Relationships will be the new heart of growth in business
June 19, 2009
By Chris Breen
Revelations that South Africa is officially in recession have confirmed all of our worst fears. The question on everyone's lips now is, When will it all end?
Economists who sound confident on radio and television predict anything from six months to two years, which tells us just one thing: no one really knows. The reality is, in this world of 2009, the old rules don't apply and it is time for a new generation of business thinkers and leaders to step into the gap.
The trouble is, this does not seem to be happening nearly as fast as it needs to. Mostly, businesspeople are like rabbits frozen in the headlights, not knowing which way to turn. Afraid to innovate, they prefer to do the same old comforting things they have always done and hope for the best.
Dr Peter Senge, the director of the Centre for Organizational Learning at the Massachusetts Institute of Technology Sloan School of Management and co-author of Presence: Human Purpose and the Field of the Future, says it best: "Even as conditions in the world change dramatically, most businesses, governments and other large organisations continue to take the same kinds of institutional actions that they always have."
Senge and his co-authors point out that this reactive behaviour is governed by "downloading habitual ways of thinking, of continuing to see the world within the categories we're comfortable."
Mostly our habitual ways of thinking are dominated by the ideas of physicist Isaac Newton, mathematician René Descartes and Euclid, the "father of geometry", which are predominantly linear. Straightness, rightness, normality and standards abound in this way of thinking.
It is a mode that has served us well in the past 400 years, hence our attachment to it. But as things get more complex, it is a limited tool. The world is full of recent examples where standards and straight lines have caused problems. In the aftermath of Hurricane Katrina in 2005, for example, volunteers desperate to help victims were held back by government bureaucracy.
Time magazine reported just days after the storm that, while flames blazed, 600 volunteer firefighters were stuck in an Atlanta Hotel where the Federal Emergency Management Agency (Fema) gave them a lecture on equal opportunity and customer service while they tried to decide how to deploy them. In the end, the frustrated firefighters got bored and returned home without helping anyone.
Similarly, while people were dying in New Orleans, the USS Bataan steamed offshore, with space for about 600 patients and its 1200 sailors idle. They were told to stand by for several days before Fema (again) decided what to do with them.
In the end, those helped were assisted not by the state, with its carefully laid out plans, but by bands of self-organised volunteers who acted freely but with a clear, shared intent, using ham radio operators to create an immediate and effective communication network. Their independence was their strength and their common efforts were able to save lives.
Recent unpublished research from Harvard Business Review shines a different light on the same problem. The working paper Goals Gone Wild shows how goal setting can backfire. The researchers argue that because goal setting requires a narrowing of focus, this can lead to the neglect of non-goal areas, unethical behaviour and distorted risk preferences. This inhibits learning, fosters unhealthy competition and harms motivation. In extreme circumstances it can cripple a corporation.
Enron sales executives were incentivised with commission based on sale volumes, leading to a situation where huge bonuses were paid out for those who had met specific revenue goals, even as the energy trading giant was folding spectacularly. By focusing on revenue rather than profit, Enron executives were enabled to drive the firm into the ground.
It is a situation not entirely dissimilar to the subprime crisis that brought about the collapse of the world economy, the aftereffects of which we still experience.
Clearly a new paradigm that mitigates against these kinds of things happening in our world would be a good thing. We can start by acknowledging that there is more to the world than lovely straight lines and recognise a more interconnected way of being. This immediately points to a world that is more open to possibilities that are emergent rather than predetermined.
Web 2.0, the second generation of web design, and social networking are showing us the way, as they allow individuals to collaborate on a greater scale than ever before and - crucially - to build trust with one another. Margaret Wheatley, the acclaimed author of Leadership and the New Science, believes that in the new world of unpredictable and random change, developing quality relationships based on trust is key to success.
She adds that there is one core principle for developing such relationships: that "people must be engaged in meaningful work together if they are to transcend individual concerns and develop new capacities".
So what are the implications for business? Wheatley predicts that any organisation that does not place relationships at its core and cultivate meaningful interactions with its employees in particular is destined to fail. This means leaders can no longer resort to command and control tactics and rely on goal setting to keep their teams motivated. Instead, they have to engage in myriad activities, from nourishing clear organisational identity and keeping people focused on the bigger picture to facilitating honest, forthright communication and paying real attention to individuals.
To cope in this environment, leaders need to expand their self-awareness and develop a new set of tools - including finding ways to train their brains not to hare off down same old Euclid-inspired pathways.
There are ways to achieve this. Recent experimentation at the UCT Graduate School of Business has seen the introduction of meditation into some of its flagship leadership programmes, with marked results. The students claim that the practice helps to reduce stress and optimise performance. It also helps create awareness of one's habits, including one's "triggers" and "blind spots" - which can be highly valuable for decision makers.
Another way is to expose leaders to paradigms that offer a working alternative to the dominant Newtonian mindset. The UCT business school's Leading Executive Programme, which is being relaunched this August, will help students tap into African and ecological wisdom to shake up their world view and challenge the way they think, act and make decisions.
A good business school should facilitate this process. It needs to move beyond teaching as explanation and move to a mode of explication - and help students to make a conscious shift from the linear into the more connected world. If this shift is made, although we still might not know when the recession will end, we will at least be able to sidestep the headlights and think creatively about ways to ride it out successfully.
Chris Breen is an emeritus associate professor at the UCT Graduate School of Business and the director of the Leading Executive Programme, running from August 23 to September 5
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