A crisis that’s not that economic

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Many people agree to admit the time has come to built a kind of new economic order, the drifts of the current system having lead to the situation we all know. But, saying that, people often neglect what I consider being a management failure. As for the hen and the egg it’s hard to say who was responsible but we have to admit both successfully helped one another.

Weeks ago I wrote that logic without good sens leads to catastroph and worried about companies who only had halve strategies, that’s to say that focus on exploiting the present without thinking of allocating part of their ressources in order to prepare the future. Said differently, it’s like promising a linear performance when they only give themselves enough assets to follow a curve limited at its top.

Recently I was backed up by a note by Jon Husband who pointed at an  interview of Henry Mintzberg who was saying it was more a management crisis than an economic one. An opinion I share. A few points I bring out from this interview

• The obsessions for short term performance reduce significatively the range of all player’s thought : managers, employees, investors, and all the players of the economic chain. Humain are irrational by definition, so there’s no need to put them in a system where they’re ask to cut themselves a leg on sundy while being asked to run faster on monday.

• The unwilingness to aknowledge interdependances. Companies stick to the dusty model that supposes every player of the enterprise and of the economic world as acting and being evaluated as an isolated entity while his performance is for a large part impacted by the other’s.It takes us back to Goldratt’s theory on local maximum vs global optimum which is more accurate than ever.

• When companies draw the adequate consequences from the above, it brings what Mintzberg calls community-ship. In terms of culture, of management, it makes people being more careful about what happens to their colleagues, to what they do. And preventive lay-offs, as he mentions, that take place before companies are in real danger, destroy the community-ship, turning organisations in worlds where all people become competitors and see each other as a threat. It has a huge impact on the ability companies will have to stay performant. Keeping today’s promises becomes a burden to be successful tomorrow. Companies are bringing up Pyrrhus sons but no one cares since they all hope have been promoted elsewhere when the bom will explode. Short term again.

Mintzberg :

“The American economy is dreadfully weak and the famous American management is absolutely dysfunctional now with the whole emphasis on leadership, on short-termism. Management is dreadful and I would not recommend to anybody anywhere in the World that they copy the style of management and leadership that has become popular.”

•Disconnection between management and reality. People’s day to day life is ignored for numbers which, if they are necessary, are not all and only give a restricted vision of reality.

So, more than a new economic system it’s, as Umair Haique says, a new way of doing business, so  that has to be invented.

It smells like 2.0 applied to management and corporate governance.