Management For A Sustainable World
Capitalism has let us down. In the second decade of the twenty first century, the world realised that capitalism was destroying the planet and had created massive inequalities in society. We have come to realise that we need to create a new model that is sustainable for the planet and sustainable for society.
Capitalism is a model where the markets or Bazaar dominates. Socialism is a model where the state or Sarkaar has the upper hand. Neither of them have created an economic system that leads to universal human happiness. More importantly, neither of them have anything to say about how to reverse climate change or live in sync with the environment. As for equality, they both pretend to strive for it, but both are inherently unequal. Capitalism favours the rich over the poor. Socialism privileges the party over the people.
It is clear that the new sustainable model that will emerge will have to put society or Samaaj
on a pedestal.
Business management, as a discipline, was created to serve capitalism. It’s tools work well in a growth oriented, competitive world which ignored the externalities of the environment and social inequalities. Is the discipline going to be relevant in a Samaaj first world? How does it need to be evolved? Do its tools need to be adapted? These are the questions that this note attempts to debate.
We are like that only
The problem is that home sapiens have considered themselves superior to all other species on earth. We talk about being made in the image of god, and of being at the top of the evolutionary pyramid. We believe that all of nature has been created for our benefit and so we feel free to take from nature as we see fit.
Some species of animals and plants on earth would beg to disagree, especially since we aren’t the biggest or the strongest or perhaps even the smartest species on earth. When Homo sapiens encountered any organism who threatened or scared us, we declared war. We looked at life as a zero sum game, where if someone won then someone else had to lose. So far, we have won all our battles against other species. We have cleared lands of trees and ‘wild’ vegetation to create our farms. We have domesticated some animals and plants, but eradicated many species and threatened others with extinction.
As the population of Homo sapiens grew, we started to fight with each other as well. As these fights grew in number and intensity, we realised that it was more efficient to organise into tribes where different members have specialist roles and there is a clear hierarchy of the members. Over time this hierarchy evolved into kingdoms and nation-states where some ‘nobles’ had most of the power. When this uneven power structures became too oppressive, the people would often revolt and try to reform their system of government. Democracy was the result of one such rebellion. Unfortunately most new systems, including democracies, lapse into inequality again. Thus, most democracies today have become lop-sided such that 1% of the people have most of the power. Democracy today is about one-dollar-one-vote rather than one-person-one-vote.
These, then, are our three key characteristics. We think of ourselves as being different from, and superior to, the rest of nature. We are greedy and always ready to fight to take whatever we want. And we keep jockeying for more power, and hence gravitate towards an unequal power distribution.
All of our biggest problems stem from these three traits. We have plundered nature because we are greedy and believe nature is here to serve us. We have inequalities in society (gender, caste, class, income etc) because of our hunger for power and material goods.
The flip side of this is that in a sustainable world, we will have to live in sync with nature, we will have to develop a win-win mindset and we will have to reorganise ourselves in a truely democratic fashion with one-person-one-vote.
Management science is in trouble
We can look at management science as it exists today in the light of the above characteristics and see that it is quite flawed.
The objective of business strategy is to maximise growth, maximise profits and maximise market share (preferably create a monopoly). Kate Raworth says that in a sustainable world, we will have to change from a growth mindset to a thriving mindset. This thriving mindset would ensure that the basic needs of all human beings are met, while we don’t cross boundaries set by nature. Clearly management strategy needs to be tweaked to optimise rather than maximise. Unfortunately this science doesn’t have a framework to account for ‘externalities’, especially when they are not expressed in numbers.
Financial management is focused on maximising one metric - either profits or shareholder value. The Chicago school of economists, led by Milton Friedman, strongly postulate that ‘the business of business is business’. In other words, that companies should just maximise its profits and not worry about anything else. This doesn’t sound too sustainable. Also why are shareholders privileged over other stakeholders? And what happens if we allow workers, consumers, environmentalists and others, equal say in the decisions of a company? What happens when we have true democracy?
Marketing is focused on war. The whole point of marketing is to beat down everybody else in the market. Manipulate customers so that they think that our brand is the best. What happens to marketing management in a sustainable world? A world where we need to have a win-win mindset and where all stakeholders have a say in what the brand should be? Brand managers are autocrats and will need to turn over a new leaf.
And what of Human Resources? Resources - is that how you refer to your fellow human beings? What are the tenets of HR when there is no organisational pyramid, where people are treated as human beings and not robots that eat and sleep, where the metrics of evaluation could be in conflict with each other?
Talking of robots, there is nothing that Operations Management likes better than machines that do their jobs in predictable times with predictable quality. Operations finds human beings messy. How is this science to change when we move to a sustainable world?
So we can see that management in a sustainable world isn’t just about using the old tenets in a new context. There is some fundamental rethinking to be done about our basic principles.
Development Management has some answers and seeks more
Marketing in the development world, has to move away from competition, instant gratification and large budgets. What are the pillars that replace these three?
At ISDM, we believe the answer lies in Purpose, Nudge Theory and Super-spreaders.
Purpose replaces positioning. The latter was all about being better than the competition, while Purpose has the power to draw in all stakeholders (customers, funders, employees, volunteers and others) in the march towards a better future. Purpose also has the ability to inspire, guide and cheer. So purpose can become the basis for branding and works perfectly in a collaborative world.
Purpose delivers over the long term, while marketing is really about instant gratification. So we need to translate purpose into specific behaviours that need to change as we move towards our journey. Thus our purpose of fighting climate change would translate into changing the way we use energy, the way we travel, the way we consume and so on. Nudge Theory helps us develop strategies to change behaviour and is a good replacement for the ‘benefits’ of instant gratification.
Finally, budgets. Marketing is critical for capitalism. An innovator can build a better mousetrap, but the world won’t beat a path to their door unless they get to know about it. Marketing, with its large budgets, is the means of doing that. The proliferation and fragmentation of media has meant that these budgets need to get larger and larger and hence out of reach of all but the biggest companies. What’s the way out?
Viruses have shown us the way. Viruses infect small numbers of people to begin with, but then grow exponentially via some carriers called Super-spreaders. We have seen that viruses can literally infect the whole world in a matter of months. Ideas can travel like viruses too, and need their own Super-spreaders. Ideas that travel are called movements and they help us create great change with limited resources. Gandhiji, ice-bucket challenge and Daan Utsav have shown us the way.
If marketing can build a theory for a sustainable world, then can the other disciplines too? Some of them have already done so.
Frederic Lalouc noticed that some companies have reinvented themselves for a sustainable world. He called them ‘Teal’ organisations. Such organisations are non-hierarchical, while being efficient. The trick seems to lie in creating small autonomous teams that are loosely held together. All targets and rewards are for the team, while individuals get to operate within the team in a family atmosphere. The model seems to work in diverse industries and different cultures. But does it work in all industries and all cultures? There may be some PhDs to be earned here.
The Teal model may solve several of our operations and people management issues.
Kate Raworth created the ‘Donut’ model to help us think of how the economy has to be optimised. This model throws up a dashboard of metrics that we should measure and evaluate ourselves against. This is at the economy level and we have seen it work at the global, national and state levels. How does this translate to an individual organisation? Can business strategists arrive at a workable dashboard that turns externalities into internalities?
If yes, then we can develop strategic frameworks and financial models around them.
So the old management worked well in a growth oriented, competitive world where the environment degradation and inequalities were treated as externalities. Development Management is management in a collaborative, thriving, balanced, democratic world with no hierarchies, and where human beings are in sync with nature.