Podcast: Play in new window | Download

You may have heard the term ‘Big History’. It comes from historian David Christian, at Macquarie University in Sydney, Australia. He has a TED talk describing what his team has been up to with Big History, a project that has received some funding from the Gates Foundation. Big History is the story of how life and eventually civilization have emerged on Earth, building upon one another. The story starts with the Big Bang roughly 13.7 billion years ago. The discussion introduces a puzzle. In a universe ruled by the Second Law of Thermodynamics (paraphrased: everything runs down over time), how could the complexity that we see today have come about?

Well, it seems that the universe can produce complexity in spite of the Second Law, but it is very difficult, and it requires special conditions, found only where suitable conditions are present at each stage of the process. Professor Christian calls this the Goldilocks conditions, not too hot, not too cold, just right. Even then, it was necessary to cross eight difficult thresholds to arrive at our present-day reality. It is not clear how much longer this can continue.

But let’s start at the beginning of the Big History story according to the best available evidence. Before the Big Bang, it was completely dark. This was before time and matter existed. Then suddenly, our universe emerged from a single point in space/time about 13.7 billion years ago. That was the first threshold to be crossed, and scientists have little idea why or how it occurred, as they can only see the after-effects.

When our universe first emerged, it was incredibly dense and hot, theoretically no bigger than an atom, yet it began to expand rapidly. Within the first second, the forces of electromagnetism and gravity were unleashed. The universe continued to expand for thousands of years until, after about 380,000 years, it had cooled enough that protons and electrons could combine to form simple atoms. Once this happened, gas clouds were formed, largely made up of hydrogen and helium atoms (the lightest elements in the periodic table).

One of today’s satellites recently peered back into the early universe and took a picture of the cosmic background radiation leftover from the Big Bang. The temperature was close to the same everywhere, but there were minute differences, indicating differences in density in the clouds of early matter. Since gravity is stronger where there is more stuff, compaction of these clouds took place gradually over time where density was highest. Where compaction occurs, temperatures rise. Some 100-200 million years after the Big Bang, the temperature in some parts of the universe exceeded 10 million degrees, where protons began to fuse, and stars were born. This was the second threshold. Today, it is believed that there are some 200-400 billion stars just in our galaxy, the Milky Way (not counting all of the other galaxies out there).

With the presence of stars, the creation of more complex chemical elements became possible. When very large stars age and run out of their lighter elements such as hydrogen, then helium, they collapse upon themselves and create temperatures so hot that they fuse more and more protons together to create heavier elements. Very heavy elements in the periodic table are formed when large aging stars are finally blown apart in a supernova event. If you have a gold ring on your finger, its elements were formed as part of a supernova explosion from a dying star. The creation of these denser chemical elements was the third threshold that was crossed, and they have been gradually scattered into space as a result of many, many supernova explosions.

Some 9.2 billion years after the Big Bang, or about 4.5 billion years ago, our solar system and its planets (including Earth) were formed. When this happened, the fourth threshold had been crossed. Of course, most of the solar system was still inhospitable to the creation of living organisms, being either too hot (near the sun) or too cold (far from the sun). Earth was just about perfect for the creation of life, especially because it had large amounts of water on its surface in the form of oceans. Wet chemistry is important for the creation of life. For instance, oceanic vents, where heat is released from the earth’s mantle, was a good place for complex molecules to form through wet chemistry involving the electromagnetic force. The remarkable thing that occurred was that a template for life was created (the complex DNA molecule), whereupon life began to reproduce itself based on that information. This was the fifth threshold. As life reproduced itself, DNA would occasionally make mistakes. Evolution relies on the fact that some of those mistakes work better in the environment than the original, so DNA appears to learn what works best over time, building greater diversity. Single-celled organizations were all there was at first, but slowly small multicell organisms began to emerge, then many others, large and small over millions of years, including famously the dinosaurs.

About 65 million years ago an asteroid crashed into the Yucatan peninsula (in current-day Mexico), creating conditions akin to a nuclear winter worldwide. That was bad news for the large dinosaurs that were wiped out in short order, but good news for mammals that began to populate the niches that they left behind. Birds, as it turns out, are today’s decedents from the dinosaurs.
It was not until about 200 thousand years ago that humans appeared. This was the sixth threshold. Their big brains allowed them to learn in real-time. Through human language, and eventually writing, the human species began to accumulate knowledge and pass it on to its future generations. About 10,000 years ago, farming began, unleashing another energy source needed for the foundation of complex civilizations, crossing the seventh threshold.

Only 500 years ago, humans began to link up globally after voyages of discovery opened major trade routes by sea, and humanity became a single global force manipulating the environment. This was the eighth threshold. Humans are now over 7 billion strong. Fossil fuels, agriculture, the industrial revolution, and a multitude of evolved technologies explain the complexity of civilization that we see around us today. Yet with all this apparent success, there is evidence that the Goldilocks conditions that have allowed our flourishing are rapidly being undermined on this planet. Climate change is a real and present danger due to the current overreliance on fossil fuels, releasing CO2, and producing the greenhouse effect.

That brings us to the question of how this progression will play out in the future. How do we ensure our world will serve future generations? What is the next threshold that we need to cross and what conditions need to be present for it to happen?
Well, one way to extend this story (which just happens to be relevant to this podcast) is to focus on the super-organisms that have emerged over the last 200 years to encompass and magnify human activities. I am speaking of organizations (in the forms of business, government, and non-profit entities). Here humans are encased within a large social entity (if only during part of their day), gain an energy source, band together with other like-minded individuals to find purpose and meaning, and accomplish things together that they could not do on their own. A successful organization has access to considerable power and resources over time. It is no wonder that organizations large and small dominate the world around us, and we find them indispensable.

Yet all is not well with the ecosystem of organizations, and the capitalism that drives them. A story is emerging about organizations need to enter a new age, one that we have called The Age of Organizational Effectiveness. There are several threads to the story. One recounts the difficult situation that society finds itself in on multiple fronts, with limited options, and no clear path forward. Another thread is about widespread dissatisfaction with what capitalism has now become.

It is questionable how far current management technology can take us into the future. Current management philosophy revolves largely around the goal model, which forms the basis for management by objectives. This is risky because the approach accepts virtually any goal that management wants to use. This means that arbitrary goals such as profit maximization, shareholder value maximization, or any other arbitrary objective or goal, can be entertained to drive an organization. Bringing in a new C-suite team with a new set of objectives can be a risky proposition. That coupled with the fact that in many public corporations, C-suite executives have been highly incentivized with stock offerings, encourages the use of financial accounting tricks to artificially inflate stock market valuations. This may be good for the C-suite (at least for a short time), but not so good for the firm and its employees in the longer term. It often leads to counterproductive actions at the first sign of financial trouble, such as layoffs, downsizing, and general efforts to do “more with less”. The approach encourages cost reduction approaches and asset sales, which strip productive value from a firm and contribute to employment instability and income inequality inside the firm, reducing the firm’s ability to be productive in the future.

Just as DNA has provided a biological code to replicate and evolve organisms from the distant past to the present, new management theory and practice are needed to provide a template for a reliable future. The single-minded pursuit of profit, shareholder value, or any other arbitrary objective can create instability in an organization’s complex adaptive system, as we have discussed in previous podcast episodes. Furthermore, the market cannot be relied upon to stabilize the economy because we now live in Alfred Chandler’s managerial economy rather than Adam Smith’s free-market economy. For example, the financial debacle of 2006-2008 and beyond in the USA was precipitated by investment banks that were focused on generating financial profits from complex investment vehicles in the housing market, without the vehicles being sufficiently supported by underlying assets on their books — thus increasing market risks and increasing environmental instability over time. To stabilize the planet, we need organizations that serve their environment effectively and cooperate to improve the common good. Today’s discussion highlights, even more, the view that we all need to find a way to live together on Earth, a little blue dot in the vast expanse of space. New-style organizations will be needed to extend ‘Big History’ into the future.

For more information, refer to my recent book: Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness (2017). A link is provided below.

Charles G. Chandler, Ph.D.

[the above content was first published in May 2017 as Episode 066]

Link to Big History Project:
https://www.bighistoryproject.com/home

Link to Become Truly Great at Amazon.com:

Podcast: Play in new window | Download

Anthropologists tell us that anatomically modern humans (i.e., Homo Sapiens) emerged about 300 thousand years ago during the Pleistocene era on the African savannas. For over 95% of their history (until the present day), modern humans have been exclusively hunter/gathers, that is, they explored the bounty of nature in small bands, adapting their behavior as they encountered different environments. Few management skills were required other than communication and teamwork. The goal was the discovery and exploitation of food and other resources necessary for survival and continuation of the species.

While Homo Sapiens are not the first species that used stone tools, they took tool making to the next level to better extract value from, and survive in, different environments. In one sense, they were early knowledge workers. They developed and applied a body of knowledge about their environment to the search for food and other resources necessary for survival. A sense of freedom was available in this early form of group organization and management. Specialization of labor was likely along gender lines; the men did the hunting, while the women did the gathering (and nurtured the young).

About 12,000 years ago, horticulture and agriculture first emerged in what is called the Neolithic revolution. Key to this transformation was the domestication of certain plants and animals that could be produced using cultivation and herding practices. For example, the goat was domesticated about 10,000 years ago in Iran, emmer wheat about 11,000 years ago in the southern Levant, and rice about 10,000 years ago in China. The emergence of agriculture-based societies enabled permanent settlements and significant population growth. Whereas hunter/gathers survived with small team-based work groups, early agriculture-based settlements led to more formal types of organization. Early institutions undertook these functions (e.g., in the fertile crescent from Egypt to Mesopotamia) as irrigation, seed distribution, and grain storage were likely organized to avoid crop failure and famine. Widespread single-crop agriculture did not become common until the Bronze Age, about 6,000 years ago.

With settlements, further specialization of labor took place. Artisans such as the butcher, the brewer and the baker that Adam Smith idolized in his book Wealth of Nations (1776) became common. A series of industrial revolutions, beginning in the late 1700s in England and continuing into the 1900s, spread throughout much of the developed world as water power, steam power, and electric power were applied in turn to the production processes of factories and other venues.

The essence of modern capitalism is investment in, and the substitution of, capital equipment for manual work in the search for efficiency gains. By the early-1800s, a textile factory using a 100 HP steam engine could do the work of 880 men. One documented example ran 50,000 spindles, employed 750 workers, and could produce 226 times more than it did before the introduction of steam.

Still, up until the 1840s, US firms remained very small (just a few people). The owners managed, and the managers owned. At the time, transportation and distribution were facilitated by animals on the land, and by wind power on the seas. Commercial steamships were not common until after 1850. Bureaucracy was the new management technology of the mid-1800s and enabled the growth of large organizations, complete with middle management, such as the railroad and telegraph companies of the day.

So, is management best when it controls or when it enables freedom? If you look at the definition of management in the dictionary, you will come away thinking that it is largely about constraint — dealing with or controlling people and resources to achieve reproducibility and productivity. Since the Neolithic Revolution in agriculture, management has gradually imposed order and control on processes, in the service of normalization, standardization, and efficiency.

Certainly, management focused on efficient process control can provide benefits, depending upon environmental conditions. For example, total quality management (TQM) was a winning strategy for Japanese car companies that were conquering the American market in the 1970s and 1980s. Consumers of the time were looking for small, reliable, and efficient cars following OPEC-led gasoline price increases. So, normalization and standardization, and the reduction of defects that comes through various management approaches have been historically important beginning with the agricultural revolution, through the industrial revolution, and beyond. This thread of the story of management is primarily about efficiency gains, as well as meeting the demands of the market for quality.

Now, however, we are in the first half of the 21^st Century. The environment has changed and is changing still. The introduction of the Internet in the early 1990s has served to disrupt the business models of many brick and mortar enterprises. Increasingly, large and formerly dominant organizations have become walking zombies as their business models have come under threat from upstart online competitors. For instance, Amazon, Netflix, and Airbnb are capturing, and bringing into their orbit, large portions of the transactions in various retail, entertainment, and hotel spaces, taking business from established brick and mortar players. Internet-based players are creating new intermediation models on a large scale, not tied to a specific location on the map but ubiquitous in cloud-based servers.

There has always been a tension between human agency, such as the individual’s freedom to act and to realize his or her dreams, and the organization’s need to control, normalize, and standardize processes to create reproducibility. Yet today, many workers are feeling trapped in their jobs, bound by bureaucratic processes and soul-draining performance management systems that prioritize adherence to key performance indicators (KPIs) over worker freedom and innovation. At a time when firms scarcest resource is innovation and creativity, management control remains heavy-handed (because it can). Gary Hamel notes that although most employees can purchase a $20,000 car in their personal lives, they need to get official permission to purchase a $200 office chair in their lives as an employee. What’s up with that?

Ironically, the hottest management trends of today (small agile teams using scrum techniques) are something of a throwback to the Pleistocene bands of early humans that exploited their environment through hunting and gathering techniques for survival. Exploring new environments and changing conditions requires freedom of action, and it is time for management to loosen control. Indeed, organizations could think of themselves as being in the Pleistocene again, in need of a modern band of knowledge workers to explore and understand the changing environment and identify new resources for survival. The next time you run into a C-suite executive that wants to impose KPIs on your unit, tell him or her to loosen up and go back to the Pleistocene. Homo Sapiens operated quite successfully in that way for over 95% of human history. It would be a return to our roots.

Unfortunately, today’s management philosophy and practice stand in the way. It is the programming and conditioning between our ears that holds us back. We can’t get to a better future if maximization of profit and shareholder value continue to be prime directives. In fact, these are merely arbitrary and self-serving goals that are unconnected to natural law.

A new management philosophy is required. From first principles, we know that an organization must find ways to exchange benefits with its environment if it is to survive. A new approach to management is emerging which acknowledges and accommodates this reality. It is called Management by Positive Organizational Effectiveness. It holds that the goal of every organization is the same, that is, to be effective within its environment. An organization becomes effective within this framework by serving its environment and being rewarded in return, exchanging different types of benefits in the process that are needed to survive and thrive. This approach places effectiveness above efficiency in the hierarchy of organizational performance.

When the goal of every organization is the same, management is no longer free to set objectives from the top down. Rather, teams at the periphery are empowered to ask, “how can I best serve my environment today.” Like the freedom of the Pleistocene bands, these new teams are set free to create a better future around specific product and service offerings, a future that not only benefits them, but that serves to strengthen the common good as well. Perhaps we have much to learn from our Pleistocene roots.

[The above content originally appeared in January 2018 as Episode 087.]

Charles G. Chandler, Ph.D.

Reference:
Chandler, Charles G. 2017. Become Truly Great: Serve the common good through Management by Positive Organizational Effectiveness. Powell, OH: Author Academy Elite.

Podcast: Play in new window | Download

In this episode, I offer three stories that illustrate the power of storytelling. Stories can be used to knit threads together, shape how we see things, and derive power from the outcomes that they describe. If you are going to change the world, it helps to first illustrate how to change a small part of it in a story. [As a footnote, this content first appeared in September 2017 as episode 078]

Charles G. Chandler, PhD, PE

Podcast: Play in new window | Download

Today’s episode is called “Managing the Next 10,000 years.” That could be a tall order, since managing the next 10 years will be challenging due to expected global climate disruptions, but stay with me and you may be intrigued.

Civilization began the last 10,000 years in its pre-history phase, as humans, living in small bands, were still emerging from the last ice age (at its peak about 20,000 years ago) as the climate warmed. Ten thousand years ago the oceans were about 130-140 feet lower than today, and scientists tell us that the last land bridge between Europe and Great Britain was submerged only about 10,200 years ago to become marshland (and later, the English Channel).

It is worth noting that it was about 10-12,000 years ago, at the beginning of the Neolithic Revolution that the practice of management could be said to have started. The ‘managers’ loosely involved in the Neolithic Revolution could be thought of as the first early managers, although they may not have recognized themselves as such at the time. If we broadly define management as the practice of (1) organizing a group around one or more ideas, (2) acting on the idea(s) as a community or group, (3) reviewing the results, and (4) repeating steps 1-3, the Neolithic Revolution constituted some of the earliest efforts to do just that on a significant scale.

The Neolithic Revolution was the first historically verified agricultural revolution, resulting in the domestication of several types of cereal grains (e.g., barley, wheat, rice, millet) and livestock (e.g., goats, cows, water buffalos, chickens, horses) by about 8,000 years ago. It made settled agriculture possible. The first monarchies arose during this period in Sumeria (ancient Mesopotamia) and ancient Egypt. To put that in context, it was only about 5,500 years ago that wheeled vehicles began to appear (Bronze Age technology), along with canals and sailboats. Recorded history only started about 5,000 years ago in the form of Sumerian Cuneiform script on clay tablets. Unfortunately, we don’t have much reading material to inform us about these early events.

Capitalism came much later — in the 17th century — when merchants took the first steps to convert their excess capital into early factory production technology, and the industrial revolution was born. New sources of power (water, steam, electric, and internal combustion engines, in turn) served to automate manual labor and improve productivity through the early part of the 20th century. Additionally, new technologies were used to improve the productivity of factories and farms.

So, what was management all about in its first 10,000 years? In thinking about this, keep in mind that management practice is part of a society’s culture, and it utilizes widely understood methods. Frederic Laloux, in his book “Reinventing Organizations,” notes that early organizations were either largely tribe-like (his code red), or hierarchical and command-driven (code amber) — such as the Roman Empire or the Catholic Church. More recent organizations have tended to be financially-focused and machine-like (code orange), beginning with the early factories and continuing in today’s large corporations.

Whether it was organizing large irrigation systems (5,000 years ago), building the pyramids (4,500 years ago), Roman aqueducts (2000 years ago), or today’s corporations, the predominant idea of management has been to convert inputs (e.g., manpower and other resources) into outputs (e.g., completed works or activities) in a relatively efficient manner, consistent with the technology of the day.  The desired result was a completed construction project, a well-run irrigation system, or a successful corporation. On its face, the first 10,000 of management was about accomplishing tangible and visible activities under direct management control. That still hasn’t changed.

My purpose in this episode is not to recount history, however, but to consider what we need (going forward) to ensure successful management of the future. In the time we have left in this episode, let’s consider what is needed to successfully manage the next 10,000 years.

Let me suggest a context that is likely to be true going forward:

• First, organizations (collectively) will manage the next 10,000 years. Only organizations (business, government and non-profit) have enough resources, power, and control to do the job.

• Third, management practice (by its nature) is socially constructed and is subject to change. Broadly speaking, management is part of the cultural tapestry of society, and culture has enabled human learning and advancement over the centuries. In short, Homo sapiens have been able to dominate their environment by building up successive layers of culture. The mammal with an advanced culture now dominates the landscape. That same mammal is now managing its environment.

Given the above context, can mankind successfully navigate the next 10,000 years and create a sustainable future? Maybe, but it is important to acknowledge that today’s dominant management paradigm (let’s call it “unconscious capitalism”) has created the world we now live in, and that world seems to be spinning out of control.

The science of cybernetics, which deals with systems and their control, offers some instruction as to why the world seems to be spinning precariously. The first law of cybernetics (Ashby’s law of requisite variety) states that “if a system is to be stable, the number of states of its control mechanism must be greater than or equal to the number of states in the system being controlled.” Considering the constellation of global systems, with new technologies ever-increasing the variety of states in the system, today’s control mechanisms are unable to keep pace.

Two clear paths appear to be available to stabilize our world and bring it under intentional management control. The first possibility involves the expansion of the regulatory role of the government to provide greater control over organizations. We could point to some heavy-handed or authoritarian regimes around the world attempting to follow this path. Yet that path is generally unavailable to free societies.

A second path is available and is more congenial to open and democratic administrations. It involves instilling a culture of self-regulation and self-management within each organization in the system so that while going about its activities, it confines itself to the use of positive, higher-order values that accrue benefits to both the organization itself and the greater common good. You may be familiar with the movement called “conscious capitalism.” In a similar vein, this is what Management by Positive Organizational Effectiveness is all about. Regular listeners to this podcast will be familiar with this new approach.

Using Management by Positive Organizational Effectiveness, the task is no longer limited to converting inputs to outputs using objectives specified by management. Rather, the task is to convert inputs into meaningful outcomes within the environment. It is achieved by converting inputs to outputs (on the supply side), while also converting outputs to outcomes (on the demand side). Instead of responding to the arbitrary financial mandates of top management, each organization is reoriented to positively serve the needs of its environment, where customers and other stakeholders live. In this scenario, effectiveness is verified by observing the exchange of benefits between the organization and its environment. First-principles indicate that the exchange of positive outcome-level benefits is necessary for an organization to survive and thrive (and benefit the common good).

Within the context of Management by Positive Organizational Effectiveness, the goal of every organization is the same, that is, to be effective within its environment while improving the whole. This goes beyond the management of visible activities under direct management control (as in the past) to encompass meaningful outcomes that occur in the environment, yet outside of management’s direct control.

It is only with the achievement of meaningful outcomes in the environment that we can be sure that the organization will survive and thrive while improving its surrounding environment over time. We could call this new paradigm “positive capitalism” because it seeks to eliminate the negative aspects of today’s capitalism. Management by Positive Organizational Effectiveness provides a kind of embedded self-regulation and self-management that, when practiced widely, could keep the world from spinning out of control, and help manage the next 10,000 years successfully. I would argue that every organization has a choice to make going forward, either to be part of the problem or part of the solution.

For more information on how to reorient your organization for the next 10,000 years, pick up a copy of my 2017 book, entitled: Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness.

Charles G. Chandler, Ph.D. (email: [email protected])

Podcast: Play in new window | Download

Today the podcast has reached a milestone, at episode 100. Starting back in February 2016, it has taken a little over 3.5 years to get to this point. I hope you have been one of those who have come along on the journey.

I am calling today’s episode, “Your mission, vision, values, and offerings … in 10 minutes.” That’s a pretty tall order, so let’s get started.

I am not a big fan of mission and vision statements that are found in most organizations. Why? Because I have always felt that they are frequently untethered to first principles. Let me explain.

Here at The Age of Organizational Effectiveness podcast, we have an unconventional view of what an organization should be about, whether it is a business, a government agency, or a nonprofit. You see, organizations are not all that different in their underlying rationale. From first principles, we know that for an organization to survive and thrive, it must exchange benefits with its environment. In other words, an organization must serve its environment, so that it can be rewarded in return. The more effective and organization becomes, the more benefits it will exchange with its environment. In short, the goal (or meta-goal) of every organization is the same, that is, to be effective within its environment while improving the health of the system as a whole. Each organization has the freedom, of course, to determine where it will serve and what it will offer its environment as part of its service to it. With that in mind, it uses positive values to improve and sustain the health of the organization and its environment as a whole.

Which brings us to your mission, vision, values, and offerings. Given first principles, we can formulate them in the next 10 minutes. Here is a suggested format:

Mission: Our mission is to serve our environment effectively using positive values in order to make the world a better place. The environment that we have chosen to serve is ____________________. Our people are free to decide for themselves how best to serve our environment every day.

Vision: Our vision is a world where our offerings are integral to the success of _______________, both now and in the future.

Values: We embed positive values in our offerings and in all that we do so that they provide benefits that build up the environment that we serve. Our top 5 values are:

1. _________
2. _________
3. _________
4. _________
5. _________

Offerings: Our offerings embody the positive values and unique attributes we seek to cultivate in order to serve our environment effectively. Our offerings are the instruments through which we exchange benefits with our environment, thus allowing us to survive and thrive, along with our surrounding environment. Our key offerings are:

1. ____________________ for __________________
2. ____________________ for __________________
3. ____________________ for __________________
4. …

Today I have provided a suggested format for crafting your mission, vision, values, and offerings. It enables the creation of a first draft quickly, but you can revise and refine the framework as needed over time. It is a good way to get your entire organization involved in crafting a path toward the future.

For more information on Management by Positive Organizational Effectiveness and the types of tangible and intangible benefits that are exchanged with your environment, please refer to my book referenced in the show notes (below).

Charles G. Chandler, Ph.D.

Reference:

Chandler, Charles G. 2017. Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness. Powell, OH: Author Academy Elite.