Recently, I was invited to deliver an "electronic keynote" at a conference called "Collaborate 99," put on by MetaSystems Design Group.
(Parenthetically: The idea of an "electronic keynote" is very new, both to me and to the world. So I have tried to figure out the best possible form. Writing an essay seemed ungainly and overly formalistic -- too much work for both the writer and the reader. Other styles, like "bullet points," seemed casually arrogant, implying that I see myself as the only expert in the virtual room.
I settled on catechism. I will ask myself questions, and offer my own answers. Then invite you to answer them as well, and to ask other questions. I really am interested in your questions and answers, because I'm not entirely sure of my own. I keep testing them on people, and they're stronger (i.e., more precisely phrased) than they used to be. But they're still not "there" yet, and I'm prepared to find some counterexample that makes me throw out the whole theory. I haven't found that counterexample yet.)
Let's start with the question most on everyone's lips these days:
Two reasons. First of all, most of us haven't really brought the rigorous thought and collective conversation to bear on the question, "How do we want it to be better?" If we did, the answers might surprise us. But that's beyond the purview of this keynote.
Second is, that in industrial and post-industrial society, the vehicle for making life better is the large organization. This is true whether we work within them, or whether we simply live outside them. And very few of us really understand the purpose of large organizations.
First of all, that's a purpose usually ascribed to corporations. As Peter Drucker has noted, large mainstream organizations have a great deal in common with each other. They're really the same kind of animal, whether they're corporations, government agencies, or non-profits. They exist in a milieu of management, where the decisions are not necessarily made by the owners, and certainly not by the customers. (This is also true of schools). So the corporate purpose of "returning investment to shareholders," at best, is a special example of the organizational purpose we're discussing.
But even in corporations, "returning investment to shareholders" is obviously a means to an end, not the end goal in itself. This is inferred from watching actual behavior of corporations, such as Sunbeam under Al Dunlap. The behavior of the company is organized to make the numbers seem good, not to produce actual shareholder wealth. In short, corporations no more exist to create profit for shareholders than schools exist to create high test scores. Scores and results are simply the way they are held accountable. But the big issue with scores and results is "looking good, so that you can fulfill your real purpose."
For more confirmation, consider the literature of shareholder frustration with corporate performance: the literature of Graef Crystal (In Search of Excess), of Nell Minow and Robert Monks. Here's one quote, from an early draft of Nell Minow's piece in The Dance of Change:
Occasionally I run across a management that is interested in learning, and my job is easy. George Fisher, then-CEO of Motorola, and Jack Welch, CEO of General Electric, have both come up to me and said, "I know who you are. If you ever have a problem with my company, come and see me and we'll talk about it." Those are the people who welcome questions from outsiders. And when I hear comments like that, it spurs me -- and other informed shareholders -- to buy their stock and hold it.
By contrast, every single CEO I've met from a troubled company has followed the other extreme. "Who do you think you are?" they ask. I always think of Alice in Wonderland, telling the soldiers, "You're nothing but a pack of cards."
The significance of this quote, to me, is that the shareholders don't have any control over how they will be treated. They have influence, if they marshall their forces. They can put pressure on the CEO. The company is accountable to them. But it does not exist to return their investment. That's just a means to the real ends.
Even the name, ROI, is suggestive. If "making money" is the only purpose of a corporation, then why not just invest in someone else's stock and eliminate the middleperson? The answer is that "making money" is not the purpose.
After all, corporations are just as accountable to governments as they are to shareholders. The penalties are as great for breaking a law as they are for letting a share price diminish. (The penalties are not the same, but they are roughly equivalent in distress and ignominy.) You would not say a company exists to "pay its taxes and lobby;" you would say that it pays its taxes and lobbies in order to exist . The same is true of return on investment to shareholder -- and obeisance to any important stakeholder group. These groups are critical to the organization's survival, but you would not say that satisfying them was the organization's purpose.
Perhaps one reason people seem to find corporations disturbing, even somehow alien -- Buckminster Fuller famously compared them to sinister giants, descended from old pirates, stalking the Earth without a thought for the people they trampled -- is the fact that they don't seem to have a natural purpose. Or at least the purpose doesn't mesh easily with the natural scheme of things, where God rules the world, kings rule subjects, and parents rule children. Corporations rule nobody; bosses rule within them, but no corporation, not even Microsoft or Disney, ever forced someone to buy its products. Yet they are unstoppable. They must have some purpose, but it's difficult to figure out what it is.
In my opinion, there are two, and you can't understand the first one until you understand the second one. So I'll describe the second purpose first. To provide the appropriate emphasis, I'll put it in boldface:
Every organization exists to make life as wonderful as possible for the "core group," the members, the people in the center.
Unless you understand that, you don't understand what the organization is trying to do.
Usually the founders --- until, like Steve Jobs at Apple in the mid-1980s, they are pushed aside. Usually, but not always, the executives. Emphatically not the employees, in most organizations -- except, ironically, the unionized employees. (And this is one of the great paradoxes of American business history). But sometimes the employees. Rarely, the customers. Occasionally, the shareholders -- or at least the major shareholders.
In fact, the only way you can define the core group is through a circular definition. So here goes, this time in italics (which I'll use for definitions):
The core group of any organization is that group of people whose happiness and well-being constitutes part of the purpose of the organization.
A synonym is "indulge." I choose the word "indulge" carefully. It does not merely mean to "fulfill the ambitions." As an employee of, say, General Electric, I could probably realize many of my ambitions. I would make a nice salary, and I could do interesting work. But I would not really feel like General Electric and I belonged together, unless one day I was invited across an invisible threshold. Then, thereafter, making me happy would be part of the company's purpose. And if I were unhappy or unfulfilled for any reason, then the resources of the company would be marshalled to figuring out why.
(This wouldn't be pure indulgence. In return for this, I would continually be expected to put the well-being of the organization foremost in my mind. Whether or not I fulfilled that expectation, of course, would depend on my own capabilities, and my own foresight -- which frequently don't live up to expectations...)
If you've ever started your own company, you know what it means to have an organization dedicated to your well-being. Within the limits of its ability, it will do what you need it to. If you need work, it will go and find you work. If you need money, it will boost your pay. If your pay is so high already that you bridle at the taxes you pay, it will get you stock options instead. Or find another way to launder the money. If you get divorced, it will watch your kids. The more you dare to ask of the company, the more it will do for you -- up to the limits of its capability.
For example, if you are part of the core group of a large corporation, and you want to live closer to the office, it may well move corporate headquarters to within eight miles of your house. Or it may spin off the division you control to a separate building, and move that to within eight miles of your house. Or buy you an apartment near the office.
(In his groundbreaking book City, William H. Whyte talks about a survey he did of corporations that left New York City for the surburbs. He plotted their new locations by a variety of criteria, and only one criteria applied to 100% of the relocations. The new location was always within eight miles of the CEO's house.)
But it need not be a large corporation to fulfill your needs, if you're a member of the core group. Several years ago, George Roth and I started a small consulting firm called Reflection Learning Associates. Neither of us wanted to work very much, and we certainly didn't want to manage many people, so RLA always took on less work than the customers requested. We wanted to make a lot of money, so RLA always took on only high-priced work. We didn't want to commute to an office, so it became a virtual corporation. If we lost our other sources of income, you can bet that RLA would move into a high-powered marketing drive to bring in the necessary income to make our lives better, up to the limits of its capabilities.
We know of non-profit organizations with very lofty espoused purposes. Unspoken, however is the purpose of making life as wonderful as possible for a core group of key people -- who are not generally the board of directors. Thus, the non-profit (in one case) indulged the founder's love of experimentation, continually trying new things at his request so he could learn from the ideas. Another non-profit has enormous overhead amidst tight budget pressures. Much of this overhead consists of secretarial staff which spends its time dealing with the many requests and ideas that come in for a few key people's attention. This is not a bad thing, nor is it necessarily abusive. It's just another example of how, by watching what an organization does, you can divine that its true purpose inevitably involves improving the life of a few key people -- in the way that they demand.
Another example comes from my book, The Age of Heretics, in its description of Warren Bennis as the head of the University of Cincinnati: "His strength was the reason for his failure: he was too preoccupied with his own learning. The result was an enterprise that couldn't help but be centered around Bennis himself, as if the university were an extension of the man." (p. 263).
In an earlier draft of this document, I suggested that organizations exist to make the core group "important." But I dropped that. Some people don't want to be important. They want to be rich. Others want to be secure. Others want to be respectable. The organization will give the core group members exactly what they want. They don't even have to be able to articulate it. You know you're a member of the core group of an organization if the organization finds ways to give you what you want, even before you're aware that you want it.
Because it isn't always that simple. Sometimes, the core group is the partners. Sometimes it is the management team. Sometimes it's the prominent shareholders. Sometimes it's the entire corporate roster of managers and employees (this was in fact the way that most large post-war corporations were organized during the "golden years" of cradle-to-grave security).
Sometimes a corporation is organized around one core group, and a division is organized around another. The division's core group essentially holds the larger organization hostage: "You give us the opportunity to be the core group for this part of the organization, or we won't run it for you any more."
Very rarely is it just the CEO. And often other members of the core group -- like Nathan Myhrvold and Steve Ballmer at Microsoft -- become celebrities in their own right, just as much as the CEO whom they ostensibly report to, but who is actually more like their partner.
It's a fabulous experience to be a member of a core group. Few of us get to experience this. I think that's (by the way) the real reason that urban kids form gangs, and that immigrant cultures spawn organized crime. Where else will the members of these groups get to be part of an organization that exists, within its capabilities, to give them what they want? Certainly not in Boy's Clubs. The Boy's Clubs exist to give the "customers" what the leaders of the Boy's Clubs think they need. Organized groups for inner-city youths will never replace gangs for this reason, no matter how deadly gangs become. .
It's certainly significant to anyone who has ever worked their whole life for a company or organization, wondering all the while, "What's missing here?" Their unspoken question is: Why does this company seem to care about me much less than I expect it to, given the amount of commitment and time it demands from me? Or, if it's a non-profit, "Why does there seem to be a hidden agenda? Why do I get frustrated because the organization does not seem to respond to me equitably?"
I have had a number of friends and acquaintances complain about organizations this way. They try to make organizations fit the purpose that they divine for it. Rex Stout once had a female character in a Nero Wolfe mystery say in effect, that a working girl living on her own had to "know what men are good for and what they're not good for." (This was the brilliantly drawn nightclub singer Julie Jacquette, in Death of a Doxy.) That's how I feel about organizations: You have to know what they're good for and what they're not good for. And what they're not good for is taking care of people -- except for the members of the core group. To expect any more from them is to be disappointed.
I know of an engineer who went through an "empowerment" program and expected to be given free rein to organize an important project the way he saw fit. He took the responsibility very seriously, and instituted a culture of innovation, with lots of in-depth team activity. Then his boss stepped in one day while he was on vacation, and just "tinkered a bit" behind his back, making some promises that the group would have to live up to, and shuffling around some people. The engineer came back, saw what happened, and effectively quit within a week. "They're not treating me like a person," he said. "They're treating me like a commodity." He might just as well have said, "They're treating me like a non-member of the core group."
That is the critical question, isn't it? Every organization has its own way of answering that question. All organizational battles over privilege, power, and diversity are based on the question of who will get to be the members. Unions are dedicated to collective bargaining on behalf of forcing their "members" to be members.
In many organizations, the central preoccupation of senior leaders is rewriting and reconsidering the rules of this game, figuring out not just who is going to be admitted to the core group, but how the process should be redesigned to get the right people into the core group (and what they mean by "right people" in the first place, and how to look good about it.) That's often why senior executives seem to spend so little time actually doing anything. Or, as Bill O'Brien puts it: "If we could somehow extract all the politics, gamesmanship, and bureaucratic garbage from hierarchical organizations, we could increase the GNP by 20% and reduce the workweek to three days." (The Dance of Change, p. 82.) The real work of the company is managing the boundaries of the core group.
(There's reason to think this state of affairs starts as early as high school. As a high school student I know put it,"Of the 7 hours I spend in school every day, only half an hour is spent in intellectual learning. That is the half hour I spend at lunch. The rest of my time is spent on the real work of school: Flirting, dispelling rumors about me, starting rumors about others, and doing whatever I need to do to keep my social status intact." In other words, he and his fellow students are learning to play the "core group" game.)
Every company has its own rules for core group membership. The Ford Motor Company exists to make Bill Ford important in a way it would not for other major shareholders or executives. Unable to achieve the same "core group" status at Ford as Henry Ford II, Lee Iacocca left for Chrysler, and was willing to risk personal bankruptcy to do so.
Again, it depends on the company. In some organizations, the unions struck a great deal: in exchange for "going with the flow," and not trying to take over the reins of the organization itself (as John L. Lewis threatened to do in his headiest days around World War II), they collectively bargained a quasi-core-group role for their members. Indeed, that was the Faustian bargain that unions struck. (The best source for this is Thomas Geohegan's wonderful book about unions, Whose Side Are You On? I'd provide a quote but I can't find my copy at the moment.)
This is why managers hate unions with such visceral distaste. It's not that unions threaten managers' control -- indeed, unions often reinforce the control. But managers cannot discipline or censure union people, because the union members have bargained their way into part of the core group while many managers have not. Managers can't discipline or fire union members, and yet the union members are not required to make the same kind of commitment to the organization that managers make. They got core group status, in effect, through a backroom deal. I believe that this agreement is at the root of most labor union troubles over the past 45 years. But it was inevitable, as Geohegan points out, given the legal and regulatory climate set up by Congress in the early 1950s.
After WW II, corporations were powerful enough to extend membership in the core group to all permanent managers. The threshold of managerial employment became the second year -- the point at which you moved from being a "trainee" to being "one of us," or a "GE man" (for instance).
A downsizing, at its heart, is a redefinition of the core group. The most celebrated core group redefiner in our time is Jack Welch, who changed GE from a company where all employees were members of the core group, to a company where you had to be #1 or #2 in your business category -- and even then the successful would only be considered for the core group. Arguably, Welch had to do this to ensure GE's survival, but in the process "Welchism" changed GE from a company dedicated to making a large group of people prosperous, to a company of winners and losers. Kurt Vonnegut, ironically, foresaw this in his 1950s novel Player Piano, but he had assumed that the impetus would come through automation. Automation wasn't necessary.
A "Welchist" redefinition is not necessarily a bad thing --- after all, being taken care of by a paternalistic corporate parent can be very stultifying, for both the people and the company. But a "Welchist redefinition" is extremely wrenching for the people caught in the transition. Indeed, if you interview people who went through GE's transition (as I have), you'll find that the angriest people are those who stayed, not those who left the company. The downsized ex-employees merely lost their jobs and their livelihood. Those who remained lost their membership in the core group. They may still draw a high salary -- indeed, it may be so high that they can never leave. But they will never have influence, and never have a sense of stability. Their company is no longer theirs.
That is the legacy of Welchism.
A similar issue goes on in most schools. Who is the school for? Is it for the parents? The students? The teachers? If the school does not partly exist to make the teachers important and valued, then it will not survive in any healthy way. Teachers will protest any reform; stonewall any change. They will assume that everything that happens at the school is intended to take place at their expense. Money is nice, but membership is better for teachers: better than being highly paid is being granted a high level of respect. A smart school administrator makes sure that the institution embodies that level of respect, as if the school has (as part of its primary purpose) the importance of its teachers.
(Another source for all this is Social Systems by Barry Oshry -- a controlled experiment in core group dynamics.)
You wouldn't think so if you'd ever been part of a core group. And by the way, this is the best possible argument for entrepreneurialism. It lets you create a core group for an organization of your choice.
Unfortunately, most of us do not ever get the luxury of working for an organization that considers us important unless we start one. That means we are always working for organizations that do not recognize us as significant. At best, we are highly desirable contractors, with valuable skills. We can exchange our time and attention for money or other perquisites. These are granted on a contractual basis and can be removed at any time. The organization is not set up to make life easier for us, except as "part of the deal we strike." Living that way tends to make one cynical, because transactional relationships tend to make one cynical. (The epitome of transactional relationship-speak is "Don't feel bad I screwed you. It's just business; nothing personal.")
If you don't know (going back to Nero Wolfe) what organizations are good for and not good for, then you may be duped. But if you know that they're good for improving the lot of the core group, then that becomes a starting point for leverage. It saves you a lot of time, trying to change the organization in ways that don't improve the circumstances of the core group. It just won't happen.
Finally, it would be a grim picture if helping the core group were the only
purpose of organizations. Fortunately, there's another purpose as well.
I like to think of it as the first purpose. But you can't understand it until you understand the role of the core group. Thus, in boldface italics again:
Every organization exists to make a mark upon the world -- to try something at a larger scale than individuals could do alone, and then to see what happens.
Another way of putting this: Every organization exists to make a better world, at least as "better" is defined by the core group.
Every organization that sustains its existence does so by trying to do something that continually changes the world. Airline companies speed up travel. Monsanto feeds people. Morgan Stanley deploys capital. We might not agree that these measures, indeed, make a better world -- but we cannot deny that their purpose is for the organization to learn. The organization's core group members want to "take the organization out for a spin and see what this baby can do."
A few organizations have ghastly goals and horrifying aims -- one thinks of the paramilitaries and guerillas in Colombia. But they are often reacting to horrors (that they see) inflicted on them. Most organizations are nowhere near that extreme. They can only survive if they build constituencies, and that means that a significant number of people (customers, constitutents, core group members) must want the things (goods, services, ideas, effects) that the organization produces. This is even true for organizations that many people hate.
Banks, as Robert Pirsig wrote in Zen and the Art of Motorcycle Maintenance, exist because people want them. Not because some bankers got together in a conspiracy to dominate the economy. Schools exist because people want some institution, larger than themselves, to play a major role in raising their children. Most of us feel that educating our children (and ourselves) is too big a job to do alone.
I first realized this point when I heard the scenario planner Peter Schwartz talk about the real motivating factor for the managers he knew. They wanted to do things, he said. They were only comfortable accomplishing something that an individual person could not accomplish alone. Doing things, in the doer's view, is ALWAYS making a better world. Because (as Dewey and Deming pointed out), doing is the only way to learn.
Executives in companies that don't do anything are like little kings in empires with no people. The role is meaningless. Conversely, the more a company seems to "do," the more meaningful the core group becomes -- which may be the real reason that Amazon.com has moved into so many new businesses.
I'm not sure. A better way to put it is: "You should always approach a corporation as if you believe its core group members are trying to make a better world."
I have an acquaintance who was recently part of an in-depth, well-funded symposium on education and learning. "R.J. Reynolds supported us," she said recently. "They covered all our expenses. They contacted the head of this Institute and said, "We think what you're doing for education is great. We have some money; here it is. You can do whatever you want with it.' That doesn't often happen in education.
But nobody told us that our expenses were funded by R.J. Reynolds until the last session. Then, someone asked of the Institute staff, 'Are you going to do this again?' It would depend, they said, on whether they had money. So we asked who had paid for it. And one of the people in charge looked at us for a minute -- because she knew we had all grown up in the late 1960s and early 1970s -- and finally said, "R.J. Reynolds." And you could hear an audible gasp."
An audible gasp. Some tried to refuse the money. Yet many cigarette company executives really do see themselves as doing good things in the world. Indeed, at one point, cigarettes were a clear boon to humanity. They helped people lose weight; they created an atmosphere of conviviality. Without smoking, J.R.R. Tolkien would have had a much harder time creating the civil, magical atmosphere of MiddleEarth. It might even have been possible to justify the addictiveness of nicotine as an element of "making a better world."
But when the link to cancer became tragically evident, then the manufacturers of cigarettes had to face their own cognitive dissonance. Somehow they had to square their original sense, that they were doing something worthwhile, with the external evidence. They managed it by stonewalling, by convincing themselves that the rest of the world had unfairly targeted them, by talking about freedom of speech, and so on. Their means had overtaken their ends.
An arms dealer, similarly, might find a way to justify his or her actions as making a better world. The position may be indefensible by any other standard; but you cannot attack corporate "villains" as villains, because that is not how they see themselves. They do not set out to make the world worse. At worst, they set out to find a need and fill it -- which, from a marketer's point of view, is making a better world indeed.
How do you reach these people -- by condemning them? Or by recognizing the purposes which have put them into this untenable position? (Or is the position untenable after all?)
First of all, it can't be done without corporations and large organizations. These entities simply control too much of the common infrastructure. Here's how I put it in a recent review of David Korten's book Post-Corporate Society:
There are too many things that large corporations provide precisely because people want them. Canned food. Paper towels. The thorough mobility of the automobile. Air travel. Power tools. Computers. CDs and the stereo systems that play them. And quickly-printed books. Most of all, people want brand names. Even in the heart of Manhattan, with its hundreds of small-company choices for food, McDonald's is popular. People want the option of fast food when the mood or the need strikes them. But they also want the option of not going to McDonald's or Wal-Mart's -- and of patronizing corporations that meet their needs more effectively.
To put it bluntly, most people are both less enlightenable and less manipulatable than Korten gives them credit for. Large corporations exist, at least in part, because people want what they produce. I come out of a counterculture background myself, with many years working at the Whole Earth Catalog. I heartfully, fervently wish that life today would be more like David Korten's Post-Corporate World -- and I would cheerfully visit such a place eagerly and often. But I wouldn't want to live there.
Changing the world can only be done by changing organizations; and changing organizations can only be done by somehow communicating the message to the core group of an organization: Unless you change, you will no longer be able to fulfill your twin goals.
Corporations are, indeed, running untrammeled across the earth. So are government agencies and (in some ways) nonprofits. Therefore, the world has two choices. First, as Ralph Nader and David Korten have proposed, we can legislate that corporations must serve democratic goals. This is extremely difficult to enforce, and prone to potential backlash.
Or we can somehow show, partly by example, that sustaining a large organization depends upon democratic participation -- inside and outside. In fact, this probably represents the most prevalent way people will seek to manage corporations in the future. The language for doing this is just emerging now.
It's not easy. A community that wants to manage its corporations has to realize, for instance, what organizations are good for and not good for. It will not do much good to make bargains (like tax breaks to bring a corporation into town) because corporations will quickly fulfill their prime purposes at the expense of such bargains. Only if the core group considers "keeping the spirit as well as the letter of our word" to be a prime value can the company be trusted. (Even then, it can only be trusted until the core group changes.) Most corporate promises to the outside world, alas, are not made by members of the core group. They're made by public relations or low-level marketing and sales people. And they are thus easily broken.
Make all bargains with the core group. Don't blame capitalism; blame the core group's priorities. Help the core group members see the impact of their decisions.
For the first time that I know of in human history, we live in a glut of organizations. There are far more organizations, providing far more infrastructure, than any individual needs. Even the relentless monopolization efforts of the past two decades have not limited the sheer number of organizations available to us, as advocates, employers, and producers of the things and services we need.
Therefore, we have (as employees and consumers) more choice than we ever had before. If organizations will not invite us into the core group to start with, we should deal with them from a position of strength -- by building our capabilities until we have more clout. And if we cannot do that, then we should create new organizations that, among their purposes, will make our happiness paramount and do things that we think organizations should do.
This is particularly relevant, to me, around diversity issues. The diversity "problem" is not about different categories of people at all. It is about the question: "Who is a member of the core group?" More specifically:
1. How broad is the membership?
2. How easy is it to become a member?
3. Does membership accrue to those who rise by merit (rare), those who join a particular group (common in the past), or those who strike a good deal (the wave of the future)?
4. Are non-members who work for the organization treated fairly? Or are they exploited?
Then each of us, no matter how privileged or unprivileged our circumstances of birth, must choose how to approach organizations and what we can gain from them.
The dominance of large organizations has created a troubling philosophical problem in the industrialized world, not unlike the problem of free will. Clearly free will exists; we prove as much each time we change our minds. And yet why should it exist? Things would be so much easier without it. Acceptance of free will does not come naturally; it must be painstakingly, deliberately cultivated, like an appreciation of opera or brie.
Large organizations are like that, too; an acquired intellectual taste. Any school child can affirm, with authority, that families exist with good reason: So children have a comfortable place to grow up. Or schools: to give children a place to sit while their parents work. Or governments: To boss people around. But where do corporations fit in the natural scheme of things? What is their purpose?
Somehow, it's not satisfying for corporations to exist to make a few people important and to do some stuff on a large scale. But there is only one other purpose that I can think of; as a vehicle for experimenting with life and thus learning about the world. I closed my book, The Age of Heretics, with that image of corporate purpose, and it still rings true to me, in a utopian kind of way:
The greatest asset that heretics have, these days, is that there are so many of them. They exist in every organization, balancing the imperative to do good works with the imperative to keep their jobs and keep earning a living. They have been daunted, but not thoroughly disheartened, by the waves of "downsizing" that emerged in the last decade. Their greatest dream is to bring their work lives in tune with their personal hopes and dreams. They want to earn a paycheck, and yet accomplish their own goals. And they recognize that they can only do it by changing the systems of the world around them, one piece at a time. Perhaps a corporation exists, in the end, precisely for its heretics. Perhaps its purpose, in the long run, is to help people expand their souls and capabilities -- by giving them the venues within which to try things on a large scale, to succeed and fail and thereby change the world.
Since this was a private conference, I don't feel comfortable making public the questions or comments made by others (cogent though they may be). But I do want to include my own responses, and a couple of other thoughts...
Reading over this, I realized that I flippantly, glibly alluded to the idea that "governments exist to boss people around" and that most people still have an attitude, deeply embedded in them, that the King bosses the subjects and the parents boss the children and that's the way it's supposed to be.
I do believe that most people have that attitude deeply embedded within us, even people who live in democracies. But I don't believe that this attitude represents an accurate view of reality. In reality, there's very little bossing that goes on. There doesn't need to be; we carry the bossing in our minds and react by accepting or rejecting it.
Anyway, I just wanted to add this to forestall any possible reaction of "Kleiner is an authoritarian at heart." If this comes off like an authoritarian screed, then I've miswritten it. That isn't the intent.
One of the most interesting things about all this, to me, is the extent to which the survival of an institution depends on its heretics. The best example is the Roman Catholic Church, which evolved either by adapting to incorporate heresies, or by adapting to exclude them. I don't claim to have a very deep knowledge of all this...
This leads me to suspect that there must be a "third purpose"
for organizations.
First, to make the core group happy;
Second, to "do stuff" on a larger scale;
And third, perhaps, in a less visible way, to give heretics a venue for trying
things.
One responder said that everyone (in a typical company) knows about the core group purpose, but no one talks openly about it. So the organization espouses that it is egalitarian. This happens because people fear that talking about it openly would make people uncomfortable. (I guess it would make the core group uncomfortable. Seems like it's a hard thing to admit publicly that you're a member of a core group.)
Maybe most corporations could solve much of their management problem by acknowledging explicitly who is a member of the core group. Then again, I saw one company do this -- a large oil company that anointed 200+ of its senior managers as the leaders of the next generation. They got various packages & options as well. And conversation throughout the company immediately turned to: "Do these people deserve it? They don't deserve it!"
I started thinking about all this because I knew a lot of frustrated people who couldn't pick up the cues. In some of these cases, they had been core group members and tacitly enjoyed the status... and then lost their status without ever talking or hearing about it explicitly. And they fell into a bitter ravine.
As several people have noted, core groups can have slippery boundaries. Especially if they LIKE having slippery boundaries. Some are locked-up tight. I imagine the core group of the Morgan Bank under J.P. Morgan was pretty hard-lined.
A reader wrote, "A person is no longer in that core group but still employed. They often don't understand or know what has happened. And it is seldom discussed. Even if raised, either denied or faux-ignorance is the response." That was the circumstance that caused me to raise this inquiry in the first place. "Exactly what had happened to my friend?" I wondered. Trying to figure that out, I had to ask myself, "Why did the organization (that betrayed my friend) act in this way? What purpose was it serving?
And I replied that it reminds me of a joke I read in Alan Moore's Watchmen graphic novel. "Man goes to doctor. Says he's depressed. Says life seems harsh and cruel. Says he feels all alone in a threatening world where what lies ahead is vague and uncertain. Doctor says, 'Treatment is simple. Great clown Pagliacci is in town tonight. Go and see him. That should pick you up.' Man bursts into tears. Says, 'But, Doctor... I AM Pagliacci.'" [Watchmen, Alan Moore & Dave Gibbons, 1986; DC Comics, Inc., p. 27]
Is Pagliacci an optimist or a pessimist? He must be something of an optimist, since he's getting back onstage tonight.
Am I an optimist? Sure. I truly believe things are getting better. In part because I think we have this unprecedented situation, a glut of organizations. The history of the industrial revolution suggests, to me at least, that organizations really are amplifiers of human endeavor. People in large organizations accomplish much more than they accomplish acting alone. Having a glut of organizations suggests some kind of meta-amplification, beyond our imagination. Wonderful news indeed.
And yet.... I resonate with Pagliacci.... Do you remember the chapter in Kurt Vonnegut's novel Cat's Cradle, with a really long title along the lines of, "Given what we know of the nature and character of humankind, what hope is there for the future?" And the chapter is one word long: "Nothing." I resonate with that, too. I respect most of the people I have met, but what I see of humanity as a conglomeration does not inspire much confidence.
In fact, many leaders in organizations are NOT members of the core group. In the Dance of Change, we have a lot of material about network leaders, who are almost never members of the core group, but who are vital to the organization continuing. The most effective network leader I know, Ford's Vic Leo, wrote a piece on how he does it. The interesting thing is that (judging by Vic's article in The Dance of Change), his loyalty is not to Ford alone, and not to "learning" alone. His primary loyalty is to "Ford Learning." That gives him a kind of independence which, I suspect, makes him a capable leader even though he is not a member of the core group.
Should Ford bring him into the core group? I'm not sure. It's an interesting quandary. I'm not sure that would be the right thing to do, either for Ford, or for Vic. I don't know anything about his relationship with them, but again, judging from his article, there's a clear transactional relationship that serves both sides, and that both sides accept.
It would be interesting to know if Vic would agree with this. I'm almost afraid to ask him. In a way this theory gives me more hope about OD's role. As an OD person, I would have a lot more impact (if the theory is correct) by learning to recognize the rules and values of the core group, to be explicit about them, and to ask: "What `core groups' exist here and what do they really want?"
I think many internal OD people are effective to the extent that they can give voice to honest perceptions about the values of the core group. A lot of people in the organization are wrestling with those values, but not talking about it -- they're trying to fit in, and they don't quite know what they're "fitting into."
To be sure, part of the function of OD is to build human bridges between the rest of the organization and the core group. Another part of the function of OD is to bring this tension to the surface so people can relax and make their own peace with their work and their position. ("Now that I know what the core group thinks, and what I'd have to do to become part of it, I know how to carve out my own position here -- or elsewhere.")
Someone asked: Whom defines the members of the core group --the members that can leverage exactly what they want? Are the core group within our organizations truly a viable change agent? Or, might it be that these core members no longer represent the greater society needs as they are unconscious also?
First of all, the core group members themselves do not set the tone of the organization's response. Organizations are often unconscious in the ways they watch out for the core group. In thousands of tiny little decisions that people make, often unawares, the organizations protect the core group members from unpleasantness. People think that's what they're supposed to do.
So a core group member who wants change must find a way, not only to say, "I want change," but to say, in his or her actions as well as in speech, "I want to be changed!" Unless the core group emphasizes how much they personally want to be shaken up and made uncomfortable, the organization will stay the same. (Perhaps this is why Jim Clark, the Netscape founder, keeps putting his life at risk in expensive helicopters and sailboats, as described in Michael Lewis' The New New Thing.)
"Without coporate support, social change is much harder," wrote one reader. I replied that I agreed. I do not believe that corporations are against social change per se. They're against social change if their core groups are against social change.
The core group may include some change agents, but if you are part of an organization with a core group primarily consisting of change agents, that's going to be quite a turbulent place to work. Come to think of it, Whole Earth was a little bit like that.
The question, "how do core groups get their legitimacy?" reminds me of Jane Jacobs' book Systems of Survival, and the old concept (which I learned from Doug Merchant) that there are in fact three different kinds of community values: Market values, clan values, and hierarchy values. In Jacobs' book, when these get muddled up (particularly market and hierarchy) then great confusion and mistrust ensue. To be sure, organizations exist because we need them. But do we need organizations per se, or do we need Clans, Marketplaces, and Hierarchies?
My own view is that we need organizations. Clans, Marketplaces, and Hierarchies do not represent innate needs, but evolutionary forms of deciding "who gets into the core group." In a clan system, you're born into your place; in the hierarchy, it's chosen by authority (presumably descended from God, even in this non-divine-right age); and in a marketplace, your place in the core group depends on your willingness and ability to broker.
None of these strike me as providing community, per se. And I guess that's what I mean by "knowing what organizations are good for and not good for." I think they're good for helping the core group, and for getting things done. I think we should turn to communities to provide community. Community requires a kind of investment that is separate from the investment we make in earning a living.
I think organizations are not, in themselves, good at providing community. When they do it (as Whole Earth did, as the Society for Organizational Learning is trying to do, as most companies do to some extent) they do it despite themselves. Providing community is not their purpose.
O.D., in practice, exists to give organizations some of the attributes of community. If my theory is correct, then it probably means that organizations will falter and be difficult to work for if they are seen as communities at the same time. This would put me in the camp of people like Elliot Jaques.
>... if the company is doing things that people do not want to do, then they leave the company.
Someone proposed that core groups have limited power, because people who don't agree with them simply leave the companies. But I'm not so sure. I've seen many people stick with a company, even when they know they oughta leave, because they keep hoping it'll turn around and treat them as an important person.
Kind of like an "enabling" spouse in a dysfunctional marriage, no? Easy to condemn from the outside, but also easy to see why people get caught up in it...
I think seeing the core group for what it is can help these people discover their own best interests more clearly,.
That may be changing. Never has it been so easy to leave an organization, and "if we don't like the organizations, go and make some of our own."
That serves as another social force, a check-and-balance (in our society) against large organizations. A citizen groundswell is the opposite of an organization. It has force, but no core group; it has, instead, the force of disorganized public opinion. In a world glutted with organizations, it's a good thing that such forces exist.
(I'm making all this up as I go along. The interesting thing about the "core group"/"doing stuff" formulation of corporate purpose is that, although I originally formulated it to answer one small question about why someone was disappointed, it seems to keep broadening out to provide an understanding of how society works. Assuming that it all holds up. I'm grateful to see it tested like this...)
Arie de Geus's concept of the living company is a clear influence on this. (I helped him craft The Living Company.) Arie's experience comes from Royal Dutch/Shell, which in my mind has quite a large core group. Even though there's a group of 6-8 managing directors, the organization exists to make life wonderful for a much larger group of people, including the Netherlands monarchy and most of the operating company executives. Or so it seems to this outsider. Other companies, while equally alive, might not be so large-minded about the question, "Who are we?"
One reader asked how to discern core members from the outside, and predict the trajectories of members close to the inner boundary -- how to network into the inner core. How to know when you're there? And who controls the core group?
All of these answers, in my view, are organization-specific. Some organizations don't want you to know who the core group is. Others make their core groups very accessible. I'm not sure how to begin answering this question generically. It would be interesting to know if one could classify organizations by the qualities of their core groups.
I think it is important to distinguish organizational Purposes (the real ends) from the organizational Accountabilities and Tactics (the means to those ends). Imagine this conversation with, say, a CFO:
"We are breaking our backs to show a positive ROI this quarter."
"Why is return on investment a priority in this company?"
"Because we have to do it."
"But why do you have to do it?"
"Because that's our purpose."
"What would happen if you didn't do it?"
The answer to this question would reveal the real reason why ROI has been given
a priority status. For instance:
"Because then we would have a lower stock price."
That suggests to me that the purpose of the company is to keep the stock price
high.
Why?
Either 1.So the core group can have higher equity; or
2. To make it easier to raise money to "do the stuff" that the leaders
of the company want to do.
Either way, ROI is a means to an end.
On the other hand, if the person says:
"If we didn't fulfill ROI then we would not be worthy of our name,"
That to me suggests that ROI is indeed a core purpose of that organization.
It would be the organizational equivalent of a miser.
The Institute for Research on Learning and Etienne Wenger, among others, have proposed a theory that suggests the most significant aspect of organizations, for changing them, is the informal networks of relationships between people.
To me, the core group is not a good example of a community of interest. It would be too small. A community of interest, as I understand it, is the body of interrelationships that actually gets the work done without formal authority.
A community of interest probably would include the core group and everyone the core group regularly came into contact with.
A community of interest defines a group of people who act together.
A core group defines a group of people ON WHOSE BEHALF ACTION TAKES PLACE.
I'm not sure that the core group has to have a common allegiance or even common values. In practice, sometimes they do.
But consider the fact that in many companies, the trade union has bargained its way into a kind of core group status. Can anyone deny that AT&T exists, in part, to enhance the lives of the members of the Communications Workers of America? (To use just one example.) The AT&T brass might hate this aspect of the company, but it is a critical aspect of their company's purpose.
I prefer to avoid defining core groups by the values of their members. The significance of the core group has much to do with the behavior of the people around the group, who are not part of the core group.
One other thing: The core group isn't necessarily greedy. They're just the group whose benefit the organization exists for. Demonizing the core group is also very dangerous. Just as dangerous as ignoring their existence.
As I said, I am MUCH more optimistic, having formulated this view, than I was before. Indeed, it's a great relief to have a theory, a testable theory, about where to apply leverage.
So let me be explicit about where to apply leverage and where not to apply leverage, in light of this theory:
WHERE NOT TO APPLY LEVERAGE
1. Making friends with the core group. How could it possibly be authentic? Here I am thinking of people inside the organization -- trying to curry favor or seek personal relationships with the core group, and thereby enter the charmed circle. Does that ever work? In my experience, it fails much more often than it works. (Maybe I'm just not very good at making friends.)
2. Complaining about the way the organization treats you.
3. Getting the credentials that should put you in some kind of succession based on merit. (Unless the core group is chosen that way.)
4. Telling the organization what it ought to do.
5. Regulations that are written in a language that the members of the core group don't understand. The only regulations that work, according to this theory, are the regulations that the core group has internalized.
(Hm! That's pretty interesting! I wonder if that resonates well with reality...?)
WHERE TO APPLY LEVERAGE
1. Pilot groups with a sense of relevance. The Dance of Change model still holds. Just because an organization's purpose is the promotion of the core group doesn't mean that pilot groups can't thrive. They HAVE to thrive. But they also have to be realistic about the amount of support they'll get. The organization's purpose is not their purpose. That doesn't make their purpose invalid. In some ways, it's a healthier place to start.
I guess I should shamelessly plug our book The Dance of Change here as a soup-to-nuts compendium of "pilot group progress" toward organizational change. What to expect and what capabilities to build each step along the way.
2. Organizational rituals and culture. Still valuable, but now they have to be linked with the acknowledged purposes (both of them.) I include CEO succession here. (See Louis van der Merwe's piece in The Dance of Change.)
3. Internal networking. As mentioned above.
4. Bringing pressure to bear. If an organization is handed either an offer of a bargain ("Settle here and you'll get X") or an ultimatum ("Do X or else,") the leverage depends on the impact on the core group.
5.Regulations and alliances that get the core group's attention, ideally not just by scaring them but by playing to their aspirations. This doesn't mean making friends with the core group. It means framing and articulating the "right thing to do," as you see it, in a way that meets the core group halfway -- in a language that they can hear and respect.
6. Needing less from the organization. The Joe Dominguez/Vicki Robin work, "Your Money or Your Life," has a lot of resonance here. Frugal people can get a lot from working in large organizations because they will not be driven, by the need for money, to blur their own boundaries.
7. Create your own organization. Seriously. Start a gang. You are your
own core group.
Isn't that optimistic?
I don't think so. The core group is critical for an organization. But for a nation, a society, a culture -- thinking in terms of a core group would be very dangerous. A whole different dynamic goes on there. The purpose of a society is to foster its people. If the purpose of a society is just to foster its "core group," then that leads to genocide. I think South Africa is one notable example of a country that (after 1989) rejected that path as a society and sought an alternative path.
What happens when the core group suddenly changes?
Dramatic upheaval. Consider the story of National Training Labs (NTL) in the mid-1970s. Edie Seashore, Hal Kellner, Barbara Bunker and Peter Vaill (the "four horsepersons") redefined the organization over the course of a weekend, by reframing how its core group would be selected. (See The Age of Heretics for more on this.) It went from being an organization whose purpose was to legitimize group dynamics in academia and business, to an organization whose purpose was to find a sustainable way to cultivating diversity in organizations.
I was asked: If you were going to start a new organization today, how would you structure it? Is there an optimum size?
My personal answer is: I would set up a structure with a lot of pilot groups with semi-autonomy, and then a lot of cross-fertilization between them. I would have a clearly defined, meritorious way for people to have equity. And I would probably instill a system like Elliot Jaques suggests, to have each executive responsible for the growth of the people two layers below.
That would set up a structure in which the organization had a de facto commitment to employees, where people knew where they stood, and where there were a variety of "core groups" to join....
A very large core group is probably not sustainable for too long. I think the large post-war corporations were stiflingly paternalistic precisely because of their core group structure. When your organization is set up to "care" for all of its people, that can be oppressive. And it can lead to very, very poor performance.
Instead, I believe it is possible, as one correspondent put it, "to build/grow organisations with spaces/networks where each member can experience being a member of a core group with a purpose congruent with that of the macro level core group." Perhaps that's what Jack Stack is accomplishing at Springfield Remanufacturing Co.
Sure. Sometimes it's because core group members, like the rest of us, have self-defeating behavior.
Usually organizations give the core group members the things that the core group members want most. These are often short-term goals, and often easier to accomplish, than the longer-term goals. For instance: Obscene CEO salaries. Clearly these are given out because all the core group members want them -- including the next two levels of executives, who will also see their salaries rise as a result. It's a lot easier to offer this to the core group than many of the other things they might want...
I think, by and large, core group members get what they want -- within the limits of the organization's capability. GE didn't shift away from a large core group because the core group felt stifled. Those who felt stifled left the company. GE shifted to Welchism because it was no longer sustainable to have a large core group.
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