thenextwave

General Motors and the 200-year company

Posted in business, economics, emerging issues, organisational, sustainability by thenextwavefutures on 19 June, 2009

I’ve written here before about the future of the organisation and also about ways of thinking about long-term futures. These two themes have been brought together for me by some of the discussion about the collapse of General Motors, and also a fine short essay by Kim Stanley Robinson in which he describes capitalism as a “multi-generational Ponzi scheme”. The pressing question, it seems to me, is how to design organisations so they value the long-term future and their long-term past, as a route away from short-term and unsustainable behaviour. The notes here are based on a contribution I was asked to make on the future of the workplace to a meeting organised by the RIBA’s Building Futures programme.

Whatever the immediate impacts of the bankruptcy of GM (probably bad for Detroit but good for the environment, given its devotion to the production of SUVs), the psychological impact on a generation of management thinkers is at least as profound. GM defined the principles of corporate management for three generations. As John Kay observed in a column in the Financial Times, the three management books which most influenced his thinking were either written by GM managers (Alfred Sloan) or by academics who had studied the company closely (Alfred Chandler, Peter Drucker). As Kay says:

“The history of modern business is the history of GM, and vice versa… Sloan gave structure to the conglomerate… Chandler’s vision was that professional managers would make diversified businesses efficient through decentralisation. The centre’s role was to monitor and direct strategy through a focused range of controls.”

Or less kindly: producer-led; inward-looking; using scale as a form of market dominance; repository of well-worn management truisms such as that ‘if you can’t measure it, you can’t manage it.’ There are, of course, increasing challenges to this model. Gary Hamel has written about the 21st century organisation as being a meritocratic place in which peer-to-peer relationships generate creativity and innovation. Other organisational writers have ploughed a similar furrow. Keith Sawyer argues in Group Genius that “we need organizations that enhance the power of collaboration, managers that facilitate the unpredictable creative work of everyone.” Or Warren Bennis in Organizing Genius: “Great Groups offer a new model in which the leader is an equal among Titans. In a truly creative collaboration, work is pleasure, and the only rules and procedures are those that advance the common cause.” (And, of course, the bulldogs all have rubber teeth and the hens lay soft boiled eggs).

The old models are deeply embedded

And truth is that when you look at the number of companies which are used to evidence innovative approaches, it is, almost invariably, the same short list: Gore, Google, IDEO, Whole Foods (and, as it turns out, maybe not Google after all). In practice, the principles which were developed by Sloan and Chandler are embedded deeply into most large organisations, including (especially including) most public sector organisations.

(And by way of an aside, but a serious aside, one of the features almost always mentioned by the ‘new organisation’ writers is the use of technology to make organisations lighter and more responsive. Actually, when we look at the recent deployment of technology by organisations, it has been universally destructive. The banking crisis, which has caused devastating loss of value to savings and pensions, was caused by the deployment of software programs in the pursuit of short-term gain; the use of technology by industrial fishing fleets, as documented in the film The End of the Line, means only that boats can be utterly ruthless in clearing areas of the sea of fish.)

One model I’ve used to try to envisage the structure of such organisations is drawn from the work of Martin Dale on the film industry, specifically film production. Successful productions were driven by “creative producers” who were a bridge between audiences, talent, and finance. In using this more widely, I’ve  adapted it: users, rather than audiences, resources rather than finance, but talent is still talent. And creative producers can be groups or teams or leaders; the point is still that by internalising three sets of conflicting demands they make connections between creativity and the production of value for end-users which is at the heart of a responsive organisation. (And Hollywood, of course, has often been used, as model and metaphor, to contrast new working styles with those old ‘Fordist’ (or GM-ist) mass production models.)

The multi-generational Ponzi scheme

This is, perhaps, where Kim Stanley Robinson comes in. He’s best known as a science fiction writer, albeit one whose world are unusually rich in social, economic, and institutional detail. His essay, published (strangely?) by McKinsey, argues that capitalism, as currently constructed, is no more than a Ponzi scheme, in which those enrolled in the scheme at present do fine – but only at the expense of those who are not enrolled, in particular future generations.

Am I saying that capitalism is going to have to change or else we will have an environmental catastrophe? Yes, I am. … The main reason I believe capitalism is not up to the challenge is that it improperly and systemically undervalues the future. I’ll give two illustrations of this. First, our commodities and our carbon burning are almost universally underpriced, so we charge less for them than they cost. Second, the promise of capitalism was always that of class mobility … There’s a problem with this, though. For everyone on Earth to live at Western levels of consumption, we would need two or three Earths. Looking at it this way, capitalism has become a kind of multigenerational Ponzi scheme, in which future generations are left holding the empty bag.

Dale-multi-generational versionI like the notion of ‘multi-generational’ – it makes clear the future and our obligations to it. (Jamais Cascio says he plans to use it instead of ‘long-term’). Capitalism or not, we’re going to end up with organisations; they’ve existed for several thousand years. So the question is; how do we design organisations that can think about their obligations to a multi-generational future? When I think of my ‘talent/resources/users’ triangle, ‘the future’ is the missing point of what ought to be a diamond rather than a triangle.

And I don’t know the answer, but maybe there are ways of getting closer to better questions.

  1. Arie de Geus’ book The Living Company tried to identify what gave some companies longevity, and identified four characteristics: sensitivity to their environment; a strong sense of identity as a community; tolerant and de-centralised; and frugal.
  2. They’d need to be ‘steady-state’ businesses (which we should know by now is not the same as ‘zero-growth businesses) – but although Herman Daly and others have written clearly about steady state economics I’ve seen little exploration of what steady state organisations would look like.
  3. And the third idea is borrowed from Elise Boulding, whose idea of the ‘200-year present’ I’ve written about before. This requires us to think of our present moment as being part of a two hundred year continuum – one hundred years back, one hundred years forwards – which embeds us in both past and future.

So: what would General Motors be like if it had been a 200-year organisation? I suspect I’m going to come back to this. Comments are welcome.

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