Businesses Are Not Machines, Nor Are You.
As South Africa came out of our fifth week of lockdown sometime in May last year, I took the decision to stop reading COVID news.
I was frazzled by the onslaught of different theories and opinions. South Africa’s hard lockdown had felt intuitively correct, but then there was Sweden and what about what was happening in South Korea?
I momentarily had the clever idea of reading the histories of other pandemics, but then I was whirlpooled into variables that I had no business trying to figure out.
I gave up on that too.
Like the batsman who comes on in the last hour of the day when his team is in crisis, I decided to narrow my focus to just each moment in front of me. And here I am. That worked!
Last October, Nicholas Christakis, a physician who has a PhD in Sociology and is the director of the Human Nature Lab at Yale University published his take on COVID – Apollo’s Arrow. I decided to add it to my 2021 reading list and am now two-thirds of the way through it.
Why am I telling you this?
Oh right, because last Friday the amazing Joe O’Brien-Hitching came over to help hang the art for a room that I have slowly occupied as my office. Here are the results (if you need art hung and live in Cape Town, drop me a mail. Joe is a genius.)
Still, why am I telling you this?
Well, I guess the engagement with Christakis and the hanging of the art are indications that I am finally stepping into this year. Perhaps a month late, but hey sometimes its best to let the world unfold at its own pace. In the last few days, I’ve felt ready to act with greater ease. I hope that you too are doing well.
In that jubilant spirit, I thought I’d share the beauty of Nandipha Mntambo’s Ophelia with you. I have many favourites in the Norval Foundation’s Sculpture Garden and this is one of them. I was pleased to see that an edition now has a home in Johannesburg. One day when I am big, I hope to have one in my garden.
I’ll share some insights from Apollo’s Arrow when I am done.
/ strategy
In last week’s letter we saw how an increasingly singular focus on profit alone led KMPG SA down a damaging road that has taken enormous effort and cost to fix.
This HBR IdeaCast conversation between Curt Nickisch and Roger Martin, professor emeritus at the University of Toronto’s Rotman School of Management, felt like a useful continuation of the theme.
Martin reflects how a machine metaphor has taken hold of how we think about businesses. It is a mechanistic view that seeks to create absolute efficiency with no consideration of other variables.
Except, as Martin, points out, “a business, just like the economy, is not a machine. It’s a natural system. It’s a complex adaptive system, and so businesses are going to have to think more about how the system works as a whole…”
Martin reflects that as this mechanistic view has taken hold, it has stripped the resilience from organisations.
This certainly resonated with Christakis’s reflection on the pandemic in the US, where doctors and nurses were exposed to hazardous conditions simply because there wasn’t enough PPE. The push to increase working capital efficiencies in private health care meant there was little stock-on-hand and so when the crisis hit, they were left vulnerable.
Martin says the relentless focus on achieving efficiency has meant “that you must get rid of anything that’s slack, so business leaders over the last period, 20, 30, 40 years, have been attacking it as if everything should be made to go away. You should not have one excess labor hour on your store floor, your shop floor.
All those things make a certain amount of sense. But when you push them too far, you create something that is not at all resilient, like Toys R Us or iHeart Media, that go bankrupt only because they’ve got too much debt. So, the, quote unquote, efficient capital structure actually was the cause of their expiring.”
Martin points us to some ideas that can make a difference:
- Recognise that efficiency needs to be balanced with long-term resilience.
- Don’t think of your business in just functional siloes. Actively recruit and train for cross-functional knowledge and experience.
- Be careful of unitary objectives because “what tends to happen is, that goal gets translated into a single measurement, and then we start to think of that measurement as the goal itself.”
The counter to unitary objectives is to consciously challenge oneself and one’s business with seemingly contradictory goals. This principle of embracing contradiction reminded me of PWC’s Six Paradoxes of Leadership that they argue are necessary for effective leadership.
Martin details how Southwest Airlines has done this, they say, “we want to be the lowest cost airline and the highest employee satisfaction and higher customer satisfaction, and most profitable airline. How do you get to be the lowest cost and highest employee satisfaction, when you can’t grind down labor costs and wages to the lowest possible, like others, like Eastern and People’s Express and their like had done before?
Well, that answer is, you’ve got to be cleverer…Driving down costs doesn’t become a singular goal. You have to figure out how to do it in a way that produces multiple outcomes.”
I posed a version of this question last week, but it’s worth asking again, if you’re a board or exco member what is the prevailing narrative amongst the leadership of your business? Is it mechanistic? Is it unitary? If so, you probably want to start exploring ways to make some changes. You can ask the same questions of how you’re approaching your own life.
/ self
Martin notes that the drive to efficiency is also leading to greater societal inequality where firms getting larger and larger, driving out others. Nickish asks him what difference the average person can make. I love the simplicity of his answer.
He says, “spread your spend.”
For example, for some of the books I read it is simply easier to place an Amazon order, but I make a conscious effort to place part of my book spend with my local bookstore, The Book Lounge. Although the supermarkets are so convenient and I use them, I only buy my fish from Ocean Jewels.
There’s no doubt that the world can feel out of control, but small conscious buying choices can make a difference. And here’s a cool fact, doing acts of kindness is one of the most effective ways of improving your happiness.
Martin’s insight has now made shifting your shopping spend an act of kindness, so you’re getting a double whammy – building a more diverse world and making yourself a little happier. Pretty cool.
/ soul
On that note, I’ve been waiting for a few weeks to share this post from the Umthunzi Farming Community. Today’s theme gave me the reason to do so.
Umthunzi works with 75 small-scale organic farmers from across the Cape Flats. In an incredibly hard year, they managed to increase sales 2.5 times! Efficiency would point us to mega greenhouses, an effective, functional society with tasty veggies points us to Umthunzi. We can choose.
I wish you a week of finding opposing objectives that bring the energy of creative tension, and of identifying some businesses that you could shift you spend to. If you get a moment, I’d love to know what you’ve done. Email me.
Karl
PS: My clients are people who want to have significant impact, live joyful lives, and build a humane world. If you’d like to work with me, you can find out more from my website.
PPS: If you’d like to subscribe to this letter, you can do so here.
(This letter was first published on 7 February 2021)