. Jeremy Rifkin asserts:
We have to rethink the human narrative…If we are truly Homo empathicus, then we need to bring out that core nature, …if it is repressed by our parenting, our educational system our business practice and government, the secondary drives come, the narcissism, the materialism, the violence, the aggression.
Benkler’s HBR article presents the command and control systems that still dominate the business landscape as an emanation of the assumption of dominant self-interest. As our inherent collaborative nature is fostered, organisations will benefit from building cooperative systems encouraging communication and, “fostering empathy and solidarity”.
Other articles in the issue emphasise:
While the biological basis of our empathy and cooperative nature have only been determined over the last decade, much of what is written will be familiar to those who have studied business. It’s over 50 years ago now that Douglas McGregor articulated theory x and theory y in his book The Human Side of Enterprise. There is a tidy correlation between the theory x position that people are inherently lazy and need to be coerced to work, and the assumption of people driven by self-interested. And the theory y position – that people can enjoy work and are intrinsically motivated aligns with the assumption that people are wired for cooperation and empathy, and want to belong.
So why, after 50 years does command and control remain the default management practice? I suspect it is because these practices have dominated human relations for millenia – such patterns of behaviour will not atrophy easily. Jeremy Rifkin’s insightful observation that the secondary drives will dominate, reinforces the need to rehabilitate our social institutions and allow our inherent cooperative, empathetic nature to emerge.
Among the business writers to champion our higher nature is Stephen Covey. In this video, he traces human history and the legacy of command and control.
Engagement emerges as an essential pre-requisite to build the relationships that embed cultures of trust and teamwork. Engagement practices are generic, enabling them to be used for the full range of stakeholders, internal and external, that businesses need to co-create their futures with. Yochai Benkler, in his HBR article provides at once pragmatic and aspirational “levers” to achieve this:
“encouraging communication, ensuring authentic framing, fostering empathy and solidarity, guaranteeing fairness and morality, using rewards and punishments that appeal to intrinsic motivations, relying on reputation and reciprocity, and ensuring flexibility”
What do you think?
This blog positions stakeholder engagement at the leading edge of sustainability and also, as a core process underpinning a superior business model is transforming older, extractive and exploitative models. However, it is also great to have evidence that stakeholder engagement supports financial sustainability in addition to environmental and social sustainability.
Witold Henisz led a major Wharton School research project to deliver such evidence summarised in Spinning Gold: The Financial Returns to External Stakeholder Engagement. Here is the abstract from their document:
We provide direct empirical evidence in support of instrumental stakeholder theory‘s argument that increasing cooperation and reducing conflict with stakeholders enhances the financial valuation of a firm holding constant the objective valuation of the physical assets under its control. We undertake this analysis using panel data on 26 gold mines owned by 19 publicly traded firms over the period 1993-2008. We code over 50,000 stakeholder events from media reports to develop an index of the degree of stakeholder cooperation or conflict for these mines. By incorporating this index in a market capitalization analysis, we reduce the discount placed by financial markets on the net present value of the gold controlled by these firms from 72 to between 33 and 12 percent.
My (limited) understanding is that the reduction in net present value is increased significantly when stakeholder co-operation is low and stakeholder conflict is high. Here is a video explanation of net present value.
Apart from the great result, what impresses here is the size of the study and the stunningly positive result for stakeholder engagement. Notable too, is the assertion that mining companies that were once known for a myopic short-term view, are now “global leaders in the implementation of stakeholder engagement”. A participant in the research commented:
It used to be the case that the value of a gold mine was based on three variables: the amount of gold in the ground, the cost of extraction, and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude. Why? Because one has local support and the other doesn‘t. (Yani Roditis, COO Gabriel Resources, interview by authors)
The researchers position the two factors of high stakeholder co-operation and low stakeholder conflict as essential to building the implicit or explicit social license to operate. Investing in positive stakeholder relations builds both social and political capital.
The nature of the research confines analysis of the benefits of stakeholder engagement to financial factors and shareholder value. As such it removes the tension between proponents of shareholder value, such as Milton Friedman and the broader stakeholder theory such as Edward Freeman.
In addition to the financial benefits of effective stakeholder engagement, there are other less tangible and quantifiable benefits. As more businesses learn to take a less extractive stance and engage more, the benefits of greater social capital compound. Trust is built and fractured communities develop more cohesion. If the ethos of external engagement of these mining companies becomes culturally embedded throughout the organisation, local people employed in mining operations, should also benefit from a more engaging workplace. Ideally these cultural practices become more manifest and normalised in worker’s families and the wider community. How is this quantified?
This landmark research in sustainability provides much-needed hard data to demonstrate the benefits of stakeholder engagement. One disappointment is the title – associating the PR metaphor of “spin” is unfortunate, as effective stakeholder engagement is the antithesis of spin. Ideally engagement is based on authentic and transparent communication rather than the more manipulative intention of spin. But hats off to Witold Henisz and his team for a superb research contribution.
The New Zealand Army provides an inspiring example of a journey of engagement, and how the engagement ethos supports their effectiveness in the field.
New Zealand is a young nation with a compressed history. 150 years ago, British and Colonial forces were engaged in a series of wars with indigenous Mäori tribes, leaving the inevitable sense of disengagement and division between the combatants. In the following century, the young nation responded to the call of “mother England” and sent young men to fight and die in the killing fields of the world wars.
New Zealanders see our tragic cathartic involvement in the Gallipoli campaign as a crucible for forging our national identity and accelerating the process of cutting the umbilical chord to the mother country. In the Second World War, many young Mäori volunteered and fought with distinction as the Mäori Battalion.
A few years later, in 1949, the NZ Army badge was adapted from the British Army design. The British Army asked for the letters “NZ” to be added to provide differentiation from their badge. Fifty years later, in 1999 the New Zealand Army adopted a new badge incorporating the words Ngati Tumatauenga (God of War) and replacing one crossed sword with a taiaha.
These outwardly subtle artifactual changes reveal a story of the integration of the army’s twin heritages of the British soldier and the Mäori warrior. The taiaha is a traditional Mäori weapon. Ngati Tumatauenga is a tribal name – the New Zealand Army reconceptualised with a tribal identity.
Ngati Tumatauenga acknowledges what the Army is one family of people bound together by the ethic of service to our country, military professionalism, common values, and mutual respect, mutual trust and camaraderie. As one people we are one tribe. Ngati Tumatauenga reflects our oneness and our unity; it has seen us develop our own New Zealand military cultural practices and ceremonial guided by Tikanga Maori on the one hand and British and European custom on the other. (from the New Zealand Army website)
We can assume that these badges represent a five-decade journey from an ethos of assimilation of Mäori culture in the army, to a more engaging ethos of integration with the consequent forging of a new identity.
It is significant that Mäori serve across the ranks of the Army, and New Zealand’s Governor General designate, Lieutenant General Jerry Mateparae, has been head of New Zealand’s Defence Force from 2006 after a distinguished career in the army.
The New Zealand military is small by international standards, but over the last 100 years has punched well above its weight. The army has served in several war zones as peacekeepers. As Ngati Tumatauenga, it has achieved stunning success. Watch the YouTube video on this page or here for the inspiring story of the New Zealand led coalition bringing peace to Bougainville with “guitars, not guns”.
I believe the Army’s success in engaging local populations and rebuilding trust can be attributed to the evolution of the shared identity of Ngati Tumatauenga. Over time underlying assumptions of the supremacy of European modes of operation were eroded and the voice of a minority culture emerged. This process could only be achieved through effective internal engagement, creating a culture that is a platform for external engagement.
Note from the video, that the inclusion of women in peacekeeping was a major asset.
Mäori have achieved much in the army, but in wider New Zealand society, they are over-represented in statistics about poverty, ill-health, unemployment and crime. It appears that wider society could learn much from the army. I would like to hear about private or public sector businesses, in New Zealand and elsewhere that have achieve impressive results through effective internal engagement.
Acknowledgements: Thanks to Bob Whiu for his help with this article.
We are nearing the end of the age of empires (see part one of this post). As the old world is crumbling under its own dysfunction, the new shoots of a new civilisation are discernible. This is the context for the shift to sustainability.
With the old world essentially a spent force, impotent to deal with the complex issues we now face, the required course correction is a radical reorganisation of human communities and patterns of civilisation. In addition to developing the new institutions to support a new world order, we face the far more profound challenge – that of disrupting ancient and ingrained assumptions and patterns of behaviour, and supplanting them with new ones. This is no simple task.
Current sustainability discourse calls for change, but it is frequently posited as incremental change (albeit challenging enough itself). The environmental and social challenges facing us are enormous. We will struggle to reverse, or slow down some of the alarming trends, such as climate change, species extinction and resource depletion. But In some ways, the task of supplanting old patterns of behaviour, anchored and expressed in age-old human behaviours, is even more challenging. But the good news is, when we can achieve this, new patterns of human interaction will make it much easier to build sustainable communities.
The changes we are facing require the displacing of these old patterns of human behaviour with often diametrically opposed new patterns. For example, most human communities have used slavery as an economic resource. The practice persists today in locations where the prevailing cultural norms of subcultures view humans as objects for exploitation. This practice is unsustainable where human dignity is a dominant value and poverty is banished.
At present, we are in a twilight zone, where many are working hard to implement sustainability interventions, but are doing so on the foundations of the old order. Many corporates struggle with schizophrenic personalities – the old “profit maximisation at any cost” personality, and the emergent “sustainability” personality. BP’s gulf oil spill personifies this. I have no doubt, the companies’ leaders are genuinely aspirational, but the hyper-competitive marketplace invokes “profit maximisation” behaviours. We are attempting to build a new world on shaky foundations.
There are encouraging developments. Take community building for example. I am hopeful that we have reached the nadir of dislocated urban and suburban communities and we are beginning to connect more with our neighbours. In this Ted talk, Rachel Botsman talks about the growth of “collaborative consumption” – a phenomena driven partly by new peer-to-peer technologies.
And in my corner of the world, the city of Christchurch recently experienced two devastating earthquakes. Amidst the tragedies, it was heart-warming to see neighbours looking after neighbours. Two “armies” were mobilised – the student army, and the “farmy” army, the former, tertiary students, and the latter, Canterbury farmers. These armies cleared away the tonnes of liquefaction that covered streets and suburbs.
A hundred years ago most of our exposure was to homogenous others – those that were much like us. It was very easy to be embedded in and “us and them” world, when most other nationalities are strangers. Now we mix a lot more, we are broadening our empathy far beyond the homogenous cliques of the past. We are more likely to respond to the plight we see our fellow humans suffering. And science has taught us to that biologically, we are all much the same.
In the previous post, I outlined the underlying assumptions that supported the empire building ethos – “growth is good” – “extracting value” and “us and them”. Our new world requires an entirely different assumption: unity of action. Rachel Botsman advocated a shift from competition to collaboration.
We also have to overturn some deep-seated beliefs about human nature. For example, we can live peaceably together, and we can transcend self-interest.
Is it arrogant to think that we are living in the midst of epochal change? Could it be that we are indeed part of a transformation of human consciousness? I believe so, and in my next post, I will assemble some supporting evidence. What do you think?
Just decades ago, the gulf between health practitioners and the many Mäori (the indigenous people of New Zealand), impacted on the quality of health outcomes for Mäori. Bridging this gap is an engagement process.
This is the first of my engagement stories and it is close to home. My wife, Huria works as an educator for Te Poutokomanawa (Mäori Health Services) at Whangarei Hospital in northern New Zealand.
My ancestors were European, Huria’s were Mäori and Polynesian. They both shared a world-view that accommodated both the material and spiritual. Both the spiritual and material influenced health practice. For example, monasteries often included a pharmacy. Both cultures relied heavily on herbal treatments.
When Europe entered the Age of Enlightenment in the 18th Century science displaced tradition. Scientific truth became synonymous with progress. Like teenagers discovering new capabilities, the followers of science viewed traditional medical knowledge as something to leave behind. Science became increasingly reductionist, and the only thing that mattered was what could be measured. Hopefully the “teenagers” will come to appreciate the wisdom of their elders.
Even as a Pakeha (New Zealander of European origins) the medical world seemed unwelcoming and sterile. I still avoid hospitals and medical clinics. Doctors seemed to treat people as objects rather than people, and some still do. To those from an indigenous tradition, the gulf is much wider. Medical practices were alien. People were separated from whanau (family), and hospital culture (individualism, medical jargon, cold and impersonal, command- control practices) clashed directly with Mäori cultural practice. Medical language was even less understandable than English for native Mäori speakers.
Prompted by poor health outcomes for Mäori, the government passed legislation in 1993 and 2000 to ensure that Mäori could, among other things, “contribute to decision-making on, and to participate in the delivery of health and disability services”. The two main changes were the development of Mäori Health providers and the development of Mäori Health Services with the public health system.
To achieve this, in practice, where Huria works the main initiatives are:
For Huria, Mäori cultural practices happened from the start. The image below is from Huria’s powhiri (welcome) on her first day at work. The powhiri is a ritual of encounter. Huria was supported by Mäori elders and family members, some travelling for half a day to attend. The family handed her over to the new employer, with the understanding that they will care for her. The powhiri is an expression of both engagement and appreciation. It was heart-warming to hear people speak so warmly of Huria’s qualities – a great way to start any new job.
Other common cultural practices Maori bring that change the flavour of the work environment are karakia (prayer) and waiata (singing).
No doubt there are those who think that this is a waste of money, and it would be better to fund more operations. But ultimately these engagement processes will change both health practice and Mäori perceptions of health practice for the better. Surely, if Maori are more comfortable and at ease in the environment that is attempting their healing, the outcomes will be better.
Health models based purely on scientific practice are deficient. Mäori academics contribute to the engagement process. Mason Durie’s Te Whare Tapa Wha model, for example, positions health as a function of four interconnected dimensions:
Two engagement principles are illustrated here. The first is the benefit of sharing world-views. If any system of knowledge becomes too insular and too dependent on its own resources, its ability to adapt and develop is compromised. Western medical models can only benefit by learning from traditional and indigenous world-views and vice versa. The more engagement, the better the learning.
The staff working for any organisation, should look like the communities they serve. Having a diverse staff is not just a nice idea. People are more likely to feel at home and want to use services if they see people working there who look like them, speak like them and dress like them.
Ultimately there will be no need for Mäori Health Services, because Mäori will be more represented at all levels of staff, and the two world-views will sit naturally beside one-another. Hopefully it won’t take too many years for this to happen.
Organisations that engage well, are generally doing well (see my online stakeholder engagement post). So how do we embed engagement processes into organisational design? As organising around hierarchy was a core process of industrial age organisations, engaging is a core process of 21st Century knowledge age organisations. This calls for a reorganisation of how we work. From this perspective, if we strip organisations down to essentials, there are three core functions:
The engagement ethos must displace older patterns of relating, and reorganising around this structure will help that to happen. Some functions that are clearly engagement functions are marketing, public relations, customer service and communications. Others, such as information systems could be positioned as either engagement, or support.
For smaller organisations, especially commercial operations, this could translate easily to a three-person leadership team. Larger organisations is where it gets really interesting. Eric McNutty and Rupert Davis in the December 2010 Harvard Business Review ask, “Should the C-Suite have a green seat?” They discuss the relative merits of having a Chief Sustainability Officer, such as SAP’s Peter Graf. While I believe that stakeholder engagement is a function of sustainability, perhaps sustainability shouldn’t be partitioned off, but rather should be a guiding value of every organisational function, championed by the CEO. Companies that are successfully championing sustainability, such as Interface have a strong CEO or executive team driving it.
If sustainability is the goal, engagement is a means of achieving the goal. As discussed before, engagement represents a new way of relating. While sustainability calls us to rethink how we sustain our environment, society and economic well being, engagement calls us to rethink how we relate with one another – so fundamental to, and vital for, our survival and well-being.
So a Chief Engagement Officer would be a great place to start (its just unfortunate that the acronym is CEO).
Marketing, public relations and customer services
Positioning marketing, public relations and customer services as engagement processes should reorient them in most organisations. In many organisations these functions still have a “hunter-gatherer” approach – go out and score a new customer or fight off competitors. Securing new customers gets more attention than retaining existing customers. Engaging infers a longer-term orientation and creating relationships rather than merely completing transactions. For example, Zappos uses its call centre to engage and as a source of information and opportunity to create a relationship. They have no scripts, quotas or call time limits.
What do you think of the production, engagement, support model? Are there functions that wouldn’t fit? And where would you position human resources?