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A better path to prosperity?

Sun, 15th Apr 2012

 It was W. Edwards Deming who said that the most important numbers in management where unknown and unknowable. To most managers and economists brought up by the book that’s terrifying and unthinkable. Rather, they take comfort in disdaining anything that is not quantifiable. Hence the thoughtless parrotting of the unspeakable ‘If you can’t measure it you can’t manage it’, perhaps the most destructive slogan in management. Hence, too, the near total neglect of the ‘soft’, human aspects of work in management theory and practice.

One of the few economists brave enough to stand out against the crowd is Umair Haque, director of Havas Media Lab, eloquent and outspoken blogger at Harvard Business Review and author of 2010’s ‘The New Capitalist Manifesto’. Paradoxically, so strong is the economic orthodoxy – with its potential not just for ridicule but for simply freezing out dissident voices – that it takes more courage to confront it as a ‘professional’ than as an amateur ranter. ‘Manifesto’, with its distinction between ‘thick’ or authentic and the ‘thin’ value of conventional business economics, was a bold step off the beaten track (into the wilderness, the orthodox would sniff). ‘Betterness: Economics for Humans’ (Kindle Single or pdf from hbr.org) takes things a step further, sketching out a framework for thinking about the organisations of the future.

Haque’s underlying contention is that in 2008’s financial crisis, and its aftermath, we are witnessing not just the popping of a bubble, but the final meltdown of the obsolete social and economic institutions, including economics and management, that carried us through the 20th century. Our institutions have become ‘extractive’: they take increasingly more value out of the world around them than they put in. In these circumstances, he says, there can’t and won’t be a recovery in the normal sense, because the problem isn't a recession. It is the end of an era and a paradigm, the Great Splintering of a whole social contract.

In many of his blogs, Haque heaps fire and brimstone on the corruption, trivialisation and McSerfdom that are the by-product of today’s reductive materialistic paradigm. Since Milton Friedman, theorists have posited that the job of economics, and of management as its faithful amenuensis, is to curb the pathologies of  human nature. Haque is well aware that establishing a new paradigm it is not a simple matter of demonstrating the inadequacy of the existing one: at least the outline of a new and better model must be visible. Here therefore he concentrates on the challenging job of constructing a positive framework, one moreover that relates to individuals as well as corporations. This is by no means the final word, as he is the first to admit. But as the first on the long route to building a new and very different corporate order it has special value. So instead of companies narrowly built (notably unsuccessfully, as it happens) to prevent anyone else – workers, customers, suppliers and society as a whole – from eating the shareholders’ lunch, he proposes an architecture which would allow them to be judged not on financial profit but on how far they the world a better, more fulfilled place than when they found it.

The key is in the book’s subtitle  – ‘economics for humans’. The overarching idea is ‘eudaimonia’, the Aristotelian concept of ‘human flourishing’ or wellbeing, a far wider idea of enrichment than material wealth. Wealth plays a part but as an enabler, not an end in itself (bringing to mind Dave Packard’s reminder from a different age that ‘profit is not the proper end and aim of management – it is what makes all the proper ends and aims possible’). Translated into economic terms eudaimonia would embrace measures of social, human and creative capital as well as the financial kind.

On the path to ‘a better path to prosperity’, Haque invokes three other difficult-to-quantify Greek terms as guides: poiesis, arête, and kairos, corresponding roughly to generational advantage, organisational advantage, and exploiting turning points – as now – to change the terms of the game. The starting point is that business as usual is not only not the answer: it is the problem. ‘Organisations that can’t contribute to the Common Wealth are increasingly useless to people, communities, society, the natural world and future generations. Though they may grow GDP or create shareholder value, increasingly they cannot spark the conditions for a meaningfully good life. Those that can, in contrast, are useful, and they are rarer than a downpour in the Sahara. And it is to those organisation that power, advantage, trust and returns are already inexorably flowing’.

No organisations have done more than start out along that route. But some companies offer a glimpse of part of the equation. For example, think of Apple, which has got to be the biggest company in the world by doing exactly what companies should: generating value through relationships (once an Apple buyer always an Apple buyer), through ceaseless innovation (rather than protecting what it's got and extracting rents), and also, crucially, by turning devices like the iPhone and iPad over to buyers via the app store to create their own value in their own lives – iStethoscope, anyone? Apple is hard to compete against precisely because doing more of the same harder, faster, cheaper than rivals, the tradition recipe for competition, is simply irrelevant against this kind of mastery. As Haque observes in the chapter on arête, ‘the habits of betterness’, betterness involves going beyond competitive advantage: ‘The goal isn’t mastering and defeating rivals, but living up to your own potential’. An organisation’s most important adversary is itself.

There are plenty of implications to roll around here. One, as Haque points out, is that ‘the corporation as we know it is probably obsolete’. This may be true. Even if it is, however, that does not guarantee its demise or the automatic emergence of something better. 'The corporation as we know it’ is not about to roll over and give up without a fight. The gravitational pull of the status quo is extraordinarily powerful, not the least of its strengths being that it has convinced us that this is the way it is and there is no alternative. It's Haque virtue that he confronts this fatalism head on. If human beings have constructed one set of institutions in the past, they can demake and remake them for the different circumstances of the present. You can argue whether his formula is right or not. But more important is the trumpet call to arms: putting individuals squarely in front of their responsibilities to help build the next round of institutions we live by, 'Betterness' has an importance far beyond its 69 pages and £1.99 download price.


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