Rethinking growth: social intrapreneurship for sustainable performance

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Rethinking Growth

10.1057/9780230235793 - Rethinking Growth, Walter Baets and Erna Oldenboom

Also by Walter Baets: A COLLECTION OF ESSAYS ON COMPLEXITY AND MANAGEMENT COMPLEXITY, LEARNING AND ORGANIZATIONS: A Quantum Interpretation of Business

KNOWLEDGE MANAGEMENT AND MANAGEMENT LEARNING: Extending the Horizons of Knowledge-based Management ORGANIZATIONAL LEARNING AND KNOWLEDGE TECHNOLOGIES IN A DYNAMIC ENVIRONMENT THE HYBRID BUSINESS SCHOOL: Developing Knowledge Management Through Management Learning (Co-author with Sent Van de Linder) VIRTUAL CORPORATE UNIVERSITIES: A Matrix of Knowledge and Learning for the New Digital Dawn (Co-author with Sent Van de Linder) WIE ORDE ZAAIT ZAL CHAOS OOGSTEN: EEN VERTOOG OVER DE LERENDE MENS (Dutch language; translated title: ‘HE WHO SOWS ORDER, WILL HARVEST CHAOS: An Essay on the Learning Human’)

The Diversity, Leadership and Responsibility Series Series Editor: Walter Baets is Professor of Complexity, Knowledge and Innovation, and Associate Dean for Innovation and Social Responsibility at Euromed Marseille Ecole de Management, France. Over the last decade we have seen an extraordinary focus on the short term, including an almost exclusive interest in the shareholder value of a company. As a consequence, the shareholdership of a company changed in nature, and so did management. But with this perspective we are unable to address the real issues of economic development over a somewhat longer horizon – or pay attention to the sustainability of this development. Companies are challenged with these problems today, and so is the world economy. The Palgrave Macmillan Diversity, Leadership and Responsibility Series seeks to publish cutting edge ideas, approaches and practices that contribute to a more responsible and human-oriented view on management development – a key success factor for the decade to come. The aim of this series is to enrich our understanding of management in diversity, building on a holistic concept of business, being relevant for both academia and business practice.

Titles include: Walter Baets and Erna Oldenboom RETHINKING GROWTH Social Intrapreneurship for Sustainable Performance The Diversity, Leadership and Responsibility Series Series Standing Order ISBN 978-0-230-23574-8 You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England.

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INFORMATION TECHNOLOGY AND ORGANISATIONAL TRANSFORMATION: Innovation for the 21st Century Organisation (Co-editor with Robert Galliers)

Rethinking Growth

Walter Baets and

Erna Oldenboom

10.1057/9780230235793 - Rethinking Growth, Walter Baets and Erna Oldenboom

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Social Intrapreneurship for Sustainable Performance

© Walter Baets and Erna Oldenboom 2009

No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2009 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN-13: 978-0-230-20139-2 hardback ISBN-10: 0-230-20139-3 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Baets, W. R. J. (Walter R. J.) Rethinking growth : social intrapreneurship for sustainable performance / Walter Baets and Erna Oldenboom. p. cm. Includes index. ISBN 978-0-230-20139-2 1. Social responsibility of business. 2. Sustainable development. 3. Management—Environmental aspects. I. Oldenboom, Erna, 1954 – II. Title. HD60.B333 2009 658.4’08—dc22

2008041037

10 9 8 7 6 5 4 3 2 1 18 17 16 15 14 13 12 11 10 09 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

List of Figures

vi

List of Tables

vii

Preface

viii

Acknowledgements

xiv

1 The Thermometer Causes Sickness 2 The Biology of Business

1 29

3 Emergence and Dynamics: A Quantum Ontology of A-causality 55 4 Non-Violence and Co-Creation

74

5 Management by Values

100

6 Sustainability Principles and Leadership in Management

121

7 Sustainable Performance

143

8 Social Entrepreneurship: A Micro Example

176

9 Social Intrapreneurship for Sustainable Performance

188

Appendix: Blueprint of a Workbook

195

Notes

226

Index

227

v

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Contents

6.1 6.2 7.1 7.2 7.3 7.4 A.1 A.2 A.3 A.4 A.5

Holism according to Wilber A holistic management model Cassandra diagram: The holistic diagnoctic for personal sustainable performance Key figures 2006 Alliance Renault–Nissan worldwide sales 2005 Cassandra diagram applied to Renault Europe Automobiles The roadbook to social intrapreneurship Blue Ocean Strategy extended The process of creativity and innovation The learning contract The learning coach

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129 134 150 159 160 165 196 200 203 218 221

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Figures

4.1 5.1 7.1 7.2 7.3 7.4 7.5

Convictions per group Unconscious and conscious attitudes The Cassandra axis (sample) Test of the factorial model adequacy for each one of the constructs Renault Europe Automobiles (Case analysis made by Carina Richards) ‘Classical’ analysis Cassandra values Questionnaire findings

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91 119 151 152 158 165 166

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Tables

Sustainable performance is clearly one of the leading contemporary issues yet it has limited coverage in the literature and research, and what little there is doesn’t link well to managerial experience. This was brought home to me two years ago when I (Erna) was asked to ‘teach’ a course called Sustainable Performance and Leadership. This invitation arose when an ‘expert’ in this specific field did not show up at the very last moment. I had no real experience in this area, but then nobody really had. Having been employed for many years as a Human Resources Manager with a leading international company, I had experience in the leadership part and the incentive to explore something that had aroused my curiosity and seemed central to sustainability: how managers make distinctions between themselves in a private setting and themselves in the business world. How could it be that people in ‘normal’ life have certain values, but believe that the same values need not be respected in business? Or, more personally, how comfortable are you in sharing with your children the decisions you make, and how you behave, in your business environment? In business we can hide ourselves behind rules, articles, procedures, and systems as if they created themselves. Unfortunately, while we can claim authority and rights, not many people take responsibilities as a logical consequence. The most economically developed countries, for instance, created a world based on their concepts, ideologies, and belief patterns. This extended to calling other countries, which may have an impressive cultural and historical background, ‘underdeveloped’. This label is applied to countries which do not fit our idea of economic wealth. And so we call their people ‘poor’, based on our own culturally created concept of poverty – a concept designed to convince that there is not enough – whereas, as Mahatma Gandhi pointed out ‘The world offers enough for everybody’s needs, but not enough for everybody’s greed’. One result is that we live in a continuous confusion between the two and, instead of living life to the fullest, many work harder and harder to earn more money that will never be enough to satisfy artificially created desires. Take the example of outsourcing and legislation. When travelling to Morocco recently, I noticed the following sign in Marseilles airport: ‘It is forbidden to import false copies of well-known brands. Imprisonment viii

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Preface

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can be the consequence’. In Marrakech I saw some very well made ‘Lacoste’ T-shirts and asked whether these T-shirts were ‘real’. The salesman responded: ‘All these shirts are of a very good cotton quality’. I smiled, agreed, and bought some of his T-shirts. He was absolutely right. They were made of the best cotton quality. Almost certainly all the Lacoste, Polo Ralph Lauren, and other well-known brands are produced by the same tailors in the same low-cost countries in the world. It illustrates how our Western world legislation defends the rights of the big industries to profit by the fact that people elsewhere are not very well paid and work under horrible conditions. Before starting the Sustainable Performance and Leadership course, I thought about the issues to be covered. I was very surprised that there was so little (almost nothing) written about sustainable performance. There was certainly literature on sustainable development and substantial bodies of work on leadership. However, these are not the same. I felt disappointed that my need for a body of research and theoretical investigation in this area was not met. Instead of feeling excited by the fact that this ‘wheel’ was not invented yet, I doubted my own wisdom and knowledge even after so many years of theoretical and practical experience in many different countries. Then I recalled the experience of creating, with Walter, an earlier management course ‘Quantum Physics and Management: A Holistic Management Approach’. We learned to teach innovative material and about which not everybody was as enthusiastic as us (it was even called ‘weird’ by a minority). We learned to stay calm in the strong storms that sometimes followed due to our creative and ‘different’ view on management. We learned to be patient and curious, never trying to convince others. During that time we noticed that our ‘students’ were almost always present, including the ones who ‘did not believe’, and we felt very aware of the learning that was taking place especially in our own brain cells. This book will consider evidence from quantum physics that the observer has a crafting impact on the ‘object’. It suggests that ‘objectivity’ does not exist but that through the notion of objectivity, we have created an image which allows us to separate ourselves from others and the rest of the world. If we separate ourselves from others we have little awareness of their suffering since it is not ours. Stuck perceptually in the concept of poverty, for example, nothing will ever be enough to satisfy our needs/greeds in life. My own path goes back to the time when, as a young child, I dreamed of grace and beauty. My first school assignments were about

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Preface

Dr Albert Schweitzer and Mahatma Gandhi and when, for example, we role-played cowboys and Native Americans, I wanted to be Winnetou or another Native American. It was much easier for me to connect to them. I learned that Columbus discovered America in 1492 but I felt this was a bit strange, since many people already lived there. The discoverers brought their habits, attitudes, and fears, based on their thinking and as a result the richness, wisdom, and knowledge of the native people almost disappeared. I thought it was normal to share without thinking about giving it any value. When I received a present, everybody else was allowed to play with it or to keep it. I never ‘owned’ something without thinking in that way. In fact, I ‘thought’ very little. I dreamed! I dreamed of a world where people loved each other, where people never suffered, where people served others, and where nature was the best place to be in. I was a horserider, and was always outside, somewhere near the river, or in the forest. Perhaps as a manager, or management student, this personal approach strikes you as unusual, or even inappropriate. However, our book seeks to present a new management paradigm and to provide managers with a framework able to bridge the divide between personal and professional responsibilities, between delivering profits and protecting the planet; a framework able to illustrate how to integrate healthy selves, healthy businesses, and healthy societies in a planetary context. With this in mind, this preface provides a largely subjective account of the journey that led to this urgent questioning of how we live and work. I seek to precede the practical applications of later chapters with a personal narrative of what lies behind the questioning of existing systems and the writing of this book. Personal involvement, personal development, and consciousness in management start with self-awareness. Just as the book sets out practical directions to the achievement of integrated living, so this preface subjectively combines elements of autobiography, human resources experiences, university teaching, and spiritual practices. From early in life, I knew what it meant to suffer, to fear, to realise what it means to be neglected, ignored, and denied. At unexpected moments, the secretly hidden undeleted files, full of pain, anger, frustration, jealousy, and grief spontaneously open up for me. I appreciate what a great gift it is to have these, in order to better understand others. It enables me to feel tremendous respect, compassion, and love. I feel it a delight to serve others, to be connected to the nobodies, the untouchables, and the ones who are called ‘poor’ and who suffer. I felt deeply connected to Mahatma Gandhi and Martin Luther King and I was completely in love with Ernesto Che Guevara. An enormous

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painted picture of Che decorated the wall of my room. Peace and (violent) action at the same time are inside me. A few years ago I bought a red motorbike and called it ‘Ernesto’. There are parts of me that I like and others that I appreciate less. By learning to embrace my shadow parts, accepting that they are all part of me, I found an inner peace. I suggest that a similar route lies ahead of a manager-leader, ready to contribute to a shift in perspective. She or he will seek to give more meaning to his or her work and to that of his or her employees and colleagues, and to offer a perspective on sustainable performance. This book’s way to self-development includes the acceptance of our own feelings and emotions. Brought up with Second World War stories and all the horrible events that took place, and the knowledge of so many innocent people, led me to ask myself: ‘What makes us do these kinds of things?’ I asked the same questions about what happened in Vietnam and remember that, in 1965, influenced by my oldest sister in Amsterdam, I participated in a ‘non-violent demonstration’ (screaming ‘Johnson Murderer’) against the American politics of President Lyndon Johnson in Vietnam. Some years later I smoked some marihuana and thought that war and violence would not exist if more people would do the same. I had opinions about generals and the army and I could not imagine ever sharing ideas and thoughts with them. In Indonesia I met the Dutch military attaché, who was a very friendly, non-violent person. How lucky I was! I was so pleased to listen to many opinions and ideas, and I was always able to learn when I allowed myself to listen from the heart. Life is a life-changing project in itself! I studied Political Sciences, Peace and Conflicts at the University of Granada in Spain and learnt from that, and my own experiences, that underlying dissatisfaction can explode at any moment in time. How often do we neglect these symptoms? According to Ayurveda (Indian medicine), young people, especially at a certain age, develop a lot of (pitta = fire) energy. Often they have too few possibilities to transform this energy into ‘healthy’ activities. In school we ‘teach’ them technical, theoretical, and conceptual knowledge but how much time and money do we spend on communication, philosophy, music, sport, arts? Would it be helpful to put more money into education and training instead of into weapons? It is a choice we can make, every day, every single minute of our lives. We can easily find figures and calculations about our expenditure. Especially in the Western world it should be easy to calculate where our focus is. How much do we spend on education, personal development, environment; and how much do we spend on armies,

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Preface

Preface

weapons, police, and guard? These priorities are consequences of how we look at the world. They can be explained as originating in our collective thoughts. Why young people are aggressive and turn violent should be answered in the first place by considering our own actions, thoughts, and manifestations. It all starts with awareness of ourselves. The European Football Championship has just finished. I always love watching such events with my son. As someone born in Holland, I was, of course, hoping for the Dutch soccer team to be victorious. I like the competition element since it gives some special attraction to the game. I very much like the existence of other teams since who would we play ‘against’ otherwise? However, the violence seen between supporters of the different teams is based on the fact that we see our ‘counterparts’ as enemies instead of friends who make our life much more interesting and attractive. Instead of hoping that the keeper will badly miss a save it is not so difficult to wish that the striker will score a brilliant, beautiful goal. It is that simple. I also like to play chess with my son and respect him very much as a ‘counterpart’ but there is no doubt that I want to win. I still do win most of our matches but can only win due to his willingness to play with me. Sometimes he feels very disappointed, especially in his own game, but sometimes afterwards I hear him talking to his friends, telling them how much he appreciates my playing. Competition in itself does not create violence. Our thoughts about it are the basis of how we react and behave. Fairness, fair play, and fair trade are the essential key factors. We can forget the basis, the mission, and the vision of the ‘game’. Every game is about sharing, laughter, creativity, pleasure, friendship, collectiveness, relationships, discipline, focus, and the beauty of the unknown. The game was never meant to be about money. This collective ‘mistake’ brought us drug scandals, hooligans, physical and mental attacks and many other disasters. Inside me I have never given up hope; Divinity has never given me up. What we recognise as negative, bad, wrong, disgusting, horrible, terrible, and ridiculous are all learning possibilities. Thank you for letting me share my thoughts, ideas, concepts about richness, poverty, values, consciousness, spirituality, nature and about what I experience as our true nature, although from another consciousness. I hope this personal underpinning will inform the ideas for change that follow. *** I would like to thank my parents for giving me life on Planet Earth and for all they did for me. I would like to thank my sisters for being true mirrors for my actions, thoughts, and manifestations. I thank my

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friends – especially Astrid, who is always with me – for their neverending compassion, love, and respect. I thank all the ‘teachers’ I had and still have, realising that I had only the very best. I should like to thank all the authors of the many good books I have been able to read, all the composers who created the melodies of my life, and all the artists who painted my soul. I should like to thank all the ‘students’ who were present on the courses for their curiosity, creativity, intelligence, as well as, without any exception, for their irritation, frustration, anger. I should like to thank Walter for his never-ending support, tenderness, and discipline. Without him this book would never have been finished. I should like to thank our children for giving us so many challenges and such great pleasure: ‘Perfect Beings of Light’. I should like to thank David McKie for his spontaneous offer to edit this book and to (re) write it in ‘real’ English, but even more so for his friendship and love. Thank you, Divinity, for loving me so much. How grateful I feel. For Sai Maa: Small particles in oceanic world How small you are, tiny simple sparkling masterpieces of emerging energy Changing in the world of imagination and observation Dancing for my eyes, moving in all directions, playful potentialities in an endless sea of creator’s souls expressions Waves and gravitation, millions distances beyond our senses, in the glorious splendid hopeful direction of causality naked for almighty God Laughing singing voices whispering the melodies of evolution which are limitless of space and time in a boundless place of love The alchemy of gold and violet light, in the heat of transformation, transition is a joyful melting fireplace of new beginnings of an endless present state Footprints of genetic rhythms, pulsations in the empty space of miracles in the majestic field full of light that never but ever touched my smiling heart Erna Oldenboom

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Preface

The authors are grateful to the following for permission to reproduce copyright material: © Ruth Bebermeyer Source: Nonviolent Communication: A Language of Life by Dr Marshall Rosenberg, 2003 – published by PuddleDancer Press. For more information visit [www.CNVC.org] and [www.NonviolentCommunication.com]. Author: Laurence Brahm Source: Searching for Shangri-La © by Higher Education Press The Renault Retail Group Belgium

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Acknowledgements

1

In the 1970s, I (Walter Baets) graduated in Econometrics and Operations research. That science had crossed the ocean, after having produced big successes in real life in the US. The Air Bridge to Berlin, at the end of the Second World War, and comparable non-complex, but sometimes complicated, problems were dealt with successfully. The problems were similar in nature: they were linear – or could be made linear – and non-dynamic. Who knew, and who cared? Those of us involved had the impression we could model the entire world; worse, we had the impression we could craft the whole world. Later on I found out that there were few grounds for this assumption, and it was not true. The world was not a big complicated machine with us looking to describe how this machine should operate. We experienced an euphoria similar to that of writing a first program that successfully does what it is intended to do. I learnt programming in those days (in Fortran) and my first program (by the way, programmed on punch cards) was the solution of a quadratic equation. I went into business and I constructed econometric and optimisation models: stock exchange forecasting, scenario analysis, risk management, assets and liabilities management, portfolio management, etc. It all worked perfectly but it did not really describe reality. I found that you always seem to run one step behind. It even became somewhat frustrating. For instance, you can make a perfect model. The better you are the more you can influence the outcome of your models. But the more you do that, the further you move away from the reality that you try to model. I found out much later that it was like the difference between playing music and playing an instrument, but knowing the difference doesn’t make it easier to switch from one to the other. After a number 1

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The Thermometer Causes Sickness

of commercial successes in modelling, but with increasing doubt about the real-life validity of it, I decided to quit my life as econometrician. I set out on a quest to find out why econometric models work perfectly, but do not fit reality. I studied for a PhD (at Warwick Business School) where I experimented with the use of artificial intelligence as a research methodology. In those days (and we were in the 1990s by then) this was still not an evident choice. I will skip that part of the story. Anyway, I found out that there is something like emergence in phenomena, and that neural networks seem to visualise some of it. So I went on in my exploration. I was invited as visiting scholar to what was then the only centre in Europe in Complexity Studies, at Aix en Provence, France. I discovered the theories of Simon, Le Moigne, Morin, and what I would like to call the French school of complexity. It was very constructivist and one of the precious gifts I still carry with me from that period is the poem of Antonio Machado to the effect that there is no road, you make your path as you walk. I also came across complexity theory in physics, initiated by Prigogine (a fellow Belgian), and was unexpectedly invited (again in Aix en Provence) to be keynote speaker, together with Francesco Varela, to a conference on the Learning Organisation. As a result, a world of biological complexity opened up to me that I continued exploring afterwards. In the meantime, my interest in artificial intelligence, or complex adaptive systems (things like neural networks, genetic algorithms, agentbased simulations, artificial life, fuzzy logic, etc.) became more and more important. I experimented a lot with those techniques in management applications and they appeared to give a way to visualise emergence. They all shared the remarkably strong quality of autopoiesis, the way Varela describes it. And slowly but surely a number of things came together. The assumptions necessary for successful use of quantitative methods (like econometrics) are so limiting (and often not discussed) that they are hardly applicable in any real-life situation. This has everything to do with the fact that real-life situations are non-linear and dynamic and in no way Newtonian. This is particularly the case in social sciences (such as management, organisational behaviour). Complex adaptive systems seemed to do a better job and the reason for that (at least in my understanding) was that they better fit the reality in the sense that they visualise dynamic non-linear systems. The reason they might work, the mechanism on which they work, is the one of complexity in its largest sense: non-linear dynamic systems behaviour (Prigogine); biological

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2 Rethinking Growth

concept of autopoiesis and enaction (Varela); and the interconnected structure of agent-based simulations (Holland, Langton). To keep the story short I will skip my encounters with all different kinds of interesting communities (the artificial intelligence one, the noetic sciences, etc.). What was missing was a larger picture. That is what I found in quantum mechanics. Puzzled by the questions that most quantum mechanics asked themselves about ‘spooky physics on the background’ (Einstein) or ‘complementary physics’ (Pauli), an entirely new world opened up. This world seemingly gave sense to most of what I had explored before. Could reality be considered from a quantum perspective, or what I call a quantum ontology? That is what I did in my previous book: Complexity, Organisations and Learning: A Quantum Interpretation of Business. But I still had the open question of meaning. In fact, at least in my interpretation, the most challenging of all quantum mechanics’ contributions is precisely their questioning of meaning. I would say that the circle is almost closing now and my personal journey links into a wider movement across different areas of knowledge which Taylor (2001) codified as The Moment of Complexity: Emerging Network Culture. As part of the shift, a lot of managerial thinking is questioning the meaning of things, products, and actions. Sense making and meaning are rapidly becoming one of the main corporate issues of today. This book is of course not value-free at all. I am seeking to question a number of fundamental managerial beliefs, concepts, and consequences that, in my understanding of conventional management thinking, are still based on the mechanics of the 1970s (what I will call later a Newtonian view on the world). They assume that we can construct the world precisely the way we want it to be. But the opposite is true. Unlimited growth as ultimate predicate of our liberal capitalist economy is no longer affordable. Nor, once we start considering ourselves as members of a much wider interconnected world, is it even ethical. What is the meaning of ever-continuing growth? Don’t all countries have the right to unlimited growth? However, if they (e.g. China, India) do, and leading Western nations continue their growth, how devastating will the impact on our economic system (e.g. oil prices) and the environment be? The planet is giving us warning signs that we cannot continue as we have done. I will argue in this book that if we want to respond to the planet, we not only need to adapt our growth figures, but we have to change fundamentally the concept of growth itself, and the entire set of values and assumptions on which our managerial thinking and practice is based.

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The Thermometer Causes Sickness 3

Growth has become the fetish of the day in economics and corporate life. Any government leader, regardless of the country, expresses pride about his or her nation’s growth figures. They seek to convince their citizens, their economic partners, and, probably above all, their financial partners/investors about how impressive their growth is. This goes on despite dire economic situations, and with little attention to how stable, or temporary, that growth may be. China boasts of its doubledigit growth over recent years. India’s results don’t quite reach double digits, but are still impressive economically. And much of the rest of the world has benefited from the cheaper commodities which have resulted. However, economic growth shows precisely what it shows: economic growth. It does not give any indication of how that growth is created nor at what expense. Has the country chosen for a short-term, immediate, and possibly forced growth? Has there been any consideration for the longer term, the sustainability of that growth, and the harmony of that growth with the natural resources which we need for a decent life on the planet? Economic growth indicators do not give insight into how it is translated into wealth, or for whom. They do not talk about the population’s level of education, the degree of illiteracy, the quality of the health care, the amount of pollution, or the general well-being of the population. The third largest gross domestic product (GDP) per capita, and, hence, by the readings on our economic thermometer, the third richest country in the world is Norway (IMF, World Economic Outlook database, April 2007). Norway also has a suicide rate of 19.5 males per 100,000 inhabitants (WHO Mental health, suicide rates, 2003; [http://globatlas.who.int/globatlas/default.asp]). France, with the twenty-first largest GDP on the list has a suicide rate of 26.1 males per 100,000 inhabitants. El Salvador, 101 on the GDP list, has a suicide rate of 10.4 males per 100,000, and Honduras, at 124 in the GDP ranking has 0 suicides per 100,000 inhabitants. Of course, this latter number is wrong, isn’t it? And maybe it is, but which of these countries is the ‘richest’? It all depends on how you measure. If the thermometer indicates a high temperature, we ‘know’ we are sick, don’t we? But if it doesn’t indicate a high temperature, does it mean we are healthy? The United Nations Development Programme has developed the Index for Human Development ([http://hdr.undp.org]). It details more than 200 items that can roughly be gathered under the following headings: demographic issues; health care; water; inequality in birth-related health issues; risks (industrial, natural, etc.); crises; technological developments; education; economic development. Using a

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4 Rethinking Growth

thermometer sensitive to such broader dimensions allows, at the least, for more systemic, richer interventions with the aim of progressing to a fuller health that takes into account equity, happiness, and well-being. Indeed, while I have not stressed these so far, there might be a chance that we are on this world in order to contribute to it and to be happy while doing so. I will come back to that. An illustration of the growing interest in more systemic thermometers than a restricted economic concentration on GDP was the conference, organised by the European Union and a few other partners, titled ‘Beyond GDP’, in November 2007 in Brussels ([http://www.beyond-gdp. eu]). The conference dealt with issues of progress, ‘true’ wealth, and well-being. Anyway, enough about ‘the wealth of nations’ since that is not what this book deals with. This book deals with ‘sustainable performance’, how to understand it, how to measure it and how to manage it. This book addresses managers, people responsible for other people, inside and outside their companies. Yes, it is maybe worth repeating: managers are people, responsible for other people inside and outside the company. An assumption, indeed, but at least a clear one up front. An assumption that refocuses the role and purpose of the manager and even of the company. Is a company a ‘corporation’ as seen in the 2003 movie The Corporation that seems to live a life on its own, with its own purposes and rules, detached from the social network within which it is active? Does it recruit only its employees and deliver output for its clients? Can a corporation only have one goal: to improve profit in order to be able to pay dividends, and to attain this at any price? If it does then working inside a corporation is contributing to this purpose; and living outside this corporation is suffering its outcomes. This individualistic view of a company and a society contrasts with a socially embedded one and, as a consequence, provides an individualistic role for a manager inside the company, rather than one which is socially embedded, outside, as well as inside, the company. Let us accept, for a moment, the earlier suggestion into an additional assumption: that we are in this world in order to contribute to it and to be happy while doing so. I am sorry if this starting point bothers you, but to me it seems a simple and straightforward one. It is this starting point that makes Corporate Social Responsibility logical and evident. It is these assumptions that invite ethical behaviour. It is such a view that makes space for sustainable performance. But we are still far away from this sustainable performance. We are only at the assumptions.

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A while ago, I participated in a panel discussion of the French Employers’ Federation (Medef), which was titled: ‘Should We Rethink Growth?’. The panellists mostly agreed that we should. Moreover, they had some very interesting ideas about some issues related to how to rethink growth. I was a bit astonished still to have this question in 2007 instead of to be asking how to rethink growth. But the apotheosis of the day, the president’s speech, made it all clear: growth is the only driver of our economies, and if we do not manage to beat the two digit Chinese growth, French companies will be in big trouble. Company growth is the credo. But let us go a step back, since I had a very remarkable experience during the panel. At a certain point in the discussion, I asked the audience (around 150 entrepreneurs and managers): How do you add value to the economy? What is your contribution to society at large? In other words, what is society missing if tomorrow you are bankrupt? And to my deep surprise, I rendered the audience of more than 100 managers completely silent. I repeated the question, but still no answer. Then I invited them to take the weekend to think this question over and over. ‘If you do not have any value to add, if society doesn’t miss you, then what are you doing?’ And if they could not find any value added, any contribution, I suggested to them that on the following Monday morning, they gather their employees together and start a process of identifying the value added by the company and its contribution to society at large. Since if you do not make such a contribution, you will be forced to market yourself vacuously, in order to sell stuff that customers don’t want and, even if they do buy, certainly don’t need. Such practices are what have caused the overwhelming phenomenon of mind-boggling and unprecedented overconsumption in our society. We left it there. I do not know whether any of the managers present took up the challenge and did this exercise and, if they did not find a contribution, whether they took the time to co-create one. Anyway, the challenge remains since, in the absence of a socially valuable purpose, someone is unable to take any socially responsible decisions. When Alice in Wonderland asks the cat which road to take, the cat asks her where she wants to go. Since she doesn’t know where she wants to go, the cat can only tell her that any road is a good one. If you do not know where to go, all roads are good ones. You need a purpose in order to be able to make decisions here and now, not necessarily in order to reach that purpose. The future will show that. But only the present urges for decisions; there is no past and no future.

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There is only a present, and in that present you need to know where to go in order to take any decision. If the only purpose you have is to grow, and/or to make profit, you limit your actions to that purpose. Independent of its devastating consequences, growth will be what you receive and/or profit is what you are going to receive. You purposefully limit your focus to a few ‘people-independent’ variables: costs, revenue, accounting, and manipulation of accounts (for fiscal reasons). Even humans are transformed into human resources (the current phrase) in order to become a cost. You disconnect yourself from the entire social raison d’être of your company. And, consciously or not, the path is chosen. Consequences can include stress and burn out. These are diseases which have a lot to do with choices made in disconnecting economic activity from the people for whom we do it all (in theory). These diseases lead to a series of interconnecting questions. Do you still feel happy when you get up in the morning and drive to your job? Do you feel that you matter? Would the company and society change for the worse if you were not there any more? Isn’t the economy sick in its fetishistic admiration of growth, a blind growth at any price? And isn’t it that growth and the management indicators that go with it that do not allow for a change? In following this blind drive for growth, do we do anything other than just apply our economic theory, our managerial theory, and indeed, I want to stress, our theory? In summary, therefore, a thermometer only measures what it is made for. A thermometer measures fever, not sickness. A GDP measures gross domestic product, not wealth nor health nor even the sustainability of that growth. Profit measures profit, and not social contribution or the value added by the company. That would not be so bad if it weren’t true that you always get what you measure. Measuring is what makes reality, not mere existence. It is observation that in quantum mechanics turns the wave into a particle. Without observation, without measurement, everything is a large pool of infinite possibilities. But once a phenomenon is observed, measured, it becomes an unchangeable particle: the particle that you want to observe. The observer creates the observation, and since we often take the observation for reality, the observer creates reality (Baets, 2006). However, reality might be different, richer, broader, more systemic, not visual, and not causal. When the Australian railways were privatised, the railway company encountered the same problem most railway companies encounter: the trains ran late. When new, ‘privatised’ management took charge, they made immediate and drastic decisions. Each driver who gained time on

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his or her train’s trajectory was paid a cash bonus at arrival. The bonus system was realistic but not exaggerated, because it was designed to really motivate people. Say Paris–Marseilles normally takes 3 hours by high-speed train. The train leaves 10 minutes late, but arrives on time at Marseilles: the driver is paid for 10 minutes. And to nobody’s surprise, the problem was about to be solved in a few weeks’ time. More than 90 per cent of the trains were on time. The downside: clients were very angry. If we ask this question to a live audience we get a lot of equally possible explanations for this which are all wrong: people missed their train; there were security problems; the price of the tickets went up; the train didn’t wait if a last passenger wanted to jump on. No, very simply, the trains didn’t stop at intermediate stations any more. Hence the driver gained time (and a bonus) and did exactly the job for which he was appreciated/evaluated. And don’t say too rapidly it would not happen in your company. What is a train being on time? The ‘being on time’ issue is only created since we have timetables. Without timetables, a train is never on time or late. Imagine that there is a train connection every half an hour between two cities. The trains run exactly half an hour late. From the customers’ perspective, are those trains late or on time? Being on time, or being late, is only a question of agreement; it is not an essential part of a train journey. Of course, you would like to arrive on time, but there are other ways to organise that. For sure, we think/hope that air traffic control is one of the best planned activities, but most probably it is not. On questioning Dutch air traffic controllers (during a seminar we held for them) about what percentage of aeroplanes fly within slot-time, I found, to my surprise, they responded with a bare 20 per cent. I had hoped it would be at least around 40 per cent, or even, 50 per cent. No, only 20 per cent of the aeroplanes leave within a reasonable period around their planned departure time. Does this mean that air traffic control is not working well? Of course it does, since it is self-organised. The aeroplane is ready, it asks for clearance, the air traffic controller puts it in the queue, and off it goes. Real delays are often caused by too much traffic in the area: there is no solution to physical limits. Or is there? By extending our earlier assumption, one solution would follow: fly less. After all, do we really need to make every one of the flights that we make or is this also just another example of consumerism? If we translate all this to a company, we of course see exactly the same behaviour. A manager is going to manage precisely that for which he is evaluated, and in practice evaluation means salary or bonus. If managers get excessive bonuses for shareholder value, they are going

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to do everything, indeed ‘everything’ – however artificial – to raise shareholder value. Shareholder value is a non-existing variable: it means you cannot manage it. You can only influence it indirectly. Higher revenues (or ‘expected’ revenues), lower costs (huge lay-offs) and good press (the Enron case, the Lernout and Hauspie case) all often have a positive influence on shareholder value. A manager can influence these three variables, but if this would be physically difficult or impossible (hampering sales), they could make it up by artificially raising the sales figures (and again the Enron and Lernout and Hauspie cases act as illustrations). The manager no longer manages the business; he or she manages the figures, the accounts. How many companies are managed by accountants and financial managers? Finance and accounts (even more, since they are only a reporting tool) are only the derivatives of the corporate operations which are based on corporate decisions. This book argues that the focus should be on corporate decision making, the vision, the shared dream of where to go, the real value added that the company creates in the economy. If there is a real contribution, the company will generate sales, revenue, and margins. A first refocus should be on the business and its societal valued added and not on finance and accounts. That is what might give the company a sustainable focus, and a sustainable performance. Inside companies we have seen comparable efforts to achieve sustainability. They manage via balanced score cards, ‘improvement factors’, etc., whereby the performance of managers (or even employees) is measured and evaluated using a series of ‘objective’ measures. The experience that most companies have with these approaches is that the managers do everything to optimise the measured items, and neglect the others. If a job description is not detailed, and if all items are not expressed in a measurable variable, it is not managed. If too many items are defined, they often act in opposition to each other, and the entire system becomes counterproductive. Many companies have returned to more classical evaluations of their managers. However, the shareholder value plague is still running through the country: albeit on a lesser scale, or in a more hidden form. We live in a time when people have become increasingly aware of the ‘limits of growth’. I deliberately use this term, since it refers to the first report of the Club of Rome in the 1960s. It all appeared to be a bit pessimistic, but a serious realistic view was the basis for it. We have thrown the baby out with the bathwater and haven’t paid attention to some of the fundamental assumptions which the report challenged. We hit the wall today, harder, and with less time to find solutions.

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One lesson from the report, and the reactions to it, is that we have a hard time to challenging and/or managing our assumptions. Further in this chapter I will come back to this, but I suggest that we rarely question our assumptions and doubt whether there is even an awareness of key assumptions. What are the economic laws behind our most important managerial decisions, if any? What managerial theories are at the basis of our managerial decisions, if any? If there aren’t any, why do we try to teach our business students all these wonderful analytical and rational approaches to management, which they seldom recognise afterwards in their daily managerial practice? If we say that leadership is so important, why don’t we have a concept of management that is built on that leadership paradigm (and not on a financial performance paradigm)? I leave the question for now, and promise to return to it later. Since the opening shot of the Club of Rome, various initiatives have been developed to make managers at least aware of other options. In the shift from TINA (There Is No Alternative) to TALA (There Are Lots of Alternatives), the latter all have their value in changing, and in transforming, our society and its managers. Different people have been looking differently in different directions, and without any attempt to be exhaustive, we offer six examples. 1. Hazel Henderson – founder of Ethical Markets Media and currently series creator and co-executive producer of Ethical Markets multimedia productions – is a futurist, evolutionary economist, columnist, and consultant on sustainable development. She has published worldwide, and developed alternative indicators for quality of life, national wealth, etc. ([www.ethicalmarkets.com]). Among many other honours, she shared the 1996 Global Citizen Award with Nobelist Perez Esquival. Ethical Markets’s mission is to foster the evolution of capitalism beyond current models based on materialism, maximising selfinterest and profit, competition, and fear of scarcity. As we move further into the Knowledge Society we learn that information and knowledge are not scarce, and our economic models can move towards sharing, cooperating, and a new abundance. Ethical Markets believe capitalism combined with humanity’s growing knowledge of the interdependence of all life on Planet Earth can evolve to serve today’s new needs and our common future – from beyond maximising profits for shareholders and management to benefiting all stakeholders. They deliver this message to the global market by featuring

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stories of success. Ethical Markets showcase the organisations, trade associations, shareholder activities, the mutual funds and pension funds asset managers, financial planners, venture capital groups, innovative technologies and companies, as well as this vision of maturing, socially responsible, ethical capitalism fitting humanity’s aspirations for a more peaceful, just, and ecologically sustainable world. 2. Another illustration is the Global Reporting Initiative (GRI) ([www. globalreporting.org]). This is a large multi-stakeholder network of thousands of experts, in dozens of countries worldwide, who participate in GRI’s working groups and governance bodies, use the GRI Guidelines to report, access information in GRI-based reports, or contribute to develop the Reporting Framework in other ways – both formally and informally. GRI have pioneered the development of a sustainability reporting framework which is used worldwide, and they are committed to its continuous improvement and application worldwide. This framework sets out the principles and indicators that organisations can use to measure and report their economic, environmental, and social performance. The cornerstone of the framework is the Sustainability Reporting Guidelines. The third version of the Guidelines – known as the G3 Guidelines – was published in 2006, and is a free public good. Other components of the framework include Sector Supplements (unique indicators for industry sectors), Protocols (detailed reporting guidance), and National Annexes (unique country-level information). Sustainability reports based on the GRI framework can be used to benchmark organisational performance with respect to laws, norms, codes, performance standards, and voluntary initiatives; to demonstrate organisational commitment to sustainable development; and to compare organisational performance over time. GRI promote and develop this standardised approach to reporting to stimulate demand for sustainability information. The demand, and the standardisation, will benefit reporting organisations and those who use report information alike, and also help to distinguish between lip-service to sustainability and tangible progress. 3. The Centre for Sustainability and Excellence (CSE) (www.cse-net. org) offer a further illustration. They are a leading advisory organisation and think tank (with offices in Athens, Brussels, and Dubai) specialising in providing sustainable development solutions to various corporations and institutions. They present outcomes of the cooperation between experts and scientists who deal with, apply,

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The Thermometer Causes Sickness

and provide support in the most advanced practical methodologies for moving towards sustainability, while simultaneously adhering to social and environmental criteria. Through its network of international partners, CSE offers coaching in a vast array of advising services promoting sustainability and excellence to organisations, society, and governments. In their own terms: management is a combination of art and science. Everyone who runs a business is ultimately interested in achieving success and sustaining it. This success is based on the ability to thrive in today’s uncertain economic climate, and what it brings with it is increased stakeholder value and growth. Although there are plenty of theories based on the subject of business success, there are still winners and losers. Nowadays, what is required to achieve sustainable success is effective collaboration and CSE aims to assist the organisations, society, and governments in that respect. 4. The Global Footprint Network (GFN) – (www.footprintnetwork.org) – focus on the dilemma or paradox central to development of demand and the available biocapacity. GFN are committed to fostering a world where all people have the opportunity to live satisfying lives within the means of Earth’s ecological capacity. They are dedicated to advancing the scientific rigour and practical application of the Ecological Footprint, a tool which quantifies human demands on Nature, and Nature’s capacity to meet those demands. Created in 1993 by Mathis Wackernagel and William Rees, the Ecological Footprint is now in wide use by governments, communities, and businesses to monitor current ecological resource balances and to plan for the future. In line with the project of this chapter to re-evaluate what we value, GFN’s vision is to make the Ecological Footprint as prominent a metric as the GDP. By 2015, through its flagship Ten In Ten Campaign, GFN aim to have ten countries managing their ecological wealth in the same way they manage their finances. Since its inception in 2003, GFN have made significant progress towards their goals. Currently 22 countries – including Australia, Brazil, Canada, China, Finland, France, Germany, Italy, Mexico, Russia, South Africa, Switzerland, and the United Kingdom – are likely to be the early adopters of the Ecological Footprint and are already working with GFN. Over 70 organisations, spanning six continents, have become formal GFN partners. Many of the world’s largest environmental agencies and constituencies are already using the Ecological Footprint to accelerate global sustainability including: EPA Victoria

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(Australia), the European Environment Agency, the Finnish Ministry of Environment, Wales in Great Britain, and large non-governmental organisations such as the Network of Regional Governments for Sustainable Development (with 50 regional government participants), International Council for Environmental Initiatives (with 650 local government members worldwide), and WWF (the global conservation organisation with 5 million global supporters). 5. The Vigeo Group (www.vigeo.com), to cite a French example, claims to be a company ‘measuring social responsibility’. They assess both the performance of companies and organisations and their level of corporate social responsibility (CSR) management. They assess the degree to which companies and public corporations take into account environmental, social, societal, and corporate governance objectives, which constitute risk factors for them in the definition and implementation of their strategy and policies. Their analysis makes it possible to • evaluate the level of commitment shown by organisations towards all CSR or sustainable development goals; • identify any risks incurred by the company or organisation in this area; • evaluate their level of management. They provide companies with mechanisms for decision making and specific operational management tools by • providing socially responsible investment (SRI) analysis for investors and asset managers on 1,500 European, Asian, and American stocks in order to assist them in selecting their portfolios • performing social responsibility audits for companies to provide assistance with their strategic management • carrying out sustainable development audits for local authorities to provide guidance for subsequent improvement. Then we get to other kinds of organisations that have less of a focus on companies and corporate performance, but pay attention to community development and the leadership roles they offer for individuals. ‘Common Purpose’ (www.commonpurpose.org) are one of these. 6. Common Purpose aim to improve the way society works by expanding the vision, decision-making ability, and influence of all kinds of leaders. They run a variety of educational programmes for leaders of all ages, backgrounds, and sectors. Common Purpose’s goal is to

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All of Common Purpose’s activities are deliberately cross-sectoral. They have been specially designed to help people in leadership and decision-making positions to be more effective: in their own organisations; in the community; and in society as a whole. The community is both their subject and their venue. The participants don’t just sit in meeting rooms studying abstract management problems or wrestling with intellectual exercises. They go out into their own community and grapple with real-life problems at first hand, and will visit prisons, housing developments, businesses, hospitals, and manufacturing plants in order to find inspiration outside their usual experience. Together, they tackle topical issues (often with the people who carry responsibility for them), they trade leadership experiences and strategies with other leaders from a variety of fields, and they build wider networks. According to them, what is different about Common Purpose programmes? All the programmes help leaders learn to lead beyond their authority, both as professionals and as citizens. People who lead beyond their authority can produce change beyond their direct circle of control. This is very different from other leadership programmes. They are committed to looking for leaders in unexpected places – and then to exposing them to the information and the perspectives they need to be more effective. In the process, they meet new people, make new connections, and find new ways of working with people who may not view the world in the same way. Diversity underpins everything they do. All Common Purpose programmes and activities share the same long-term ambitions: better decision making in all sectors, more effective solutions to common problems, more engaged and active citizens, and, ultimately, stronger communities. Since 1989, more than 120,000 people have been involved in Common Purpose worldwide and over 23,000 leaders have completed one or more of the programmes. They, and their organisations, consistently report better strategic thinking, better decision making, dramatically enhanced leadership competencies, and a greater ability to apply them in new situations as a result of their experience of Common Purpose. Without any attempt at offering complete coverage, it is clear that a lot of initiatives have existed, do exist, will continue to exist, and even to blossom, to improve the environment and society. They aim either

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provide them with the inspiration, information, and opportunities needed for changing the world.

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Life on the edge Symptoms and diagnostics Despite all the good news of increasing interest in social responsibility, responsible management, etc., there is something more fundamental at stake in our opinion. While humanity is living in the turmoil of what is possibly the most decisive period in history (sanitary risks, ecological risks, experimentation with the living, etc.), Viverot (2005) diagnoses a kind of a widespread depression, or world at the edge of a ‘universal nervous break down’. In what might be seen as a form of manic depression, our society suffers from not being, not living, at the right moment, the right time. In other words, it is incapable of intensely living the present, feeling good in this time-span and in contemporary ‘shoes’. This ‘dis-ease’ transforms us into rational mammals, but even worse, into endlessly consuming mammals. The consumer society in which we live and simultaneously feed continuously makes for eternally unsatisfied people. This ‘poverty’ of the daily poisons lives. In Viverot’s terms, there exists a relationship between the culture of economic warfare and the large psychic destabilisations. These are today at the roots of a new faintness in the civilisation of the young century. The crisis is not economic, but cultural and mental. For Viverot, the so-called economic crises are, in fact, cultural crises which are linked to the outcomes of our economic system. Thanks to this cultural crisis, the world has gone back half a century, and is scarred by unemployment and poverty, while, at the same time, consuming at levels not even imaginable only a few decades ago. And consume is what the world does. The Talk the Walk study (UNEP, UN Global Compact and Utopies) gives us an idea of the role that marketing plays in that overconsumption, but, equally, it suggests the role that marketing could play in contributing to a different consumption pattern. Over recent decades, both in terms of volumes and quality, consumption has radically evolved. Average household consumption expenditures increased from US$4.5 trillion in 1960 to US$ 19.5 trillion in 2000. World population doubled over the same period. Half of that growth is due to a dramatic change in consumption patterns, which are today mainly produced by a consumer class of roughly

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to rank companies differently, to help them to be ranked differently (addressing some new and annoying stakeholders for instance), or just simply to share the idea that the thermometer itself indeed creates sickness, and explore pathways to holistic health.

1.7 billion people, half of whom live in the so-called developing world. Recently that consumer crowd expanded significantly in countries like India and China. The breakdown of household expenditures has changed. The strong increase in incomes has led to expenses in areas such as leisure activities and devices, services, and transportation. The percentage of household expenditure dedicated to basic needs is decreasing. However, this growth is unsustainable, since the ecological footprint has grown larger than the world population. Since the mid1980s we have crossed the Rubicon. If all humans were to consume like the Europeans, they would need three planets the size of Earth to live, and if they were to consume like the North Americans, they would need five more planets (WWF figures, 2004). One gift of overconsumption patterns is obesity. Obesity already affects 30 per cent of the US population and grows at a triple digit rate every ten years (UNEP, 2003). Food-related cancers, which account for 30 per cent of all cancers in industrialised countries and 20 per cent in developing countries, also grow rapidly (ADS, 1998). The worldwide reorganisation of supply chains has disconnected consumers from the labour force, and is creating various social and economic side effects in both developed countries (delocalisations) and developing countries (exploitation). Talk the Walk expect energy consumption, carbon emissions, waste production, and water resource shortages to increase over the next decades. The single main reason for this is overconsumption to the service of an almost fetishistic growth credo, and the world still remains far away from what the UN CSD International Work Programme (1995) defined as ‘sustainable consumption’: The use of services and related products which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the lifecycle so as not to jeopardize the needs of future generations. Products can be made cleaner, and there is growing interest in buying these kinds of ecoproducts, but still the trend of unprecedented overconsumption remains unbroken. In Europe, the market share of green cars has grown from close to 0 per cent in 1999 to 14 per cent in 2005; and the market share of green electricity has grown from 1 per cent in 1997 to almost 8 per cent (anticipated) in 2006 (Talk the Walk, 2005). SRI’s market share, however, remained stable at roughly 12 per cent between 2000 and 2006 (after a 13 per cent peak in 1999, and coming

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from 8.5 per cent in 1997). It is also revealing that advertising budgets, as a percentage of sales, remain at astonishing heights: spirits at 15 per cent; detergents at 11.5 per cent; office supplies at 10 per cent; food at 10 per cent; beers at 8.5 per cent (Schonfeld & Associates, 2003).

The Institute of Noetic Sciences’s (IONS, 2007) Shift report is not only a highly readable document on the transformation, but offers positive ways forward. On the one hand, the Institute observe how our materialistic and scientifically based world view has led to lower infant mortality rates, eradication of many fatal diseases, explosion of new technologies, broader access to the accumulation of wealth, and greater individual freedoms and rights. At the same time, they see that not all its effects have been beneficial; and may lead us beyond the edge of extinction for humans. The rise of capitalism and modern technology have fuelled heightened global consumerism, which is stripping the Earth of its resources and filling our land, seas, and skies with polluting ‘externalities’ of production. Fear of scarcity has driven nations to fight over resources, and modern weapons development has made war more lethal and widespread. Income disparities, species loss, the disappearance of indigenous wisdom, and global warming are all by-products of a materialistic and self-centred world view which continues to be propelled by ignorance, denial, and its own momentum. And to all that, the Institute of Noetic Sciences add the ongoing and escalating clashes among both ethnic groups and religious fundamentalists, which are not new to this century but further reflect a world in disorder. According to Willis Harman, a past president of IONS and renowned futurist: Very central to our modern myth is the idea that it is perfectly reasonable that the economy should be the paramount institution around which everything else revolves and that economic logic and economic values should guide our decisions. It turns out that if you look at the assumptions underlying our economic system – especially the ones regarding the prerogatives of ownership – and then you look at the goals we humans have about how we want to live our lives, there is no compatibility. The assumptions can never lead to the goals. (IONS, 2007) Joachim Wolf (2003) sees it as humankind that is now wrestling to resolve the seemingly insurmountable differences between its parts.

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Extinction or transformation?

The mindsets of many are so focused on differences that they cannot identify with the whole that unifies all. At the same time, many of us are dealing with too many changes, too many decisions, and too many things to think about. A 2006 KidsHealth survey found that 40 per cent of children (in the US) reported feeling stress all or most of the time because of ‘too much to do’. More and more people are being diagnosed with mental illness. One of the most telling indicators that levels of stress have exceeded our ability to cope is the mushrooming sales of antidepressants and prescription drugs (although that is also driven by pharmaceutical spending on advertising): an estimated US$1.9 billion in 2005 on television ads alone (in the US). US spending on prescribed drugs (Kaiser Family Foundation) went from US$40 billion in 1990 to US$189 billion in 2004. Our biological systems were not meant to handle stress as a lifestyle, nor as a persistent feature of daily life. ‘Fight or flight’ was meant to be a tool for handling crises, not a permanent state of mind or way of being. Other facts highlight allied concerns: the richest 2 per cent of adults in the world own more than half of global household wealth (Helsinkibased World Institute for Development Economics Research of the United Nations University). The richest 1 per cent of adults owned 40 per cent of global assets in the year 2000, and the richest 10 per cent accounted for 85 per cent of the world’s total assets. There have been more than 250 major conflicts since the Second World War which have resulted in over 23 million deaths and countless millions injured. Since 1945, 90 per cent of the war casualties have been civilians. Economic data are also useful for putting the annual cost of war in perspective: the ongoing Iraq War, US$200 billion; Universal health care for all US people, US$100 billion; universal preschool in the US, US$35 billion; cancer research, US$6 billion; immunisations worldwide, US$0.6 billion (IONS, 2007). Credit market debt in the US reached US$36.91 trillion in 2004 compared to US$13.77 trillion in 1990 (IONS, 2007). Perhaps the most sobering statistic is the World Health Organisation (WHO) report of a 60 per cent increase in suicide rates worldwide over the past 45 years. They estimate that approximately 1 million people per year die from suicide, and that suicide attempts occur 20 times more frequently.

Connecting business When all that information is connected to corporations, the results are paradoxical. Many consultants and innovators are among the first to

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embrace new, even radical, models of change. At the same time, the dominant paradigm rests on a model of competition that prioritises short-term gain over long-term sustainability. Today, the Newtonian model of business, among others characterised by Taylor’s theories – that is to say, dominated by efficiency and obedience, command and control, and thinking of organisations and people as parts in a machine – is facing challengers for whom systems thinking and organic processes are primary. At the UN Global Compact Summit in Geneva, July 2007, economists and politicians, in unlikely harmony, pleaded for thought leadership in the area of management theory. Responsibility will only flourish in a managerial ontology that makes responsibility foundational. This book argues that such a new conception of business, and such a new managerial ontology, will be based on what we have learnt from quantum physics and evolutionary biology. Together, these provide the theoretical groundwork for developing a new managerial ontology, one that, in this book, will be based on social ‘intrapreneurship’ using such key concepts as: self-organisation, networks, wholeness, interdependence, and entanglement. Evidence of the idea of responsibility as a major issue has begun to emerge through the business community’s involvement in Corporate Social Responsibility (CSR). The UN Global Compact Summit in Geneva (2007) bears witness to hundreds of companies’ growing interest in becoming more responsible through CSR, and starting to manage their companies as part of an interconnected reality. According to Aron Cramer, CEO of Business for Social Responsibility (in the IONS Report), companies are today in the fourth stage of implementing Social Responsibility. He calls it ‘strategic’ CSR, which he defines as value creation and the development, research, and development that looks for solutions to critical social problems in a way that has a dollar-andcents impact on the bottom line. However, from the perspective of this book, companies are not yet into understanding how ‘happiness’ can contribute to that bottom line, and how that bottom line itself is most probably the biggest issue in becoming a more socially responsible company. This book aims to develop this fifth stage, a stage where social responsibility becomes an aim and is no longer just a derivative. Indeed, companies need to refocus on creating wealth, on contributing to the wider economy and society, and should no longer be focused on the short-termism of that famous bottom line. The bottom line is nothing but an indicator, it is not a purpose. Unfortunately, it is often the indicator that while becoming a purpose causes illness. What is measured will be obtained, and if the bottom line is the holy

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The Thermometer Causes Sickness

benchmark, it will be reached, and reached at any cost, regardless of its sustainability. A company that contributes to the economy and to the society is almost by definition sustainable. It considers itself as part of a larger interconnected economic and social reality, in which it has a role to play. That role is creating wealth for that society. A pure Newtonian business model, which considers the economy as in Chaplin’s Modern Times (i.e. that suggests that past and future are completely interlinked, and that management therefore becomes an act of rational command and control), has no space for responsibility. It might allow it as a side effect, but only as long as it does not hamper the bottom line. The 2007 Shift report does observe a growing interest in retraining (or training) leaders, using various approaches based on values such as integrity, authenticity, social and emotional intelligence, and selfawareness. Similarly, Senge et al.’s (2005) notion of ‘presencing’ asserts the primacy of deep inner experience; and Scharmer’s (2007) book Theory U (2007) goes further to advocate an ongoing cyclical process of listening and observing, processing, and acting. In the processing stage, Scharmer’s (2007) emphasis is on stillness and reflection. All these moves reflect another paradigm: linking being present with processing, and with stillness and reflection. Interest is growing; goodwill is manifesting. But more than just goodwill is needed. To develop further will require a theory, a conceptual framework, able to support an alternative, and an associated methodology or metrics will be necessary to manage it. The McKinsey report ‘Shaping the New Rules of Competition’ is based on in-depth interviews with CEOs and executives of 38 organisations throughout the world. It shows that 31 of the companies, or 61 per cent of the respondents, think that increasing environmental concern, greater demand for, and limited supply of, natural resources (38 per cent), and the emergence of China and India in the global marketplace (37 per cent), are going to influence society’s expectations on business. Furthermore, the following environmental, social, and political issues were considered as the most critical to address for the future success of their business: educational systems and talent constraints (50 per cent); poor public governance (44 per cent); climate change (38 per cent); and making globalisation’s benefits accessible to the poor (36 per cent). Some 59 per cent of the respondents say they want to incorporate ‘much more’ environmental, social, and governance issues into their company’s core strategy; and 34 per cent say they already incorporate ‘somewhat more’ of it.

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But most enlightening in the McKinsey report is what those CEOs believe are the barriers. They see the obstacles to implementing an integrated and strategic company-wide approach to social responsibility as: competing strategic priorities (43 per cent); complexity of implementing strategy across various business functions (39 per cent); lack of recognition from the financial markets (25 per cent); and differing definitions of CSR across regions and cultures (22 per cent). Freely interpreted: they do not see it as a priority. Each function in the company operates autonomously and there is no real interconnectedness; the focus is short-term financial performance; and there is difficulty in recognising and using diversity as a creative force. What else would you expect to see if you carefully consider our mainstream managerial thinking? As Kuhn and others, among them a number of quantum mechanic physicists, have said: one cannot explore a new paradigm from within the borders of the existing mainstream paradigm. Galileo Galilei could never have explained or discovered that the planets were turning around the Sun if he had stayed within the prevailing paradigm of his time (i.e. that the planets and the Moon would be turning around the Earth). Einstein could never discover or prove his relativity theory within the current Newtonian view of physics. Quantum mechanics doesn’t make any sense within a Newtonian concept of physics. Similarly, longterm responsibility makes little sense within mainstream managerial thinking. For example, what we know as business economics, the theory that forms the basis of our managerial thinking, seems to be of extremely limited help for contemporary conditions. Standard business economics is based on four main assumptions (Arthur, 1990; 1996; 1999). The first one assumes that all economic agents show rational behaviour. Though this is certainly partly true, it is also obvious that, for instance in buying behaviour, there is not always a lot of rationality. Marketing in practice aims to influence so-called rational behaviour, with mostly emotional elements. Accordingly, the acceptance of marketing itself as a valid activity and even a managerial discipline contradicts this rationalistic assumption fundamentally. As argued in my earlier work (Baets, 2006), no observation, no measurement, and, even more so, no interpretation can be objective, therefore the assumption of full rationality cannot hold in reality.

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Shifting barriers and undermining assumptions

The second assumption states that the different economic players are fully informed (a necessity in order to be able to act rationally). In this specific era with massively expanding Internet information, this assumption seems highly theoretical at best. Not only is it virtually impossible to have all information, but even more so the interpretation of all available information brings us again to the non-rationality of information. Indeed information can only be transformed into knowledge by individuals, as knowledge that allows the user to enact behaviour (e.g. action and shaping). The expectation of being fully informed, independent of the knowing subject, is not feasible. The next assumption is the alternative use of resources. In practice this means that once a resource is used in one product, it cannot be used in another product any more. This is a clear industrial era point of view, in which we mainly produced material products. In the knowledge economy, this is different. Information and knowledge are alternatively usable and, what is more, the more they are shared, the more their value can rise. That is an essential constituent of the law of increasing returns (Arthur, 1996). The law of diminishing returns, a basic one in classical economy, doesn’t hold in the knowledge economy and doesn’t hold in the ‘today’ economy, where nodes increase value. The fourth assumption, which is more a question of convenience and probably causes least harm, is that there are a limited number of goods and services. It is clear that, certainly in the knowledge economy, services are often used for different purposes. Any service defined might therefore become a set of different services, according to the use that the clients imagine.

A new Mandelbrot set: Chaos perspectives, catastrophic consequences, and macroeconomic mistakes Mandelbrot and Hudson (2004), particularly in respect of financial markets, identify a similar set of assumptions that modern financial theory makes in order to justify their financial models. Mandelbrot and Hudson illustrate the catastrophic consequences of those assumptions on dayto-day financial portfolio management, and en route, destroy both the theoretical concept of those models and their financial performance. The assumptions he identifies behind classical financial theory are: • People are rational and only aim to get rich. • All investors are alike. • Price change is practically continuous.

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In general, the strong assumption behind most financial processes, but equally behind many managerial processes, is the normality of phenomena (99 per cent of the observations fall between the mean, plus or minus three times its standard deviation). Observational reality certainly does not conform to this assumption in most volatile markets. In addition, these assumptions all fit in a reductionist framework that limits reality to a theoretically viable environment. As a consequence, observations in such a limited framework do not allow extrapolation into a real world, which, inconveniently, does not obey the assumptions. As The Economist (17 April , 1999) article, ‘Quarks and coaches’, observed: ‘The one group of people to whom most businessmen rarely turn is economists. Big firms ask economists to predict the ups and downs of national economies, but when it comes to finding ways to run their own company better, many managers would sooner consult an astrologer’. Furthermore, there are a number of concepts defined that don’t really matter, that are acceptable but not really relevant, or do not add any value to the understanding of a particular problem. One example of such a concept is ‘the circular flows of income and spending between business and households’, whereby banks and governments play the role of ‘multiplier’ or ‘catalyst’. Both multiplier and catalyst are concepts based on different assumptions. Multipliers indeed fit equations and causal relationships. A catalyst is not always as determined as assumed. A catalyst brings a situation to acceleration, without always precisely knowing where it moves to. The use of the word ‘catalyst’ in fact suggests a different kind of reaction, where what is meant, when analysed in more depth, is really a multiplier. Reality has shown that tax policy, possibly based on these theories, does not always work in the manner intended. In fact, it has become a political debate, and hence a political choice, whether one believes in a more important role for the government (always via taxes) or not. Independent of whether economic theory would work, tax policies are political choices, where all different parties in fact assume, or invent, possible side effects that would make crucial differences. The claimed aims of macro-economic policy, again a set of political choices, are full employment, stable prices, economic growth, and a balance of payments equilibrium. So-called macroeconomic models

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• Price changes follow a Brownian motion (independence of consecutive observations; statistical stagnation of price changes; the normality [Bell shape curve] of changes).

prove particularly unable to catch the dynamics of those markets. Therefore, they become highly irrelevant if a country enters any highly dynamic environment (hyper-inflation, political treaties, threat of a revolution, etc.). In the case of a stable situation, of course, those models would work, but they aren’t necessary in that case, since behaviour is stable. The essence of monetary theory is based on the equation MV = PQ (quantity of money * velocity = price * quantity). This is neither untrue, nor wrong, but it is not particularly helpful for the manager. And that summarises the essential ‘axioms’ of business economics.

Business economics and textbook lessons Similar illustrations can be drawn from what is known as business economics by briefly going over the structure of a standard business economics textbook. Typically, such a textbook would start describing the ‘international economic environment’ by concentrating on such high-level aggregations as: average wage level, labour cost per unit, trading price, competitiveness, and efficiency that would not be discounted in any other variable. Such a chapter would finish up with the role governments play in business practice, referring to legislation, taxes, trade zones, etc. Most textbooks contain a chapter on macro-economics, which is interesting, but not really part of business economics. In a chapter on the organisation of firms and markets, where we expect to see some organising principles, mechanisms on how processes emerge, etc. we mainly find legal issues. In effect it offers a summary of a business law course. The chapter on business objectives is the one that builds foremost on the assumptions and axioms (stated or hidden) of business economics mentioned earlier. The chapter starts with a discussion about mission statements, carefully not identifying whether we talk about a goal or a path. Referring to the ‘rational behaviour’ assumption, a company is claimed to pursue the profit maximisation principle. This maximisation is based on a number of equally impossible assumptions, which, in fact, limit reality to an artificial (i.e. unrealistic) but above all linear and stable situation (highly unusual). Those assumptions are: • No division between ownership and control (which in practice is, of course, years out of date for any larger company). The ownership (the shareholdership) is represented in a general assembly of shareholders

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but the daily management (the control) is done by professional managers. An interesting discussion here is whether a different kind of management can be observed in Small and Medium Enterprises (SME) (where ownership and control are often either in the same hands, or close to each other) and larger companies. Most research indeed suggests a difference. • Full knowledge of costs and revenues (referring to the full information general assumptions) which is often neither reached nor reachable. An additional problem is that even if we can identify a fully correct picture at any moment, this would deny the dynamics of this process (certainly on the revenue side). • No problems with fixed cost allocation (since there is theoretically only one product). In most companies this is far from the reality. • Rational behaviour and only one objective, which, as already argued, are weak assumptions. The difference between ownership and control – not to mention other stakeholders who are dramatically ignored in business economics – also opens the debate between sales revenue optimisation and growth maximisation, or sustainable development. Simon, for example, talks in this context about ‘satisfiers’ instead of maximisers. The classical mistake, or weakness, resides in the process description of how to get to the corporate goal, due to oversimplified assumptions and presumed static, linear behaviour. Business economics focuses on fixing the path, instead of explaining the emergence in networked systems. Next the fixed path should be realised and management reduces itself to the control mechanism of the realisation of the path (not even always of the goals any more). The law of increasing returns (described earlier) in a knowledge economy is only one example of how disastrous the classical law of diminishing returns is when discussing the knowledge economy. The illustration of this type of mistake can be found in the classical aspects of business economics: demand analysis; cost theory; and pricing theory. Demand analysis is often done using linear regressions (in best cases, as described in textbooks), denying the dynamic behaviour of markets. Apart from the basic assumptions already mentioned, a number of technical assumptions (often hidden) need to be fulfilled in order to be able to apply linear regression. Homoscedasticity (normal distribution of the error term) and the absence of multicollinearity (collinearity between explanatory variables) are only two of them. Nonfulfilment of these assumptions causes numerical deficiency on the

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The Thermometer Causes Sickness

results that cannot be observed in the classical statistics of the regression analysis. In quasi-stable, quasi-linear markets, all those models work, which only serves to illustrate that this situation is a special case (a simplified form) of a more generally valid quantum interpretation. In fact, the regular business economics theory is a special case of the more general quantum economics theory, only applicable to quasistable and quasi-linear situations. The fixed and variable cost theory, based on oversimplified assumptions of no cross relationships and full information, is again a special case of a more general cost behaviour structure. Once we accept cross relationships between products (services) and human production actions, we automatically fall into the network paradigm.

Emerging differences and guiding frames Other than in oligopolistic markets, which are again a special case of fully interacting markets, pricing in non-linear dynamic markets becomes a question of strategising. The best example of strategising games can indeed be found in game theory. The best known case is the prisoner’s dilemma, in which two ‘players’ play against each other, each having two possible strategies (reality, of course, is infinitely more complicated, with a huge number of possible strategies for each player.) The unknown in the game is that each of the players ignores what the other plays. Game theory knows zero sum games or non-zero sum games. Game theory has been used to illustrate pricing games. As the law of increasing returns suggests, strategising of prices goes much further. According to Arthur’s theory, the aim is to get a snowball effect going, at the right moment. If a company strategises a market correctly, it should be able not only to price correctly, but to do so at the correct moment. That kicks off the dynamic process of market penetration, often leading to important market shares. A wrong strategy (price or timing) causes the product to die out. The law of increasing returns explains why demand analysis and pricing cannot be considered differently. In dynamic situations (knowledge markets), market behaviour and price interact in continuous feedback loops and can therefore only be studied jointly. It is clear that this market behaviour, incorporating pricing issues, will become the backbone of a quantum interpretation of business economics (Baets, 2006). Most classical textbooks have two more chapters. A chapter on investment analysis, concentrating on investment appraisal, which is highly dependent on a lucrative anticipation of the future expected returns.

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A final chapter needs to discuss corporate strategy formulation, discussing goals, but most often fixing paths. Porter’s chain of value analysis, and/or his five forces model have survived the major quantum revolution. It still identifies a number of generic strategies: cost leadership, and differentiation and focus, that, if all assumptions indeed worked, would lead automatically to a fully transparent market with all players having all information. This would reduce strategic choice to the one and only really plausible strategy in such a situation of fully informed markets and players, which is a pricing strategy (hopefully based on a cost leadership). In a case where these assumptions proved true, and the model worked, it would push the remaining players to minimal profits and eventually into losses, which we can indeed observe in certain markets. The airline market is just one illustrative example. As much as markets are emergent and pricing is one of the many loop variables in such markets, strategy cannot be identified, but equally emerges out of the interaction of market players. One purpose of this book is to give the business community a conceptual framework, an ontology, and tools to be able to manage for sustainable performance in an interconnected world. Where current managerial theories seem to be part of the disease, we need not only another conceptual frame, but also other metrics in order to allow a company to manage for sustainable performance, from a more holistic point of view. Only within a more holistic view on management is there space for sustainability, for Corporate Social Responsibility, and for ethics. These offerings are designed to contribute to the call of the UN Global Compact programme to take part in the development of a new conceptual understanding of responsible management. Chapter 2 of the book discusses its underlying theories of biology and complexity that allow us to suggest a quantum ontology of acausality in Chapter 3. Chapter 4 introduces concepts of non-violent communication, interrelationship, networks and co-production. Chapter 5 deals with an emerging practice of management by values and discusses the central role of values in corporate strategy, while Chapter 6 develops the concept of sustainability and leadership. This enables Chapter 7 to design and test a holistic diagnostic for sustainable performance; to construct a technology for analysing the company differently. Leadership, as will be argued, is playing a key role in sustainable performance once we have defined the latter from a systemic perspective. Chapter 8 draws some interesting lessons of social entrepreneurship, before ‘social intrapreneurship’ – a new kind of management, targeting

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different goals, with different activities, and piloting the company with different tools – is defined in Chapter 9.

Arthur, B. (1999) ‘Complexity and the Economy’, Science, 2 April. Arthur, B. (1996) ‘Increasing Returns and the New World of Business’, Harvard Business Review, July–Aug. Arthur, B. (1994) ‘The End of Certainty in Economics’, Talk delivered at the conference Einstein Meets Magritte, Free University of Brussels. Appeared in Einstein Meets Magritte, D. Aerts, J. Broekaert, E. Mathijs eds, (1999) Kluwer Academic Publishers, Holland. Arthur, B. (1990) ‘Positive Feedbacks in the Economy’, Scientific American, Feb. Baets, W. (2006) Complexity, Learning and Organisations: A Quantum Interpretation of Business, Routledge. Institute of Noetic Sciences (IONS), (2007) The 2007 Shift Report: Evidence of a World Transforming, IONS. Mandelbrot, B. and Hudson, R. (2004) The (Mis)Behaviour of Markets: A Fractal View of Risk, Ruin and Reward, Profile Books. McKinsey and Company, (2007) Shaping New Rules of Competition: UN Global Compact Participant Mirror. Scharmer, O. (2007) Theory U: Leading from the Future as it Emerges, The Society of Organizational Learning. Senge, P. Scharmer, O., and Flower, B. (2005) Presence: An Exploration of Profound Change in People, Organizations, and Society, Currency. Simon, H. (1996) Sciences of the Artificial, MIT Press, 3rd Edn. Taylor, M. (2001) The Moment of Complexity: Emerging Network Culture. University of Chicago, United Nations Environment Programme, (2005) UN Global Compact, Utopies, Talk the walk: Advancing Sustainable Lifestyles Through Marketing and Communications. Viverot, P. (2005) Pourquoi ca ne va pas plus mal, Editions Fayard. Wolf, J. (2003) Understanding the Grand Design, Trafford.

Internet sites ADS: www.bls.census.gov/cps/ads/1998/stabtop.htm Economist: www.economist.com IMF: www.imf.org Schonfeld & Associates (2003): www.saibooks.com/ UN CSD International Work Programme: www.un.org/esa/sustdev/natlinfo/ indicators/isd.htm UNEP: www.unep.org WHO: www.who.int/en/ WWF: www.wwf.org

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Bibliography and further readings

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Exploring an interconnected world, as we suggested in the first chapter, immediately makes the link to biology and the lessons we can learn from biology. Ecosystems, life itself, and nature are interesting models of interconnectedness. The interactions that take place between different elements (be they amoebas, cells, animals in a colony, the process of photosynthesis, etc.) at different levels of existence suggest some ideas to explore in order to improve our understanding of the interconnectedness between people in markets and companies. In this chapter we consider some biological concepts that are challenging for the study of human behaviour and in particular for human behaviour within the context of groupings. Does something like self-organisation exist? The answer to this question opens revolutionary possibilities for business. The relevant research for answering it comes from biology in general and neurobiology in particular. While Maturana and Varela are perhaps the best-known representatives for the perceptual innovation known as self-organisation or autopoiesis, the concept has been applied by several people in different domains and in different ways. In their work, the two neurobiologists did not examine the systems from genes or ‘species’ perspectives, but from the most simple biological element, the amoeba. For them, the amoeba has a central role in each living being and so they studied how cooperation between these amoebas creates (complex) behaviour. Each amoeba has individual autonomy at the centre of a certain organism, and what appears to happen is that the living system basically functions in a mechanical fashion. In effect, the total behaviour of the system is generated by its elements and their interaction. As a result, observers find themselves entirely outside the system and, therefore, perceive the unit as well as the environment. 29

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The Biology of Business

The elements of a system react uniquely in interaction with other components. Each declaration of a living system cannot therefore be based on either the idea of the goal or the direction or the final function. In this layout the systems seem to be autopoietic, they are circular, selfproductive, self-conservative but also self-referring. Here we have a few points of reference to see how people collaborate in a company or an organisation. Perhaps, effectively, in a company there is a more important objective than profit, or the creation of value, for the shareholder. A company cannot be anything other than a collaboration of a number of individuals who are trying to attain their own individual goal and who use a certain number of rules of interaction. If this is the case, then it is remarkable, for such a system creates its own order and maintains itself in a good state (like our body) on the condition that no artificial order is imposed (something we could call an organisation). By contrast, scientific management does precisely that. We impose an organisation, which we are then going to control if the requisite results are to be attained. It is perhaps sometimes the reason for failure.

Questioning organising and observing theories At this stage we must advance in the understanding of the process by asking key questions: What does autopoiesis need to be true? What conditions must be satisfied to produce this self-production and selforganisation? The answers lie in the theory. All perceptions, observations, and experiences happen to us via our body (our senses) and our nervous system. The body then becomes the medium of transport. Once in the system, therefore, it is impossible for human beings to have a pure description of anything that is independent of themselves. Each experience is always a reflection of the observer. There is no object outside the field of the observer, but this observation belongs only to them. What is therefore true in an autopoietic system and how can we face up to knowledge and truth? What does the truth signify? Who supports autopoiesis in maintaining a system in a good state? The survival of the system becomes a key criterion for measuring knowledge and success. Each apparently scientific approach can only clearly describe what the observer sees: in effect, the observer plays a crucial role. The comparison with the external world makes no sense. Therefore the methodology and the manner of leading our investigations are specific. They cannot be detached from the view of the observer. In a company situation, each truth can be just as precious, and just as important, as

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another. It is not certain that the manager has more reason or a better understanding than someone who is closer to the company process, or to the customer. Consequences follow from this. Autopoiesis really says more about the observer than the subject (or should it be object?) which is observed. In the case of autopoiesis, at least this is clearly accepted, but what about other scientific paradigms? An ulterior consequence is, of course, that any absolute claim of objectivity cannot be made, by whatever approach. All of this has already been confirmed by Gödel’s theory. Both belief and theory are pure human constructions, which then construct a reality instead of being a reflection of an existing reality. For this reason we sometimes speak of a paradigm of radical constructivism. Reality is created and not perceived. Constructivism as a research paradigm is obtaining increasing support in social sciences research, but is also subject to a lot more discussion in the classical sciences.

Theory in action: Computers, law, and linguistic animals Self-productive ideas have been successfully applied in the construction of self-generating computer applications. The application manipulates itself to be in an optimal situation at every moment: in this case we are talking about genetic software. A telephone switchboard, for example, must at any moment of the day deal with a volume of swiftly changing traffic. We can easily imagine making a program which takes account of the multitude of possibilities, but in practice it appears rather difficult. We can now develop a software program that manipulates itself in relation to specific volumes of traffic that the switch intercepts. We do not produce a program which resolves the specific problem, but it is a program which uses ideas of self-reproduction. Legal systems, for example, organise themselves in the best manner to ensure their survival, and the survival of their practitioners, rather than (exclusively) furthering their expressed aim of enabling justice. A legal system reproduces itself and establishes its own frame of reference. In order to make a legal system more efficient, a common language (the law) and a number of procedures are created. The professionals of a legal system (judges, lawyers) who work daily with such procedures know the language and the systems. Common understanding and efficiency increase within the legal system. But the citizens, who are only seeking justice (and have no a priori interest in the survival of the system itself) do not understand the jargon and

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The Biology of Business

ceremonies around what they consider to be a very down-to-earth facility. For these outsiders, the insiders become extraterrestrials. For the insiders, the outsiders don’t understand the importance of the system’s own survival. We have already mentioned the idea of self-reference as a strong, but potentially destructive, idea. By analogy with the legal system, we can regard each human being (a society, an organisation, a meeting, etc.) as an autopoietic system. People seem to be ‘linguistic animals’ (and that refers to communication and interaction in a network) who do nothing other than play the game that could be called the ‘practice of (artificial) living’. Human experience as an observer is not only crucial, but is more important than what really happens in the world. The role of language and communication is core. All understanding happens through language and its representation, but, in addition, all communication with others in a network takes place through language. The number of misunderstandings in the world, in the same group of languages, is symbolic in relation to this central aspect of interaction. Even in the centre of the same group of languages, the Dutch and the Flemish, for example, use the same words differently. Sentence structure is different, which leads to gathering the same ideas in different ways. The network of ideas which a speaker tries to transmit is a function of the construction of sentences, even the sequence of sentences. But also, from the listener’s side, how they make sense of the phrases determines the understanding of the message received. Communication is constituted by a network of agents (people) exchanging a network of thoughts, with, perhaps, some hopes of being able to learn something, develop knowledge a little, or get something done. In order to get to a real understanding of communication, we should not ignore common intention. For facilitation of communication, we have to create formal ‘languages’ (a set of rules). These languages have the intention of standardising and therefore facilitating communication. However, they do not grasp the common intention, and by formalising the exchange of ideas they sometimes obscure common intention. Children who communicate between themselves in different languages, without speaking those languages, may consequently make far fewer mistakes in the formal language and seem able to conceptualise more rapidly. It seems evident that the messages children want to transmit are easier than those which politicians want to transmit. Here, too, we immediately fall into the positivist trap: if we can measure, then we can

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know. But it would now seem that communication is not at all organised in the same way as thoughts are. Is non-verbal communication not equally efficient and less structured? Does the extreme order help the process of communication, compared to a higher intensity of communication? If everyone in a Spanish café seems to be talking at the same time, and no one seems to be listening, is the communication less significant and less precious? Do similar interlocutions lead to not-so-good decisions? Do we always have the intention of rational exchange, or do we use language for emotional connection? And would the latter add less value in communication?

Cognitive connections and artificial intelligence Contemporary cognitive psychology seems to prove a good number of these ideas. A lot of research is done around language and interlocution, showing that language and action are tightly linked. Language is our ‘existence in the world’. Language is really the entire thinking of humans. Even on the subject of language, we think using language, about language (a good example of self-referencing). Knowledge is not linguistic representation, because it is possible to distinguish between different things beyond language. Language is, in fact, a social act. Organisations are therefore networks of recurrent interlocution constructed between individuals and groups of individuals. This thinking has parallels with a certain reorientation in the developments in artificial intelligence. The reigning paradigm of objective observation, and the associated possibility of drawing up optimum rules, led to the research of ‘machines based on rules’ in expert systems. The assumption is that all people’s decision processes can be captured in rules. While these expert systems have known moderate success, the achievement of the objectivist orientation of artificial intelligence has certainly been overestimated. Current developments lead in two rather different directions. One goes in the direction of research, which we can regard as looking for a selflearning behaviour of systems (emergent behaviour), and makes use of connective structures. This development is seen in artificial intelligence in particular. The connective structures are structures with which a lot of simple tightly connected elements and communication make sense out of chaos. In practice, this involves such techniques as neural networks, or networks of agents. The second direction in current research also builds on the selflearning behaviour of systems. In this case, it is perhaps better translated

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as constructing behaviour, based on ‘enacted’ technologies. ‘Enaction’ here refers to what Varela calls ‘enacted cognition’ as an actor ‘enacts’ a theatre play. An amateur asked to play the role of Hamlet might try but would be unlikely to achieve a satisfying theatrical outcome. If an actor is asked to play Hamlet, he does not ‘play’ Hamlet, he becomes Hamlet. Each evening he re-creates another Hamlet. Maybe the two find each other in the character of Shakespeare. A manager can no longer ‘play’ the role of manager. A manager can simply ‘enact’ his role. He ‘is’ his role and it is therefore very difficult to learn this ‘behaviour’. You become a manager by experience. You cannot teach someone to become a manager and, as will be argued later, something which is based on skills and competence cannot be taught.

Developing knowledge: Pathways, platforms, communities For this reason, the personal development path of a manager is so crucial. A ‘learning’ manager will only be up to playing the role of the spider in the web: the inspirer and creator of good conditions for others. The manager must and should strive to continuously improve himself in this task. Operations or instruments only have a very limited utility and can never play a driving role in dynamic situations. Worse still, they can, therefore, never have a general validity. Knowledge is only knowledge if it offers a reasonable representation of action and creation. Otherwise, it is possible to speak only of information. In this case, therefore, the use and the analysis of communication (conversations) as well as a strong focus on the support of communication (by platforms, for example) only gives the context within which the actors create knowledge. To illustrate: the ‘communities of practice’ experiment carried out by numerous companies, seems to conform well to this preoccupation. This experiment was not uniquely led by artificial intelligence. Nevertheless, the interest in dynamic re-creation in two directions appears in artificial intelligence research. Things are not fixed, but are produced afresh each time. If someone is asked their age, the information is not stored somewhere particular in the brain. Each time the question is asked, the person is going to produce the reply again. This seems inefficient, from the point of view of a recurrent question. That is, in fact, the case. However, a question is rarely truly repetitive, even if it is asked using the same words, since in the majority of cases it is looking for another signification. The intonation, for example, very often gives a big hint about the question and the expected answer.

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This dynamic reproduction as an approach therefore leaves open the possibility to reply very quickly (and differently) to similar or slightly changed questions. For an authentic, real-time conversation this principle is therefore a lot better and more efficient. Furthermore, if the brain needed to store all possible information in order to be able to answer all possible questions, it would need a lot more storage capacity (and hence a larger head to accommodate that). From a rational and positivist view of the conversation, this seems an aberration and an error of thinking. Language in general plays an important role in this research. The research methods themselves are more self-learning. The general validity of the observations is less declared; something which is done more quickly in classical science. Contemporary theories of artificial intelligence on how to think about the subject of reasoning offer a different stance. They take more distance from earlier, rather positivist approaches. Possible interaction between reason and the soul are looked for, which was unthinkable before in cognitive psychology. Reason (intelligence) is considered as a behaviour: behaviour is what counts. The link between the brain and reason (intelligence) is broken: reason is not only present in the brain but in the whole body (distributed intelligence). We are speaking here about the concept of ‘embodied mind’. Reason, the brain and intelligence, are considered less and less to be a sort of computer which refers to the thinking of the machine behind reasoning. The interpretation, which is generally always vigorous, becomes, in effect, more and more based on shifting sands. Intelligence is strong in the organisation of ‘the next step’. It is weaker in the planning of a number of next steps (multiple) and weaker still in the execution of subsequent multiple steps. Intelligence is the organ of control for an autonomous agent. The structure was formed in a descending manner or by a combination of some elements. A common example of a combination occurs when different people sit around a table. The result is something like a structure as it sets up a network of different elements (people). In addition, intelligence is something continuous, and not only a sort of metaphor for a machine which functions with zeros and ones. Intelligence does not function with numbers and symbols but with vague notions like tall, taller, smaller etc. Intelligence reacts to these sensations, which can be translated into sensorial perceptions. Then all of that is translated into information. It is not the action on the senses themselves which creates information, but the liaison of a specific perception with the existing network of perceptions and information.

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Sensorial perception, action and knowledge go together and this is summarised in the notion of ‘enacted cognition’.

Self-organisation and self-production are concepts which are strongly embedded in neurobiology; concepts which, when translated into social systems, receive more and more attention, but which are radically different from the tradition of Western management. In this tradition, everything must be organised and controlled, based on whichever intellectual tradition is inspiring. But in practice that does not work and can lead to frustration. Through Varela’s concept of enacted cognition, it is possible to see how intelligence recombines old information and experience to produce new actions. Intelligence is positioned in a diffuse way in the whole body, but it seems that, even if the modules are independent, they collaborate through connections between each other. These notions undermine what is used most of the time as a basis for our management, especially specifically concerning structure and control. In particular, it raises one crucial question: can a social system be organised from outside? From enquiries into the behaviour of autopoietic systems, the answer seems to be ‘no’. Instead, it appears that each system, even if examined at the level of the simplest components, can only organise itself, replicate itself, and assure its own survival. Although this could be taken as negative at first sight, it represents an undeniable strength. Systems do not necessarily need a tight direction with a lot of complicated rules, at least if we dare to give back the control and the direction to the system itself. Therefore, the shocking conclusion for traditional management is that intervening in such a system should probably be avoided. Just as people are often not aware of the self-organisation within themselves, management of large companies are largely not aware of the self-organisation within. Many reorganisations of traditional companies directed from ‘outside’ or ‘above’ actually risk destroying the very organisational fabric that has allowed them to operate as an integrated whole. However, careful experiments in certain companies seem to indicate how a more self-organised management could succeed. In practice, how can this be related to knowledge management? Or, to put it in more specific terms: how might knowledge be organised in a ‘self-searching’, and preferably self-finding way (in opposition to the branch structure implemented in very large databases)? Groups

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responsible for the conception of new products seem to be more creative and efficient if they have more liberty. This is not to claim that nothing can be learnt from the past with regard to successes and errors – on the contrary. However, the difference is that the lessons learnt from previous experience are not translated into typical outcomes such as the ‘ten commandments of innovation’. Instead, they are used rather like stories from which, according to individual interests, advantages can be extracted.

The gift of learning and ‘walking’ to learn The potential of learning in itself, in companies, is an interesting gift. More and more companies try to provide a more flexible range of training and support better linked to the profiles of particular individual roles. They seek to provide ‘just-in-time, just-enough’ learning, based on the development of necessary managerial competencies. Other research, including my own (Baets, 2005), has illustrated that workplace learning is a very effective and efficient way of continuous learning. This is particularly marked if it is related to the development of managerial competencies. E-learning by itself (without speaking of classical e-teaching or of distance or correspondence learning) is a promising development through which a manager, while doing her or his job, is supported by the learning environment. To those who want to learn, it will offer potentially effective support, adapted to their needs. Such situations also abolish the classical teacher role, which is designed to transmit to classes of pupils how the real world is (or should be). Those who want to learn find what they want and need to learn, and then do so by doing. All these developments are promising on condition that the organisation has the courage to relax control at all levels. This does not translate into saying that everyone does just anything, and then see what happens. Let me refer again here to Alice in Wonderland. If, effectively, employees do not know where they, or their organisation, want to go, then each path is equally relevant and good decision making difficult. Nor can organisations be too rigid with direction as in Western management’s tendency to fix the paths to follow. This leads to problems when these paths change – as they quickly do in current conditions of rapid change – and organisations forget the need to adapt and to change themselves, because they concentrate on the destination to reach instead of the path to follow. From an autopoiesis perspective, the path that goes towards the goal will be made by walking, in the network of employees. As Antonio

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Machado says: ‘Caminante, no hay camino, se hace camino al andar’ (There is no path, the path is made by walking). Management, or organisational strategy, must concentrate on the goal to be reached, and should also share ideas with the network of employees. In practice, this does not often happen. Strategy is often considered as secret, and so employees cannot even help management to attain the goal. The agents in the network each have their own preferences and capabilities. In the interaction with other elements of the network they can walk on the path which will lead to the goal by different little steps. If the goal is clear and realistic, the path could be adapted each time it is necessary in practice, and sometimes this could be very often. Knowing the goal, employees can take their responsibility in contributing to this network of walking paths.

The search for an underlying theory Chaos and order As already noted, certain contemporary disciplines challenge the tradition of Western management and its propensity to organise and control. Another understanding of the functioning of social systems is possible and can give us other ideas for management if we are able to observe from another paradigm. Is there therefore a paradigm which is scientific (based on scientific discovery) and which provides a vision of social self-organisation? In seeking to ground this vision theoretically, I found inspiration for this book in what is known as the theory of complexity and/or chaos. Scientists, effectively starting from a positivist paradigm, but with an open-mindedness which lets them really see, have made remarkable observations. A number of them, for example Prigogine, have received the Nobel Prize for their research, but very often their knowledge remains essentially within their own circle of researchers in hard sciences. Only during the last few years have we seen little by little what their theories, especially the application of them, can mean for social systems. This aspect orients us towards ‘the search for an underlying theory’. Look at the chaos of daily life, a point of common contact where writers and readers can, supposedly, agree. But how does it work? Chaos is clearly present at times, but fortunately we also regularly have order. Certain things often play out in a well-organised way. The administration is organised, the trains are well organised and planes leave more or less on time. Isn’t that order, and how does chaos play a role in that? Is there a theory of chaos? As we have already stated, positivism goes

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Sometimes small differences in initial conditions produce very large differences in the final observations. A minor change in the former can cause a tremendous error in the latter. The phenomenon is becoming unpredictable; we have random phenomena. He could not prove it, but he could clearly see remarkable things happening. During the simulation of certain mathematical models when very small differences in the initial values appear, big differences can be found in the final results. Poincaré could not explain the cause. Nor did he appear to have the least idea that he was making an observation which would later lead to what became known as complexity theory. It should also be remembered that Poincaré did not have computers at his disposal to experiment rapidly with all sorts of simulations. It was not until 1964 that Lorenz, an American meteorologist, discovered and identified the problem with supporting data. In between these dates, in 1931, Gödel’s theory had sowed confusion by proving that any axiomatic system, let us say a mathematical system of variables and equations, would not be up to accepting or rejecting all possible statements one day. Therefore, there could be no unique perfect model of the world. This discovery was much more than a huge question mark, making a new turning possible for mathematicians. Mandelbrot’s fractal algebra is just one of these new orientations. But Gödel’s theory, while adding to its significance, does not give a response to Poincaré’s problem. Lorenz, however, did add clarity. As a meteorologist he worked with a simple system of three dynamic non-linear equations. Dynamic means, for example, that today’s temperature is a function of yesterday’s. Nonlinear means that somewhere there is a variable with an exhibitor. With his system, Lorenz tried to predict the weather. He made a number of observations and simulations on this subject. Lorenz had a computer, which was not common in 1964, and thanks to this he could clarify what Poincaré had suspected. The use of computers was indispensable for making sufficiently large simulations. During these simulations Lorenz had to interrupt his research. In fact, since computers did not have screens at this time, they produced a mountain of paper. When he wanted to pick up the simulation later, he wanted to take the last value the computer had produced as the initial value of the rest of the simulation. He had, as a good scientist, a certain

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perfectly with the Cartesian attitude. It is, however, in the positivist sciences that the first doubts emerged. As early as 1903, Poincaré made a remarkable observation.

doubt. This is how, instead of taking the last value, he took the result of the previous 100 observations and started from that. During this new simulation of the 100 last steps, he wanted to be sure that everything went as well as previously before going further. To his great surprise, Lorenz discovered something scary. Nothing went as expected. In the first period, he saw little differences appearing, but they were not always the same. They were rather arbitrary. Although the range of discrepancies was at first quite limited, the same values were a little random. The biggest and smallest values alternated in a previously unknown pattern. But while the simulation continued, he observed some remarkable occurrences. The new simulation seemed to suddenly react in a strange way. The values showed huge differences in the two directions and the differences between the first and the second simulation became bigger than the values simulated. Therefore, these values became incoherent. The whole exercise became totally futile. Lorenz had hit on what might be described as ‘the bug of unpredictability’. In certain systems it seems impossible to predict. From a certain moment, and we do not really know which moment, the system becomes entirely incomprehensible: it displays ‘chaos’. Therefore a prediction can work very well for a certain period, and then, suddenly, and seemingly unpredictably, become completely useless. What had happened? Lorenz had certainly entered the correct number. But although he had used the correct number printed on the list, it was not really the same thing. It was a rounded figure, compared to the one the computer had used in the first series of calculations. It calculated, for example, with precision up to sixteen figures, but only printed eight. Therefore the number with eight figures after the decimal point was slightly different from the true figure. In real life, calculations are often done with rounded figures, rather than with the precise number, which may include several figures after the decimal point. It appeared to be a question of non-linearity and of the dynamic characteristics of the system, and so, just like that, Poincaré’s worry had a name. Dynamic and non-linear systems cause, by their very structure, unpredictability. A complex system is hereby defined as a non-linear dynamic system.

Management paradox Company managements constantly confront complex (or, in other words, non-linear and dynamic) systems. Is there a phenomenon in management for which the current value will not be dependent on yesterday’s value? The current value is, in part, always a function of

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yesterday’s value. The level of salaries (this year) is without doubt a function of the previous year’s levels. The market share which you can achieve today is without doubt a function of the market share you could achieve the previous month. The phenomena of management are, in consequence, dynamic until proven to the contrary. In addition, each management phenomenon is not only dynamic but also non-linear, except for the processes (production lines, for example), which are constructed to be linear. Such processes have been built specifically to perform specific tasks, in a way that can be checked and controlled. Although, even there, experiences of control going off the rails can be found (e.g. nuclear plants), and all the interesting phenomena are non-linear. Market behaviour, competitors’ behaviour, employee collaboration in their daily work, and the processes of decision making through dialogue, etc. are non-linear and dynamic and, therefore, essentially unpredictable and uncontrollable. So a paradox of management is the attempt to direct and control something which cannot be controlled and directed. That would not be so terrible if its failures were not found to be surprising. In fact, it is impossible for management to guarantee success (in markets and/or dynamic companies) through control and prediction. Consequently, it is called into question as a way of facing up to such dynamic systems. What can a manager’s role be if everything is unpredictable and uncontrollable? In essence this is the main question of this chapter: what can a manager do if no control approach works? One possible response is to adopt a learning approach. The cause of chaos, which intervenes in a system for the same reason as order, is the very characteristic of a dynamic system. A system does not have a problem with that. It does not have a problem containing order as well as chaos, sometimes demonstrating order, sometimes chaos. It is human beings who have a conceptual problem with trying to consider systems as organised entities which are therefore manageable, and who have ongoing practical problems in trying to deal with a complex system with control and prediction mechanisms. In practice, the phenomenon emerges though trying to reach understanding through models. It happens when a manager uses models (even simple ones), or rules of thumb. Those simple models are often linear and non-dynamic, and they cannot deal with the simultaneous presence of order and chaos in a system. Certain mental models of managers, like automatic pilot behaviour, are naturally also models. The phenomena studied in management are continuous (they never stop and constantly change) and not discontinuous. But what

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measurement can be taken? As precisely as possible, this should always be a point of discontinuous measurement. We therefore continually approach societal processes which are themselves continuous (market behaviour, buying behaviour, human interaction) with variables and decisions based on discontinuous measurement. The point of measurement (of observation) is never really correct. Using the phenomenon Lorenz revealed, which we could call ‘the dependence of initial values’, we know that, since the observation is never correct, the simulation is going to produce chaos. But there is still something else. In practice, we cannot approach a reality which is by definition continuous (e.g. market behaviour) other than by a discontinuous approach. In other words, although managers may try to do the maximum, and to be precise, observation and data can never be correct. In managerial applications, there is no immunity from the virus of unpredictability. Accordingly, the approach advocated by this book aims, to an extent, to incorporate this virus in the model. Any systematic approach will always demonstrate order at certain moments and complete chaos at others.

Characteristics of complex systems Learning from the Lorenz Butterfly At this stage, having established that these observations are not only scientifically important, but also, and especially, that they have consequences for companies (and also for social life, politics and law, etc.), the rest of this chapter looks at what we can learn from the theory of complexity. This theory is not new, but in the management of companies or other general social sciences it is still growing and relatively recent. This is why it is important to revisit key figures. Through his research, Lorenz, for example, shed more light on what Poincaré had suggested and gained a little more comprehension of complex systems’ behaviour. Lorenz captured the dependency on the initial values: little differences in the initial values led to big differences in the subsequent sequence of events. But Lorenz found yet another characteristic of complex systems. Apparently, complex systems can also demonstrate moments of relative calm (stability) in the middle of chaos. Sometimes the simulations turn around points of attraction, let us say points or fields of local stability, then suddenly change and orient themselves towards a more chaotic sequence of events, then calm down again around another point of stability. We call these points of local stability ‘attractors’, even ‘strange attractors’, since we do not know when, how, or with what strength

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they attract the phenomenon. Certain complex systems have only two attractors (points of stability) but certain other systems have a much higher number of attractors. The name of Lorenz remains linked to a very remarkable phenomenon in respect to weather forecast systems. In a certain simple simulation (three equations with three unknowns), Lorenz observed that the phenomenon being studied centred around two attractors. The phenomenon moved around the first attractor one moment and suddenly whizzed off to then settle itself around the second attractor. Next, the phenomenon moved back suddenly to the first and then back towards the second. In fact, in doing that, the phenomenon created a sort of butterfly-shape. This therefore became known as the Lorenz Butterfly after his 1972 paper title ‘Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set off a Tornado in Texas?’ (cited in Lorenz, 1993, p. 14). It would be comforting to be able to say that such speculations are impossible; that they do not make any sense. In theory, at least, however unsettling, it is possible as simulations show and no one, at the time of writing, has ever been able to prove the contrary. In fact, despite the formidable progress of science, weather is still totally unpredictable a few days in advance. So why should it still be necessary to emphasise again that this is also the case in management? Consider the stock market. Do expert analysts know why the stocks do what they do? Is there one person who can do better than the ‘random walk’ in anything other than the short term? Could it be true that the lack of understanding of stock market behaviour has a relationship with the manner in which we approach it, and, therefore, with the perceptual glasses used to observe it? In the 1960s and 1970s we considered the Soviet Union to be the bogeyman, which allowed the examination of the world with a certain perspective, a certain pair of glasses. These glasses were not necessarily correct but they perceived what they perceived; except that, this is also not necessarily true. The Berlin Wall fell and at that moment the military and economic power of the Soviet Union could really be observed. To represent the Soviet Union as the great danger for the world and development has come to seem, at least in retrospect, a little unjustified. At the time, however, this vision served all sorts of goals and justified massive investments in, for example, the arms industry and the defence sector. This, of course, happened to the detriment of other possible expenditure. The point of departure chosen will justify our action. By choosing the glasses, the field of vision is restricted to them or by them.

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After the fall of the Berlin Wall, another pair of glasses was required. And in the meantime perhaps yet another pair has focused almost exclusively on Muslim fundamentalism. It is a lot simpler to consider the world in terms of huge aggregates, like the free West, the Communist world (although now it is a lot smaller), the Islamic world, the problem states (Iraq, Iran, etc.). However, what if the world is just a game played by a collection of individuals, organised or not in groups at a local level; groups which are linked in various networks where each individual (or group) can continue to live life in the best possible way, with a minimum of rules of behaviour? Perhaps the search for theoretical understanding takes place at too elevated a level of aggregation? The theory of complexity, and notably the work of John Holland on agentbased simulations, provides contrasting points of reference which open other fields of vision.

Prigogine, liquids, and time Up to this point, two characteristics of a complex system have been identified: it is strongly dependent on initial values and it displays local stable moments around what we call strange attractors. These can be extended by the ideas of a man who is closely linked with the theory of complexity: Ilya Prigogine, a Belgian Nobel Prizewinner, Professor Emeritus of the Faculty of Science at the University of Brussels (ULB), who (unfortunately) died a few years ago. His research was oriented to the dynamic of liquids. At first sight, these theories are a long way from managerial thinking. In fact, Prigogine’s research on the behaviour of liquids (during the process of heating) discovered dynamic characteristics of liquids in this phase, which in turn led to remarkable conclusions of wider relevance. Prigogine’s best-known conclusion, and the most important for the study of complexity, is the principle of the ‘irreversibility of time’. In short, he showed that the future cannot be extrapolated from the past, at least in dynamic systems. The reason is that a dynamic system recreates itself all the time and can branch off at any moment. A dynamic system develops in a non-linear way, and thereby obscures its historic development. It makes reference to the concept of the constructive role of time, what he calls ‘the arrow of time’. Time plays a constructive role in dynamic processes. Over time, or rather, as time moves gradually on, something new happens in liquids, something with new characteristics; the initial characteristics are never found again if we stop the heating (or if we cool it down). For example, once a cake is cooked it will never again return to being a paste. Coffee, once made, will never go back

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to being powder and water, but it will also change again when it is reheated a second time. In the heating process, liquid takes on other irreversible characteristics. Time plays a constructive role. Time contributes to a new creation. Despite the two great scientific revolutions – relativity theory and quantum mechanics – most thinking in physics is still Newtonian: the space–time couple is seen as a fixed one. In Newtonian thinking time is reversible and so the future can be predicted from the past and, in theory, also vice versa. In fact, the past can be predicted from the future, and, therefore, past and future are immutably and deterministically linked. In practice, in companies, that is naturally not the case. In fact, no one has ever succeeded in predicting a market potential, or market shares or future relationships between competitors. The financial markets are the most eloquent examples of failure but, for whatever dynamic market, it is equally impossible to forecast other than in the short term. The more dynamic a market, the more difficult the forecasting, because, in this case, time plays a ‘more’ constructive role. This does not mean that the past is totally insignificant. The past, and more particularly the experiences of the past, are the raw material for human learning (see Chapter 3). But the past does not let us predict the future at all (other than in the very short tem, or in stable situations where forecasts are therefore useless). The characteristics of a liquid, according to Prigogine, are created anew each time. These characteristics are a type of knowledge and consequently knowledge is created anew each time. It is not enough to mix powdered coffee with water to obtain coffee. We have to go through a process using a coffee machine and in the course of this process the qualities of coffee are introduced, by the dynamic behaviour of the system in question. After Gödel’s observations, the principle of the irreversibility of time is the second important phenomenon in thinking around complexity. Prigogine also investigated the behaviour of systems far from their balance point, far from equilibrium, in comparison with systems close to equilibrium. By way of comparison, and this is in opposition to classical economic thinking, a system in balance is a totally uninteresting system. It contains all information, it is dead, and can therefore not be moved from its balance. In the theory of information, it can be said that the system understands all the information, or contains all information. There is nothing else to add. A society (or company) in balance is therefore a dead society and it is extremely difficult to revive it or innovate. Therefore a system is interesting if it is not in balance. It is the same thing for a company. Nevertheless, there is also a difference

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between a system close to equilibrium in comparison with one which is further away. Prigogine introduced the notion of entropy and the production of entropy. Entropy is an indication of the ‘amount’ of chaos in a system. A system where entropy is equal to zero is dead and in a balanced position. A system far from balance has a high level of entropy. Prigogine observed that systems far from equilibrium are more interesting because, in this state, a lot of things happen. It is not, strictly speaking, a question of entropy, but rather the production of entropy, the progression (or diminishing) of entropy. This is important to bear in mind, but, for the purposes of this book, there is no need to go further on this point or the detail of Prigogine’s work.

Holland, the game of life, and fitness How does this apply to management? Well, in mature markets, for example, increasing market share is a lot more difficult than in emerging markets. In dynamic markets (chaotic markets) such as, for example, in Eastern Europe, market share is won more easily simply because the entropy of these markets is higher. Of course, it is also possible to fall a long way, but this is essentially the risk the entrepreneur takes: those who take risks will be rewarded (won’t they?). Companies are therefore theoretically encouraged to actively look for markets with higher entropy (i.e. rather chaotic markets). In practice that goes against the thinking which controls and dominates current management behaviour. The current preference is to choose the long and rather difficult path of a more stable (and expensive) approach to win market share. The tendency to control everything in management aligns with that thinking. ‘Controlled growth’ with a ‘calculated risk’ typifies the contemporary credo but runs the risk of neglecting market characteristics. In practice, as the subprime mortgage market has only too graphically illustrated, that often does not turn out as expected. Shifting to discuss new products and new markets, the innovatory force of a company is immediately invoked. Innovation does not go well with a stable company and a culture of strong control. To explore new possibilities necessitates a rather chaotic company culture, a culture with a lot of entropy, a culture where one can learn and fail. To limit innovation by detailed and defined procedures (as is often the case in practice) becomes a contradiction in terms: the so-called management of innovation. To develop beyond this requires introducing new ideas. Besides the ideas of Varela and those of Prigogine, another major current of ideas related to the theory of complexity is linked to the name

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of John Holland, the father of genetic algorithms. Indeed, Holland’s theories, along with those of Prigogine, are accepted by the majority of people in the Anglo-Saxon world as the theory of complexity (although the development of genetic algorithms cannot be seen disconnected from the research of ‘artificial life’, which is closely connected to Chris Langton’s work). The research on artificial life highlighted remarkable characteristics of systems, notably the functioning of so-called complex systems, on the basis of a number of simple rules. It is possible that a system with simple agents (say people), in which everyone follows their own simple goal (to survive, for example) and where everyone follows rules of simple interaction, produces complex behaviour. To take two simple examples: the flight of birds and the game of football. In general observation, the flight of birds flying in V formation appears to be well organised. However, the individual behaviour of the birds is not very organised. It can be reduced to simple rules such as birds not losing sight of each other while not touching each other. Trying to write a programme to simulate this process, based on reductionist ideas and an associated procedural approach, will never succeed. The birds’ behaviour can never be understood at a sufficiently detailed level. However, it is perfectly possible to simulate a flight in V formation with the following two rules: Always keep a distance between 15 and 25 cm from each other. If a bird wants to move away, it can do it up until it hits the 25 cm barrier when it risks losing its neighbour. The 25 cm rule links this bird with its neighbour. When the birds risk touching each other, the 15 cm rule maintains a sufficient distance between them. We can immediately see the movement in waves of the entire flight. When a flight approaches a post, first of all, the 15 cm rule keeps the bird at a sufficient distance and pushes it around the post. The 25 cm rule avoids them flying off into the distance. At the other side of the post, the 15 cm rule again prevents them colliding and the flight continues on the other side. The game of football has precisely the same qualities. Because it is impossible to understand the rules of footballers’ decisions, programming classically, in terms of procedural thinking, does not provide any solution. Once again a few simple rules can provide the solution. They all want to win, remembering that there are therefore 22 players with the same aim. A few simple rules of interaction are determined between them; for example, not to play the ball with their hands, not to kick each other, etc. These rules are identical for all 22 players, only there is one difference. Eleven players play in one direction, the other 11 in the other direction. What happens now is that these 22 cooperating

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agents can develop a very complex game, while each one of them has a simple aim in front of them (in this case, the aim is, of course, to score a goal). The world’s most popular sport is based on a few simple rules of interaction. The coach does not determine the rules or how someone must play. The coach transmits his understanding of the game and shares his experience, after which the players themselves must act. That is what happens in genetic software, genetic algorithms or ‘artificial life’. It appears that a given network of agents (entities, software, people, etc.) with a certain aim in mind, and with a few simple rules of interaction, is capable of very complex acts. It is the underlying principle of agent simulations, a development in artificial intelligence, for which Holland is in part responsible. These (artificial) agents appear to be able to learn by themselves and to produce behaviour which is adapted and geared to learning, like the footballer who gradually acquires experience during his training. Accordingly, such a system based on simple rules of ‘fitness’ (i.e. geared to Darwinian notions of the survival of the fittest) can demonstrate a capacity for learning and for solving complex problems. Agents’ systems are therefore an imitation of methods of organisations noticed in human ‘colonies’ (football players, companies, employees, etc.). The search for rules of decision making becomes useless. Determining objectives for each individual, linked with rules of interaction, seems to produce the work required. Two important developments stem from this: genetic software programmes as well as genetic algorithms. A genetic software programme is therefore software which self-regulates in such a way as to optimise the execution of the task in relation to the environment at a given moment. The software of a call centre, which genetically self-regulates to be able to manipulate the flow of continually changing communication, is one example. Another interesting development is the use of genetic algorithms: algorithms which genetically manipulate chains of 0s and 1s to provide a multitude of possible solutions. The different possibilities are compared on the basis of their ‘strength’ (fitness). By constantly manipulating the information, and keeping the better solutions, the best solution can finally be found. This system is remarkable in its simplicity and strong in its capacity to resolve complex problems. The basis of these developments, and the interesting applications which stem from them, have implications. They imply that, where the hierarchical and organised structures are not capable of completely understanding this type of system, it is no longer necessary to look in the classical direction: a number of alternatives already exist elsewhere.

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Companies, or any kind of network or social entities (society, country, international community), can be considered as agent networks. These agent networks demonstrate emergent behaviour (or self-creating behaviour) which is produced anew each time by the network (in line with Prigogine’s illustrations). The role of a manager in such a network is therefore no longer to provide good solutions (if that was indeed the case before). Instead her or his job is to create the best conditions and circumstances for the network to be able to work in freedom in the best way possible. These networks are self-creating and self-organising, and based on principles already found in neurobiology. These networks demonstrate behaviour which is sometimes very complex, but the rules of piloting are very simple. The strength is not even in the links in the network (the agents) but more in the quality of interaction (in the network itself). Effectively, it is the quality of agent interaction in a company, and not the quality of individuals, which will build the quality of the company. Recruiting very intelligent employees brings nothing to the company if they are not prepared to collaborate. It is clear that the supervision mechanisms for such networks are different from classical management. What is most important is not what is good or better, but rather how to speed up the process of learning. It is therefore important to learn from mistakes and successes while each time leaving the network the possibility of creating a new space (with the solution). This network must be held as far as possible away from balance, in order to maintain high entropy and therefore creative potential, but that can only be done with good conditions of basic support. The key word is: learn. The basis of management is learning; but learning quicker than competitors with the best support of collaborators in their learning. However, the more order is sown in the network; the more chaos will be harvested. Only a learning human – a human prepared to learn, and capable of learning – can play a role in such a network in the best way. The manager is ‘only’ one element in the network. Prigogine’s work on the one hand and Holland’s on the other was considered by the majority as the theory of complexity (in AngloSaxon terms). We have also seen in other sciences (such as physics, chemistry or information technology) how evolutions in the same sense are produced, notably with the works of Maturana and Varela in neurobiology. The autopoietic principle (of self-reproduction and self-organisation) conforms perfectly to the character of permanent creation in a system (Prigogine) as well as the emergent behaviour of agents in a network

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(Holland). Neurobiological research is not a negligible fundamental aspect to take into consideration in comparison with what is developed here. Varela himself made parallels between human organisation and the functioning of the human brain (the neural network), which is a very dense network linking billions of ‘knots’ (neurons). Each neuron is in fact very simple (stupid) and can only execute very simple actions (yes or no to pass on energy). Connected (in a network), these neurons are capable of marvellous things. The idea of neural networks and their use for understanding organisations has already been studied in my other publications (most of them available on my blog, [http://euromed. blogs.com], or see Bibliography and further literature below). This metaphor of the organisation as a neural network not only goes well with Varela’s theories, but also with the metaphorical aspect of Prigogine’s and Holland’s theories.

Towards a new paradigm A number of more recent theories seem to be forging a new strong paradigm; a paradigm which has rather a lot of consequences for management and managers. Prediction and control become useless, since they are not realistic in dynamic systems where they cannot be correctly calculated. As a result, managing some parameters or variables, (and the associated slogan ‘we can only manage what we can measure’) does not make sense any more. But what is the role of a manager then? Which qualities must a manager have to be a good manager? If the manager effectively looks at companies with another pair of glasses (another paradigm) he could see other things. The things that are seen now, but cannot be well understood in the classical paradigm, could suddenly make sense. This opens opportunities to do something with them today which will be different, without a doubt, from what has been done so far. Market behaviour and the behaviour of the agents in the network can be better understood. Everything therefore becomes a question of learning, learning more quickly, learning continuously, and inviting others to learn alongside: the learning manager as an inspirer in a learning network. Applying this new paradigm in companies allows a better understanding. At present, it is not much applied. A few research centres and even a few companies follow this evolution with interest, but proportionately this is still very limited. Sometimes little companies manage to organise themselves in an ‘organic’ manner. These companies seem to open more possibilities for self-creation and self-organisation. There are even

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virtual companies which have succeeded, although in general they are very small.

On the scientific economics plane, Brian Arthur has for several years studied the economic theory of complexity by looking at market behaviour. He therefore observes things completely differently from traditional approaches. Other contemporary economic thinking is based on a number of simplifying assumptions, none of which are realised in practice. Man is supposed to be entirely rational, possessing all the information, working in a market with a limited number of goods (or services) and a limited number of players. This continues, despite the fact that not many people any longer believe that buyers are rational, or that they possess all the information. This has been further undermined by the spread of the Internet. It is not only difficult to possess all the information, to the regret of the Internet, and also thanks to the Internet, but there is a continual ‘overload’ of information. Information is not so important in itself, but rather it is the interpretation of this information that makes the difference. All these assumptions of rational economic man, which seem to be innocent at first sight, are necessary to be able to work with non-dynamic models (or to assume dynamic behaviour to be static). Based on knowledge about the faults of a static and linear approach of a non-linear dynamic phenomenon, there can be little hope that these models will give an understanding of real market behaviour. A fourth assumption of our economic theory is the law of diminishing returns. Under this law, physical goods (or services which are not based on knowledge) are such that if one consumes more of one, then one will obtain less satisfaction (marginal) for each additional unit. Having eaten five tarts, the sixth is not really very enticing. That is to say, that, if one has already seen ten films, the eleventh is no longer so attractive. The latest new unit produced less of a plus-value than its predecessors. The same is true in the production sphere. If we have the necessary amount of steel in order to produce a car, any additional unit of steel will not create any more value. This economic theory does not pay attention to the fact that, in an economy based on knowledge, where the products are principally based on knowledge (even if it is not pure knowledge), this law no longer holds. The characteristic itself of knowledge is different compared to the raw material of an industrial product. Knowledge increases in

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applicability the more one shares it. With products based on knowledge, the prefinancing is very important (the research part) even before the product can exist. Let’s take medicine as an example, where, at first, investment in research is very important. After this first phase one can market the medicine, sell it, and it will then be necessary to hope that the revenue pays back the investment made. The price of the first copy (of the first product) is very high, but each following copy is very cheap in ‘production’ (copying). Since the sales prices remains the same, each additional unit sold can therefore provide an increasing added value per unit (and not decreasing as suggested in the law of diminishing returns). The first copy of Microsoft Windows costs a fortune. Each following copy cost a few dollars: the time to make the copy and a CD. To return to the earlier example of the eleventh film, the assumed loss in pleasure or utility takes no account of how increasing appreciation of a genre, or an auteur, can frequently increase viewing pleasure. A delight in Hitchcock movies, for example, often means looking forward to the next, or even an early, poorer quality film by the master. In knowledge-based markets some reinforcing element appears. It can be caused by ‘positive feedback’, or a market strength which does not lead to a balance, but creates a sort of snowball. At the beginning of the video era there were different standards. VHS and Betamax fought a battle where Betamax was really of better quality and price, but VHS won. What happened is that more videos of the VHS standard invaded the market, then more video equipment manufacturers chose the VHS standard, thanks to which more filmmakers produced films to the VHS standard. This snowball led to VHS becoming the market standard today. Microsoft DOS was not the better operating system for PCs. At the moment when IBM chose DOS as their operating system they were far from the standard, and far from a product considered as good quality. The IBM decision led many developers to create their software programs using the DOS system. The other PC manufacturers (Olivetti, Philips, etc.) then also chose the DOS system. Windows still works on DOS (though it is well hidden). A more current example in the politico-social sector is the pre-election campaigns for the US presidency. Why did all the new candidates make such huge efforts to win voices in tiny states such as Iowa and New Hampshire at the beginning of their campaigns when, obviously, states like Florida or California would deliver many more delegate votes? The reason is very simple; they hoped to start out with victories, a snowball in ‘funding’ to buy more television time, thanks to which they could

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attract more attention, and then get more financing etc. Often, in effect, this approach really works. In the world of business, where Microsoft has clearly won the battle of the PC standards, the phenomenon of positive feedback no longer leads to the usual market share of 15–20 per cent in industrial leaders’ markets. In the knowledge markets it is closer to 60–80 per cent and – effectively, in the Microsoft case – there are even higher percentages. Continuing to think in the industrial paradigm is surely due to misappropriation. The justice system that only understands the old paradigm, by which it operates itself, very quickly supports so-called allegations in the knowledge market. If Microsoft were divided into several little companies, there would very quickly be another majority player emerging in this market. It is the logic itself of these types of markets. A classical approach has great difficulty understanding this; complexity-based theory has no such problem. Nor is the difficulty restricted to economics. Western thinking about science and organisation in general does not fit easily with the theory of complexity. Although opposed to Western philosophical and scientific traditions, complexity-based theories are not only interesting, but could also very well contribute to a better understanding of social phenomena. Managers will have difficulties accepting a number of aspects and the consequences of these theories. But very few concepts of Western managerial thinking seem to contribute to finding solutions in a dynamic world. It is systematically difficult to seize on what really happens, and the classical instruments do not always necessarily help towards a better understanding. How can a manager apply all that? When managerial control puts a brake on innovation, is there an alternative? This chapter has argued that there is, and that it has a direct relationship with learning: how to keep learning yourself, how to simultaneously stimulate others to learn, and how to create an environment that supports learning. These are managerial attitudes and skills required to cultivate creation and innovation.

Bibliography and further readings Baets, W. (1998) Organizational Learning and Knowledge Technologies in a Dynamic Environment, Kluwer Academic Publishers. Baets, W. (1999) A Collection of Essays on Complexity and Management, World Scientific. Baets, W. (2005) Knowledge Management and Management Learning: Extending the Horizons of Knowledge-based Management, Springer.

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Clippinger, III J. (ed.), (1999) The Biology of Business, Jossey-Bass. Gleick, J. (1987) Chaos: Making a New Science, Heinemann. Holland, J. (1998) Emergence from Chaos to Order, Oxford University Press. http://euromed.blogs.com Lorenz, E. (1993) The Essence of Chaos, University of Washington Press. Maturana, H. and Varela, F. (eds) (1980) Autopoiesis and Cognition: The Realization of the Living, Reidel. Maturana, H. and Varela, F. (1992) The Tree of Knowledge, Scherz Verlag. Merry, U. (1995) Coping with Uncertainty, Praeger. Mingers, J. (1995) Self-Producing Systems: Implications and Applications of Autopoiesis, Plenum Press. Nicolis, G. and Prigogine, I. (1989) Exploring Complexity, Freeman. Stacey, R. (1992) Managing Chaos, Kogan Page. Stewart, I. (1989) Does God Play Dice?, Basil Blackwell. Varela, F. (1979) Principles of Biological Autonomy, Elsevier-North Holland. Waldrop, M. (1992) Complexity, Penguin.

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Emergence and Dynamics: A Quantum Ontology of A-causality

The previous chapter has opened a quest for a new paradigm, or even possibly for a new ontology. If we would like to understand the world differently, we might need a new set of basic assumptions, beliefs that we hold about how nature itself functions. It is generally accepted that the world functions according to the laws of Nature given to us by Newton. We would operate in a fixed time-space concept. Events are causally related, and if we know what happens today, we know with certitude what happened yesterday and what is happening tomorrow. Clearly, however, our relationship with the past is a much easier one than our relationship with the future. We know exactly what happened yesterday; we have no clue what is going to happen tomorrow. In reality, in practice, a Newtonian world does not seem to hold. Nevertheless, our managerial thinking is still heavily based on causal thinking. We claim that we can only manage causalities. But in reality again, what a manager, a leader, deals with is interconnectedness of people, and that seems to follow its own pattern of logic. We have known the revolutions of relativity and quantum mechanics in physics during the previous century. How do the findings of quantum mechanics allow us to adjust our basic assumptions on the functioning of companies and markets?

Introduction Management theory and practice today are facing the challenge that linear and deterministic ways of thinking about managerial problems may create more problems than they solve. Strategy studies, for instance, display a growing interest in learning and organisational flexibility, and IT gives importance to distributed cognition and adaptive systems. 55

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Management theorists are keenly observing developments surrounding the complexity and chaos theory in science; management researchers are attempting to apply emerging theories to managerial problems. The ideas that many simple, non-linear deterministic systems can behave in an apparently unpredictable and chaotic manner is not new. It was first introduced by the great French mathematician Henri Poincaré. Other early pioneering work in the field of chaotic dynamics is found in the mathematical literature by scientists such as, among others, Birkhoff, Levenson, and Kolmogorov. More recently, Nobel Prizes (to Prigogine and Kauffman) have been awarded in this field of research. One of the difficulties for management theory and practice engaging with complexity theory lies in its attachment to causality. Complexity as an emergent organisational paradigm in the knowledgebased economy primarily questions the concept of causality. Despite relativity and quantum mechanics, most physics (and certainly all managerial thinking) is still Newtonian, based on a fixed space-time frame. In the meantime, further developments have taken place in the area of biology (such as the concept of Sheldrake’s morphogenetic fields) and mind/body medicine which all seem to point to a federating idea of a quantum interpretation of social phenomena (non-locality, synchronicity and entanglement). Could a-causality form the basis for a quantum ontology of complex systems? This chapter attempts to explore the essence of such a quantum ontology, enabling the development of a systemic concept of sustainable performance and diagnostics that go with it.

The philosophy of quantum mechanics: Challenges and opportunities The foundational concepts in the complexity realm emerge from such fields as neurobiology, cognitive sciences, physics, and organisational theory. New developments in knowledge management – such as connectionist approaches (complex adaptive systems) for the visualisation of emergence – give promising results (Baets, 2005). In fact, instead of causality, it appears that the networked economy is ruled by synchronicity (appearing at the same time) in line with findings in quantum research. Could it be that economy and management in general, and the more dynamic aspects of it like innovation, in particular, are indeed based on a quantum ontology? The insight into complexity which developed over the last decade, and its consequences for management – discussed earlier in the book

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and in previous publications (Baets, 2006a; 2006b) – provide a platform for this chapter to explore the ontological basis of complex systems. What Prigogine and complexity theory in general discussed fundamentally was the existence of any causal relationship. In fact Prigogine was surprised that despite the two fundamental revolutions in physics in the twentieth century (relativity theory and quantum mechanics), physics still remained mainly Newtonian. Physics presumes a fixed time and space concept in which the future is causally related to the past, while complexity theory and quantum mechanics show the impossibility of this assumption. In both the special and the general theory of relativity, the notion of causality, in which a cause precedes its effect, remains intact in the relativistic formulations of electrodynamics and mechanics and of gravitation. In quantum theory, the usual meaning of causal connection between one event and another is therefore called into question. The discontinuity versus continuity dichotomy can be seen as contingently rooted in philosophical commitments and in the physical phenomena studied. By the late nineteenth century, there were already significant, even if not overwhelming, philosophical precedents for the concept of indeterminism (including the possibility of inherent chance) in Nature. These opposed the straightforward determinism often associated with classical physics. Soren Kierkegaard believed that objective uncertainty can force one to make a leap into the unknown so that decisions cannot always, ‘even in principle’, be based on a continuous chain of logic. For example, one of Hoffding’s tenets was that, in life, decisive events proceed through sudden ‘jerks’ of discontinuities, an idea incorporated into Bohr’s view of atomic phenomena (Cushing, 1998). As Schrödinger concluded: this means nothing else but taking seriously the de Broglie-Einstein wave theory of moving particles, according to which the particles are nothing more than a kind of ‘wave crest’ on a background of waves (Klein, 1964). Einstein, de Broglie, and Schrödinger shared a commitment to a continuous wave as a basic physical entity subject to a causal description. There was a split in philosophical outlook along generational lines: on one side was the ‘older’, essentially classical, world view of people like Einstein, Schrödinger, and de Broglie; on the other was a radically different, eventually indeterministic, conception of physical processes engendered by a generally younger generation (Bohr and Born being exceptions here), including Heisenberg, Pauli, Jordan, and a new member of the group, Dirac from Cambridge University (Polkinghorne, 1990).

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On the standard, or Copenhagen, interpretation of quantum mechanics and, in particular, the Schrödinger equation, there is no longer event-by-event causality and particles do not follow well-defined trajectories in a space-time background. The theory predicts, in general, probabilities, not specific events. Dirac argues that an intrinsic distinction between large and small is related to the effects produced on an object when it is observed. The act of observing the system – the cat, in Schrödinger’s famous experiment (Schrödinger, 1935) – has forced the system into a given state (Dirac, 1958).

Beyond causality This leads to one of the most profound issues in the interpretation of quantum mechanics – that of causality (in the sense of a specific, identifiable cause for each individual effect). As Dirac (1958) observes, causality applies only to a system that is left undisturbed. If a system is small, it cannot be observed without producing a serious disturbance, and hence observers cannot expect to find any causal connection between the results of their observations. In this same spirit, Heisenberg too felt that, since the mathematical structure of quantum mechanics is so different from that of classical mechanics, it is not possible to interpret quantum mechanics in terms of our commonly understood notions of space and time with classical causality (Heisenberg, 1927). This sudden and discontinuous change of the state of a quantum-mechanical system upon observation or measurement is an example of one of the central and long-standing conceptual difficulties of the standard interpretation. It is termed the ‘measurement problem’. The Heisenberg uncertainty principle (see above) and the lack of absolute predictive power are an inherent feature of quantum mechanics. In principle there is no deterministic scheme to predict the exact future trajectory of an electron. Bohr developed this idea further. Today, this dependence of the outcome of a measurement upon the means used to effect it is referred to as contextuality. An obvious rhetorical question now presents itself. What does the wave function represent – our state of knowledge of the system (in which case quantum mechanics is incomplete) or the actual physical state of the system (in which case there must be a sudden change of the system upon our observation of it)? Although the system may appear in either of two states (or ‘components’) before the measurement, Nature has (in the

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image suggested by Dirac) been forced to ‘make a choice’ when observed. Since the system is thereafter in a definite component, no subsequent interference with the other component is possible. The ‘collapse’ of the wave function has taken place. An issue of ontology, isn’t it? EPR (Einstein, Podolsky, and Rosen, 1935) introduced the deterministic hidden-variables theories. They assume that there is a set of variables, or as yet undiscovered properties, of a system and that the exact space-time behaviour of the system is causally determined by the values of these ‘hidden’ variables. The introduction of such a large number of hidden variables may seem to be a high price to pay to maintain locality and realism. John Bell proved a remarkable theorem in 1965. Simply put, no determinate, local hidden-variables theory can agree with all the predictions of quantum mechanics. Consequently, it can now be asserted with reasonable confidence that either the thesis of realism or that of locality must be abandoned. Either choice will drastically change our concepts of reality and of space-time (Clauser and Shimony, 1978). It is generally believed that a causal interpretation of quantum mechanics is impossible, although no proof of this currently exists. The standard, or Copenhagen, view of quantum mechanics is characterised as requiring complementarity (say, wave-particle duality), inherent indeterminism at the most fundamental level of quantum phenomena, and the impossibility of an event-by-event causal representation in a continuous space-time background. So, on the Copenhagen interpretation of quantum mechanics, physical processes are, at the most fundamental level, both inherently indeterministic and non-local. The ontology of classical physics is dead. The heart of the problem is the entanglement (or non-separability) of quantum states which gives rise to the measurement problem. This entanglement makes it impossible to assign independent properties to an arbitrary isolated physical system once it has interacted with another system in the past – even though these two systems are no longer interacting. The non-separability characteristic of quantum systems can be seen as an indication of the holistic character of such systems. Some claim the need of a new concept of causality, but it is not clear what that would be. Heisenberg long ago suggested introducing a new class of physical entity, potentia, into our theory (and into our ontology). Eventually, a Bell-type theorem is proven and taken as convincing evidence that non-locality is present in quantum phenomena. Quantum mechanics has undeniably introduced us to non-locality, entanglement and synchronicity; concepts that thus far have not been applied in business, economics or social sciences at large.

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Earlier work (Baets, 2006a) suggested that an interesting path of exploration might be, in effect, to go as low as possible on the aggregation level (and work on the level of human emotions, team members) to allow innovation to produce itself through the emergence of processes. In fact, we want to explore the quantum reality of management, and by extension of any other social phenomenon more generally. A double question remains: can, and how can, you make the concept of innovation holistic? The answer would encapsulate the personal emotional side; but, on a deeper level, this question can be asked with reference to conscience and causality, and the ‘seat’ of consciousness. At a more grounded level, the questions are: on what level can we find consciousness? Is there something like a collective consciousness (for example, in a company; on the subject of innovation)? Does everyone have a sort of essential element of incorporated consciousness with a possibility of connection with others (at the level of consciousness)? These can be directly translated to companies: do consciousness, engagement, and emotions make a difference for a company? Does a company have a ‘soul’, a consciousness? Is there a link between this ‘consciousness’ and the success of a company? Are vision, emotions, and consciousness linked? More concretely, who determines the choice of a client who has a preference for one company rather than another? What enables potential clients to make a distinction between two companies, which in fact offer the same services (for example, two big banks such as BNP and ING; or two consultancy companies such as PWC and Accenture)? And finally, can we arrive at an approach, accepted as scientific, that gives at least the beginning of a response to these questions? Although the questions are, of course, a little metaphysical, this does not prevent them from remaining important ones. This chapter will now explore some evolutions in different types of sciences, each interpreting the suggested new ontology. Once holism, constructivism, and emergence are accepted as fundamentals of a new paradigm, a paradox – perhaps the most important one in science – emerges. Despite the two great revolutions of the twentieth century – the theory of relativity and quantum mechanics – almost the whole scientific community is still focused on Newtonian principles, that is to say fixed space and time. If what happened yesterday is known, then so too is what will happen tomorrow (and also what happened the day before yesterday). Science still does very little with the space-time

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Extending spirit, the fifth dimension, and other implications of a possible new ontology

continuum that these revolutions have offered us. In the hard sciences, at least, there are groups of researchers working on this subject. In economics and managerial and social sciences this revolution seems to have been completely sidestepped. Our managerial thinking is still the Marshallian economic thinking of the nineteenth century (Arthur, 1998). At the end of his scientific career, Wolfgang Pauli (as described in de Meijgaard, 2002) asked himself how we can know if human cultures can live with a clear distinction between knowledge and belief (an idea, moreover, of Max Planck). For this reason, according to Pauli, societies are in difficulty if new knowledge arrives and puts the classical spiritual values in question. The complete separation between the two can only be a solution in the short term, and one of facility. Pauli had predicted that there would be a moment in the near future when all the images and metaphors of classic religions would lose their strength of conviction for the average citizen. In that situation classic ethical values would explode and result in a period of hitherto unknown barbarism. He was touched by, and very interested in, what he called ‘background physics’: the spontaneous appearance of quantitative concepts and images concerning the physical in fantasies and dreams. He admitted he also experienced them himself. Their character was very dependent on the dreamer. Background physics has an archetypal origin and that leads (always, according to him) to a natural science which will work just as well with matter as with consciousness. He was also sufficiently realist to say that if a researcher in physics has observed a sub-system, the observations are as much dependent on the observer as on the instruments. According to Pauli, the physical concept of ‘complementarity’ physics (de Meijgaard, 2002) illustrated a profound analogy with concepts such as conscience and the unconscious. Two extreme cases which can never be attained in practice are ‘someone with a perfect conscience’ (Eastern philosophy suggests that this can be attained uniquely in death, also called Nirvana) and something like a ‘bigger spirit’ which will never be influenced by a subjective consciousness. This ‘bigger spirit’ is what Eastern philosophy calls the ‘consciousness’, and Western psychology calls ‘collective unconsciousness’. Pauli accepted that physical values, as much as archetypes, change in the eyes of the observer. Observation is the result of human consciousness. Pauli wrote a book with Jung on this issue (1955). Where Jung talks about defined archetypes as primordial structural elements of the human psyche, Pauli introduced the notion of the ‘collective unconsciousness’.

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They both believed that humans were moving towards a joining of the psyche and the physical.

The introduction of the notion of ‘synchronicity’ in this co-authored work is not only interesting in itself, but recurs in other authors and also in other disciplines. According to Pauli, synchronicity (being united-in-time) appears in all the sciences and the techniques in which simultaneity plays a role. What must be taken into account here is that this is not about a causal coherence (from cause to effect) but about a coincidence (being together in time), This coincidence must be considered as useful even if the deep cause of the simultaneity cannot be explained. It needs to be remembered that references to synchronicity are always if the events concerned occur in the same time period. The concepts of statistics or the theory of probability are of another order. Probability can be calculated with mathematical methods, which is impossible when speaking about synchronicity. Synchronicity (according to Meijgaard) is considered as the basis of many phenomena which are difficult to explain and which are often called non-scientific. However, they will not be considered further in this context. The concern here is that the widening of consciousness and the dissolving of borders are only possible when, besides (classical) energetic causal thinking, there is also a space kept for synchronicity and information. It is to Pauli’s great credit that he indicated the necessity to create space for the concept of synchronicity in scientific thinking, and Jung speaks about this as the ‘a-causal’ link. Sheldrake later confirmed these ideas with his theory of morph(ogenet)ic fields. Pauli and Jung proposed that the classic triad of physics (space, time, and causality) be extended with synchronicity to then form a tetrad. This fourth element works in an a-causal manner, and it is, in effect, the polar opposite of causality. Pauli and Jung believed that these oppositions were orthogonal in time and space. The idea of an a-causal link, or non-locality, are new concepts which should contribute effectively to the science of management (and specifically to the management of innovation) enabling its practical application. The term ‘non-local’ comes, in fact, from Einstein’s opposition to his own grandchild (quantum mechanics). The majority view (of researchers, Einstein excluded) concludes that the observation of one particle produces a direct and immediate effect on the second. In effect, there must be a ‘togetherness-in-separation’ against the intuitive

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Ideas without borders (1): Synchronicity

(a theory which was refused by Einstein, who called it ‘spooky action at a distance’). Even Nature seems to attack pure and simple reductionism (Polkinghorne, 1990). The subatomic world can no longer be treated in a purely atomic way. The implication of these observations is that the phenomenon of ‘entanglement’ (non-locality) includes a real remote activity, not simply epistemological, but in fact ontological in nature. Recently, the Bogdanov brothers (Bogdanov and Bogdanov, 2004) have published an interesting book that summarises their PhD work (in theoretical physics and mathematics): Avant le big bang. In their book, which is, of course, discussed by many attached to more classical theories, they attempt to take the understanding of the quantum interpretation a step further. Their theoretical work makes an attempt to explore what could happen beyond Planck’s Wall (<10-43). Not only do they find non-locality, synchronicity, and entanglement, but also a possible explanation for non-locality. It extends beyond our current acceptance of just four dimensions: three of space and one of time. Indeed, they theoretically observe a fifth dimension, which would be a fourth dimension of space, expressed though in ‘imaginary’ time. Explaining the concept of imaginary time would take us too far, and it is extremely mathematical, but it has to do with the famous ‘i’ in mathematics (the square root of a negative number). If they theoretically observe this fifth dimension beyond Planck’s wall, it of course also exists before that ‘wall’, which would mean that there is something like an interwovenness between time and space. Time has a space dimension and space has a time dimension. Though their proof is rather convincing, and their PhD juries were mainly Nobel Prizewinners, even if some scientists want to argue with this work, the least one can say is that their observation and proof are elegant, even if their conclusions would be wrong. This development should not be misunderstood as an extension of the search in physics for the string theory. The latter is not concerned with the (Bogdanov) singularity, but accepts Planck’s wall as a fact of life.

Quantum interpretations and ways of knowing in complex social systems One of the illustrations of this quantum concept, and with the goal of doing a thought experiment, is developed in Mitchell’s ‘dyadic model’ as he describes it in his book The Way of the Explorer: An Apollo Astronaut’s Journey Through the Material and Mystical World (Mitchell and

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Williams, 1996). Stated simply, the concept of non-locality is derived from quantum physics (as explained before). In fact, in the experiments he demonstrated that particles (photons) stay attached in a ‘mysterious’ manner, even if they displace in directions contrary to the speed of light. The dyadic model is built on the idea that everything is energy. This basic energy is linked to information, or what Mitchell calls structures of energy. The energy and the information form a dyad. The information, in this context, is the basis of the capacity of matter to ‘know’ (and so has nothing to do with information as treated in information systems). All matter contains a sort of ‘awareness’ or, in other terms, a capacity to ‘know’. If not, how can molecules ‘know’ that they must join up with others to form cells? In a subsequent state (a more complex state), it could be that in the human body/brain matter evolves such that it knows what it knows. It is therefore capable of self-reflection. Another dyad in his model is ‘awareness’ and intention, which equally make up part of the evolutionary process that leads to consciousness. Consciousness and innovation, accepted elements of the energy-information scheme, are the basis of self-reflective consciousness. The non-locality is illustrated by the famous connection proven and explained in more detail before (‘entanglement’) between partner photons which are sent in opposite directions. They remain in a position to immediately (‘instantaneously’) communicate between each other over large distances. This has a relationship with the ‘knowledge’ of these particles. Humans are equally made up of these sorts of particles.

Ideas without borders (2): Morphogenetic fields and quantum arts So how does such communication function according to Mitchell? The groups of particles seem to have special characteristics of resonance and coherence which are evoked by the groups themselves. This resonance includes historical knowledge about universal matter. This idea strongly corresponds with Rupert Sheldrake’s observations. The body/brain can receive holographic information in the form of virtual long wave signals. Mitchell’s dyad suggests that the particles ‘know’ by their inherent qualities of consciousness and intention. The groups of particles communicate between themselves on the basis of quantum holograms (which Sheldrake calls morphogenetic fields), which includes information about the universe. As the body/brain also works in a holographic way, it can recover this information. Apparently, Nature does not lose

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its memory concerning its own evolution. Mitchell believes that it is intention, or directional attention, which links humans holographically with the signals or non-local long waves. The greater the experience of satisfaction, the more the consciousness of each cell in the body will resonate with the holographic information engraved in the ‘quantum zero point’ – the lowest possible state of energy, in an almost resting situation (Polkinghorne, 1990) – of the energy field. This phenomenon refers to what it is to be ‘carried along’. If humans live in harmony with their biological rhythms (all sorts of rhythms) the body is in balance and the person will fall ill less quickly. The material world bears witness to this phenomenon of ‘being carried along’ when two pendulums are put beside one another. Although the movement of the pendulums in the two clocks seems at first to be totally arbitrary, after a certain time the movements adapt to each other and move in harmony. The two clocks are ‘carried along’. In the world of medicine a lot of these ideas are found in Ayurvedic (holistic) medicine. This quantum approach of energy, information and communication, suggests causality at a much lower level of aggregation; that is to say, at a quantum level. In effect, it is synchronicity or coincidence rather than causality. This structure allows people to realise what they want to realise – whether it is, for example, to protect themselves against viruses, or simply to survive or innovate as in companies. It becomes, therefore, a question of elementary particles (say the characteristics of people translated into economic behaviour) which are linked in solid networks with all sorts of matter (the context), which, in turn, interact with this matter, and in doing that, become part of the wider energetic field (morphogenetics) which contains knowledge and information. When more members of a team (or a company) are ‘carried along’, their actions will have more success, whether in project management or in product innovation. Others (Caro and Murphy, 2002) have applied the quantum concept to art and aesthetics. And although this too is not the subject of this book, it is interesting to see how the same principles of synchronicity, non-locality, and quantum structure can be applied in art. The cradle of this quantum movement in arts is in Spain. Caro and Murphy’s book includes chapters on quantum art, quantum literature, quantum anthropology, and quantum politics. Towards the end of the book, the authors suggest that the quantum principle makes more profound sense and they integrate it with the understanding of societal phenomena.

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Dalla Chiara and Giuntini (1999) tried to apply the quantum logic to the concept of truth and interpretation in art. They first of all dedicate themselves to the subject of poetic force and ask themselves if truth in poetry is less ‘true’ than observed truth. Where quantum theory and orthodox quantum logic deal uniquely with problems of absolute clarity leaving no place for different interpretations, problems linked to language are evidently vaguer. But true humans are not clear and neither are absolute notions. What is it to ‘be honorable’? What is ‘important’? Quantum logic does not only work with well defined unambiguous concepts. With these problems, semantic uncertainties are only the result of the fact that the problem is not completely defined in detail. The authors plead for a vague quantum theory (perhaps even to be compared with fuzzy logic). They refer themselves to a piece of music. A piece of music does not only consist of a score, but a mass of different possible combinations between the same score and different musicians’ interpretations. It is therefore a combination of senses (emotions) and symbols, but although each combination is possible, each combination is not necessarily good.

Back to biology: Sheldrake and ‘implicit order’ The illustrations above concern the use of quantum concepts, nonlocality, and synchronicity, as much in physical science as in the science of language and music. This section returns to Sheldrake’s theory, which is founded on biology. Sheldrake (1995), who is a well-known Cambridge biologist, is now an affiliated Research Fellow at the Noetic Society. Although his theory is controversial (as is often the case with a new paradigm) it has been validated, as his many publications witness, by considerable research. As ideas, these theories are entirely in accord with the scientific subject developed up until here. In Sheldrake and Bohm’s book (1982), they broach the subject of ‘implicit order’. Implicit order is something like a ground below time, a tonality, of which each movement is projected in explicit order (what is known). For everything visible, there is something in implicit order which is at the origin of the projection. If an event is repeated a lot, behind that there is a constant built component. A sort of (fixed) link is born. Via this process, the forms of the past can continue to live in the present. This is more or less what Sheldrake calls morphogenetic fields, created by morphogenetic resonance. If something climbs into ‘totality’ where neither time nor space is fixed, it could be that things of the same nature will attach themselves to one another, or resonate. Because

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neither time nor space exists in this totality, things which happen at a particular place could therefore also happen elsewhere, or at least have an influence elsewhere. These ideas are very much in line with the Bogdanovs’ singularity and their observation that a fifth dimension, being a fourth dimension of space, expressed in imaginary time, could exist. There is clear convergence between the different ‘quantum’ interpretations in the different sciences. The convergence can be understood as an emergent understanding of this quantum world and its consequences. Although Sheldrake and Bohm’s theory, mentioned above, is the scientific topic that Sheldrake vigorously researches these days, his theory of proved morphogenetic fields could also still be very useful for us. Sheldrake’s idea of morphogenetic fields complements the later ideas which Varela (1979) worked on before he died. They engaged with how something like resonance could be responsible as the organising principle in networks. Varela’s suggestion has become illustrated by Sheldrake’s research. In fact, these characteristics identified from morphogenetic fields are completely in parallel with the complexity paradigm. They could just as well be the characteristics of an economic system, a market, a company.

East–West interactions A last science where holistic concepts are increasingly popular is, without doubt, medical science, where many different thinkers are active on this subject. One general area is Ayurveda (the ancient Indian medical science) in which field Dr Chopra (1990) researches quantum concepts of healing. Chopra’s experiments also help to provide basics for the approach advocated in this book. Ayurveda examines man in a holistic way, a different approach from that of Western medical science. Ayurveda looks for a natural balance in the human being. Another startling distinction is that Ayurveda is a preventive medicine so that the best doctor does not have any patients. Not surprisingly, or at least in line with other theories presented here, Ayurveda focuses on energy flows. The human body has its own system of regeneration, its own defence mechanisms, and the art must therefore be to reinforce all that. The heart, for instance, is seen as an important regulator of these energy flows. A certain illness (a stomach problem or migraine) is always caused by an imbalance in energy flows and this balance must be restored. As the body is a very complex network with all sorts of cells which know exactly what they should know to be able to

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co-operate with the others (and knowing perfectly with which others), it is vital that this network be disturbed as little as possible. For many reasons, the WHO (World Health Organisation) has identified Ayurveda as the medical solution for developing populations. Healthy living and good nutrition are now also credos in the West. Nevertheless, the ‘why’ of this advice is of a different nature. Ayurveda considers the human body as a self-organising system composed of a lot of simple elements which, taken independently, are very stupid, but which together form a formidable distributed intelligence. Entirely in parallel, we can consider a company as a network of ‘simple’ elements each of which ‘knows’ what they should know to be able to form correct networks with others. The knowledge of a system is found in the community, not in a local element. The interesting thing is that these theories reconfirm the concepts proposed before. In particular, Chopra’s theories concerning synchronicity and non-locality illustrate the arguments already developed here from a different and interesting perspective. To summarise the essence of all these theories we can say that quantum reality – which is expressed in non-locality, synchronicity and entanglement – holds the promise of offering new understanding for a more efficient harmony of the concept of causality in management and the economy, and hence in any complex system. Instead of talking about causality, the focus shifts to discussing synchronicity (coincidence).

The key concepts of the new ontology As a basis for formulating a new paradigm for understanding complex systems in general, and management in particular, as well as to develop an adequate research agenda, this section summarises fundamental concepts, often developed in other sciences than those of economy, management, or social sciences but equally applicable in complex social systems. • It is worth repeating that the approach developed and proposed here is inscribed in the holistic paradigm. Holism, in the sense used here, draws from Ken Wilber’s (2000) theories. He defines holism as an eternal dynamic interaction between four ‘spheres’: the mechanical (external) and individual sphere; the mechanical (external) collective sphere; the internal collective sphere (common values); the internal individual sphere (emotions and consciousness). Clearly,

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in reductionist and rational approaches, the external individual sphere receives all the attention. ‘Classical’ ecologic scientific movements are especially interested in the collective, but always external, sphere. More recent scientific interests attempt to go beyond that by including more values and emotions (that is to say consciousness). Holism, as defined by Wilber, is evidently founded on a constructivist approach. • The proposed ontology fits clearly the reality of the sciences of complexity in Prigogine’s definition of them as the study of dynamic non-linear systems. In particular, he was always very interested by two important aspects: the role of time and behaviour far from equilibrium. He illustrated the constructive role of time, as expressed in the principle of the irreversibility of time, in complex processes. This principle says that an important consequence is that in complex systems it is not possible to extrapolate the future from the past. Complex systems are extremely sensitive to the initial conditions. Minimal changes in these conditions can have major influences on the further development of the process. Finally, Prigogine identifies the most productive state of a (complex) system as one that is far away from equilibrium: ‘order at the edge of chaos’. • John Holland, a pioneer in artificial life and agent systems, formulated a Complex Adaptive System (CAS) called agent-based simulations. This approach simulates the interaction between different agents and, consequently, simulates emergent behaviour in those kinds of systems. An agent, according to Holland, is a mini software program. Each agent has characteristics. It is necessary to define the field of action (the limits of the system) and to identify a minimum of interaction rules (and exchange rules). Then, it is necessary to make the system iterate and simulate the dynamic interaction of those agents. The agents meet each other, interact, exchange (and so learn) and, step by step, form a global behaviour with qualities that emerge from the interaction itself. • Synchronicity, according to Pauli, appears in all the sciences and the techniques in which simultaneity plays a role. It is necessary to take into account that this is not to speak about a causal coherence (from cause to effect), but about coincidence (as occurring together in time). This has to be considered as potentially useful, even if we cannot explain the more profound cause of the simultaneity. We must remember that we always speak of a synchronicity if the events concerned happen in the same period of time. The relationships therefore, to use Jung’s words, become a-causal.

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• The implication of these observations is that the phenomenon of ‘entanglement’ (non-locality), including a real activity at a distance, is not simply epistemological. It is, in effect, ontological by nature (Polkinghorne) and can be called ‘a quantum interpretation’. • Sheldrake and Bohm (1982) broached the subject of ‘implicit order’ as something like a ground underneath time, a totality, from which each movement is projected in explicit order. For everything seen, there is something in implicit order at the origin of this projection. If there are a lot of repetitions of an event, then behind it there is a built constant component. A sort of (fixed) link is born. Via this process, the forms from the past can continue to live in the present. This is more or less what Sheldrake calls ‘morphogenetic fields’, created by morphogenetic resonance. • Ayurveda considers the human being as a self-organising system composed of a lot of simple elements which are, when taken independently, very stupid, but which together form a formidable distributed intelligence. In parallel, a company can be considered as a network of ‘simple’ elements which each ‘know’ what they must know to be able to form correct networks with others. • The ontological nature of this quantum structure forces us to look again at our approach to innovation, and on a wider scale at our economic theory. The understanding of innovation must therefore be based on the ‘carrying along’ of quantum structures, synchronicity, morphogenetic fields and individual space for self-organisation. • In their recent work the Bogdanovs, searching for what they define as the Bogdanov Singularity, suggest the existence of a fifth dimension. This dimension would be a fourth dimension of space, expressed in imaginary time. This theoretical development suggests a formal system in which time and space indeed get closer to each other; in fact, they share a dimension. Their proposed theoretical framework could be the beginning of an explanation of most of the concepts illuminated here.

The research agenda The research agenda, as defined here, needs to be understood as a number of steps en route to achieving a real understanding of what we have labelled a quantum interpretation of management. These steps form the materialisation of the newly proposed paradigm which is developed in this chapter. They should lead an academic research agenda into that quantum interpretation, but they also generate an

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• Is there a quantum structure (or at least interpretation) of management phenomena and what is this structure (i.e. the role of the consciousness, synchronicity, morphogenetic fields, etc.)? • Can one create empirical evidence on the emergent character of management phenomena, in particular of innovation? • Can CAS help to visualise emergence, synchronicity, and morphogenetic fields? • Can one understand better the crucial role of knowledge, learning and innovation for companies? • By responding to the previous questions, can one also render them useful from now on? The proposed research domain suggests therefore limiting itself at first to knowledge, learning and innovation. Earlier work (Baets, 2006a) suggested a more formal economic interpretation. It was based on research already undertaken that illustrates to some degree this research agenda. In doing so, the evidence found (Baets, 2005) suggests some first evidence for that quantum interpretation of management. Consequently, this is partly an illustration of the potential of CAS (since it is the research tool used). This ontology accepted, the further chapters of this book will develop a richer understanding of management, which will be systemic in nature and host a more meaningful understanding or interpretation of management and the role of the manager. It will deal with different managerial competencies (like non-violence, co-creation, management by values). Moreover, instead of merely considering issues like ethics, responsibility, and sustainability, as hostile intruders (which is how they are theorised in mainstream managerial thinking), it will invite their active integration as part of a more meaningful understanding of management and the role of the manager. Wanderer, your footprints are the path, and nothing more; Wanderer, there is no path, it is created as you walk. By walking, you make the path before you, and when you look behind

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equally important set of questions which a practising manager cannot avoid. Such questions include the following:

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In this chapter, we have explored a possible new paradigm, an ontology, or maybe just a set of assumptions, that seem to fit the contemporary understanding of the physical world. This new set of assumptions, that we have called a quantum ontology, opens up a whole new world of possibilities – literally the quantum world is a world of infinite possibilities – for an improved understanding of performance in management. Once this new ontology is accepted, we can start exploring a number of building blocks. The first building blocks, that according to us are essential for a different management approach, are non-violence and co-creation: essentials for crafting a new kind of leadership.

Bibliography and further readings Arthur, B. (1998) ‘The end of certainty in economics’, in D. Aerts , J. Broekaert, and E. Mathijs (eds), Einstein meets Margritte, Kluwer Academic. Baets, W. (2005) Knowledge Management and Management Learning: Extending the Horizons of Knowledge-Based Management, Springer. Baets, W. (2006a) Complexity, Learning and Organisations: A Quantum Interpretation of Business, Routledge. Baets, W. (2006b) ‘Complexity theory: dynamics and non-linearity are the only reason for knowledge management to exist’, in I. Boughzala and J-L. Ermine (eds) (2006) Trends in applied knowledge management, Edition Hermes Penton Science. Bogdanov, I. and Bogdanov, G. (2004) Avant le Big Bang, Editions Grasset & Fasquelle. Caro, M. and Murphy, J. (eds) (2002) The World of Quantum Culture, Greenwood Press. Chopra, D. (1990) Quantum Healing: Exploring the Frontiers of Mind Body Medicine, Bantam Books. Clauser, J. F. and Shimony, A. (1978) ‘Bell’s Theorem: Experimental Tests and Implications’, in Reports on Progress in Physics, 41. Cushing, J. (1998) Philosophical concepts in physics, Cambridge University Press. Dalla Chiara, M. L. and Giuntini, R. (1999) ‘Quantum Logical Semantics, Historical Truths and Interpretations in Art’, in D. Aerts and J. Pykacz J. (eds) (1999) Quantum structures and the nature of reality, Kluwer Academic. De Meijgaard, H. (2002) Wolfgang Pauli Centennial 1900–2000, PhD Thesis TU Twente. Dirac, P. (1958) The Principles of Quantum Mechanics, 4th edn, Oxford University Press.

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you see the path which after you will not be trod again. Wanderer, there is no path, but the ripples on the waters. Antonio Machado

Einstein, A., Podolsky, B., and Rosen, N. (1935) ‘Can Quantum-Mechanical Description of Physical Reality Be Considered Complete?’, in Physical Review, 47, reprinted in J. A. Wheeler and W. D. Zurek (eds), Quantum Theory and Measurement, Princeton University Press. Heisenberg, W. (1927) ‘Uber den anschaulichen Inhalt der quantentheoretischen Kinematik und Mechanik’, Zeitschrift für Physik, 43. In English translation: Wheeler J. A. and Zurek W. D. (eds) (1983) ‘The Physical Content of Quantum Kinematics and Mechanistics’, in J. A. Wheeler and W. D. Zurek (eds), Quantum Theory and Measurement, Princeton University Press. Klein, M. J. (1964) ‘Einstein and the Wave-Particle Duality’, in D. E. Geherson and D. A. Greensberg (eds), The Natural Philosopher. Mitchell, E. and Williams, D. (1996) The Way of the Explorer: An Apollo Astronaut’s Journey Through the Material and Mystical World, Putman’s Sons. Pauli, G. and Jung, H. (1955), The Interpretation of Nature and Psyche, translated from German, Routledge & Kegan Paul. Polkinghorne, J. (1990) The Quantum World, Penguin. Schrödinger, E. (1935) ‘Die Gegenwartige Situation in der Quantummechanik’, Die Naturwissenschaften, 23. English translation by Wheeler J. A. and Zurek W. D. (eds) (1983) ‘The Present Situation in Quantum Mechanics’, Quantum Theory and Measurement, Princeton University Press. Sheldrake, R. (1995) The Presence of the Past, Park Street Press. Sheldrake, R. and Bohm, D. (1982) ‘Morphogenetic fields and the implicate order’, ReVision, 5: 41–8. Varela, F. (1979) Principles of Biological Autonomy, Elsevier-North Holland. Wilber, K. (2000) A Brief History of Everything, Gateway.

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4

Now that we have identified the assumptions that we would like to build on for rethinking growth (the ‘why’), we aim in this chapter to identify the building blocks to the question of ‘how’. Emergence and leadership seem to be two cornerstone competencies for the contemporary manager in this new paradigm, but what are some of the building blocks helping the manager to develop his or her leadership? The following two chapters develop some of these building blocks, before we go on to consider leadership and sustainability in Chapters 6 and 7. Consideration of leadership and sustainability will allow us to develop the concept of sustainable performance in Chapters 8 and 9. In this chapter we are going to develop the building blocks ‘nonviolence’ and ‘co-creation’. The next chapter will deal with management by values.

What is violence? Non-violence and co-creation are two concepts which are rather new in our managerial vocabulary. Violence and non-violence are in general related to the world of politics and political science. But how far is the managerial reality of every day different from the political arena? Doesn’t business talk about the interaction of people, power and the game of power, higher purposes, ‘enemies’ (or competitors), alliances (and takeovers), and strategising? The simple word ‘strategy’ that is in daily use in management has, of course, its roots in the military. Non-violence and co-creation are concepts which have a much deeper meaning and are therefore of interest in rethinking growth. 74

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Non-Violence and Co-Creation 75

Peace and Violence

A vague smile of shyness was visible in his face and his eyes showed me the unspoken words behind my outspoken question bubbling from a madness mind I am free We would like to start referring to the famous speech of ‘I have a dream’. Many people will know it, maybe even by heart, while some might call it outdated or they may not even be aware of its existence. However, it still has the magic power and passion of a soul that believed in a better world. Martin Luther King received the Nobel Peace Prize in 1964. On 6th August 1965 President Lyndon Johnson signed the ‘Voting Rights Bill’. Martin Luther King was assassinated on 4th April 1968 on a balcony of the Lorraine Motel in Memphis. In our families, in Europe, as in many other places in the world, the news came suddenly. All of us were deeply shocked. We were young then, but are still able to recognise this profound feeling of being personally hurt. An intense and deep pain was felt. Many of us were mourning for a long time since our needs for understanding, peace, honesty and love were not fulfilled. Martin Luther King was very much inspired by Mohandas Gandhi, the Mahatma, ‘the Great Soul’, who was never awarded a Nobel Peace Prize. One can wonder why he never received this award. Reading through articles written about him, this might be explained by some of the teaching offered by the Bhagavad Gita: ‘there is no more supreme teaching than the injunction that just duties must be pursued with detachment, without any expectation’. When Mahatma Gandhi was assassinated on 30 January 1948, he was already a legend. This spirit of duties and detachment of expectations will be considered by many managers as idyllic and not applicable to management. But is this the case? Isn’t this understanding of responsibility (a duty, a contribution, the creation of a value added not for oneself but for the economy or the society as a whole) closer to the social role that management and

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Can you tell me where I can find peace? I asked a stranger somewhere in the streets Of a forgotten village, hidden between the Small hills in a never discovered valley.

managers should fulfil? Doesn’t this bring risk right into the picture where it should be: the risk of showing the path that has not yet been wandered? Should the manager or leader be the one who commits first to a mission? Redefining risk as such, and even rewarding this kind of risk and risk taking, could be a wise alternative to a system in which risk is mutualised, but the reward for risk individualised. The central role of dreams and vision for rethinking growth, for redefining controlling management into social intrapreneurship will get attention in the coming chapters. At the basis of those dreams and visions are values: non-violence and co-creation are only two of them.

On visions and violence One of Erna’s (Erna Oldenbloom, co-author of this book) first presentations in primary school was about the life and work of Mahatma Gandhi. He never left her. Secretly and sacredly hidden, even in her darkest episode in life, his imprint filled her heart. How grateful she feels. Let us become the change we seek in the world Mahatma Gandhi Thinking of violence and aggression leads almost immediately to thinking of all the horrible scenes presented on a daily basis on television or in newspapers. Without knowing all the history books of the world, we observed, in the countries where we lived and worked, that most of human focus in the history courses is on battles and wars. Violence, killing, murdering seems to be ‘normal’ in many of the television programmes, movies and computer games. It seems difficult, if not impossible for human beings to live in peace. Them or us: we seem guided to experience ‘the others’ as different from ourselves. Nelson Mandela who, together with Frederik Willem de Klerk, received the Nobel Peace Prize Award in 1993, was a prisoner for 27 years due to apartheid in South Africa. Apartheid was based on the idea of a necessary separation between black, coloured, and white people; and it was often defended by political interpretations of the Bible. Many of the conflicts and barbarities in the world are sustained through the illusion of a unique and choiceless identity. According to Amartya Sen (2006), people try to see themselves and others as members of particular groups or clans. There are difficulties in seeing someone as

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having at the same time many qualities, even opposing qualities, and belonging to different groups at the same time. People are often reduced to one main characteristic (a French citizen, a Muslim, an economist, a socialist, etc.). As a consequence of this ‘false’ belief, or assumption, we might find that we have to fight for our belief systems, our ideas, concepts and theories rather than knowing that we are able to make different choices. All people have different truths according to, or depending upon, their vision, culture, and the personal perception they keep and the choices they make. If one were aware of this pattern, one would not need to convince others of this truth. Our assumptions and belief systems do not need to be defended especially. There is no need to punish others for having another idea or another truth. At the time of writing this chapter, the following short new message popped up: ‘A 17-year-old girl has been stoned to death in Iraq because she loved a teenage boy of the wrong religion’ (Daily News, 3rd May, 2007). As a horrifying video of the stoning went out on the Internet, the British arm of Amnesty International condemned the death of Du’a Khalil Aswad as ‘an abhorrent murder’ and demanded that her killers be brought to justice. Reports from Iraq said a local security force witnessed the incident, but did nothing to try to stop it. Now her boyfriend is hiding in fear for his life. Miss Aswad – a member of a minority Kurdish religious group called Yezidi – was condemned to death as an ‘honour killing’ by other men in her family and hardline religious leaders because of her relationship with the Sunni Muslim boy. It was said that she had shamed herself and her family when she failed to return home one night. Some reports suggested she had converted to Islam to be closer to her boyfriend. Miss Aswad had taken shelter in the house of a Yezidi tribal leader in Bashika, a predominantly Kurdish town near the northern capital Mosul. A large crowd watched as eight or nine men stormed the house and dragged Miss Aswad into the street. There they hurled stones at her for half an hour until she was dead. The stoning happened last month, but only came to light yesterday with the release of the Internet video. It is feared her death has already triggered a retaliatory attack upon 23 Yezidi workmen who were forced off a bus travelling from Mosulto Bashika by a group of Sunni gunmen and summarily shot dead. An Amnesty International spokesman in London said they receive frequent reports of honour crimes from Iraq – particularly in the predominantly Kurdish north. Most victims are women and girls who are

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considered by male relatives to have shamed their families by immoral behaviour. Kurdish authorities have introduced reforms outlawing honour killings, but have failed to investigate them, or prosecute suspects, according to Amnesty. In the words of Kate Allen, the organisation’s UK director: ‘This young girl’s murder is truly abhorrent and her killers must be brought to justice. Unless the authorities respond vigorously to this and any other reports of crimes in the name of “honour”, we must fear for the future of women in Iraq.’ When reading this ‘old’ article, many questions came spontaneously to mind. How can people be expected to be peaceful and empathetic when they continuously observe violence in their direct environment and when it seems that their needs for safety are not met? Feeling compassion and empathy for the young woman, we can ask ourselves whether it is possible to stay non-judgemental about the male relatives who could not find other ways of expressing their unfulfilled needs. Marshall Rosenberg (2003) would call it a very sad expression of unfulfilled needs. He shares these concerns with many other people about the social consequences of using physical punishment. In this case, the physical punishment is incredibly dramatic and raises feelings of horror, since many needs are not fulfilled. At the same time, punishment can be observed as an ‘educational’ method in many environments, societies, school systems, and families. Opting to use force, humans may win the battle of getting others to follow, but, in the process, Rosenberg asks, does this not perpetuate a social norm justifying violence as a means of resolving questions about difference? According to Avishai Margalit (1996), the feelings experienced while reading these kinds of stories are ones which result from mere identification with others, without the reader being a direct victim of the humiliating and terrifying behaviour. Often the reaction of the reader is felt in the same violent way (fight or flight) since this seems justified by early evolution when it was a necessary part of survival. Now obsolete in practice in most of the contemporary world, such responses continue in the rhetoric of certain leaders: Either you are with us, or you are with the terrorists. George W. Bush Punishment, humiliation and cruelty are related to each other. A society can try to defend the rights of its own inhabitants but can humiliate many ‘foreigners or strangers’ at the same time. As frequent

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travellers to foreign countries we experienced many times how people, including ourselves, are treated by employees working at the borders. The first impressions we have of some ‘modern and civilised’ countries are full of humiliation and aggression. There always seem to be reasons and justifications behind this kind of behaviour. The same nations that will immediately express their feelings and emotions about the tragic death of the young woman in Iraq will, at the same time, as a nation, humiliate and torture prisoners and suspected enemies. Death penalties and executions still take place in so-called modern and developed societies. Many of the countries that signed up to respect human rights are not aware of the fact that they themselves are often forgetting to practise what they preach. As the Bible long ago asked: ‘Why do you notice the splinter in your brother’s eye, but do not perceive the wooden beam in your own eye?’ (Matthew 7:3). At the same moment, while writing this chapter we realise that this includes us as well. While observing ourselves we feel the different emotions that flow through our system. We would like to express ourselves in a loving way but we feel that the language we are using is not sufficient. We grew up in a certain paradigm that has a language related to it. The language we are used to, that we grew up with, is based on the idea of separation (them and us), and a rather critical and analytic way of listening. The resulting language is one that is made for a world of competition, convincing others of how right we are, and the idea that ‘we’, our nation, our generation, our political party, have a better understanding of the world, a much more profound and rich world view than others have. While writing we find it difficult to find the words since they do not seem immediately available. Shifting to another paradigm does not mean that the adequate words are immediately available: words that have a common connotation. We know that we are not native English speakers and that makes it more challenging to express ourselves in English, but our lack of capacity to express ourselves is not caused by that. We know that it would be difficult in any language, since we never learnt to express ourselves in different ways. We found in Non-Violent Communication (Marshall Rosenberg) a wonderful poem that we feel connected to. Words are windows (or they’re walls) I feel so sentenced by your words,

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I feel so judged and sent away, Before I go I’ve got to know Is that what you mean to say? Before I rise to my defence, Before I speak in hurt or fear, Before I build that wall of words, Tell me, did I really hear? Words are windows, or they’re walls, They sentence us, or set us free. When I speak and when I hear, Let the love light shine through me. There are things I need to say, Things that mean so much to me, If my words don’t make me clear, Will you help me to be free? If I seemed to put you down, If you felt I didn’t care, Try to listen through my words To the feelings that we share. Ruth Bebermeyer

Violence: Continuities, locations, and scale Further press releases New York Times, May 2, 2005— Murder is the leading cause of job-related deaths among journalists worldwide, and the Philippines is the most murderous country of all, a new analysis by the Committee to Protect Journalists (CPJ) has found. Iraq, Colombia, Bangladesh, and Russia complete the CPJ list of the ‘Most Murderous Countries for Journalists.’ In issuing its analysis to mark World Press Freedom Day, May 3, CPJ called murder with impunity the most urgent threat facing journalists worldwide. After studying more than five years of death records beginning January 1, 2000, the CPJ found that the vast majority of journalists killed on duty did not die in crossfire or while covering dangerous assignments. Instead, 121 of the 190 journalists who died on duty worldwide since 2000 were hunted down and murdered in retaliation for their work. The same kind of observations can be found in coverage about trade unionists.

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An International Trade Union Confederation press release titled New ITUC Worldwide Report Reveals Catalogue of Murder, Violence and Intimidation Against Trade Unionists. An appalling total of 144 trade unionists were murdered for defending workers’ rights in 2006, while more than 800 suffered beatings or torture, according to the Annual Survey of Trade Union Rights Violations, published by the 168-million member International Trade Union Confederation. The 379-page report details nearly 5,000 arrests and more than 8,000 dismissals of workers due to their trade union activities. 484 new cases of trade unionists held in detention by governments are also documented in the report. ‘Workers seeking to better their lives through trade union activities are facing rising levels of repression and intimidation in an increasing number of countries. Most shocking of all is the increase of some 25% in the number killed compared to the previous year’, said ITUC General Secretary Guy Ryder. ‘In many of the countries highlighted in the report, repression continued during 2007’, he added. Colombia remained the most perilous place in the world for union activity, with 78 killings, almost all of which were carried out with impunity by paramilitary death squads linked to government officials, or acting at the behest of employers. Of 1,165 murders documented between 1994 and 2006, only 56 perpetrators have been brought to trial, with a grand total of 14 sentenced. A wave of anti-union violence in the Philippines is also documented in the Survey, with 33 unionists and worker-rights supporters murdered, in some cases by killers acting in collusion with the military and the police. The report gives accounts of mass dismissals, beatings, detentions, and threats against workers and their families used, sometimes routinely, in countries in each region of the world. Dictatorships and authoritarian governments in Belarus, Burma, China, Cuba, Equatorial Guinea, Iran, North Korea, and several Gulf countries maintained their suppression of independent trade unions, with more than 100 Chinese workers detained in prisons and forced labour camps in appalling conditions. The Zimbabwean government continued its violent repression of the country’s trade union movement. Of 265 participants in a trade union protest who were arrested by the authorities, 15 including the top leaders of the Zimbabwe Congress of Trade Unions were severely beaten whilst in detention. The Survey also reports growing government hostility to fundamental workers’ rights in some industrialised countries, in particular in Australia, where the government’s deceptively titled ‘Work Choices’

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legislation stripped workers of a raft of rights and benefits, and imposed heavy restrictions on union activity, with harsh penalties for individual workers and union officials. The government launched prosecutions against 107 construction workers, who faced heavy fines for taking industrial action in support of a health and safety representative who was dismissed. In the United States a National Labor Relations Board Ruling deprived millions of the right to organise, extending the definition of the term ‘supervisor’, while in Switzerland the government, in a move eventually defeated by the ITUC’s Swiss affiliate, tried to invalidate the authority of the ILO’s Committee on Freedom of Association with regard to Swiss labour laws. The anti-union activities of a number of multinational companies, including repeat offenders such as Coca Cola subsidiaries and suppliers, Wal-Mart, Goodyear, Nestlé, and Bouygues come under the spotlight. Heavy repression by suppliers to well-known global brand names, especially in the textiles and agriculture sectors, is also described. Several multinationals took advantage of an increasingly hostile environment in Poland to clamp down on workers’ rights and conditions. Women workers in particular continued to face repression, particularly given the exploitation of the mainly female workforce in Export Processing Zones in Asia, Africa, and Latin America, with numerous instances of dismissal and outright refusal by employers to recognise even the most fundamental rights of their employees. In Morocco women textile workers stood trial for organising a strike, while in Mauritius women workers taking part in a sit-in were beaten by police. Abuse of women domestic workers, among the most exploited of the world’s 90 million migrant workers, is also a prominent feature in several countries, notably in the Gulf States. In the Asia-Pacific, repression of workers – in particular in Bangladesh, Cambodia, India, Indonesia, Malaysia, and Sri Lanka – included the dismissal of nearly 5,000 workers for their union activities, and killings of workers in Bangladesh, India as well as in Nepal where two unionists were killed by the army during pro-democracy demonstrations co-organised by the country’s trade union movement. Police violence also left scores of workers injured in Cambodia, a country renowned for worker-rights violations, and in Malaysia. Violence against trade unionists in Cambodia continued into 2007, where union leader Hy Vuthy was assassinated in February. In Thailand, the military coup led to harassment and dismissal of trade union members and leaders, and in common with a number of other countries in the region, migrant workers were particularly vulnerable to abuse and exploitation.

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Along with the appalling toll of murders in Colombia, violence against trade unionists elsewhere in Latin America included the killing by police of two miners in Mexico and injuries to 41 others, while 15 Ecuadorians were seriously injured during brutal repression by the police and army of a union-organised demonstration against a free trade agreement with the USA. A woman teachers’ union leader escaped an assassination attempt in Guatemala, where the long-established pattern of anti-union violence continued into 2007 with the murder of port workers’ union leader Pedro Zamora on 15 January. Anti-union activities by Export Processing Zone employers and by plantation owners, including several cases of large-scale dismissals and intimidation of workers, took place in Costa Rica, the Dominican Republic, El Salvador, Honduras and Nicaragua. Workers organising unions or participating in strike action in Argentina, Peru and several other countries were dismissed en masse. Workers were arrested for taking part in union activities in nine countries in the region. Workers in Africa also faced gross violations of their rights to union organisation and representation. Security forces attacked a unionorganised demonstration in Guinea, killing some 20 demonstrators and injuring many more. One municipal worker was killed and several injured during a union protest in Morocco, while in South Africa police fired on striking newspaper employees and some 18 other trade unionists were injured by police in separate incidents. As in Asia, mass dismissals were a common feature, principally in Kenya, where more than 1,000 striking flower plantation workers were sacked, and several of them were injured by police. Public service and education workers faced anti-union discrimination in Algeria, Benin, and Ethiopia, where the government continued its harassment of the Teachers’ Association. The Djibouti union centre UDT was subjected to heavy government harassment, and one of its senior officials had to flee the country in fear for his life. The Libyan and Sudanese governments also maintain heavy restrictions on freedom of association, while Egypt also imposes limits on union rights. Tentative steps towards trade union rights in Oman and positive developments in Bahrain were overshadowed by continued severe restrictions or outright bans on union activity in much of the Middle East, notably in Saudi Arabia. Restrictions on freedom of association also continued in Jordan, Kuwait, and Yemen, and the Syrian authorities exercised virtually total control of the official trade union organisation, the only one allowed. Many migrant workers throughout the Middle East faced hazardous and exploitative working conditions without any

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effective legal recourse. Iraqi trade unionists faced ongoing and targeted violence. Among the many attacks, one of the most appalling involved a health union leader who was abducted, tortured with an electric drill and then shot to death. Iran continued to deny basic rights to its workers, cracking down hard on independent trade union activity with mass arrests and detentions including that of a 12-year-old girl who was beaten and thrown into a police van. Mansour Osanloo, head of the Tehran bus drivers’ union, was held in solitary confinement for four months, and beaten and arrested a second time in November. Following his release on bail, he was once again arrested by the authorities in July 2007 and remains, along with several colleagues, in prison. Continued violence in Palestine also affected the trade union movement. In one case, masked men threw a hand-grenade at a union-run radio station and then set it on fire, injuring four people. Continued restrictions on movement of Palestinians between the West Bank and Gaza by the Israeli authorities made trade union activities even more difficult. In Europe, systematic repression of independent trade unionism remained a feature in Belarus, and the European Union pledged to withdraw trade preference benefits due to the failure of the Lukashenko regime to respect core ILO standards. Employers in Azerbaijan and Turkey were responsible for serious anti-union harassment, while government interference in legitimate trade union affairs was documented in Bosnia/Herzegovina, Lithuania, and Moldova. Labour law changes in Russia and Georgia also undermined adherence to union representation and collective bargaining rights. Yet there is a positive message too. In the foreword to the report, ITUC General Secretary Guy Ryder points out that ‘Despite all the difficulties, millions of women and men remain firm in their commitment to, or are discovering the benefits of, trade union action.’ Saluting the courage of all those who stand up to anti-union repression despite the obvious personal danger they face, Ryder added that ‘International solidarity action by trade unions around the world has brought much-needed support to workers whose fundamental rights are being violated.’ In many of the cases documented in their Survey, global trade union pressure on governments and companies has brought results. ‘Nevertheless’, he warned, ‘there are few if any signs of overall improvement since the end of 2006, and governments need to face up to their responsibilities to make sure that global standards adopted at the International Labor Organization are fully respected everywhere in

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Identity, belonging, and the context for violence The list remains long and though much of it seems to take place outside the ‘developed world’ it is that same developed world which is using the labour force in those developing countries. Violence takes place, far from home, but it takes place nevertheless. Guus van Kouwenhoven is a Dutch businessman who was born in 1943. Van Kouwenhoven was close to the former President of Liberia, Charles Taylor. Throughout the civil war that raged on for seven years in Liberia and caused the deaths of 250,000 people, the parties in the conflict financed their war activities through overly exploiting and exporting the natural resources of the country. Charles Taylor in particular used the funds generated by the excessive exploitation of timber and diamonds to illegally acquire large quantities of arms. In his position as Director of Operations of the Oriental Timber Company (OTC) and of the Royal Timber Company (RTC) in Liberia, van Kouwenhoven managed the biggest timber operations in Liberia. Having very close relations with Charles Taylor he facilitated the import of arms for the latter, thereby infringing resolutions of the UNO Security Council. The United Nations Organisation consequently issued an order in 2001 banning Guus van Kouwenhoven from travelling, qualifying him as ‘an arms trafficker in breach of Resolution 1343 of the Security Council’ in addition to being ‘someone who supported the efforts of ex-President Taylor in destabilising Sierra Leone to gain illegal access to its diamonds’. According to the subsequent prosecution, ‘the militias hired by the former timber companies belonging to this Dutchman, are accused of participating in the massacre of civilians not even sparing the life of babies. Guus van Kouwenhoven is accused of having supplied the arms to the militias to enable them to carry out these crimes’. Guus van Kouwenhoven was arrested in the Netherlands on 18 March 2005. Of course this is possibly an extreme example, but at the same time it is good to keep in mind what violence is, and where it finds its support. Can one label van Kouwenhoven’s behaviour as violent? And can one talk about corporate performance, efficiency, and so forth as violent?

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the world.’ The episode of Democratic Romanticism is overruled by a period of Businesslike Pragmatism according to Mr. Sergei Chemezov, CEO of Rosoboronexport, a Russian Governmental Weapon export organisation, who sold in 2005 for an amount of 4 billion Euro weapons (Bizniz 20 Juni 2006 10:31: Henk Willem Smits).

Sen (2006), in his book Identity and Violence, argues that the idea of belonging to one group, and the fact that everybody is expected to have only one ‘identity’, are major causes of violence. The problem is trying to put restrictive labels on people: they are American, Muslim, Tutsi, as if they would not have any other qualities or relationships. All human beings tend to have families, and children, are members of different communities to which they contribute, possibly belonging to sports clubs or other associations, and giving a spiritual dimension to living (and some might express that through a religion and others don’t). In what way are people so different from each other? In order to sketch the network around any person, you would probably need a large number of attributes. However, in practice the description of somebody is restricted to one unique attribute. And that is where, according to Sen, the problems start. The essential basis for violence is a one-dimensional representation of people. (It might seem coincidence that this idea of one-dimensionality as a potential danger was already brought forward in 1964 by Herbert Marcuse in ‘The One Dimensional Man’ (2002). Marcuse’s main argument was a different one though.) While Sen describes this phenomenon on a societal level, it is clear that the same can take place on an organisational level, within a company or between a number of companies, on the level of associations, etc. Before making an attempt to suggest some ways out, in particular by referring to the concept of non-violent communication (Rosenberg), the next section summarises the essentials of an earlier simulation study – for the full paper see Baets et al. (2005) – that confirms Sen’s assumptions.

Some theoretical concepts on peace and conflict The problem of peace and conflict in societies is as old as those societies themselves and unfortunately the world has an increasing number of conflicts which remain difficult to understand and to explain. In political sciences, huge efforts have been made to explain the existence and intensity of conflict throughout the world. However, most of those efforts have not been very illustrative of the process by which such conflict emerges or of its context. Most of those explanations are based on a rather causal approach, and, as such, are often static and linear. Complexity theory, defined as the study of dynamic non-linear processes, and in particular its social complex adaptive systems insights, sheds another light on the emergence of human conflict.

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An experiment can be undertaken in order to simulate the emergence of conflict and peace in an artificial society. Within a society, a number of groups of like-minded people, who communicate with each other, are identified. They exchange experiences and insights in two different ways. In the first series of simulations, the agents exchange visions based on their own individual values and beliefs without taking into account the values of the groups (clan, religion) they belong to. In almost all simulations, this exchange, independent of the extremity of an individual’s opinion, leads to a viable situation. In the second series of simulations, agents exchange values based on the values of the group they belong to. Independent of their specific independent opinions, they exchange values based on what they presume is the common value. In many of these simulations, conflict emerges. In science, we tend to pay a lot of attention to the correct and unique definition of the subject area. In the area of political science, and even more so concerning peace and conflict, concepts aren’t that easy to define. They are, for example, highly contextualised and in fact are often based on some epistemological choice. Is peace the absence of war or conflict? What is a conflict and how is it described? How can peace be defined? They connect with issues discussed earlier in this chapter. Clearly, when people start killing each other, the talk is about conflict and war. But this doesn’t automatically mean that killing, war, and conflict are the same. When consumption is more or less unlimited in one part of the world, and in other parts of the world people starve from lack of food and water, it is equally valid to talk about conflict. When people suffer from hunger and illnesses for which drugs exist, ignorance can be defined as violence, and might lead to conflict or war (Mallet, 2003). Galtung (1995) defines ‘peace’ in a very indirect way. In fact he gives three simple principles to describe it: 1. The term ‘peace’ is identified using social imperatives that are accepted by a majority, not necessarily by all. 2. Those social imperatives can be complicated and difficult, but not impossible to reach. 3. The expression ‘peace is the absence of violence’ should be viable and reachable within those social imperatives. Consider the current European Constitution debate. People’s arguments are based on their experiences, their context, and their reality.

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Individuals are able to discuss, to have comfortably explorative dialogues, when the outcomes are less important for them. But what happens when these individuals are politicians from a certain party and, even worse, when they are observed by lots of people on television. The frequent outcome is that the progress towards developing a shared vision, shared values, a better understanding, a reasonable interaction, and a sharpening of the intellect, is completely lost because of the attachment to positions of winning and losing. Imagine that when we bring people together on an individual basis to explore ideas, and to be creative in a more or less neutral environment, it is probable they will mostly get along very well and be able to learn from each other. There are many examples in daily life. Outside Israel, you find Jewish people who are best friends with Palestinians. Many projects illustrate all kinds of peaceful possibilities. One project, which allows Palestinian children to attend the same school as Israeli children, results, not surprisingly, in these children getting along with each other very well outside their countries. Indian and Pakistani students outside their countries find far more interesting common significance between each other than differences, although inside their countries there is a lot of violent conflict. It appears to be that individuals are different and behave differently when compared to their behaviour as part of a group. However, in practice, is it possible to differentiate the individual from the group he belongs to? Many psychology and philosophy books are written about the individual and the necessary process of identification (with a group, a religion, a country, parents). To be part of a group means inclusion. But at the moment that someone feels part of a specific group, family, country, region, or club, the intimacy between the people inside the group almost automatically begins to exclude other individuals or groups. The ‘conflict’ between individual choices and ‘clan’ choices, and its consequences for the viability of a(n artificial) society, is what this chapter addresses. Using agent-based simulations, it approaches the issue via a non-causal methodology.

Agent-based simulations Imagine the following thought experiment. Construct a city where housing is free and everybody is permitted to come and live. There’s only one requirement: you’ll be mixed with people of other backgrounds,

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religions, beliefs, etc. One can assume that this will result in truly random meetings between people. Some will engage in conversations and these too will take place at random. Some people will try to convince others of their convictions’ validity. The possibility that convictions may collide, and conflicts may erupt between people – even resulting in murder – cannot be excluded. It is assumed that no groups will officially form and collide, since that would lead to a war scenario. In fact what we describe here is a ‘social’ situation in which individuals (who are here called agents) interact with each other (and exchange information, values, etc.). No organisational rules about these interactions exist. Each individual (agent) optimises what he thinks is the best possible behaviour. People meet a priori at random (though other patterns could be identified), and they sometimes ‘successfully’ exchange ideas. Many meetings take place without any exchange. Successful exchange is not controlled, but also happens at random. Without going into the detail (for further information, see Baets [2005]), an agent-based simulation does not define relationships, but rather agents with their characteristics, values, emotions, etc. These agents operate within a given ‘world’ (say a country) that limits the simulation. The exchange and learning rules are defined. Exchange changes each agent’s values. Exchange therefore contributes to the ‘development’ (positive or negative) of these values. There is something more that is fundamentally different between an agent-based simulation and most other simulation techniques but that it shares with e.g. artificial neural networks. Most modelling and simulation assumes that causal relationships would exist between the different variables. Agent simulations, however (see Baets, 2006), assume that there are still relationships, but that they are no longer causal (from cause to effect). Indeed they can be called a-causal links, based on phenomena such as non-locality and synchronicity (occurring together in time). Certainly, the latter is an ontological choice, and one could call it a quantum interpretation (Baets, 2004; 2006). It is nevertheless a choice which gives a real epistemological value to agent-based simulations. This chapter does not deal with an ontological choice itself, but simply accepts it. Agent-based simulations visualise this synchronous interaction between agents and even more so between the qualities and values of those agents. If this interaction might emerge into any specific scheme, it is observed and it can be interpreted. In no way would these visualised schemes indicate causal relationships.

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The ‘conflict’ between individual choices and ‘clan’ choices, and its consequences for the viability of a(n artificial) society, is the theoretical construct that is dealt with in this section. Based on the ontological choice made explicit above, agent-based simulations are used to materialise them through the construction of the following (thought) experiment. In order to formalise this problem, a number of interacting agents (people) are seen as having the following tangible convictions/values: • • • • • • •

Peacefulness Spirituality (values, connectedness) Religion (the degree of orthodoxy) Economic position Sense of justice Sense of responsibility Rationality.

The convictions are expressed with a number between 1 (weak) and 10 (strong). At the beginning of each simulation, those values are fixed (and different scenarios can be simulated) for the different agents (see Table 4.1). An individual falls into one of the following four categories: • • • •

Pragmatics Fanatics The just (the fair) Peace lovers.

Table 4.1 Convictions per group Convictions/Group

I

II

III

IV

Peacefulness Spirituality Religion Economic position Sense of justice Responsibility Rationality

5 2 2 7 1 3 8

1 4 9 7 2 4 5

5 6 1 4 9 7 3

9 7 1 2 8 8 2

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The experiment

Non-Violence and Co-Creation 91

I: Pragmatics II: Fanatics III: The just (the fair) IV: Peace lovers. Now that the populations are defined, the simulation has to identify interaction rules for the meetings between pairs of agents. Individuals meet at random. All meetings have a certain chance that characteristics will be exchanged. When a meeting is successful, all characteristics are exchanged in a certain way. Each conviction is reviewed when a ‘successful’ meeting takes place. There is a percentage chance that a meeting is successful. In that case, the individual with the strongest conviction will become a bit less certain; the other person will become convinced, to a certain extent, in the opposite direction. The mean of all the convictions determines how much the one conviction considered will be adjusted. Let us give an example. Imagine that a pragmatic (I) meets a fanatic (II) in a successful meeting. Let us consider now the exchange of the third conviction (religion). The value for religion of the pragmatic (that is the lowest of the two values) will increase by 9 ⫻ 9/32 ⫽ 2.53. The 32 is the sum of all values in Column II. Therefore the value for religion of the pragmatic becomes 2 ⫹ 2.53 ⫽ 4.53 The same happens in the opposite direction with the value of the fanatic. His value for religion is decreased by 2 ⫻ 2/28 ⫽ 0.14 and hence becomes 9 ⫺ 0.14 ⫽ 8.86. A separate case to consider is when both individuals have equal convictions (or nearly equal). In this case (at the beginning of the simulation that will be the case for people of the same group, but later on, this could happen with people of different groups) they are strengthened in their mutual beliefs. If two pragmatics meet (in the beginning of the simulation) and they have both a 7 for ‘economic position’, both their values will be increased by 1 (if equal to 5 or larger), in order to become 8. In the case that the values are less than 5, 1 is deducted. In any case, 1 is the minimum value and 10 the maximum value, which can never be exceeded. These numbers all alter continuously during the simulation. The alternative set of simulations, where individuals react to each other based on their perceived group adherence, is based on a different

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Within each category, it is assumed that the value for each agent that belongs to that category is equal, for all convictions. As starting values we have taken the following matrix. The columns are:

exchange rule. In that case it is not the specific individual values that are exchanged, but rather the means of the convictions of the group to which the individual belongs. Since those change all the time, they need to be recalculated all the time. Different experiments were set up and studied. The simulations have been programmed using SWARM. The Swarm Project was started at the Santa Fe Institute (SFI) in New Mexico. It is currently based at the not-for-profit organisation Swarm Development Group, also based in Santa Fe, New Mexico. All details can be found on the Swarm-related sites cited at the end of this chapter.

The scenarios The population size has been set to 10,000 for all the simulations. The variables that have been adapted were as follows: • The chance that a meeting is successful, and hence that convictions are exchanged • The relative importance of the four groups in the overall population size • Exchange based on individual values, or based on group values (as explained earlier). In total eight simulations/experiments were simulated. The ‘A’ simulations assume that the individuals exchange values, based on their respective individual values. The ‘B’ simulations assume that individuals exchange values, based on the average value of the group to which they belong. Within the A and B groups, each time four experiments were simulated. Simulation 1: • Chance for a successful meeting is 33 per cent • Each group is exactly equal in numbers (2,500). Simulation 2: • Chance for a successful meeting is 10 per cent • Different groups are equal in size. Simulation 3: • Chance for a successful meeting is 10 per cent • Group I (pragmatics) has 5,500 members

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Non-Violence and Co-Creation 93

• Group II (fanatics) has 500 members • Group III (the just) has 2,000 members • Group IV (the peaceful) has 2,000 members.

• • • • •

Chance for a successful meeting is 10 per cent Group I (pragmatics) has 4,000 members Group II (fanatics) has 500 members Group III (the just) has 2,500 members Group IV (the peaceful) has 3,000 members.

The first part of this analysis concentrates on the values for all groups together. The second part of the analysis only focuses on the fanatics, often blamed for problems of violence. The time of convergence given is the number of months necessary to reach a seemingly asymptotical value (to reach out). Detail of the simulations can be found in the original article. Here the concerns are limited to some of the conclusions, based on many detailed simulations. Despite the limitations of the experiments, this is to our knowledge the first successful attempt to visualise a phenomenon that is known in political science, but of which the organisational implications are not well understood. Complex Adaptive Systems seem to be able to contribute to a better understanding of (artificial) societies, in areas where other more classical approaches have not been able to contribute a deeper insight. From a political science point of view (and even more broadly from an organisational behaviour point of view), the simulations suggest that conflict emerges out of opposed group values, rather than out of opposed individual opinions. At least the simulations suggest a different emergent behaviour in both cases (individuals reacting with individual values, or individuals reacting with clan values), leading to different group behaviours. More detailed research will have to confirm this. The results of the simulations studied give an interesting insight into the role that the different values play in creation or avoidance of conflict situations. The study went much further and studied the different subgroups, and can now be used for exploring many more scenarios. Indeed what this research has illustrated is the potential use of this tool (or tools of this kind) in the study of peace and conflict. Where most of what is done in the area of conflict study is causally rational,

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Simulation 4:

this approach is radically different and can illustrate emergence in action. Emergence allows deeper understanding of the creation and history of conflict situations. Further research will have to confirm the role of these tools in conflict studies. A second conclusion is that the same people, interacting based on individuals’ values (A simulations) or based on perceived shared values (B values), create a dramatically different situation. First of all is it clear that the B simulations take an awful lot more time to converge, which might give sense to the observation that certain main political conflicts seem to take forever (e.g. the Palestinian problem, Northern Ireland). Second, this observation suggests that it is extremely difficult to find solutions as long as people negotiate via perceived groups and their representatives. Peace is clearly something that could be more easily found on the ‘battleground’ (via individual interaction, and of course without fighting) than around the ‘table’ (where clan representatives interact with so-called shared values). This observation supports the approach of certain attempts to organise education, sports, music, etc. in areas where important conflicts have taken place, with the aim of fostering individual communication. Supposedly, this increased and individual exchange might be a very constructive element in a conflict situation. On the contrary, groups (or countries) that officially support groups (or countries) against others (and by doing so embed a lot of perceived shared values) mainly lead to more conflict. Comparing the A simulations with the B simulations also shows that they converge on other variables to other values, and the B simulations converge to more specific values than the A values. In the B simulations ‘values’ seem to matter. Finally, though this research has dealt with conflict in societies, it is clear that the approach could easily be used in order to study organisational conflict. The ontological assumptions on which this study is based are clearly much closer to corporate reality in conflict management than most existing knowledge. With some careful consideration, it should be observable that an evident source for conflict in companies will also be the perceived group values and the way exchange and learning doesn’t take place in such a situation. It would be interesting to research whether this approach could illustrate in real-life cases some of the claims made in the ‘learning organisation’ literature. Self-Creation In the world of separated community the spectrum is wide and my focus can not imagine how far the distance

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Non-Violence and Co-Creation 95

Over undiscovered oceans In the world of meaningless and unconscious thoughts I am far away from recognising your mind maps, synapses, And unspoken needs In the world of anger and violence I cannot spread my Wings to cross the sky because the darkness is without The light of sparkling stars I am grateful that there is no such world Erna Oldenboom This simulation is not used to make a final claim on the correctness of the definitions, nor to claim any illustration of political consequences. However, it does support Sen’s argument that considering people as having a unique identity might be an important cause for violence. Though Sen considers mainly societal reality, and so does this simulation, it is clear that the issue of a ‘unique identity’ is equally problematic in corporate structures, where people are mainly (if not exclusively) seen through the lens of their function in the company. This lens colours vision on people, and often positions them in opposition to others. Just as in Sen’s work, and as in the simulation, the ‘us and them’ construction is in essence a violent one.

Non-violent communication and the workplace There are other experiences of developing non-violent ways of communication. This section ends by advocating one example developed by Marshall Rosenberg (2003). Rosenberg has developed an approach to non-violent communication which serves worldwide as a valuable resource for communities facing violent conflicts and severe ethnic, religious, or political tensions. The spread of non-violent communication training and its use in mediation by people in conflict in Israel, the Palestinian Authority, Nigeria, Rwanda, Sierra Leone, and elsewhere has shown remarkable results. Fortunately, companies are possibly not as rude and devastating as some war zones, but, unfortunately, (hidden) violence is common practice in companies. Nonviolent communication might offer a simple and straightforward tool

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Is in my optical view of the world In the world of individuals, separate from each other, the Space between you and me is more than a million miles

for a manager who would like to shift to a more human communication on the workfloor, and create the basic conditions for social intrapreneurship. For those interested to learn more about this approach, see Leu’s (2003) workbook. At this point, only the concept will be described. In studying the factors which affect our ability to stay compassionate, Rosenberg was struck by the crucial role of language and the use of words. He has since identified a specific approach to communicating – speaking and listening – that leads people to give from the heart. This connects people with themselves and with each other in a way that allows natural compassion to flourish. He called that approach ‘Non-violent Communication’ and uses the term ‘non-violence’ as Gandhi used it: that is, to refer to a natural state of compassion when violence has subsided from the heart. While the way humans talk may not be considered to be ‘violent’, words often lead to hurt and pain, whether for ourselves or others. In some communities, the process is also known as compassionate communication. Non-violent communication is founded on language and communication skills that strengthen, even under trying conditions, the ability to remain human. It does not pretend to contain anything new; all that has been integrated into non-violent communication has been known for centuries. Instead, the intent is to remind us about what we already know – about how we humans were meant to relate to one another – and to assist us in living in a way that concretely manifests this knowledge. The approach guides us in reframing how to express ourselves and hear others. Instead of being habitual, automatic reactions, words have become conscious responses based firmly on an awareness of what we are perceiving, feeling, and wanting. We are encouraged to express ourselves with honesty and clarity, while simultaneously paying others a respectful and empathic attention. In any exchange, we come to hear our own deeper needs and those of others. This approach trains people to observe carefully, and to be able to specify behaviours and conditions that are affecting us. We learn to identify and clearly articulate what we expect from a given situation. The form is simple, yet powerfully transformative. The approach replaces old patterns of defending, withdrawing, or attacking in the face of judgement and criticism. It enables us to perceive ourselves and others, as well as our intentions and relationships, in a new light. Resistance, defensiveness, and violent reactions are minimised. When we focus on clarifying what is being observed, felt,

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and needed – rather than on diagnosing and judging – we discover the depth of our own compassion. Through its emphasis on deep listening – to ourselves as well as others – this approach fosters respect, attentiveness, and empathy, and engenders a mutual desire to give from the heart. Although non-violent communication is referred to as a ‘process of communication’ or a ‘process of compassion’, it is more than a process or a language. On a deeper level, it is an ongoing reminder to keep our attention focused on a place where we are more likely to get what we are seeking. When we give from the heart, we do so out of a joy that springs forth whenever we willingly enrich another person’s life. To arrive at a mutual desire to give from the heart, we focus the light of consciousness on four areas – referred to as the four components of the non-violent communication model. First we observe what is actually happening in a situation: what are we observing others saying, or doing, that is either enriching, or not enriching, our life? The trick is to be able to articulate this observation without introducing any judgement or evaluation – to simply say what people are doing that we either like or don’t like. Next, we state how we feel when we observe this action: are we hurt, scared, joyful, amused, irritated, etc.? And third, we say what needs of ours are connected to the feelings we have identified. An awareness of these three components is present when we use non-violent communication to clearly and honestly express how we are. For example, a mother might express these three components to her teenage son by saying, ‘Felix, when I see two balls of soiled socks under the coffee table and another three next to the TV, I feel irritated because I need more order in the rooms which we share in common.’ She should follow immediately with the fourth component – a very specific request: ‘Would you be willing to put your socks in your room or in the washing machine?’ This fourth component addresses what we are wanting from the other person that would enrich our lives. Or, at times, make life more wonderful. Thus, part of non-violent communication is to express these four pieces of information very clearly, whether verbally or by other means. The other aspect of this communication consists of receiving the same four pieces of information from the others. We connect with them by first sensing what they are observing, feeling, and needing, and then discover what would enrich their lives by receiving the fourth component, their request. As we keep our attention focused on the areas mentioned, and help others do likewise, we establish a flow

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• • • •

What What What What

I am observing, feeling and needing I am requesting to enrich my life you are observing, feeling, and needing you are requesting to enrich your life.

Non-violent communication helps us connect with ourselves and each other in a way that allows our natural compassion to flourish. It guides us to reframe the way we express ourselves and listen to others by focusing our consciousness on four areas: what we are observing, feeling, and needing, and what we are requesting to enrich our lives. This approach fosters deep listening, respect, and empathy, and engenders a mutual desire to give from the heart. Some people use this approach to respond compassionately to themselves, some to create greater depth in their personal relationships at work or in the political arena. We suggest this as a valuable approach to fostering non-violence in the workplace. In this chapter we have argued for two cornerstone building blocks necessary for the development of sustainable leadership: non-violence and co-creation. A third and more encompassing building block is management by values. Where non-violence and co-creation are attitudes that a manager is invited to embody, management by values is a framework, a guiding principle for managerial practice. In the next chapter we are developing such a framework, which we can afterwards operationalise in management tools (in Chapter 9).

Bibliography and further readings Baets, W. (2004) ‘Une interprétation quantique des processus organisationnels d’innovation’ (A quantum interpretation of innovation), HDR-thesis (Habilitation à la Direction des Recherches), IAE Aix-en-Provence, Université Paul Cezanne, Aix-Marseille III (F). Available on my blog: http://euromed.blogs.com Baets, W. (2005) Knowledge Management and Management Learning: Extending the Horizons of Knowledge-Based Management, Springer. Baets, W., (2006) Complexity, Learning and Organisations: A Quantum Interpretation of Business, Routledge. Baets, W., Oldenboom, E., and van Starkenburg, T. (2005) ‘Emergence of Peace and Conflict: An Experiment with Agent-based Simulations’, EGOS Colloquium ‘Unlocking Organizations, Berlin. Daily News (2007) 3rd May. Galtung, J. (1995) ‘Investigaciones teoricas: Sociedad y cultura contemporaneas’, Instituto de Cultura Juan Gil-Albert, Editorial Tecnos.

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of communication, back and forth, until compassion manifests in natural self-reflection:

Leu, L. (2003) Non-Violent Communication: Companion Workbook, PuddleDancer Press. Mallet, J. (2003) ‘Etique et Education: défis pour un nouveau millénaire’, Omega Formation Conseil. Marcuse, H. (2002) The One-dimensional Man: Studies in the Ideology of Advanced Industrial Society, Routledge. Margalit, A. (1996) The Decent Society, Harvard University Press. New York Times (2005) 2nd May. Rosenberg, M. (2003) Non-Violent Communication, PuddleDancer Press. Sen, A. (2006) Identity and Violence: The Illusion of Destiny, Allen Lane.

Internet sites My personal blog: http://euromed.blogs.com Information on Swarm approach and software: http://www.swarm.org/ and http://wiki.swarm.org/ http://www.humboldt.edu/~ecomodel/ http://www.santafe.edu/projects/swarm/swarmdocs/set/set.html http://www.santafe.edu/projects/swarm/swarmdocs/refbook-java/index.html Sites on the use of Swarm: http://gcc.gnu.org/ ftp://ftp.xraylith.wisc.edu/pub/khan/gnu-win32/mingw32/gcc-2.95.2/

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5

Until now, we have defined a new ontology, a new set of assumptions, that allows us to change our managerial focus and behaviour, and that will allow us to rethink the growth concept in favour of one of sustainable performance. In order to build management tools to support the leader in their endeavours to achieve sustainable performance, we need a number of building blocks and attitudes that help to redefine that new focus. In Chapter 4 we introduced the concepts of non-violence and co-creation. In this chapter we want to broaden the scope to management by values. Management by values will be the focus in managing for sustainable performance. Indeed, sustainable performance is exclusively based on the realisation of socially or societally relevant values. It concentrates on the realisation of real value added for the customer, the citizen, the stakeholder, and it does not limit its focus to the shareholder only. In the first part of the last century, Management by Instructions (MBI) was what was then called the ‘scientific’ way of management. Since that time, the evolution of the behaviour of markets, and also of our understanding of this evolution – especially in terms of an increasing complexity, uncertainty, and rapidity of change – has fuelled further evolution in our managerial thinking. The 1960s, for example, gave rise to the still popular Management by Objectives (MBO). MBO came alongside ideas on the role of the group and of group thinking: the idea of matrix organisations, project groups, sales teams etc. This understanding of organisations, and its accompanying, sometimes, guerrillalike management style, have contributed to economic success over the last few decades. More recent has been the emergence of Management by Values (MBV), which continues to have a slow uptake. Nevertheless, as this book illustrates, there is a growing demand for more human, 100

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Management by Values

Management by Values 101

1. 2. 3. 4.

The The The The

need need need need

for for for for

quality and customer orientation; professional autonomy and responsibility; ‘bosses’ to evolve into leaders/facilitators; ‘flatter’ and more agile organisational structures.

The quality and customer orientation are confronted with the issue that in today’s markets, value added becomes an issue for continuation (or call it survival). A highly developed customer expectation can be met either by a value-added product or service (something which the others do not offer), or by a cut-price offering (which of course, in the long run, is not viable for the company). Consider the simple question (already mentioned in the first chapter) that in practice does not seem to be so simple to answer: what is the value added of your company? What are the market, the economy, and the society missing if your product or service were no longer to be there (e.g. if it went bankrupt)? Are companies able to state their value added to society and, if not, how could they manage the company to realise such values? If they did not have that value added, why in the first place does the company exist from an economics point of view (other than for making an individual profit)? Maybe there was no answer since we were all looking for the perfect answer. In the last chapter of the book, we will help you to formulate an answer. The need for professional autonomy and responsibility is one that has to do with the refocusing of the human skills on the human (and the mechanistic skills on the machine). The more technology progresses, the greater the need for humans to take decisions, and to use technology to best realise its potential. Successful companies today seem to clearly understand the need for the human dimension in management. In a networked structure (whether a company or an economy), the intense interaction of individuals can only produce emergence if those individuals have autonomy, are responsible, and have the necessary professional skills. A soccer team will only function if all players are professionals (they know how to play soccer), they have their autonomy on the field, and they are willing to shoulder their responsibility in the game. There is no other way to manage a soccer team, nor is there any different basis for a company.

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purposeful, and meaningful orientation of business. What does it all lead to? Dolan et al. (2006) suggest that the following four interconnected trends are heightening organisational complexity and uncertainty, and contributing to situations where the MBO approach reaches its limits:

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Success needs to be based on ‘bosses’ who evolve into leaders and/or facilitators. The chapter on sustainability principles and leadership develops this a bit further. Leadership is related to communication (as discussed in Chapter 4) and, as Dolan et al. suggest, instructions are the management tools of bosses, objectives are those of administrators, and values are what leaders use. Though many are convinced of the need for flatter organisations, very many traditional organisations are oriented towards hierarchical control comprising: • those who direct and think (or are supposed to) • those who control the ones who produce • those who produce. Some bosses, but only a few first-class ones, continue to be necessary, but not as controllers of irresponsible operatives. Rather, their role, in line with Dolan et al.’s research, should be to transmit values, facilitate work processes, and allocate and co-ordinate resources.

The scenery of values As illustrated in previous chapters, ‘Shareholder value only’ belongs to the mainstream managerial paradigm which is increasingly being called into question. With less and less time to lose, people cannot afford the luxury of continuing to think in a paradigm that hardly questions the negative side effect of its own ontology, let alone its impact on all living species, including ourselves and Nature. The framework of a short-term business view, ignoring the devastating impact of our consumerism on our own environment and our own wellbeing, is no longer tenable. Listening to the radio and reading the press on Sunday the 27th January 2008 we learned that at least one trader in France would be responsible for Société Général’s loss of ∊5 billion. It is not the first time in history this has happened, since we all recall the story of Nick Leeson in February 1995. While searching through Google, we found this small paragraph, part of a much larger article. The collapse of Britain’s Barings Bank in February 1995 is perhaps the quintessential tale of financial risk management gone wrong. The failure was completely unexpected. Over a course of days, the bank went from apparent strength to bankruptcy. Barings was Britain’s oldest merchant bank. It had financed the Napoleonic wars, the

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We would like to draw the reader’s attention to a small detail in this paragraph. The failure was completely unexpected. We already believed and knew, and we are not financial specialists, that this could happen. We also like to express that we did not use our ‘super (psychic) power’ to look into the future. It is a rather straightforward application of the dynamics of a (complex) financial market. We used to work at ING, an international financial institution, which is still headquartered in the Netherlands. ING bought Barings for a notional price. We still recall the excitement and the feeling of glory of most people involved in this deal. After a while Barings was sold off again, with an appropriate profit. We were not at all surprised by the fact that this could happen, since it was, for us, a realistic outcome of a systematically wrong assumption of reality. Everything that has to do with options and futures is, by definition, part of a completely artificial world that is created, and that can continue to survive, without any underpinning economic reality. It is a virtual world that has created its own reality, its own goods and services that are pure belief products. There is no link any more with real companies, markets, economic dynamics, etc. A downward economy contains an equally large potential for profit as an upward market. It gets to the kind of virtuality inherent in the gap between a real football game and its huge economic potential (potential connected to the value of top international players and to their possible success in competition). At that point the comparison ends: with soccer, the ball and the goalposts do not change during the match; in financial markets they do. We participated a while ago in a presentation by the then Minister of Internal Affairs of France (the current President) in a French Business School, for students and staff. Without judging him as a person, and without even suggesting that we would know a much better president for a country of which we do not know enough, we still were able to make some interesting observations. The speaker explained to the audience, including a few hundred students, that whatever one could say about capitalism, it, at least, never made victims. We still want to believe that he wanted to be truthful. We still want to have the idea, the impression, that the speaker wanted to express his true feelings, ideas, and vision based on his experiences and assumptions. We heard what he said and we felt upset, angry, and could not believe our ears, since

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Louisiana purchase, and the Erie Canal. Barings was the Queen’s bank. What really grabbed the world’s attention was the fact that the failure was caused by the actions of a single trader based at a small office in Singapore.

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our need for honesty, integrity, and the knowledge of some truthful facts was not fulfilled. We wish and hope that we will continue our search for reason, for truth, for an open vision, and for meaning. We hope that we never forget to search for facts, for clarity, and for reasonable questions in every situation, and for every institution. We do not need to be out-of-thebox thinkers to be able to know, to experience that, in the first place, thoroughbred capitalism never existed; and that, in the second place, it had, and has, some very ‘negative’ impacts on people’s wellbeing (child labour, exploitation in low-cost countries, arms trade, etc.); and that it makes victims through the diamond trade, arms trade, trade in alcohol, tobacco and other drugs, wars over energy sources, etc. One does not need to be a communist to see this, and one should not call somebody who does see it a communist. What else does Enron illustrate? In the Netherlands we had our own Enron called Ahold, an international retailer. Many small (private) investors lost their money, many employees lost not only their minor investments but their jobs as well. Ahold almost faced bankruptcy. Before they ended up in rough water, many parties wanted to do business with Ahold: suppliers, accountants, and financial specialists of outstanding banks. The General Manager, eventually responsible for the disaster, was once elected ‘Businessman of the Year’. They all operated in the same illusionary (or artificial) ‘world’ based on finance and financial values expressed by the share value. In general it was believed (and it still is) that this business model, this management style, should be ‘the’ example for the rest of the world. It does not recognise the existence and diversity of other business models elsewhere in the world that might be based on other, sometimes more ethical, assumptions. When Ahold went bankrupt, former friends wanted to distance themselves from the former ‘Businessman of the Year’. Unconditional friendships are rather rare in business. We sometimes see a strange separation between private life and business environment, and Kofman (2006) clearly states that this separation is the cause of much ‘unethical’ or ‘non-responsible’ management behaviour. Managers can be at the same time a parent or a grandparent and they will honestly talk about and discuss with their children and grandchildren the importance of honesty, integrity, and ethics. At the same time they do not hesitate to deny responsibility for the disasters created in the organisations they help to manage and lead. Some go so far as to say that today’s managers do not even incur any risk any more: at the time of their recruitment they negotiate a golden handshake for

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the moment the company wants to get rid of them. Poor results or not, important bonuses are paid out every year. Where is the link between the reward and the risk run by such so-called managers? What would justify their extremely high salaries? Arguably lots of money is unfairly ‘earned’ by non-equitable trade, child labour, unsafe working conditions, unfair legislation and regulation, unfair competition, fraud in the construction sector, and that seems to take place in most countries. It is almost place and culture independent; but it is paradigm dependent. Changing this attitude therefore needs an evolved managerial paradigm. Europe and the US had some interesting cases. Well-known and respected managers of large multinationals were accused of insider trading, which is legally forbidden in many countries. The challenge is to find evidence for insider trading. In respected financial institutions, trading by employees is not permitted. But how can one exclude insider trading by a family member or friends of managers who have key positions in those financial institutions?. They can easily share their knowledge in a (for them, too) very profitable way. Despite the strict laws and regulations in this matter, it is the fundamental paradigm that governs ‘management’ (and its supporting ideology) that makes this unethical use possible and even underpins it. Banking became, like many other industries, a self-referential system. Inside the system it works highly efficiently, by using a ‘jargon’ that only the insiders understand. The outsiders do not understand what happens in the system and are therefore excluded from the supreme insider possibilities. Insider trading need not be deliberately unethical behaviour; it can be nothing more than a logical consequence of the self-referential system of contemporary banking. Our grandmother happened to be ‘the owner’ of an organisation and she knew all the people she worked with. She knew that she needed the ideas and creativity of all the other people in the company. She felt responsible, not only for all her family members, but also for the people she worked with. She considered them as an extended family. She had a vision. She would have been able to answer the question of the value added that her organisation brings to society. She committed to the organisation and the people she worked with, first (see Chapter 6). She did not hide behind hierarchy, protocols, and the like. She was her company. The present shareholders of an organisation are no longer the ‘ownermanagers’ of the organisation. There are now shareholders on the one hand and managers on the other. They have different goals, means, and ideas. Shareholders do not necessarily need a vision or a mission.

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They keep a distance from the organisation and the people that work in and for the organisation. They are much more interested in managing figures, and obviously certain figures interest them most: share value, dividends, etc. If they believe that the organisation will do worse in the future, they will leave ‘the sinking ship’ without hesitation, and long before the water begins to be visible to others. Some would call this recklessness that gives no thought to the impact on other stakeholders of the company. A number of acquisitions offer dreadful examples of this, such as the recent breakdown and takeover of ABN AMRO Bank. It seems that feelings of empathy are minimal. Currently empathy, respect, a peaceful mind, and love seem to be separated from what we consider business should be. Talking about peace and love in many parts of the world is something you do in private and not in public, especially not in the world of business. In business, the prevailing belief seems to be that the analytical, isolated mind is superior and separates us from our heart since minds are much more effective and efficient. But what do we call effective and efficient? Shareholder value only? Return on investment only? Short-term (financial) results? Continuous competition? But what if, as argued in earlier chapters, it is not possible to separate mind and thoughts from the rest of the body? What are the consequences of false hypotheses and assumptions? What price might be paid for these (wrong) mindsets? What about poverty, starvation, humiliation, aggression, child labour, abuse, and other cruelties? It could be that our reason can deal with all of these but what about feelings and health? Could this be why people in many organisations and corporations avoid talking about love, compassion, empathy, and peace? Could it be that the decisions made by the so-called corporations could be completely different if they would not exclude compassion? Is this what people fear most in business? And what is the cause of the many burn outs? The separation of the owner-manager into an owner (shareholder) and a manager did not only change the purpose and the method for the shareholder, it also changed them for the manager. As Whittington wrote in his award winning 1993 book What is Strategy and Does it Matter?, managers have invented a new type of skill in order to justify the role of the manager. In the era of the owner-manager, the role of that owner-manager was clear: it was the leader who committed to the vision of the company, who committed first, and who functioned in a co-creating mode. In the absence of that commitment, and given that the manager takes a technocrat’s role (i.e. managing on behalf of someone else), a new skill was necessary to justify the role and position

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of the manager: that became strategy. Gradually, strategy became disconnected from purpose, meaning, commitment, and involvement. A manager is hired, negotiates his golden handshake up front, has a high salary with a multitude of bonuses, and runs no risk. The risk–return logic of entrepreneurship has become one of ‘administration’ (we indeed train managers to become masters in business ‘administration’). Whittington’s answer is devastating: having explained what strategy is, it appears, to him, not to matter. At the 250th anniversary celebration of the Sara Lee Corporation, the former Mayor of New York, Rudolph Giuliani (a recent candidate for the Republican presidential pre-elections) and some celebrities tried to convince the other invitees of the great importance of the shareholders for managerial success. We did not observe any further interest from those anniversary speakers in any of the other stakeholders. The four classical production factors (land, labour, capital, knowledge) were reduced to one. Everyone is interrelated and we do not want to judge them for what we would call a short-term vision. Nevertheless this short-term vision causes a lot of problems. Enormous amounts of money are invested in advertisements and marketing campaigns, to make sure that as many people as possible consume products and use services that not only do they not necessarily need, but which may even have negative side effects (such as health-related issues with certain types of food, drinks, or other legal drugs). In the Netherlands, the Christmas Sales are seen as the most important instrument to measure the confidence of the buyers in the national economy. Will we ever be able and courageous enough to rethink growth? We hope that in a new paradigm this might be possible.

Some principles Before talking about values per se, it is important to spend some time on principles that allow and support management by values. Values in themselves can easily be identified, but, if a manager wants to start managing by values, she or he will see the difficulty of kicking it off. Values need a context, and without that context values are little more than wishful thinking. An example of a set of interesting principles with this purpose are the Core Principles of Sustainability developed by Michael Ben-Eli ([http: //bfi-internal.org/sustainability/principles]). They are subscribed to by the Alliance of New Humanity ([http://www.anhglobal.org/]), among others.

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At the core of its vision, the Alliance recognises the unity of all life and a wholehearted adherence to the noblest aspirations of humankind (as proclaimed in all spiritual and humanist traditions that call for compassion and the celebration of life). The values and principles of the emerging movement for a new humanity, (and of the Alliance, which is trying to serve it), are based upon the support of policies, causes, and actions that favour respect for life, human dignity, freedom, ecological sustainability, and peace. The basic tenet of this approach is a consciousness based on the inseparability of all life (i.e. that everything is connected and that therefore our wellbeing is the wellbeing of everyone). This consciousness, we believe, cannot be just passive, otherwise it would remain irrelevant. Instead, it has to be expressed for the benefit of all through service that improves life for all mankind. Love and action need to go essentially together, as Hafsat Abiola suggests while saying that action without love is meaningless and love without action irrelevant. Sustainability, according to Ben-Eli, calls for a deep transformation in all aspects of human activity including our worldview, our values, our technology, our governance, and more. A growing number of people need little convincing that establishing the concept of sustainability as the organising principle on our planet fosters a well-balanced alignment between individuals, society, the economy, and the regenerative capacity of the Earth’s life-supporting ecosystems. It is a challenge unprecedented in scope and urgency in our time. It requires a fundamental shift in consciousness as well as in action. It calls for a deep and simultaneous transformation in all aspects of human activity including world view, values, technology, current patterns of consumption, production, investment, governance, trade, and more. The concept of ‘sustainable development’, as coined by the World Commission on Environment and Development, and with it the term ‘sustainability’ itself have been gaining increasing recognition in recent years all around the world. Widespread use has been followed by growing ambiguity. As a result, both terms are employed within a very broad spectrum of meaning, often to the point of trivialisation. Expressions such as ‘sustainable loans’, or ‘sustainable projects’, for example, are often used by international agencies which provide financing for development. The terminology relates to questions of whether loans are likely to be repaid, or if projects are likely to be self-supporting beyond the term of initial backing. It has become completely divorced from the deeper and more important questions regarding the very nature of development and its ultimate impact on humans as well as the environment.

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To be serious about ensuring a sustainable future, however, will mean being guided by more rigorous concepts, and by principles that could provide clear blueprints for the required change. Nothing could offer a better perspective on the deeper meaning of the concept of sustainability than the direct experience of aboriginal peoples and the way their life has always been intimately linked to their environment. In a documentary film on New Guinea, made some years ago, the filmmakers interviewed a local tribesman. He was a hunter of birds of paradise: a revered profession passed for generations from father to son. The birds’ feathers are prized for ornamental decorations in sacred rituals. He was telling the story of how he was doing well, having a good wife, and owning two pigs. Then one day he was able to acquire a hunting rifle. Overnight his harvest of birds exploded. With every shot, birds were virtually falling into his hands. He grew rich, obtained a new, younger wife and many more pigs, but suddenly, to his bewilderment, there were no more birds left to hunt. In a moment of lucid recognition he understood that a ‘profit’ gained today at the expense of tomorrow cannot be considered real wealth. He also saw how the new miracle tool which brought him quick plenty turned into a dark curse, destroying the very resource upon which his livelihood depended. In the ‘old days’, birds were hunted with blowpipes, a much more demanding practice than spraying lead pellet around. It yielded fewer birds with each hunt, but also left the total stock basically intact. Moreover, in a technique perfected through generations, the arrow tips were wrapped in a leather bulb. On impact, a bird would fall to the ground, knocked momentarily unconscious. The few desired feathers would be plucked and the bird, after gaining its composure, would fly away able to grow a new crop of feathers. In his simple observations, this native hunter was able to strike at the core meaning of sustainability. His story brought to the fore two crucial aspects: that the concept ultimately relates to a particular type of balance in the interaction between people and the carrying capacity of their environment; and that in achieving such a balance some form of self-restraint must be involved. It is this specific kind of balance which must be the focus of a meaningful definition of sustainability, applicable to any population and its related environment – amoebas in a Petri dish, algae in a lake, or humans on the planet. The currently prevailing definition of sustainability emphasises crossgenerational equity, clearly an all-important concept for any society that wishes to endure, but one that is operationally insufficient. Since

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actual, specific wishes of future generations are not easy to ascertain, cross-generational equity often fails to provide unequivocal guidance when specific policy decisions are debated. Anchoring an alternative definition directly to the relationship between a population and the carrying capacity of its environment offers a more advantageous approach. It assumes a number of key variables: for example, population numbers; a measure of wellbeing; total inventory and rate of consumption of resources; impacts of by-products generated by human activity on the absorption capacity of the environment; impacts of new technologies in opening or hindering new evolutionary possibilities. These are all potentially measurable. Hence, the following definition (Ben-Eli, 2004): Sustainability: A dynamic equilibrium in the processes of interaction between a population and the carrying capacity of an environment such that the population develops to express its full potential without adversely and irreversibly affecting the carrying capacity of the environment upon which it depends. This definition points to the dynamic nature of sustainability as a state, a state that has to be calibrated with time, again and again, as changes occur in population numbers, or in the resources available for supporting all humans at a desired level of wellbeing. It does not seek to define specifically what such a level is, nor to limit yet unimaginable possibilities for social evolution. It recognises, however, boundaries and limits that must be maintained by Stone Age tribes and industrial societies alike. As long as the underlying conditions for equilibrium are maintained, the wellbeing of future generations is assured. The set of sustainability principles which follows is grounded in BenEli’s definition. The principles are articulated in broad terms but can receive a specific operational meaning in relation to particular sectors of the economy, development issues, business strategies, investment guidelines, or initiatives taken by individuals. We express them in relation to the following five fundamental domains (all representing an essential aspect in the interaction of human populations and the environment): 1. The Spiritual Domain: which identifies the necessary attitudinal orientation and provides the basis for ethical conduct. 2. The Domain of Life: which provides the basis for appropriate behaviour in the biosphere with respect to other species. 3. The Social Domain: which provides the basis for social interactions.

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The result is a set of five core principles, each with its own derived policy and operational implications. The set is fundamentally systemic in nature, meaning that each domain affects all the others, and is affected by each in return. Rather than a list, the set should be approached and understood as a coherent whole. The framework of these principles enables a nurturing context for talking about values. The first principle relates to the spiritual domain, to the basic assumptions we hold about the very nature of reality and the values we hold. It calls for recognising the fundamental mystery which underlies all existence, and the seamless continuum that links us humans, and our technology, with the rest of the biosphere, and with the outermost reaches of the cosmos. This principle means honouring the Earth with its intricate ecology; fostering compassion and an ethical perspective in all human affairs; reintroducing a sense of sacredness and reverence to all interactions; linking inner transformation of individuals to transformations in the social collective; and fostering the emergence of a genuine, wise, planetary civilisation. The second principle relates to the domain of life. It recognises that the lasting viability of all complex, self-organising systems – rainforests, coral reef communities, and industrial economies alike – depends on their very complexity. It is their internal variety that allows for the emergence and re-emergence of different configurations in response to change. This principle calls for ensuring that the essential variety of all forms of life in the biosphere is maintained. It means assuming a responsible relationship with all species and ecosystems; conserving the variety of existing gene pools; harvesting other species only to regeneration capacity; limiting human encroachment on other life forms; and enhancing biological diversity even in areas of human habitat. The third principle relates to the social domain. It recognises the need for a new agenda for society based on human dignity, open processes, responsive structures, plurality of expression, social justice, and global solidarity. This principle calls for maximising degrees of freedom and potential self-realisation of all humans without any individual or group adversely affecting others. It means fostering respect for cultural diversity as the cornerstone for social interactions; establishing universal rights and responsibilities for all individuals and communities; ensuring

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4. The Economic Domain: which provides a guiding framework for creating and managing wealth. 5. The Material Domain: which constitutes the basis for regulating the flow of materials and energy that underlie existence.

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inclusion in governance and equitable access to natural resources; strengthening cooperation as a basis for managing global affairs; and outlawing war as a method of resolving disputes. The fourth principle, which relates to the economic domain, recognises that the accounting system used at present to guide the economy grossly distorts values. It does so by pricing environmental services practically at zero, by repeatedly counting consumption as if it were income, and by ignoring important cost components, ‘externalities’, such as impacts of depletion, pollution and waste. The fourth principle calls for the adoption of an appropriate accounting system, fully aligned with the planet’s geological, ecological, and societal processes. It means employing a comprehensive concept of wealth involving the simultaneous enhancement of all key forms of capital; incorporating critical externalities in all cost accounting; recognising a measure of wellbeing and human development in economic calculations; ensuring that taxation and regulation policies are designed to accentuate desirable outcomes and optimise for the whole; and finding ways for calibrating market mechanisms to reflect the true value of the global commons. The fifth principle relates to the material domain. It emphasises the idea that the limits on possibilities in physical systems and thus on the productive potentials in the use of resources, are ultimately prescribed by the primary laws of physics. The principle calls for using superior design to ensure that the flow of resources, through and within the economy, is as nearly non-declining as permitted by natural laws. This means using resources consciously and creatively; cutting out waste; recycling each molecule and employing new knowledge in order to increase performance with each cycle of use. It also means avoiding depletion of capital resources and increasingly using income sources. Ultimately, any serious reflection on the concept of sustainability and the five core principles that together prescribe it reveals that the spiritual principle is essential for the possibility of attaining sustainability as an enduring state. It alone underscores the difference between a greedy, egocentric, predatory orientation and a nurturing, self-restrained approach to the world. The spiritual principle drives, integrates, and centres the other four principles. It provides the attitudinal orientation that is absolutely essential as a basis of change and, to quote Satish Kumar: ‘The moment our attitude changes, everything will start to change.’ Or in Gandhi’s words: ‘We must be the change we want to see in the world’. Changing and transforming are what contemporary leaders are expected to do. That is in equal need of a redefinition. It opens challenging doors for the new leaders of the future. Some of those ideas are not even

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really new. Jack Welch was with the General Electric Company (GE) from 1960. Having become Chairman and CEO of GE in 1981 with a market capitalisation of about $12 billion, Welch turned it into one of the largest and most admired companies in the world, with a market value of about $500 billion when he stepped down 20 years later in 2001. Although he is ‘the celebrated leader of a global manufacturer’ often noted for its technological prowess, Welch utilised a very human process to drive change through GE’s vast organisation. Having respect for the individual as a pivotal force in organisational change, he created a model of exceptional performance every corporate leader can learn from. As Welch wrote in a letter to shareholders: ‘In the old culture, managers got their power from secret knowledge: profit margins, market share, and all that … In the new culture, the role of the leader is to express a vision, get buy-in, and implement it. That calls for open, caring relations with every employee, and face-to-face communication. People who can’t convincingly articulate a vision won’t be successful.’ New leaders should be able to have firm dialogues on values. Ethics should be defined and explained in their companies. The organisation should be completely transparent and it should be possible for people to analyse the values by which the organisation is driven. It is important to have internal dialogues in organisations about these values. We are convinced that this can be organised and retain a profitable situation by living according to these values. During one of our classes we had a debate on responsible management. The question was whether the government and the society should be more responsible than organisations for sustainable development and performance. We personally think that business cannot be separate from society. The businessman and businesswoman are taking part in society at the same time as individuals and as managers. Companies, more often, are not very good when it comes to pollution and aspect of the use of (natural) resources. The impact of the biggest organisations is the least impressive. Some of them have more money, more power than average developing countries in the world (Philips, as only one example, has a budget larger than entire regions in the world). It is their responsibility, isn’t it? They put their money into election campaigns, with the hope of obtaining favourable treatment. They can overnight make a decision to delocalise their companies and production processes. Instead of preaching to their families about honesty and integrity, they have to act with those virtues in their businesses. Does it mean that an individual would not have an impact? We believe that we have an impact. Paraphrasing Steve Jobs, the people

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who are crazy enough to think that they can change the world are the ones who will eventually do so. Another burning question is whether it is possible to do something for the environment and Nature without knowing what Nature needs? We felt that this question is based on the idea of separation: the disconnection between the observer and the subject. In a new paradigm the observer is connected to the subject. The observer is part of the subject. According to a quantum interpretation, the observer creates the observation while observing. The least we can therefore say is that we are Nature ourselves. Nature is not something out there. This only takes a shift in perception and a small change in consciousness. In our business school environments we aim to stop ‘teaching’ but rather try to create an environment in which learning can take place. This follows our belief that we are all connected, we believe in unlimited possibilities and that we are able to create something for the better of all living creatures. In certain cultures, if one talks about spirituality and business in a new paradigm, the word ‘sect’ is used. That kind of old thinking avoids giving the opportunity to young people to take responsibility for their own future and denies them the right to live in a peaceful and natural surrounding. As suggested, it is each individual’s choice and freedom to try and make this world a better place, or, alternatively, not to bother about it. According to Chopra, change cannot start on the surface. It can only be generated from consciousness, and translated into management terminology, that is where we get to management by values.

What are values? Without too much effort, it is possible to come up with a whole list of possible corporate values: liability, availability of information, involvement, reliability, conflict solution, consensus, creativity, democratic process, sustainability, ecological awareness, honesty, ethics, organisation as a family, decency, shared identity, shared vision, shared values, equal chances, community services, harmony, humour/pleasure, innovation, integrity, quality of living, long-term perspective, emphasis on global thinking, nature conservation, humility, mutual support, openness, training possibilities, optimism, personal growth, personal satisfaction, personal freedom, political involvement/activism, recreation possibilities, respect, respect for the law, risk-mindedness, social justice, social cohesion, social responsibility, social security, solidarity, spirituality, strategic alliances, strict moral/religious rules, tolerance,

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transparency, responsibility, diversity, willingness to make a difference, faith, public health and security, prosperity, continuing improvement, peaceful cooperation, friendship, freedom of expression and of opinion, conscience of values, support of world peace, employment, and many other values. Dolan et al. (2006) propose a triaxial model of organisational values: economic–pragmatic values; ethical–social values; emotional– developmental values. Economic–pragmatic values: • Efficiency • Performance standards • Discipline. Ethical–social values: • • • •

Honesty Congruence Respect Loyalty.

Emotional–developmental values (related to trust, freedom and happiness): • • • •

Creativity/ideation Life/self-actualisation Self-assertion/directedness Adaptability/flexibility.

The single most critical success factor for MBV is congruence between what corporate leaders say they believe and what their actions and decisions communicate they believe, in both the short and long term. One should not only preach the gospel. A first step to be taken in management by values is to aim to achieve high performance in day-to-day work by making it more meaningful. But what are values? Dolan et al. (2006) claim that values are more than just words. Values guide and direct our behaviour and affect our experiences in our daily lives. Espoused values represent a mismatch between what we say and what we do. Values that are demonstrated through consistent and enduring behaviour are lived values. So far, for the ethical–social

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dimensions, or what they call preferential choices. From an economic perspective, value is also the measure of the significance or importance of something. And gradually, Dolan et al. move towards what are classically called values: the economic value of something (that in theory is expressed by its price). This comes back to mainstream management thinking. They even refer to Porter’s (1985) value chain, saying that this would be a reflection of the shared values of the people who constitute the company. Concerning the emotional–developmental dimension they identify ‘final’ values and ‘instrumental’ values, and they suggest that the number of final values a person habitually holds would be less than a dozen. Instrumental values would be far more. The latter can be subdivided into personal values (what is important in life), ethical–social values (what you want to do for the world), ethical–moral values (how you think you should behave), and values of competition (what is necessary to compete in life). A few examples of each can clarify this subdivision: • Personal values: happiness, health, salvation, family, personal success, recognition, status, material goods, friendship, love, etc. • Ethical–social values: peace, planet ecology, social justice, etc. • Ethical–moral values: honesty, sincerity, responsibility, loyalty, solidarity, mutual confidence, respect for human rights, etc. • Values of competition: culture, money, imagination, logic, beauty, intelligence, positive thinking, flexibility, sympathy, courage, etc. Companies and people move from beliefs to behaviour via values. Beliefs and values are indeed closely related. Personally we would like to go a bit further in our understanding of values, though the classification of Dolan et al. is giving due attention to human developmental issues. Exploring the book further, however, does bring the MBV approach back, at least partially, to the realm of efficiency and management for (financial) results. We think beliefs and values need to be brought closer to each other. At this stage we therefore define a managerial value as a measurable belief of value added that leads to action and later we will illustrate how to operationalise it as a workable concept.

A step-by-step process Dolan et al. define MBV as a major change process in the company. Accordingly, based on change management theory, they suggest the following step-by-step plan for putting MBV into practice.

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It starts with a prechange phase in which the company asks itself whether they are serious about a culture change. Are they in for the long term and how do you define the long term? Do they have the right type of leadership to initiate and sustain the process? Do they have the necessary resources? Next, they propose that the company should distil shared essential values. Currently, corporate strategic plans are notoriously confusing in their use of terms like vision, mission statement, strategic purpose, objectives, behaviour guides, values, and goals. In this phase the company is expected to collectively visualise the kind of future desired, which will lead to the final values that should be integrated in the organisation’s mission and vision. The current set of values should be analysed and compared to the desired one (a Strength-weaknessesOpportunities-Threat analysis on values). Finally, a consensus on the change path should be build. All this is designed to happen in dialogue with all the stakeholders. Once agreement is reached on the change path, the project teams will commence their work. Their purpose is basically to convert the essential values into objectives for action. These include the design of a set of new practices and policies, especially a human resources policy based on the values. This relates to recruitment and selection by values, training and development by values, and performance evaluation and recognition of effort according to compliance with values. Finally, they propose that the realisation of operational values should be monitored via culture audits. In Dolan et al.’s kind of processes, there is a high risk that through those very processes, management by values will gradually revert back to management by financial values (economic values). Such processes are familiar, are measurable, are simple to visualise as progress, and can easily be related in terms of (financial) appreciation. At the end of the day, they are very reassuringly close to business as usual. The planned process described by Dolan et al. is interesting, but it carries the potential to confirm inertia, and needs strong and visionary leadership to maintain momentum and reach the desired end.

Conscious business: Another starting point Would it help to start even a little more acentrically? Would the culture shock be made bigger by limiting the values to consciousness-related values in line with Kofman’s (2006) view that conscious business means finding your passion and expressing your essential values through your

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work? A conscious business seeks to promote the intelligent pursuit of happiness in all its stakeholders. It aims to produce sustainable, exceptional performance through the solidarity of its community and the dignity of each member. Ken Wilber (in Kofman, 2006), talking about Kofman’s book Conscious Business: How to Build Value through Values, says that integral mastery begins with mastery of self, at an emotional level, a mental–ethical level, and a spiritual level. Anything more than that is not needed; anything less than that is disastrous, according to him. Peter Senge, in the same book, highlights yet another important issue. The key to organisational excellence lies in transforming our practices of unilateral control into cultures of mutual learning. When people continually challenge and improve the data and assumptions upon which their map of reality is grounded, as opposed to treating their perspectives as the truth, tremendous productive energy is released. Collins (2001) studies what drives average companies to take a quantum leap and become extraordinary. He concludes that a crucial component of greatness is a group of leaders with a paradoxical blend of personal humility and professional will. These leaders, whom Collins calls ‘level 5’, channel their ego ambition away from themselves into the larger goal of building a great company. Conscious employees are an organisation’s most important asset; unconscious employees are its most dangerous liability. So what are conscious employees? Kofman uses seven qualities to distinguish conscious from unconscious employees. The first three are character attributes: unconditional responsibility, essential integrity, and ontological humility. The next three are interpersonal skills: authentic communication, constructive negotiation, and impeccable coordination. The seventh quality is an enabling condition for the previous six: emotional mastery. Conscious employees take responsibility for their lives. They don’t compromise human values for material success. They speak their truth and listen to others’ truths with honesty and respect. They look for creative solutions to disagreements and honour their commitments impeccably. They are in touch with their emotions and express them productively. Buckingham and Coffman report on a 22-year study on organisational effectiveness. According to them, exceptional managers create a workplace in which employees emphatically answered ‘yes’ when asked the following questions: 1. Do I know what is expected of me at work? 2. Do I have the materials and equipment I need to do my work right?

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3. At work, do I have the opportunity to do what I do best every day? 4. In the last seven days, have I received recognition or praise for doing good work? 5. Does my supervisor, or someone at work, seem to care about me as a person? 6. Is there someone at work who encourages my development? 7. At work, do my opinions seem to count? 8. Does the mission/purpose of my company make me feel my job is important? 9. Are my co-workers committed to doing high-quality work? 10. Do I have a best friend at work? 11. In the last six months, has someone at work talked to me about my progress? 12. This last year, have I had opportunities at work to learn and grow? Kofman proposes a systemic organisational map that comes very close to our own development that is laid out in later chapters. In line with Wilber’s proposal, he offers a matrix consisting of the columns ‘I’, ‘We’, and ‘It’ and adds three rows (in each column): Product/result oriented (Have); Process/behaviour oriented (Do); and Platform/structure oriented (Be). But most importantly: they are systemic and the purpose is to manage these as a holistic system. Kofman illustrates the difference between unconscious and conscious attitudes through the following table (see Table 5.1). A big, tough samurai once went to see a little monk. ‘Monk’, he barked, in a voice accustomed to instant obedience, ‘Teach me about heaven and hell!’ The monk looked up at the mighty warrior and replied with utter disdain, ‘Teach you about heaven and hell? Table 5.1

Unconscious and conscious attitudes

Unconscious attitudes

Conscious attitudes

Unconditional blame Essential selfishness Ontological arrogance Unconscious behaviours Manipulative communication Narcissistic negotiation Negligent coordination Unconscious reactions Emotional incompetence

Unconditional responsibility Essential integrity Ontological humility Conscious behaviours Authentic communication Constructive negotiation Impeccable coordination Conscious responses Emotional mastery

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I couldn’t teach you about anything. You’re dumb. You’re dirty. You’re a disgrace, an embarrassment to the samurai class. Get out of my sight. I can’t stand you.’ The samurai got furious. He shook, red in the face, speechless with rage. He pulled out his sword, and prepared to slay the monk. Looking straight into the samurai’s eyes, the monk said softly, ‘That’s hell.’ The samurai froze, realising the compassion of the monk who had risked his life to show him hell! He put down his sword and fell to his knees, filled with gratitude. The monk said softly, ‘And that’s heaven.’ Zen parable This book attempts to integrate management by values into the larger context of a holistic management view. We have developed (and will describe) a diagnostic for sustainable performance. Once it is used to make the diagnosis, that diagnosis can serve as a guiding principle (see last chapter). We propose that we need a context, a framework, within which we define sustainable performance, in order to be able to realise values. As argued in this chapter, management by values is essentially a spiritual choice, within a context of principles operating a systemic approach. In the rest of the book we further develop such a context, its diagnostics, and a methodology for practice.

Bibliography and further readings Alliance for New Humanity, http://www.anhglobal.org/ Ben-Eli, M. (2004) ‘The Five Core Principle for Sustainability’, http://bfi-internal. org/sustainability/principles. Buckingham, M. and Coffman, C. (1999) First, Break all the Rules: What the World’s Greatest Managers do Differently, Simon & Schuster. Collins, J. (2001) Good to Great: Why Some Companies Make the Leap and Others Don’t, HarperBusiness. Dolan, S., Garcia, S., and Richley B. (2006) Managing by Values: A Corporate Guide to Living, Being Alive and Making A Living in the 21th Century, Palgrave Macmillan. Kofman, F. (2006) Conscious Business: How to Build Value through Values, Sounds True. Porter, M. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Free Press. Whittington, R. (1993) What Is Strategy and Does It Matter?, Routledge.

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Sustainability Principles and Leadership in Management

After the development of the assumptions and the building blocks that contribute to management for sustainable performance, we now move on to exploring what leadership and sustainability principles mean within this context. As we will develop in this chapter, leadership shows itself to be the key quality of the manager (a manager is not necessarily a leader) in management for sustainable performance. The motivation, values, focus, interconnectedness on all levels, of the leader is what is going to make the difference. But leadership in our context does not go without the concept of sustainability. Leadership and sustainability are intimately intertwined, at least within a holistic management view. Sustainability is a concept which has been around for roughly 20 years. Although everybody interprets it a bit differently, a common understanding seems to emerge. The previous chapter considered the Core Principles for Sustainability of Ben-Eli as an example of a coherent set of values; this chapter goes deeper into the operationalisation of sustainability and its unavoidable link with leadership. Chapter 1 already referred to a growing number of companies that consult in the area of sustainable development. It argued that all of them seem to converge on the idea that, within the current mainstream managerial thinking, there is no real place for sustainability. Indeed, as already noted, the Global Compact Summit in Geneva (see ‘Global compact principles’ below) (July 2007) launched a call for thought leadership in innovating managerial theory, in order to be able to host concepts of responsibility and sustainability. Chapter 1 also laid down the main criticism in respect to mainstream managerial thinking. The book has gone on from there to develop an ontology, based on recent developments in biology and quantum mechanics, that could be the basis for a managerial concept that naturally integrates 121

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sustainability and responsibility. This ontology has subsequently been enriched with elements of non-violence, co-creation and values. The challenge now is to pin it down to a usable concept which can be translated into diagnostic tools and, eventually, into a managerial approach. In effect the aim is akin to a roadbook with checklists. This chapter and the next will develop a holistic managerial concept and a diagnostic called Cassandra. In subsequent chapters, this diagnostic will be developed into a managerial approach, and into an instrument of responsible management for sustainable performance.

Sustainability Instead of following many other authors in discussing the true nature of sustainable development, we aim, ultimately, to transform the drive for sustainable development into a concept of sustainable performance. Brundtland in 1987 – in what was, if not the first, then certainly the most influential definition – set out sustainable development as: development seeking to meet the needs of the present generation without compromising the ability of future generations to meet their own needs. This Brundtland definition introduces at least three dimensions – the economy, the ecology, and the society – and it suggests that these are interconnected. It furthermore introduces a time and a space dimension, and it raises the governing issue. By introducing space and time as variables in the equation, Brundtland has introduced a paradox in managerial thinking. The classical Newtonian view on management cannot cope with a moving and integrated space-time concept. From that perspective, as long as the society and the economy move slowly, one can make a fixed time-space approximation. That era is over. The complexity of the world (its nonlinear and dynamic character) in connection with the speed of change no longer allows for non-linear static approximations: classical metrics fail and the thermometer becomes the disease itself. The Brundtland definition introduces the paradox of the short term versus the long term. Short-term efficiency is required in order to remain attractive for shareholders; at the same time a longer-term sustainability orientation is needed in order to be attractive for the stakeholders. Paradoxes enforce choices; choices and balances between different and sometimes orthogonal interests. Another paradox (which isn’t new) reinforced by Brundtland is that between reductionism and holism. Classical managerial approaches mainly, if not exclusively, focus on financial performance: the so-called bottom line. With the Brundtland definition’s introduction of extra dimensions – for example,

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societal, ecological, temporal, and spatial – no reductionist approach is up to the task of helping a manager to answer the issues raised by the massively increased complexity. Nevertheless, attempts have been made. One example was by introducing a concept such as corporate social responsibility and requesting reports on a company’s responsibility. Companies have also been required to report on their ecological footprint and, ultimately, may be held responsible for being ecologically neutral; they may even have to ‘pay’ for their carbon emission rights. This again turns responsibility (a value) into an economic good that can afterwards be traded as an emotionless economic good. It doesn’t matter if a company pollutes, as long as it pays for it. This opens the way for countries which are willing to sell their ‘non-production’ of carbon emission to get some money for their economic development, just as there is a market in healthy body parts, such as kidneys, from developing countries for wealthy recipients in richer economies. From a holistic perspective, needless to say, this only shuffles the problems around and, as usual, they end up in the hands of the powerless. A reductionist approach to sustainability, responsibility, and even ethics will only lead to displacements, not to solutions. Participants in the Global Compact Summit can buy off the carbon emissions that they cause by flying to the summit. When are we going to use video-conferencing and, in so doing, open up such a summit to all those economically unable to attend? Why do we still organise higher education at a restricted number of locations for only the happy few who can access and afford it, and thus exclude millions of people who are struggling to get education and, through education, development? The technology is available; it is an issue of choice. Within a reductionist frame, a reductionist answer is offered: make ‘misbehaviour’ an economic good. On the assumption that everything can be reduced, assume that everything is an economic good and therefore anything can be commercialised. But can responsibility simply be diminished to the status of an economic good?

Global Compact principles The Global Compact is a programme, started by former Secretary General of the UN Kofi Annan at the Davos Summit in 1999. It is (in the words of the Global Compact programme itself) a framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, the environment, and anti-corruption.

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As the world’s largest, global corporate citizenship initiative, the Global Compact is first and foremost concerned with exhibiting and building the social legitimacy of business and markets. The programme accepts that business, trade, and investment are essential pillars for prosperity and peace. But in many areas, business is too often linked with serious dilemmas – for example, exploitative practices, different forms of corruption, income inequality, and barriers that discourage innovation and entrepreneurship. However, responsible business practices could, in many ways, build trust and social capital, and contribute to broad-based development and sustainable markets. The ten principles of Global Compact are as follows: Human Rights • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights. • Principle 2: Businesses should make sure that they are not complicit in human rights abuses. Labour Standards • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. • Principle 4: Businesses should support the elimination of all forms of forced and compulsory labour. • Principle 5: Businesses should support the effective abolition of child labour. • Principle 6: Businesses should support the elimination of discrimination in respect of employment and occupation. Environment • Principle 7: Businesses should support a precautionary approach to environmental challenges. • Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility. • Principle 9: Businesses should encourage the development and diffusion of environmentally friendly technologies. Anti-corruption • Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

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The Global Compact is a purely voluntary initiative with two objectives:

To achieve these objectives, the Global Compact offers facilitation and engagement through several mechanisms: Policy Dialogues, Learning, Country/Regional Networks, and Partnership Projects. The Global Compact is not a regulatory instrument – it does not police, enforce or measure the behaviour or actions of companies. Rather, the Global Compact relies on public accountability, transparency and the enlightened self-interest of companies, labour and civil society to initiate and share substantive action in pursuing the principles upon which the Global Compact is based. The Global Compact is probably the one initiative of the UN oriented towards companies. It cooperates closely with: the office of the High Commissioner for Human Rights; the United Nations Environment Programme; the International Labour Organisation; the United Nations Development Programme; the United Nations Industrial Development Organisation; and the United Nations Office on Drugs and Crime. The Global Compact claims to offer its participants the following benefits: • Demonstrating leadership by advancing responsible corporate citizenship; • Producing practical solutions to contemporary problems related to globalisation, sustainable development, and corporate responsibility in a multi-stakeholder context; • Managing risks by taking a proactive stance on critical issues; • Leveraging the UN’s global reach and convening power with governments, business, civil society, and other stakeholders; • Sharing good practices and learning; • Accessing the UN’s broad knowledge in development issues; • Improving corporate/brand management, employee morale and productivity, and operational efficiencies. Many companies have subscribed to the Global Compact and that in itself is encouraging. But even the voluntary support of a community programme doesn’t necessary change a lot if the pressure for a ruthless growth – with an adequately increased bottom line – remains the corporate credo.

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• Mainstream the ten principles in business activities around the world. • Catalyse actions in support of UN goals.

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It is not difficult to grow if one doesn’t want to be sustainable; and it is easy to be sustainable without growth. The question, hence, becomes how to rethink growth. Growth in itself is not a problem. It should not be forgotten that entire regions and populations make legitimate claims for a decent development that in one way or another will include a certain type of growth. Such responsible growth will need a managerial approach of sustainable performance.

A changing geopolitical reality The quest today for a more responsible type of management is not taking place independently of a changing context. A different geopolitical reality is growing, and some of its general characteristics need to be taken into account. Within Europe, there has been a growing interest in the Mediterranean region (gateway between different continents, religions, traditions, but equally the source of a lot of those cultures, religions, languages, etc.). This specific characteristic of the region, and its quality of being a kind of a mini laboratory for what may occur on a wider scale in the world, makes it a useful reference point. Talking about a Euro-Mediterranean approach or even zone is basically identifying a ‘space’ (not necessarily in the geographical interpretation) where political, sociological, and organisational (and, indeed, geographical, physical, climatological, etc.) elements, show apparently different behaviour from similar sub-groups or other spaces. It seems pertinent to refer to the most recent geopolitical work around this theme, particularly that conducted by Zaki Laïdi (1994; 1997; 1998). He illustrates a process of delocalisation of meaning which is the result of acceleration and globalisation and key to modernity (in so far as it does not end up in a return to tradition). The delocalisation process relies in the first place on the acceptance of plurality on a world scale, which is realised through four axes: • Decentralisation of modernity, which is no longer European or EuroAmerican • Dissemination of authority for today ‘it is difficult to think about any political, social or cultural phenomenon from the point of view of one single player, or one single power (the State, the Church, etc.)’ • Growth of relativism, in the first place as a consequence of previous dynamics, but also because of the philosophical questioning of universality. Observers note a growing complexity in the world that,

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on the one hand, no generalist view can restore or reconstruct, and, on the other hand, is supported by the value-based refusal to reject already existing specifics that may be local or particular • Decrease in the honour of nations, partly linked to the end of a world view based on opposed ‘blocks’ of countries (starting with the end of the Cold War) and therefore allowing the pre-eminence of trade and culture (to the detriment of ideology). Laïdi observes the emergence of a new kind of ‘espaces de sens’ (a virtual area of common understanding). Using the Euro-Mediterranean one as an example, it seems to be structured around a different set of attributes – the following list skips the geographical, historical and sociological attributes, in order to focus on the economic ones: • Permanent juxtaposition of the different levels of wealth and growth: since the Industrial Revolution, the European growth dynamic has relied on the ‘wealthiest’ countries’ capacity to give impetus to peripheral economics. The economic histories of Italy, Austria, Portugal, Spain, Greece, etc., are illustrations of this extension of growth while respecting national socio-economic characteristics. This movement is welcomed by the former Eastern bloc countries and, of course, by the Maghreb countries and Africa. • Integration of diversity: very few countries or groups of countries have succeeded in building a long-lasting economic space that does not renounce aspects of diversity. The Euro is an almost-perfect example of the integration of diversity, where the respect for the criteria set down in the Maastricht Treaty has not been as dictatorial as was predicted by the Eurosceptics. • Contemporary Europe, of the 25 countries, constitutes one of the biggest reserves in the world for fresh water. While ‘blue gold’ is becoming one of the major stakes of geo-strategy, a Euro-Mediterranean view is required. • Less than one hour’s flight separates the European Union (highest GDP/population) and Africa: the Mediterranean no longer represents a separation between the ‘rich’ and the ‘others’. Delsol (1998) proposes that the definition of a Euro-Mediterranean ‘espace du sens’ would be equivalent to proposing a political humanism resting on a few foundations: • An ontological equality in dignity, which aims to come about by the equality of rights and conditions, the right conferred on each person

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•

•

•

• •

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to participate in the definition of a collective destiny, just as if they were deciding their individual destiny. Freedom, made concrete in individual conscience and independent thinking, in the distance kept in relation to communities of belonging, in the separation of the temporal and the spiritual, private and public. Knowledge that signifies the dissociation of knowledge and secret, of knowledge and power; the divulgence of knowledge to everyone; permission to doubt, to question; the constant possibility of transforming the world … at the risk of making mistakes. These foundations do not set up an opposition (a dualism, but rather a dialectic progression) between the North and the South; they offer ideas on how to get closer one to another and to mutually enrich, not to antagonise. These foundations do not link to the old dichotomy: Northmodernity-industry and South-tradition-land. These foundations can only enrich our political vision of democracy and our market economical approach.

Arguably, this is not limited to a Euro-Mediterranean region, but this is a much wider quest for a new shared meaning of our geopolitical system. The political humanism which Delsol refers to describes an emerging geopolitical reality that fosters the managerial development proposed in this book. Such geopolitical thinking around management leads to consideration of diversity as a creative force and complexity (dynamic, non linear behaviour) as an organising principle. Many publications exist on this subject, related to the difficulty that the dominant neo-classical model encounters in restoring the choice of economic players. Several models (Baets, 2006; Wilber, 2000; Calori and de Woot, 1994) illustrate the different dimensions of a holistic view on human action and hence a holistic view on management. This chapter develops such an applied model, which is based on a double dichotomy: external–internal; and individual–networked. This contemporary geopolitical reading, in fact, contains many elements of what we could label a holistic and/or systemic approach, as compared to a more Anglo-Saxon approach. Indeed this new evolving geopolitical reality – and more particularly the values and choices on which it is based – might be an indication of the emergence of a new paradigm: a paradigm that would enrich the mainstream, reductionist, managerial approach with a deeper or broader layer of integration.

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Holism is yet another term that is loosely defined and interpreted by many people in different ways. Is there a common notion of holism? Is there somebody who one day tried to compile all the theories? Perhaps it is evident that one should have all sorts of critiques here. This chapter builds on one of Ken Wilber’s (2000) concepts because it is in line with the new geopolitical reality described, very handy, and useable. Wilber visualises something that could be called different dimensions of the image of the holistic world. It is summarised in the following figure (Figure 6.1). The figure is developed around two dichotomies: external–internal and individual–networked (collective). The top two quadrants make reference to the individual level. The bottom two quadrants refer to the collective level. The quadrants on the left have to do with the internalisation of Man (or processes, or things), while the quadrants on the right examine, let us say, the mechanical part (the external). A holistic image is obtained, according to Wilber, if all the quadrants receive sufficient attention. He labels these quadrants the ‘I’ quadrant, the ‘We’ quadrant, the ‘It’ quadrant, the ‘Its’ quadrants. All the quadrants matter in order to achieve a life, an observation, a research, and a holistic interpretation.

I Interior-Individual Intentional World of: sensation, impulses, emotion, concepts, vision Truthfulness

Justness

World of: magic, mythic,rational Interior-Collective Cultural

IT Exterior-Individual Behavioral World of: atoms, molecules,neuronal organisms, neocortex Truth

Functional fit World of: societies, division of labour, groups, families, tribes, nation/state, agrarian, industrial and informational Exterior-Collective Social

WE Figure 6.1

ITS Holism according to Wilber

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In the top-right quadrant, we study the external phenomena – for example, how the brain functions – and so, naturally, reduce it to very specific parts such as atoms: the classical reductionism. This is not completely mistaken, but one may react to this partial vision by saying that understanding the functioning of a specific atom does not allow us to understand the functioning of the whole (the consciousness of Man). What we call, at the heart of science, a global approach, is found in the bottom-right quadrant; however, that is nothing more than one of the four dimensions of holism. Here one can think of the systemic approaches (still mainly mechanical), of ecological concepts, sustainable development, etc. To really understand what the brain produces requires attention to the left part of the figure. The brain causes, in humans: the emotions, feelings, concepts, etc., which are used in daily life. No matter how detailed the understanding of the right part, it still says nothing about what a human thinks or feels. To get to the dimensions on the left, the classical approaches are insufficient. Communication is the only means to try to understand how people feel and what emotions they go through. In the left part there is also a collective dimension: one could label it ‘culture’. This has a relation with what are accepted as groups, norms, and values. So a holistic understanding cannot bypass these internal, individual, and collective dimensions. Classical science goes completely in search of the ‘truth’ (identified top right). More and more global approaches of the systemic in science appear as the functional whole. The true notion of Man and his emotions which we call, a little paradoxically, a ‘flesh-and-blood’ man, does not give a real understanding of truth and fairness. That requires attention to the three other quadrants in order to provide a more complete understanding than the dominant thinking Western culture allows. This book aims for a more holistic approach in management research and in the understanding of phenomena. At the heart of each of the four quadrants, there can, be found a natural evolution from physics, via biology, psychology, and theology towards mysticism. Translated into the fundamentals, this goes from matter, via life, thinking, the soul, towards the spirit. This demands a lot more explanation for which Wilber’s book is essential. In a crude abbreviation, holism can be said to consist of an ensemble of ‘I’, ‘We’, ‘It’ and ‘Its’. This is quickly recognised in certain metaphors of holism, such as ‘Art meets science and spirituality’, the ‘I’, ‘We’ and ‘It’ of Wilber, or his ideas could be expressed as saying that the hands, head, and heart lead to holism.

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Applying this holistic model of Wilber to management, describing companies and markets, within the context of the paradigm developed earlier in this book, we indeed describe the continuous non-linear and dynamic interaction of agents within a holistic concept. Business behaviour is the outcome of such interaction. Business economics is the theory describing the reasons why this quantum interpretation should work, but equally how it works (see Baets, 2006). The quantum interpretation of business economics has three complementary foci on: the environment, the company itself, and people’s interaction. Translated to current business practice, they could be called: market behaviour, management learning, and human interaction. Market behaviour describes the environment of the company, the context, the interaction that takes place in what we call markets. Markets are not necessarily physical markets. Even what are called physical markets consist in part of so-called virtual components. Of course, all players that are in, and influences upon such a market are never physically present. Policy is made and has an impact, without really being always very explicit. In fact, market behaviour involves talking about market and pricing interactions, out of which strategies emerge. Management learning considers the company in its most essential processes (Baets, 2006): innovation and knowledge considered as learning processes. The move is from a control-oriented model to developing and applying a learning-oriented process, especially around innovation and knowledge. Both are essential for the longer-term development of the company. Both innovation and knowledge management may need some supporting technical tools (like financial reporting, logistics, etc.). However, the latter are necessary, but not sufficient, elements of management. Those elements are easy to copy, can be described and easily optimised, and can therefore never become a real source of sustainable (profitable) development. It does not make them useless, but just as with the architect’s profession, it is not the tools that the architect uses that make the difference. Human interaction of people (inside and outside your company) is probably the one complex resource that needs to be understood and carefully monitored. Human interaction needs to be understood as the potentiality of the interaction of people (agents) producing either individuals who co-create out of emergence (at one extreme) or agents who cause a real disastrous conflict (at the other extreme). The situation obtained is not what is important, but rather the process of potentiality and its

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evolution. Human interaction, just like management learning, might need some supporting techniques, but these will never be a substitute for understanding the interaction itself. Up until now there have been few publications about the process of business economics as a learning and emergent concept. Likewise, there have not been many publications about emergent behaviour and the methods of studying it. Previous work (Baets, 2006) reported on a number of real-life projects, researched in existing companies and markets which formed a first layer of experimental evidence for the quantum interpretation. At this stage, the point is to get to a diagnostic that allows a manager to consider this company and himself as a leader, according to those three complementary foci on: the environment, the company itself, and people’s interaction.

Applied to management: A holistic management interpretation Of course it is clear that the Anglo-Saxon model has brought insight into the functioning of markets and companies and therefore it is extremely important to clearly understand this model. But there is more. While the Anglo-Saxon model implicitly wants to wash away diversity as a disturbing factor, it becomes clear in the wave of mergers around the world that diversity can be a creative force. Therefore, a creative use of diversity becomes important in order to tackle the corporate world in the coming years. Openness to diversity, and the understanding of different world and economic views, will enrich future managers considerably. This can be conveyed through the metaphor of the mosaic. If the world consists of different colours, then either the colours can be melted together in order to make it one colour; or, instead, be combined to create a mosaic which preserves the originally different colours and networks them to form an aesthetic arrangement. As well as a science, management can be understood as an art. A holistic management approach clearly aims to enrich the prevailing Anglo-Saxon one. In some ways, therefore, the proposed vision of management comprises diversity, sustainable development, and network structures. Study of the evolution of contemporary companies illustrates that even the larger corporations are in fact a highly dense network of business units, outside providers, individuals, clients, etc. In fact, these combine to form a number of often flexible, overlapping, and dynamic networks which cut across the company, instead of just one simple, tidy organisation with clear boundaries.

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A more holistic management approach cannot focus exclusively on the search for truth, and not only because absolute truth doesn’t exist. Furthermore, and despite the difficulty of measuring the internal quadrants of Wilber’s model, it is clear that it is rather those internal quadrants that will make the difference. The values, the culture, and personalities of people, managers and employees alike, are going to become the intrinsic cause of the emergence of a responsible management approach. The Wilber model illustrates the different dimensions of holism in human action, based on a framework of two axes. The two axes oppose, on the one hand, individual to networked (collective); and, on the other hand, internalised to externalised. Developing a complete, broad, and integrated picture of a person (a manager, or a human activity, such as management), one should cover the four quadrants formed in this picture to form a systemic view. The individual–network dichotomy illustrates that in all human activity, although the individual is crucial, there is always a collective dimension. That collective dimension of interacting individuals in companies, markets, societies, is increasingly one that is networked (as opposed to a strict hierarchical organisation common during the last decade). The internalised–externalised dichotomy is one which illustrates that most knowledge is experience-based and acquired by experimentation, in order to become actionable knowledge via internalisation (concepts very popular in knowledge management theory). Nevertheless there is an important aspect of externalised, transferable information that is the visual part of what people read, share, should know, etc. This diagram (Figure 6.2) can be used to define a vision for any management development activity (or organisation). Values and culture belong in the bottom-left quadrant, in between internalised and networked. Some of the contemporary choices explored and accepted in this book are a choice for diversity as a constructive power; the long-term perspective has an inherent dimension of social responsibility, humanism, and relativism. These are some examples of shared values and cultural dimension that are eventually going to be the basis of all corporate drive. This left part of the figure is much more concerned with how people (students, future managers, managers, clients) feel culture and common values, how they co-create and co-construct them, and how they are shared. Such a vision can only be translated into action by people (students, future managers, managers) who have the personality to take part in this challenge and who have the qualities and the motivation to make a real difference in the world. Not only does this necessitate a strong focus

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• Personal development • Leadership • Making a difference • Self-motivation • Emotional development • Joy • Involvement • Responsibility • Respect

Individual

Personal development (Learner centered)

Management techniques

Internalised • Historic legitimacy • Diversity • Sustainable development (long-term perspective) • Social responsibility • Sociology • Humanism • Relativism

• Quantitative approaches • Control/performance • Management by objectives • Models • Financial orientation • Short-term efficiency • Production management Externalised

Systemic management approaches

Values and culture (Identity)

Networked

• Dynamic system behaviour • Management in complexity • Management in diversity • Knowledge management • Community of practices • Ecological management • Ethics in management • Social corporate responsibility • Sustainable development • The networked economy • Emergence, innovation…

Figure 6.2 A holistic management model

on personal development as a backbone for all managerial approaches. It also highlights the need for companies to organise around lifelong learning and career development for their employees. A key element of management becomes management of human resources, which translates into managerial competencies inventories (assessment centres), personal development programmes (coaching, etc.) to choose a much greater learner-centred approach. These value choices and this focus on personal development, enable innovation and improvement in management techniques. The top-right quadrant has a more Anglo-Saxon management approach (or should we label it a more mechanistic approach?): a minimum condition to be a successful manager. Its characteristics would include: quantitative approaches; control-oriented procedures; performance management; models; financial focus; and short-term efficiencies. Effectiveness and efficiency are, and remain, important tools for becoming a sustainable company. They are necessary conditions; but in no way are they any longer sufficient. The bottom-right quadrant complements this model with systemic management approaches. Systems, in this sense, are interacting elements which create a logic of their own, which surpass the simple addition of the composing elements. This quadrant contains the more ecological approaches to management: network theories and applications;

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sustainable development models; complexity theory; and concepts around diversity as a constructive force, etc. A holistic management approach is the ‘interweaving’ of those four quadrants. It is based on a clear vision and values that make a choice for personal development the backbone of corporate activities. The choice allows people to innovate and optimise their management techniques and to enrich them with a more systemic management practice. Only by pulling the elements of the four quadrants together can the individual develop into a responsible manager who is able to pilot a company for sustainable performance. A manager, just like any other employee, becomes the entrepreneur of his or her own development within a dense and intensive network of peers. In contrast, the AngloSaxon model is focused mainly on the top-right corner and, therefore, although companies might pay some attention to culture, or personal development, the focus remains firmly on the realisation of financial results.

Leadership: The driving force of sustainability To accept a holistic management approach is to accept that responsible management goes far beyond the traditional, mechanistic, and control-driven view. It even goes beyond the desire to create an interrelated economy because that interrelatedness (bottom-right quadrant in our holistic model) is only a consequence. The basis and drivers are values, purpose and meaning. It is a management style that is value driven, and that gives true meaning and space to each and every one’s need for personal development, improvement, development, and ultimately learning. It further considers that the personal development of each employee provides the driving force, and the energy, for the success of the company. In other words, leadership becomes central in management. Much academic research has been devoted to leadership, leadership styles and leadership training. Instead of replicating that here, this section develops a metaphor around the orchestra and its conductor, to generate a checklist for sustainable leadership. It is based on a 1999 British Broadcasting Corporation (BBC) recording made in cooperation with Nierenberg (a conductor) and the BBC Orchestra. The analysis of this metaphor will produce a leadership checklist: a set of questions to help evaluate existing leadership quality, but also to provide a learning path for creating more inspirational leaders. Nierenberg had placed a number of managers (as he calls them: people who have the podium) inside the

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orchestra, in order to be able to make different types of observations. Next he carried out a number of experiments with the orchestra during which he asked the managers to observe and reflect. Retrospectively this emerged as a superb course in leadership via experimentation. Though the authors highly recommend readers to participate in this kind of experience, the main lessons learned from this powerful metaphor can be identified in words. First, accept for a moment that the orchestra is the company, with its multiple divisions, their geographical locations, their middle managers, etc. The purpose of the orchestra is to deliver a service (to create an emotional sensation with the audience; any sensation of joy, grief, danger, despair, etc. – whatever the score and the composer allow to be conveyed). There is some hardware involved (musical instruments), there is a common process (the score), but all that is only in support of a service to be delivered in real time to a client. That is not so different from what most of the companies claim to do in Europe and the US. The conductor is the CEO. The conductor is not the best ‘first violin’ who is afterwards promoted to conductor. If an orchestra were to do that, they would lose twice: first, they would lose their best first violin; and, second, they would risk appointing a suboptimal conductor. Being a conductor is a profession, one which of course needs a better than average knowledge of music, playing, instruments, harmony, etc., but which above all is a profession of leadership in its own right. A conductor is indeed a leader, a visionary, an inspirer. Management often promotes the successful marketing manager, or financial manager, to CEO. And, if he or she is indeed a successful marketing or financial manager, the company loses the successful manager, but it has no guarantee of gaining a good CEO, and, unfortunately, the promoted manager will most probably continue to have his functional focus. A manager is an orchestra conductor; it is a profession in its own right; it needs good technical and functional knowledge; but most important is the need for the manager to be a leader who is able to keep the holistic view of the orchestra, and, simultaneously, the service to be delivered to the audience. A conductor is not the one who plays the music. S/he has another role to fulfil: the role of the visionary leader, the motivator, the coordinator, the one who sets out the vision and takes the responsibility of the podium. In what way is a really good CEO different from a really good conductor? Playing music involves many, many decisions to be taken, all individually, and most very small, but this overall interaction of decisions makes, or breaks, the success of the musical performance. Each musician has

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the capacity to balance between activity and restraint. Both are equally important, both for playing the instrument and for coordinating with the others. Each and every individual should be able to perform his or her task. These are the essential cornerstones of the service eventually delivered. The instrument (the hardware) really becomes part of the body. It appears that the violin (for example) is nothing more than an extension of the body. And ultimately the body plays the music, not the violin. The violin is only the sensory connection with the external world. Two musicians, playing the same score on the same instrument, will create distinct sounds and sensations. While playing, all the senses are engaged; senses that go far beyond analytical or technical skills. Delivering a service has to do with all the senses, with emotions, with connectedness with the client. Playing music is, for each musician, an incredible act of coordination. Musicians need basic technical skills, but the value added is made in the coordination, inside themselves and within the orchestra. Each musician has to have the ability to work together in a team. The teamwork creates the sensation and, if a musician fails in that teamwork, the dissonance risks becoming disturbing for the orchestra’s performance. Other team members cannot necessarily make up for the failing player. This coordination, this teamwork, needs a constant sense of awareness, of presence, of being in the ‘here and now’. The conductor and musicians need this sense of awareness. Being at work,and really creating value needs a sense of awareness and presence. Therefore it is an illusion to be able to separate private from professional life. Being aware and present is something which is done with the entire body, the senses, the emotions: it is a holistic presence in the way described above. Just like an orchestra, an organisation is made of ‘positions’, geographical positions. In the orchestra, the violins are in the front, the percussion is at the back. Each position, however, goes with a different level of information. It is clear that the violin player in the front will hear more of what the other members of the orchestra play than the percussionist at the back. They do not all need to have the same information; the conductor, however, needs to be aware that they all have different levels of information. Information management, information flow, and communication inside a company are therefore of utmost importance. We do not need to know everything, but information needs to be clear, transparent and adequate. Communication is what gets the coordination going. Given the crucial role of that coordination, communication certainly needs a lot of attention: the quantity, the quality, and the tone. Only the leader has

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the global view. It is precisely this global view that gives the leader the responsibility of the podium. Managers like to take the podium; they do not always assume the responsibility that goes with that podium. A leader always assumes his or her responsibility conferred by the podium. Today we see too many shareholders who do not feel responsible for the company (the people, the musicians and the clients, the audience) and managers who do not feel that responsibility either. Combined with the eagerness to get the advantages of the podium (the salary, the status, etc.), it explains some of the malaise in today’s management practice. Essential for success on the podium is the responsibility that goes with it. An orchestra would not need a conductor, if it were only to play music. In the absence of a conductor, the orchestra gets remarkably self-organised: they get started, play, and just coordinate more. Obviously, that is not where the leader’s role is. A leader is not there to organise the others: they can do that perfectly well for themselves. Do not forget that each and every individual is perfectly capable of doing his or her job. In the absence of a formal organiser (which is not the same as a formal organisation), the network of communication that is the company becomes only more intense. What then, is the role of the conductor? The conductor sends signals to the orchestra, and gets feedback. It is the conductor’s role to send and receive (and listen to that reception). What the conductor precisely sends – see below – is something very important (we would almost say something very sacred). Ultimately, the energy that the audience feels while the orchestra plays the music comes from the composer and the many musicians who have already played that music (in line with the morphogenetic fields of Sheldrake). But in the concert hall, the energy comes from the people and from the purpose. It is the combination of musician/purpose which makes the audience experience that immensely intense feeling of music (if it is well played; the ‘flamencos’ call that ‘duende’: the indescribable feeling of being together and interconnected that brings the musicians and the audience into a more trance-like state). It is the same combination of employee/purpose that the client/customer would be able to feel. This is what creates the energy necessary to deliver the service. Within this realm, the leader creates the space for the others in order to co-create that experience. What is the message the conductor sends out? The conductor (and hence the leader) always says what has to be done. He or she projects a vision. Never should a conductor correct a musician (anyway, the music would stop to allow it). That doesn’t mean that at the next rehearsal one cannot debrief the performance, learn from the errors and decide

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on corrective (learning) actions. Learning is in fact the essential component of observation and debriefing. How many times in our managerial practice do we ‘correct’ people? How many times do we, thus, stop the music? And how many times do we lose the opportunity to learn from experiences instead of correcting them? However, once a message is sent out, it takes time for the organisation to respond. In the situation of the orchestra, the response time is very short. In almost all other organisations it is much longer. This is a difficult moment. Once the vision is sent out, one has to wait until a response comes. The more the vision is supported, believed, the easier that period of waiting will be. If, however, there is no vision, or the vision is merely an act of window dressing, there is a high risk that the manager will rapidly adapt and/or correct the signals, or even send out new (and different) signals, for fear of not getting any response. This results in unclear communication, and unclear communication makes it extremely difficult for the musicians to perform well. The leader has a vision and he or she sends out that vision. Then, the leader waits for response, trusting the musicians. Leadership is about committing to what has not yet happened. Leadership deals with creation, innovation, and new directions (not copying what others have already done). It is the leader who commits first, and if the leader is not able to commit then the musicians cannot follow. The role of a leader is important; the one of a manager much less so. With some creativity, management can be seen as rigid leadership. The conductor’s experience with rigid leadership is, however, discouraging. If the conductor attempts to conduct (to lead, to manage) the orchestra rigidly, it seems to create confusion among the musicians. They do not know precisely what the conductor wants to send out. They don’t feel confident and, in the end, rigid leadership slips off the line, the purpose: that for which we ultimately act. Just as rigid leadership creates confusion, so too does unnecessary movement. The latter creates un-clarity and that, in turn, creates tension with the musicians and eventually leads to underperformance, or worse. As with micro-management, rigid leadership, overly controlled leadership, unnecessary movement and messages, and bad communication all lead to tension, loss of purpose and underperformance. At the end of the day, the controlling leader gets precisely the opposite of what he or she aims for. In the TV programme presented by Nierenberg, he conducted a final experiment. He asked his orchestra to do two very comparable acts. Twice the musicians were asked to play for a particular person (a client). In the first experiment they had to play as technically correct as possible.

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The violins, for instance, had to move their bows exactly in the same place and the same manner as the first violin. In other words, though they would all play technically as correctly as possible, they were not really playing for the client as they were very much internally oriented. Their focus was on doing it the way they should do it. In the second experiment, Nierenberg asked them to play for the person (for the client). Each and every musician was to play in such a way as to try to give the person that great feeling of despair and salvation that (in the example) Brahms intended to provoke with his music. They played technically as they felt they should (recall that they were all capable of performing what they were expected to), but their focus, of course, became outwardly oriented. Their focus was really towards the client. In the first experiment, and now applied to business, most companies will consider this experiment as client-focused. For Nierenberg, this is not the case. Not surprisingly, the music sounds very different and much more convincing in the second experiment compared to the first. It is not enough to know that there is a client, it is not enough to say that we are client-oriented; we should all play as if we play for that one and only client. Without delivering that client orientedness, the playing is bound to be technical, without a vision, and without that the message is conveyed. It is this external focus that gives meaning to our work.

The leadership checklist Based on the previous section, we have drafted a so-called ‘leadership checklist’. It is just a checklist which helps identification of how close one is to becoming a real leader, instead of just a manager. Part of this checklist will be used in the overall holistic diagnostic tool Cassandra, which will be developed in the next chapter, and in the methodology, which will be designed in the last chapter. An honest and detailed reflection on this checklist allows the reader to progress on the way to sustainable leadership. • Are we able to take many ‘decisions’ in parallel? • Are we able to balance between activity and restraint? Are we capable of ‘slow’ management? • Do we base our leadership on the belief in each individual’s ability to perform their task? • Do we consider any ‘instrument’ we use as an extension of our enacted leadership? • Do we engage all senses?

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• Do we see management as an incredible act of coordination (and not control)? • Are we really able to work together in a team? • Do we have a constant sense of awareness? • Are we aware that organisations are made of ‘positions’, and that there is a different level of information related to each position? • Are we aware that only the leader has the global view and do we act accordingly? • Are we assuming the responsibility of the ‘podium’? • Are we aware that the orchestra doesn’t really need the conductor? • Do we accept the self-organisational capacity of the organisation? • Do we see the company as an intense network of communication? • Do we behave as the conductor who sends signals and receives signals back? Are we open to receiving these signals back? • The energy that makes the company turn, ultimately comes from its purpose. Do we have a purpose and do we manage that related energy in that sense? • The energy, created by the purpose, is carried and transmitted via the people: do we manage people accordingly? • Do we, as a manager, create space for the others? • As managers, do we say what should be done (rather than what should not be done)? • As managers, do we project a vision or do we rather correct people’s behaviour? • Are we aware that power always goes with responsibility and do we take that responsibility of our power? • Are we able to perform ‘slow’ management, knowing that there is a response time? • Leadership is committing to what has not yet happened; is that our daily practice? • The leader should commit first. Do we do that? • Rigid leadership creates confusion. Are we flexible enough in our leadership style? • Rigid leadership chops off the line (the purpose). Can we identify when we chop off the line? • Unnecessary movements (unnecessary activity and change) create confusion. Do we actively limit confusing messages and actions? • Un-clarity causes tension and underperformance with the people. Are we always crystal clear in our communications? • Do we recognise how we are internally orientated (oriented to the technicality of processes)? Do we see where this limits our client focus?

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• Are we sufficiently externally focused? Are we aware that it is the external focus (the desire to serve a client who is waiting and paying for our service) that gives meaning to our work?

Up to now, this book has been setting out the principles, both for sustainability and leadership, within the ontology described earlier. At this point the book moves to design a tool, a metric, a diagnostic, which takes into account the newly developed paradigm and translates it into a workable tool. It considers how, if a manager really would like to manage for a better sustainable performance, this can be measured and monitored. The following chapter is concerned with designing and validating such a tool (named Cassandra), both on a corporate level and on a personal level. Though the fundaments are the same, the questions, obviously, will be different for the two versions.

Bibliography and further readings Baets, W. (2006) Complexity, Organisations and Learning: a Quantum Interpretation of Management, Routledge. Calori, R. and de Woot, P. (1994) A European Management Model – Beyond Diversity, Prentice Hall. Delsol, C. in Z. Laïdi (1998) Géopolitique du sens, Desclée de Brouwer. Laïdi, Z. (1998) Géopolitique du sens, Desclée de Brouwer. Laïdi, Z. (1997) La mondialisation en question, La découverte. Laïdi, Z. (1994) Un monde privé de sens, Fayard. Nierenberg, R. and the BBC Orchestra (1999), Music for Money, BBC TV. Wilber, K. (2000) A Brief History of Everything, Gateway.

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Earlier chapters have dealt with the concepts, the ontology, and the (new) paradigm that would allow the integration of responsibility as a key component and driver of managerial action. These enable the construction of a tool (a metric) and an approach to make all this happen in real life (if the desire is there). This chapter describes the design and test of such a tool, named Cassandra, which has been developed in a personal and corporate version. The personal version is designed to give the user an insight into his or her potential for being a leader for sustainable performance. This is validated and the validation will be summarised. In a second stage, the tool can be used by the manager to design and guide his or her personal development path towards being a responsible manager, managing for sustainable performance. The corporate version, which defines sustainable performance, can be used as a metric for a company interested in sustainable performance – already showcased in a number of corporate analyses. One case example, with the detail restricted for reasons of confidentiality, is presented to illustrate the use clearly. The tool is named ‘Cassandra©’. In Greek mythology, Cassandra (‘she who entangles men’) was a daughter of King Priam and Queen Hecuba of Troy and her beauty caused Apollo to grant her the gift of prophecy (or, more correctly, prescience). However, when she did not return his love, Apollo placed a curse on her so that no one would ever believe her predictions. This metaphor could hardly be more illustrative for introducing this shift in paradigm. Sustainable performance, though it seems to speak for itself, is yet another unknown concept. Unable to find a definition for sustainable performance – rather bizarre in a world filled with discourse about sustainability and responsibility – this chapter offers one. Based on Ben-Eli’s 143

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core principles (Chapter 5), sustainable performance is corporate (or organisational) performance that seeks a dynamic equilibrium in the processes of interaction between a company, the carrying capacity of its stakeholders, and the environment in such a way that the company develops to express its full potential without adversely and irreversibly affecting the carrying capacity of the stakeholders and the environment upon which it depends. As previously argued, this rather new concept needs another context and paradigm but, for application, it also needs metrics.

Cassandra: A holistic diagnostic for sustainable performance and personal development Within the framework of this book, sustainability, sustainable development, sustainable performance, and corporate responsibility only find a conceptual basis within a holistic view on management. Within classic managerial approaches, other than for personal (or corporate) ethical motivation, there is no reason or space for a company to be responsible or sustainable. The President of the EFMD correctly iterated during the Global Compact Summit in Geneva that the average manager does not automatically think ‘responsibility’ so, if that is to be changed, there is a long way to go. Our book does not necessarily stress the length of the journey, but rather the taking of different routes. A highly reductionist view on management, focusing primarily, if not exclusively, on shortterm financial performance, makes sustainability counterproductive. There are no commonly accepted managerial theories which give the manager tools for managing differently. Some will argue that economics allows the taking into account of any externalities, by including, for instance, the cost of pollution. There needs to be a clear distinction between the economic calculations of costs for certain externalities, and straight management of sustainable development. Calculation of costs for externalities that in fact turn them into an economic good, allowing them to be traded off, is no solution for sustainable development. It simply shifts the costs of economic development in general from those with economic power to those without economic power, and at the same time keeps that economic development concentrated in the hands of the economically developed. The market for CO2 emissions is only one example, and resembles the active trade of risky country debt a number of years ago. Indeed, a number of international banks have been able to make money by selling high-risk loans, without at any point in time solving the

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problem of that same towering country debt. Sustainable development cannot be seen other than within the large network of countries and individuals which are all equally a part of the same planet Earth. They have to move forward in co-creation, within a holistic perspective. In certain respects, it becomes a zero-sum game. Sustainable performance and management for sustainable performance therefore need both new concepts and new diagnostics. This chapter outlines the development of a diagnostic, based on the Wilber holistic model, but adapted to a managerial context. For each of Wilber’s quadrants, it has identified, with reference to existing management research, a number of items which taken together co-construct the quadrant. The diagnostic is in the first place an inventory and can be used in the second place as a guide for transforming into a manager capable and prepared for a different way of management. At a later point the book will develop it as a management tool. At this point, the focus is on the manager as a person; the person who is going to be the transformational leader able to manage his or her company, or organisation, for sustainable performance. The diagnostic analyses the individual’s potential for sustainable managerial performance and is, in fact, a tool for personal development. The manager scores each question on a 1–5 scale of agree/disagree or yes/no. It is clear that not all the questions are equally easy to understand and can be interpreted differently. This tool is used more adequately (and more easily) within a coached framework, but has been successfully tested for non-guided use. The quality of the coaching and tutoring will always improve its learning potential. The holistic management quadrants were labelled: values; personal development; mechanistic approaches; and holistic systemic approaches. For the purpose of the development of a diagnostic, we have subdivided each quadrant into two items, and we have given the content more of a performance orientation (see Table 7.1). The value quadrant is subdivided into themes of ‘diversity’ and ‘complexity’. Based on the work of de Anca and Vazquez (2007) and Kofman (2006), the diversity theme has been covered by the following questions: • Do you base your actions on ethical codes? • Do you sometimes make a reflection on the sustainability of your actions? • Do you pay attention to being anti-discriminatory? • Do you have a Social Responsibility reflection in your actions?

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The Cassandra axis (sample)

Values Axis 1 Axis 2

Diversity Complexity

Axis 3 Axis 4

Personal well-being Leadership and teamwork

Mechanistic performance Axis 5 Axis 6

Financial performance Innovative potential

Holistic performance Axis 7 Axis 8

Sustainable development and social responsibility Knowledge and learning

• Do we need to take care for all the parties involved in what we do? • Is assessing someone’s work environment important? • In an organisation it is important to pay attention to retention of talent? • Do you believe that variety in opinions is a value? • Do you pay attention to communicating correctly with those around you? • Should leadership be strongly committed? • Do you see active interest groups as an asset for society? The questions for the complexity theme are based on the findings of our own earlier work (Baets, 2006): • • • •

Are you most dynamic and creative at the edge of chaos? Does evolution need both the new and extinction? Is diversity a prerequisite for the emergence of the new? Is radical unpredictability an essential characteristic of any organisation? • Is the self-organisational capacity of any group an indicator for sustainability? • Is interaction between ‘individual agents’ essential for selforganisation? • Is agency (the action) located at the level of interacting individual entities?

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The personal development quadrant is subdivided in the themes of personal well-being and leadership and teamwork. The first theme questions the undeniable link between well-being, happiness in one’s job, and the person’s contribution to the development of the company. The analysis is based on the work of Chopra (e.g. his simple guidelines published in 1994), who is an authority in mind–body medical approaches, and retains the following questions: • Do I value an active approach for the development of individual competencies and skills? • Do I also value time that is not immediately productive? • Do I practise a policy of non-judgement on appearances (facts, humans, etc.)? • Is joy an active element of my professional or societal life? • Do I feel valued in my professional environment? • Do I have a real responsibility and space to manoeuvre? • Is there space for the realisation of my desires in my function/ activity? • Is courage valued in my professional environment? • Do I feel an essential part of the whole? The theme of leadership and teamwork is plugged into an alternative source. A number of years ago, Roger Nierenberg (1999), a well known conductor, made a remarkable TV programme in which he put managers in the midst of the BBC Orchestra in order to have them experience the essence of leadership and teamwork. He conducted small exercises with some of the managers and the orchestra and, while doing so, dealt in a brilliant metaphorical way with the essentials of leadership and teamwork. The questions retained for this theme are: • Is each individual (surrounding me) well trained and prepared to do his/her job? • Is a constant sense of awareness essential for success? • Is a professional environment an intense network of communication? • Is the purpose in my professional environment always clear and shared? • Do my managers create space for the others? • Are my managers more concerned with projecting a vision and less with correcting what happened? • Does rigid leadership create confusion? • Does lack of clarity cause tension and underperformance? • Do I have an external focus that gives meaning to my work?

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The two so-called external quadrants are more classic and better known by most managers. The mechanistic performance has been subdivided into financial performance and innovative potential. Financial performance is not expressed in absolute figures, but rather in comparison with the perceived peer group, and accepts that the financial performance of a person is highly dependent on what he or she perceives to be wealth and a ‘correct’ financial situation. The basic variables are based on Stone’s work (1999) and the questions retained are: • Is my appreciation of my revenues above average in society? • Is my appreciation of my belongings above average in our society? • Is my liquidity position above average in society (can I spend what I really want)? • Do I generate enough cash in order to be financially self-sufficient for what I want to develop? • Does my cash-flow generation give me a feeling of comfort? Anticipating that over a certain period of time (this is a longer-term diagnostic) the capacity to create and to innovate is essential for performance, the second component of the mechanistic performance quadrant is one’s potential to innovate. This is based on innovative potential from the theories of Edward de Bono (as they are commercialised though a network of consultants). In this case, the questions are based on the work of Advanced Practical Thinking Training Inc. (2001). • Do I actively pay attention to developing new ideas? • Am I am able to produce creativity on demand? • Does my professional environment regard idea generation as a key business practice? • Do I personally develop new ideas on a regular basis? • Does our leadership structure and acknowledge innovative thinking? • Should an organisation have a structured process for evaluating/ refining new ideas? • Does our professional culture value idea assessment/refinement as a core competence? The final quadrant focuses on systemic performance. Its themes relate directly to systemic concepts of performance, such as sustainable development, social responsibility, knowledge management, and organisational learning. As established earlier in the book in more detail, those

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• Do I value unconditional responsibility? • Do I value essential integrity? • Do I value ontological humility? (Is my basic starting point to be humble?) • Do I value authentic communication? • Do I value constructive negotiation? • Do I value impeccable coordination? • Do I value conscious responses? • Do I value emotional mastery? For the knowledge management and management learning theme, the questions are based on Baets and Van der Linden (2000), where the background of the questions is analysed in detail. • Should project managers use more than financial factors to measure success? • Does the rigidity of processes give people very little possibility for correction? • Because interaction is important, is harmony between people crucial? • Are confidence and control two contrary variables? • Do confidence and motivation have a strong influence on exchange and the creation of knowledge? • Must confidence levels always be built? • Does interaction without knowledge prevent learning? • Does interaction without confidence and motivation prevent learning? • Do motivation and organisation seem to interact positively? • Is interaction always necessary for the construction of confidence? • If there are agents at group level who do not co-operate, does the learning of the group stop? The person scores all these questions on a 1–5 scale as indicated before, according to the best of his or her perception. The more honest the answers, the more value added the tool will give. The questions are

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systemic themes are an essential contribution to sustainable performance and therefore need to be present in a holistic diagnostic. The sustainable development and social responsibility questions are based on the work of Stacey (2000), one of the forerunners in linking strategy with complexity to deal with a complex world.

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3

2

1 0

7

3

6

4

5 Figure 7.1 Cassandra diagram: The holistic diagnoctic for personal sustainable performance

not made in order to be a perfect research tool (though, as explained further, it is correctly tested and validated), but rather to be a good diagnostic. Above all, it is a tool which helps the person to develop. In practice this means that the questions are formulated in such a way that, ideally, someone would want to be on a value of 5 on all the axes. Of course, this situation is idyllic and not realistic, but it provides an actionable picture of the themes that need further attention and/or development. Per theme, an average score is calculated and a raster diagram represents the eight axes in the following illustrative figure (see Figure 7.1) of a possible case. If this person would like to give him or herself a higher possibility for sustainable performance in leadership (his or her own functioning as a manager), he or she needs to develop his/her personality in most areas other than the values quadrant. In the future, we will possibly be able to identify most types of managers and types of development paths. For the time being, the idea of this diagnostic is to give a rich picture of the current situation and suggest possible paths for improvement. Cassandra, the holistic diagnostic for personal sustainable performance, has been tested for its stability and validity. The next section gives further insight into some of the observations made during the testing. Overall, however, the tool seems to be well understood by the user, and,

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more importantly, easily used by them. The future will show how it works as a tool for personal development and guidance. In order to make sustainability a concept which is practically usable for the manager, we have created this diagnostic based on our holistic understanding of sustainability. The tool is oriented to the manager/leader as a person. This is the first step to start from: the personal development trajectory of the learning manager. But the same kind of development needs to be made for the company. The elements developed in this chapter need to be taken company-wide, in order to define a way of management that allows the manager to manage according to a more responsible and more sustainable paradigm; one that is oriented towards sustainable performance. This is the task of the second part of this chapter.

Validity test of the personal version Although normally outside the scope of a book, this section will summarise the validity testing undertaken on the Cassandra tool (personal development version). As well as being important to show the testing, it will serve to demonstrate its novelty, both in subject and in approach (the eight axes, and the relatively high number of questions, compared to more classical approaches). While probably more interesting for the researcher, it should comfort the manager that this tool is sound. The structure invites validation using the technique of Factorial Analysis (FA), based on Malhotra (2004), using data collected from Master in Management students who follow a curriculum within a more systemic management concept. The size of the sample researched was 255 respondents, all students of the same programme, with a homogeneous profile in relationship to the age (between 19 and 22) and experience (rarely are there students with previous company work experience). According to Basilevski (1994), Hair et al. (1998), and Bartholomew and Knott (1999), the sample should contain at least five times more observations than variables or items. Our sample size is smaller, hence the results are not completely robust and so should be interpreted with caution. However, since Cassandra is a tool developed within a systemic paradigm, searching for emergence, we are currently doing research with more emergent techniques, such as artificial neural networks. By its definition, Cassandra does not fit the statistical conditions of a reductionist model. Care was nevertheless given to the methodological underpinnings. The researchers did consider constructing the full

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correlation matrix, independent of the construct to which it belonged. Given the size of the sample, that could have caused problems. Thus, it was decided to build the correlation matrix for each of the eight constructs that form the Cassandra Tool: (a) diversity; (b) complexity; (c) personal well-being; (d) leadership and teamwork; (e) financial performance; (f) innovative potential; (g) sustainable development and social responsibility; and (h) knowledge and learning. The following tests were used in the analysis: • Bartlett’s sphericity test, in order to test the null hypothesis that the variables are not correlated in the population, where a high value of that statistics favours the rejection of the null hypothesis. • Kayser Meyer-Olkin’s (KMO) test, that it is an adequacy measure of the sample showing magnitudes’ comparison indexes of the correlation coefficients observed with the magnitudes of the partial correlation coefficients; a value superior to 0.5 is desirable (Hair et al., 1998). Table 7.2 illustrates that both tests, with an exception for ‘complexity’, can accept the significance hypothesis, suggesting that factor analysis is an adequate approach. Both for the Bartlett’s sphericity test and the KMO test, the values are high enough at the error level of 0.05 of significance in all situations. It is generally known that while using 1–5 Likert scales, standard deviation values of above 1 are not really accepted (Bisqueira et al., 2004). In the case of the weak statistics for ‘complexity’, this is the cause. From a statistical perspective, this would suggest that respondents understand the complexity construct rather differently, and would Table 7.2 Test of the factorial model adequacy for each one of the constructs Constructs Diversity Complexity Personal well-being Leadership and teamwork Financial performance Innovative potential Sustainable development and social responsibility Knowledge and learning

Bartlett’s sphericity test

KMO test

Degrees of freedom

192.321 65.191 327.972 200.975 394.778 344.986 486.225

0.616 0.492 0.789 0.701 0.765 0.758 0.811

55 21 36 36 10 21 36

392.979

0.777

55

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• Determination a priori – starting from the researcher’s previous knowledge • Determination based on eigenvalues (eigenvalues higher to 1.0) • Determination based on a slope graph – the decline graph (showing an accentuated interruption with an accentuated decline of the factors with great eigenvalues) • Determination based on the variance percentage (Hair et al., 1998) • Determination based on significance tests. Per construct, the following numbers of variable were retained, with the explanatory percentage of variance: • Diversity, five factors, 60.447% of the variance explained • Complexity, three factors that explain 54.595% of the variance • Personal well-being, three factors that represent 54.591% of the variance • Leadership and teamwork, two factors, with only 38.963% variance explained • Financial performance, five variables could be reduced to one, explaining 55.551% of the variance • Innovative potential, two factors, explaining 56.301% of the variance • Sustainable performance and social responsibility, two factors, 49.42% explained • Knowledge and learning construct, four factors that explain 58.325% of the variance. From a classical stance regarding the validity of tests, these results are fine, but at the same time they illustrate how much variance would be lost if we were only to limit the suggested numbers of variables. As argued, and for the reasons discussed, this approach is one of making a picture as diverse as possible, even if it may be less stable from a classic statistical point of view. The conscious option was to prefer richness of information to stability of tests, whatever the latter would mean.

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necessitate correction. Nevertheless, for the purposes of our research, this widespread interpretation was retained. The FA method used in this research was the analysis of main components, identifying the total variance in the data and searching for the minimum numbers of factors. Several procedures were used:

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Based on the principles described earlier, a corporate version of Cassandra has been similarly designed. This version shows a picture of the current potential of a company for sustainable performance, and in a second stage it allows the definition of a path of sustainable development (a strategy, a vision), and a possible action plan. The questions raised for the different themes are given below, and they are equally scored on a scale from 1–5. At the end, the outcome is the same type of diagram as for the personal version. It is not a quiz and there are no good and bad answers. The more the responses are correct, the more the tool can assist.

Values Diversity • • • • • • • • • • •

Does your company have ethical codes? Does your company produce sustainability reports? Does your company have anti-discrimination policies? Does your company have Corporate Social Responsibility indicators? Should your company maintain a dialogue with all stakeholders? Do you think that assessing the work environment is important? Does your company have a human resources policy that pays attention to talent retention? In your company, is variety in opinions considered a value? Does your company pay a lot of attention to internal communication? Is your company leadership strongly committed? Does your company have active interest groups?

Complexity • • • • •

Is the dynamic of a company situated at the edge of chaos? Does evolution need both the new and extinction? Is diversity a prerequisite for the emergence of the new? Is radical unpredictability an essential characteristic of business? Is the self-organisational capacity of a company an indicator for sustainability? • Is interaction between ‘individual agents’ essential for selforganisation? • Is agency (the action) located at the level of interacting individual entities?

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The corporate version of Cassandra

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Personal development

• Do we have an active policy and programmes for the development of individual competencies and skills? • Does the company also value time that is not immediately productive? • Does the company practise a policy of non-judgement on appearances (facts, humans, etc.)? • Is joy an active element of our corporate life? • Do I feel valued in my company? • Do managers in our company have real responsibility and space to manoeuvre? • Is there space for the realisation of my desires in my function? • Is courage valued in the company? • Do I feel an essential part of the whole?

Leadership and teamwork • • • • • •

Is each individual well trained and prepared to do his/her job? Is a constant sense of awareness essential for success? Is our company an intense network of communication? Is the purpose in our company always clear and shared? Do our managers create space for the others? Are our managers more concerned with projecting a vision and less with correcting what happened? • Does rigid leadership create confusion? • Does lack of clarity cause tension and underperformance? • Do we have an external focus that gives meaning to our work?

Mechanistic performance Financial performance • • • •

Is our profit margin above average in our industry? Is our return on capital employed above average in our industry? Is our liquidity position above average in our industry? Do we generate enough cash in order to auto-finance our activities and growth? • Is our cash-flow generation above average in our industry?

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• Do we have a distinct methodology/process in place for developing new ideas? • Are we able to produce creativity on demand? • Does our culture regard idea generation as a key business practice? • Do I personally develop new ideas on a regular basis? • Do our leadership models and rewards structure acknowledge innovative thinking? • Do we have a deliberate, structured process for thoroughly evaluating/refining new ideas? • Does our culture value idea assessment/refinement as a core competence?

Systemic performance Sustainable development and social responsibility • • • • • • • • •

Does Does Does Does Does Does Does Does Does

our our our our our our our our our

company company company company company company company company company

value value value value value value value value value

unconditional responsibility? essential integrity? ontological humility? conscious behaviours? authentic communication? constructive negotiation? impeccable coordination? conscious responses? emotional mastery?

Knowledge and learning • Should project managers use more than financial factors to measure success? • Does the rigidity of processes give people very little possibility for correction? • Because interaction is important, is harmony between people crucial? • Are confidence and control two contrary variables? • Do confidence and motivation have a strong influence on exchange and the creation of knowledge? • Must confidence levels always be built? • Does interaction without knowledge prevent learning? • Does interaction without confidence and motivation prevent learning?

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Innovative potential

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A case study using the corporate version of Cassandra Both the personal and the corporate versions of Cassandra have been successfully used in a number of corporate workshops. Often, it works well to ask the individuals to do the personal development version and coach them on that, while, at the same time, asking them to prepare for the seminar by filling out the corporate version. The corporate version is then used as a life case, helping to define the way ahead, the actions to take, and once this step is taken, to feed this back into the personal development agenda. This cycle, and the continuous feedback mode between personal version and corporate version, has attracted strong participant involvement. However, given its systemic concept, the complicatedness of the issues raised, and the profoundness of a number of the questions, this does work optimally within an organisational development workshop that includes some personal development coaching. It would be further enhanced if the latter could be continued over time, so that it fed back regularly into a corporate re-evaluation. An alternative use of the corporate version of Cassandra is to make a corporate analysis of a company, in order to give advice on the sustainable performance potential of a company (for instance, for those considering a possible investment in the company). This type of use is a very welcome approach in courses or general purpose workshops. An illustration of what kind of alternative-enriched views the corporate version of Cassandra could lead towards can be found in the following case compiled by one of our part-time MBA students (Carina Richards). She has made a case study, using published data of the company, and had regular interviews with the director general of Renault Europe Automobiles (REA). At the end of the case study, the management of REA verified and validated it. The values in the Cassandra analysis are her interpretation, based on her research and interviews, however, eventually validated with the company. Although it deals with the Renault company, it is in no way to be understood as either an approval or a rejection of the company or its policies. The case study is intended only to illustrate, for learning purposes, the operation, method, and the potential of Cassandra and, as such, has been simplified to show only the essentials since the actual analysis went much deeper and had far more detail. The case first makes

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• Do motivation and organisation seem to interact positively? • Is interaction always necessary for the construction of confidence? • If there are agents at group level who do not cooperate, does the learning of the group stop?

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a more classical analysis of the performance of Renault, before using Cassandra to analyse sustainable performance.

This analysis was drawn from reports and documents published by the Renault Group via its Internet site (see Figures 7.2 and 7.3). The

Figure 7.2

Key figures 2006

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Information and indicators

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Alliance Renault–Nissan worldwide sales 2005

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Figure 7.3

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Year Revenues Operating margin Operating income Financial expense Share in net income of Nissan Motors Share in net income of other associates Pre-tax income Current & deferred tax Net income Net income – minority interests’ share Net income – Renault share Earnings per share €

2002

2003

2004

2005

2006

36,336 1,483 1,217 (91) 1,335

37,525 1,402 1,234 (71) 1,705

40,292 2,115 1,872 (331) 1,689

41,338 1,323 1,514 (327) 2,275

41,528 1,063 877 61 1,871

(4)

155

234

322

389

2,457 (447) 2,010 54

3,023 (510) 2,513 33

3,464 (561) 2,903 67

3,784 (331) 3,453 86

3,198 (255) 2,943 74

1,956 7.53

2,480 9.32

2,836 11.16

3,367 13.19

2,869 11.17

Source: Taken from the Renault 2006 Annual Report Note: Figures quoted in € million

assessment was based on financial statements and indicators, and information released concerning: the group’s strategy and performance, the Renault–Nissan Alliance, and future projects and objectives (see Table 7.3).

Interpretation of findings Revenues are increasing slightly. The group recorded a slowdown due to preparations for the launch of new products that will drive the group forward during the second half of 2007. • Main markets performed sluggishly in 2006: – The French market declined by 1.9% and the European market grew by 1.3%; – In Western Europe, the mid-range segment lost 5.5%, mainly to the benefit of the entry-level segment, which gained 6.5%. • At the same time financial expenses have been reduced despite high cost pressures on raw materials. The group is dedicated to cost control, i.e. manufacturing costs, general expenses. The financial health of the group is sound and its future is clearly promising.

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Table 7.3 Renault Europe Automobiles (Case analysis made by Carina Richards) ‘Classical’ analysis

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– It has reached 2.56% which is the first milestone of the 2009 plan. • The cross-functional teams have identified opportunities for generating additional operating profits of over €1.5 billion during the 2009 plan period. – Action plans are being implemented – In 2006, cooperation between the cross-functional teams and the functional departments contributed €200 million to operating profits through various measures. • Dividends to shareholders have already increased from €2.7 to €3.1 in 2007. Plans are to reach €4.5 by 2009.

The Renault–Nissan Alliance Our Alliance is a huge competitive advantage, encouraging independence yet also allowing for full synergies between a European and Japanese carmaker. Carlos Ghosn1

Principles of the Alliance Nissan now has a 15 per cent stake in Renault and Renault has increased its holding in Nissan from 36.8 per cent to 44.3 per cent. ‘The Renault-Nissan Alliance is built on two independent companies, each with its own corporate culture and brand identity, with a joint strategy of profitable growth and a community of interests.’2 The Alliance Charter sets out the principles of a shared ambition, mutual trust, respect of each partner’s identity, and balance between the two partners – the values that underpin the Alliance – together with respect for a set of operating and confidentiality rules. • The Alliance is based on trust and mutual respect. Its organisation is transparent.

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• The operating margin has reached a little over 2.5%, mainly due to cost of raw materials, in particular oil-related products. It is confirmed that these significant increases could not be passed on to sales prices:

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– clear decision making for speed, accountability, and a high level of performance; – maximum efficiency by combining the strengths of both companies and developing synergies through common organisations, cross-company teams, shared platforms and components. • The Alliance attracts and retains talent, providing excellent working conditions and challenging opportunities to enable people to grow and develop a global and entrepreneurial mindset. • The Alliance generates attractive returns for the shareholders of each company and implements the best established standards of corporate governance. • The Alliance contributes to global sustainable development.

The value of the Alliance today • Today the Renault–Nissan Alliance represents two global companies linked by cross-shareholdings and ‘united for performance through a coherent strategy, common goals and principles, results-driven strategies and shared best practices. They respect and reinforce their respective identities and brands’.3 • Renault has more than doubled its market capitalisation (increased by €17.5 billion/$22.25 billion), and has risen from 15th to 6th place in the industry in terms of corporate value rankings. • Nissan has more than quadrupled its market capitalisation (increased by ¥4,854 billion/$41.28 billion), climbing from 7th to 4th place in the automobile industry value rankings. • Nissan (pre-Alliance facing near bankruptcy) now has one of the highest operating profit margins in the industry (9.2%). • Nissan made $4.57 billion net profit in 2005/06 (sixth consecutive year for record profits). • In the first six months of 2006, Renault Group had increased its sales outside Europe by 10.6%; sales outside Europe now represent 27.7% of total Renault sales, an all-time record. • Collectively, the Alliance has the second highest market capitalisation in the motor industry. • Collectively, the Alliance is the second most profitable in the motor industry. • Collectively, the Alliance is now the world’s fourth biggest car producer with more than 5.9 million vehicle sales in 2006.

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• It ensures:

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• Transparent benchmarking allows two culturally diverse companies to share best practices. • A common platform strategy and shared purchasing strategy have procured massive cost savings; the Alliance saved $1.78 billion (the estimated savings when the Alliance was formed) in total synergies in just three years. • Substantial cost savings, claim the management, have been translated into the booming profitability of each company. • Separate companies, management, brands, and identities have ensured that Renault and Nissan cars remain distinctive. • Each company has been able to focus on its core competencies, e.g. Nissan in developing new petrol engines and Renault in developing new diesel engines. • The new engines are shared but are tuned according to brand: Renault and Nissan engines continue to drive and behave differently, reflecting one of the underlying principles of the Alliance: preservation of individual brand and market identities. • Common B and C Platforms have been developed but here again there has been no negative impact on brand differentiation. For example, Nissan’s Micra, Cube, Note and Tiida, and Renault’s Clio and Modus have all been developed using the shared B Platform – they are very different cars targeting very different customers with as much brand differentiation as cars produced by each company before the Alliance. • The sharing of platforms has generated about 50% savings in engineering development costs and huge economies of scale advantages.

Recommendation to potential shareholder Since the year 2000, the Renault Group has doubled its market capitalisation, and its earnings per share have increased dramatically. Its corporate value has brought the company from 15th to 6th place in the rankings in just a few years. Collectively, the Renault–Nissan Alliance is the second most profitable business in the motor industry and the fourth biggest car producer in the world. Combined vehicle sales exceeded 5.9 million in 2006. Both Renault and Nissan have ambitious objectives for the future, articulated in separate development plans as follows: Nissan Value Up, April 2005, commitments: • To reach annual global sales of 4.2 million units in 2008 • To maintain top-level operating profit in the motor industry • To maintain return on invested capital at or above 20%.

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• To achieve an operating profit of 6% in 2009 • To grow and sell an additional 800,000 units in 2009 compared to 2005 • To position the next Laguna, to be launched in 2007, among the top 3 models in its segment in terms of product and service quality. With these ambitious objectives in view, together with the strength of the Renault–Nissan Alliance, we strongly recommend you to invest in the Renault Group. Over the last few years, the Renault Group has made significant improvements in terms of revenues and profits: Revenues went from €36.336 million in 2002 to €41.528 million in 2006 • Net income went from €2.010 million in 2002 to €2.943 million in 2006 • Earnings per share went from €7.53 in 2002 to €11.17 in 2006. •

Renault has a strong corporate vision, a coherent strategy, and clearly defined goals. Cross-functional teams have been working effectively to obtain substantial cost savings, and have identified further opportunities for generating additional operating profits of over €1.5 billion during the next few years. The group’s internationalisation plans are already reaping benefits with sales outside Europe increasing by 10.6 per cent in the first half of 2006 alone. Extra-European sales now represent 27.7 per cent of total Renault sales, an all-time record and proof that Renault’s global strategy is working. Despite a drop in performance (decrease in net profits and fall in share value) during 2006 due to the rising costs of raw materials and the company’s ageing product lines, the ‘Commitment 2009’ fouryear improvement plan seeks to double the number of new cars it will launch in the coming years. The Renault–Nissan Alliance seeks to continue its joint projects and activities in each of the areas identified, and is looking for new opportunities, greater synergies, and increased profitability. Engineering is seen as one field with high potential for developing additional synergies and the Alliance aims to have ten shared platforms by 2010. In short, the company is financially healthy and future prospects are extremely good. The company is on track to further develop and implement its strategy of profitable growth and to achieve the objectives it has set itself within the Alliance:

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Renault Commitment 2009, February 2006, commitments:

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1. To be recognised by customers as being among the best three automotive groups in the quality and value of its products and services in each region and market segment 2. To be among the best three automotive groups in key technologies, each partner being a leader in specific domains of excellence 3. To consistently generate a total operating profit among the top three automotive groups in the world, by maintaining a high operating profit margin and pursuing growth. Huge costs savings, and new high-quality, innovative products will enable the Renault Group to honour its 2009 commitments, achieving its objectives of sales growth and profitability in order to secure a satisfactory return on investment for its shareholders.

Cassandra analysis (see Figure 7.4 and Tables 7.4 and 7.5) 1 5 8

4

2

3 2 1 7

0

3

6

4 5

Figure 7.4

Cassandra diagram applied to Renault Europe Automobiles

Table 7.4

Cassandra values

Values Axis 1: Diversity Axis 2: Complexity

3.4 3.7

Personal development Axis 3: Personal well-being Axis 4: Leadership and teamwork

2.2 3.3 (Continued)

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Table 7.4

(Continued )

Mechanistic performance Axis 5: Financial performance Axis 6: Innovative potential

3.6 1.7

Axis 7: Sustainable development and social responsibility Axis 8: Knowledge and learning

3.0 3.7

Table 7.5 Questionnaire findings Values Diversity

Score

Does your company have ethical codes? Does your company produce sustainability reports? The company has anti-discrimination policies. Does the company have Corporate Social Responsibility indicators? The company should maintain a dialogue with all stakeholders. Assessing the work environment is important. Our company has a human resources policy that pays attention to talent retention. Variety in opinions is a value. The company pays a lot of attention to internal communication. Our leadership is strongly committed. We have active interest groups in the company.

4 2 4 2 5 5 2 5 2 3 3

Complexity

Score

The dynamic of a company is situated at the edge of chaos. Evolution needs both the new and extinction. Diversity is a prerequisite for the emergence of the new. Radical unpredictability is an essential characteristic of business. The self-organisational capacity of a company is an indicator for sustainability. Interaction between ‘individual agents’ is essential for self-organisation. Agency (the action) is located at the level of interacting individual entities.

1 4 5 3 4 5 4 (Continued)

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Holistic performance

Sustainable Performance Table 7.5

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(Continued)

Personal development Personal well-being

Score 1 1 2 2 2 2 2 4 4

Leadership and teamwork

Score

Each individual is well trained and prepared to do his/her job. A constant sense of awareness is essential for success. Our company is an intense network of communication. The purpose in our company is always clear and shared. Our managers create space for others. Our managers focus more on projecting a vision than correcting what happened in the past. Rigid leadership creates confusion. Un-clarity causes tension and underperformance. We have an external focus that gives meaning to our work.

1 5 3 2 2 4 5 4 4

Mechanistic performance Financial performance

Score

Our profit margin is above average in our industry. Our return on capital employed is above average in our industry. Our liquidity position is above average in our industry. We generate enough cash in order to auto-finance our activities and growth. Our cash-flow generation is above average in our industry. Innovative potential

4* 4* 3 4 3 Score

We have a distinct methodology/process in place for developing new ideas. We are able to produce creativity on demand. Our culture regards idea generation as a key business practice. I personally develop new ideas on a regular basis. Our leadership models and rewards innovative thinking. We have a deliberate, structured process for thoroughly evaluating/ refining new ideas. Our culture values idea assessment/refinement as a core competence.

2 2 1 2 2 2 1

(Continued )

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We have an active policy and programmes for the development of individual competencies and skills. The company also values time that is not immediately productive. The company practises a policy of non-judgement on appearances (facts, humans, etc.). Joy is an active element of our corporate life. I feel valued in my company. Managers in our company have a real responsibility and space to manoeuvre. There is space for the realisation of my desires in my function. Courage is valued in the company. I feel an essential part of the whole.

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Table 7.5 (Continued) Holistic performance

Our Our Our Our Our Our Our Our Our

company company company company company company company company company

values values values values values values values values values

unconditional responsibility. essential integrity. ontological humility. conscious behaviours. authentic communication. constructive negotiation. impeccable coordination. conscious responses. emotional mastery.

Knowledge and learning

Score 2 4 2 3 2 2 4 4 4 Score

Project managers use other than financial factors to measure success. The rigidity of processes gives people very little possibility for correction. Interaction is important, so harmony between people is crucial. Confidence and control are two contrary variables.

2 4 4 2

Values Diversity

Score

Confidence and motivation have a strong influence on exchange and the creation of knowledge. Confidence must always be built; the level at the start is never enough. Interaction without knowledge does not allow learning. Interaction without confidence and motivation does not allow learning. Motivation and organisation seem to interact positively. Interaction is always necessary for the construction of confidence. If there are agents at group level who do not cooperate, the learning of the group stops.

5 5 2 5 4 4 4

* Renault Europe Automobiles (France + other countries)

The analysis itself Renault Europe Automobiles (REA) Belgium • Analysis performed by: Director General REA Belgium • Number of years in the company (REA France & REA Belgium): 12. º Renault SA Group:

automobile manufacturer €41 bn turnover (2006) 126,000 employees

º REA Belgium:

100% subsidiary of Renault SA Group automobile sales €250 million turnover (2006) 380 employees

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Sustainable development and social responsibility

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As a large company which is part of a very large group, perhaps it is not surprising (and perhaps it is reassuring?) that REA Belgium (and France) scores highly (4 or 5) on having ethical codes, anti-discrimination policies, and maintaining a dialogue with its stakeholders. However, though assessing the work environment is important (5), the company scores little (2) on internal communication and on retaining talent. Equally low scores were given to having Corporate Social Responsibility indicators and producing sustainability reports, suggesting that Renault appears to neglect its stakeholders other than its shareholders. However, variety in opinions is rated highly (but is this the point of view held by the company or the person who performed the assessment?). The fact that the commitment of the leadership and the presence of active interest groups in the company received scores of 3 is perhaps of concern for an organisation of this size. All in all, the scores for diversity were diverse (strong, weak, and average), leading to an overall score barely above average.

Complexity: 3.7 Concerning complexity, the scores are equally diverse. Diversity as a source of creativity is rated highly, as are new ideas and extinction (of the old) for evolution and progress. Interaction between individuals is necessary for action and self-organisation. However, radical unpredictability and being at the edge of chaos as elements that are vital in business activity scored non-committal or low, indicating that the notions of control and certainty are important for the company.

Interpretation of findings: Personal development Personal well-being: 2.2 In the main, the scores for personal well-being within the company were very low (1–2). There is an absence of active policies and training programmes to develop individual competencies and skills which may well reinforce the typical notion of a large corporate machine manned by a grey and anonymous mass of employees. Time must always be productive and joy is not considered as part of working life. Not feeling valued by the company reinforces this, though considering the position of the assessor as a top executive the findings are particularly worrying. What’s more, even a country-level general director feels that he does

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Interpretation of findings: Values Diversity: 3.4

Rethinking Growth

not have real responsibility, space to manoeuvre, or the possibility of self-fulfilment in his professional function. One suspects that valuing courage and feeling nonetheless part of the whole (4) stems from the assessor himself and not his work environment. It would thus be interesting to ask these questions with greater clarity and at other levels of the company. Despite the fact that the company values certain aspects relating to diversity, in practice a policy of non-judgement on appearances is not highly rated.

Leadership and teamwork: 3.3 The scores for these questions reinforce the findings above. For an automotive company operating in a highly competitive and fastchanging environment, a constant sense of awareness is obviously recognised as being essential for success (5), but employees receive insufficient training and there appears to be a lack of internal communication. Though managers focus more on projecting a vision for the future than correcting the past, the mission is neither clear nor shared. This supports the hypothesis that the approach to management is directive and does not enrol or acknowledge the individual. The fact that rigid leadership creates confusion was corroborated, but we suspect that this was the assessor’s view and not that of the company as a whole. Clarity is valued for high performance but the means to achieve clarity are not necessarily employed.

Interpretation of findings: Mechanistic performance Financial performance: 3.6 The scores concerning financial performance are relatively high – almost the highest score of the assessment. The company appears to be financially healthy with above-average performance for the industry in terms of profits and return on investment, though liquidity and cash flow received average scores.

Innovative potential: 1.7 Where financial performance rated near the top, innovative potential found itself at the very bottom, with an average of only 1.7 overall. Of course we are talking about the sales organisation and not R&D, but maybe the company as a whole is suffering from a lack of creativity and innovation. The generation and development of ideas is poorly rated, even among top company executives. Innovative thinking is neither encouraged nor rewarded by the company.

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The scores here are mixed. Impeccable coordination and control score highly whereas humility, authentic communication, and constructive negotiation do not. Where integrity is highly valued unconditional responsibility is not. Conscious behaviours receive a ‘yes/no’ 3 whereas conscious responses receive a positive ‘yes’. Not being sure if the statement ‘Our company values emotional mastery’ was correctly interpreted, we think that what was intended by the score it is better to keep one’s emotions to oneself, in the particular case of this company.

Knowledge and learning: 3.7 The findings here are relatively high (top scores for the assessment). Low scores (2) confirm that success tends to be based on financial criteria and control is a determinant of confidence. However, interaction is considered essential for building confidence and confidence must always be built; confidence and motivation have a strong influence on the exchange and creation of knowledge; and all these are required for learning to take place within an organisation (4–5). If processes are too rigid, correction is almost impossible; and if people do not get on with each other and co-operate, learning stops (4). Though the scores for knowledge and learning were high, we suspect that they reflect a personal rather than company view.

Recommendation to potential shareholder On the surface the group appears financially sound, with its operating profits and return on investment above average for the industry and glowing reports of its successful alliance with Nissan. It is, however, important to consider what is going on underneath to really get an idea of what the company is about and where it is going. It may have ambitious plans and ‘seductive’ goals but how will these be realised? Is the company doing what is necessary for sustainable performance? The Cassandra findings indicate that Renault as a company is suffering somewhat from a top–down directive style of leadership and management by objectives which attaches little importance to the well-being and professional/personal development of its employees, and gives little opportunity for learning. Despite the importance of competencies and performance, interaction, and knowledge, there is a real lack of training and very poor internal communication.

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Interpretation of findings: Holistic performance Sustainable development and social responsibility: 3.0

Rethinking Growth

Though the Renault Group has adopted a series of policies protecting the individual, judgement on appearances is rife and the notion of corporate social responsibility (especially for a company of this size) rates very low. Diversity is recognised but the full potential of the company’s tremendous diversity does not appear to be exploited despite its growing global reach into different cultures. For an automobile company where innovation plays a key role, innovative potential is also well under par. It appears that courage, a strong personality (even a certain aggressiveness), and hard work are required to succeed within the organisation, but the level of responsibility conferred to managers is low and there is little space to manoeuvre, even for top executives. Impeccable coordination and control seem to prevail to the detriment of humility, authentic communication, and constructive negotiation. The general impression given by the analysis is that inside the company motivation and morale are not very high, and creativity and innovation are sorely lacking. Long-term sustainable performance is questionable, the focus being on operational effectiveness and shortterm financial results. Our analysis suggests that investors should think twice before investing in the Renault Group. Cassandra points to examining the Group’s values and to seeking a deeper understanding of what the company is really doing. It also suggests considering how they are doing it. What the group communicates to the outside world is not necessarily a reflection of what is communicated to people on the inside. So when recent press reports point to cracks in the surface, one might well be wise to ask the question: are these caused by growing tensions underneath? Our Cassandra analysis confirms that Renault executives may well be feeling the crunch. A Renault spokesman stated that employees are concerned about the future and that much of that concern is linked to the company’s globalisation plans.4 Since last October, three employees at the Renault SA technical design centre (Guyancourt Technocenter) have committed suicide. One of the cases has just been recognised as ‘un accident de travail’, but the others are still under enquiry. However, they are allegedly due to the excessive pressure placed on Renault personnel, particularly since the company started implementing its restructuring plan last year. The Renault Contract 2009 has sharply increased the workload, ‘with a race for deadlines and developing an activity that is becoming more and more complex.’5 Peugeot seems to be suffering a similar fate with four suicides reported within a 15-day period last month. Though ‘mal-être sur le lieu de travail’ is not yet confirmed as the cause of these events, press releases report that stress levels in the workplace are high and

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depression among employees is a real concern. These are serious affairs and require deeper understanding. We should at least ask ourselves what is happening within the European automobile industry: fierce competition is one thing but human life is quite another. At Renault, the leadership of Carlos Ghosn is being questioned. Notwithstanding his star status in Japan where he masterminded Nissan’s extraordinary turnaround, can he do the same in Europe? And can he head two distinct organisations simultaneously and successfully? Looking at a photograph of the Renault executive management board, does the collection of rather aged and serious-looking men really inspire confidence? Do they communicate the dynamism of the forwardthinking, innovative company? Or do they project an image of the ‘old school’ approach to management? Anyone thinking of investing in the Renault Group would do well to address these questions and to conduct further investigations before making a decision. Renault has recently started a training programme for its middle/top managers entitled ‘How to manage stress’. However, this may be a case of treating the symptoms rather than the cause. Similarly, for the Technocentre, Renault has pledged to hire a further 110 engineers and technicians, host weekly meetings for work teams, better assess workloads, and bolster training for technical staff. From the perspective of this book, ‘people [and not only the CEO] make the company’. If the ultimate success of the Renault Group and of the Alliance is not just about cost cutting and profit margins but about whether the group can produce cars superior to those of the competition, then questions remain: are they on track? Our analysis of the sales organisation within the Renault Group confirms that things are not as rosy as they may appear to be on the surface. And what is happening in R&D and production? The group’s success is undeniably about achieving sustainable competitive advantage but that ultimately depends on the organisation’s people; and a more holistic understanding of the whole.

Conclusions (by Carina Richards who analysed this case) Despite the emphasis placed on internal communication and dialogue, transversal management, cross-functional teams, enrolling and empowering the individual, attracting and retaining talent, benchmarking and transparency, learning, learning from mistakes … a more ‘classical analysis’ may not reveal what is really going on in the Renault Group and, as such, only provide a potential shareholder with a ‘superficial’ view or external/public image of the organisation. The final success of

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Rethinking Growth

a business organisation ultimately rests on its people, and what is really going on ‘behind the scenes’. This is where a more holistic analysis, such as the Cassandra tool, may be far more useful and revealing. The Cassandra tool involves measuring for visualisation, understanding, and learning. Understanding of these provides insight into how an organisation is really functioning and a more accurate picture of its future potential. Herein lies the notion of shareholder value in real terms: its present capacity for future action and sustainable performance. It highlights the need to understand not only what is done but how. It also encourages questions about wide-ranging issues concerning the values of a company and the way it operates. Do we like the company? Does the company share our values? Do people enjoy working for the company? Does the company contribute to and support the development of its employees? Is the company socially responsible? Does the company play an active part in protecting the environment for future generations? And so on. However, a more ‘classical’ analysis involves measuring for control and profit. It focuses on a limited notion of shareholder value based on financial measures and external communication. We see only the surface, what has been ‘accomplished’, but rarely how. It encourages us to be concerned only by short-term return on investment: what’s in it for me? What can I get out of it financially and how quickly can I get it? I don’t really care how, I just care how much. Even when a company may communicate strong human values and to a certain extent actually live up to them (e.g. the success of the Renault–Nissan Alliance), how widely are these values really felt within the organisation itself? And are they adhered to in such a way as to secure long-term sustainable performance? Would we prefer to see a company as a collection of people or a collection of computers? Such diametrically different analyses will inevitably give us completely different views of a company: one all-embracing and long-term, the other reductionist and short-term. What we see depends on the way we want to look; and that ultimately depends on the choices we want to make, and hence on us. Cassandra has been designed to inform such insights at both individual and organisational levels. This chapter has outlined the thinking which informs its construction, the methodology which underpins it, and the kind of results it is capable of generating. *** We have provided insight into the ontology, the building blocks, the managerial skills, and the leadership dimension to start working for

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sustainable performance. In this chapter we have defined a tool that allows to diagnose but equally to follow up on managerial performance. The last step is to redefine the manager as the entrepreneur, the risk taker, the creator, indeed, of value added, and after all a true leader. Sustainable performance is realised by the manager/entrepreneur, since sustainable performance is not a concept to be administered but one to be co-created daily within the interconnectedness of people inside and outside the company. The manager/administrator has made different choices. He or she is in for managing a Newtonian system, a system which anyway would manage itself even in the manager/ administrator’s absence. He is in for controlling a system with very limited focus on shareholder value. A multicriteria approach, or even ‘worse’ an approach based on value realisation, is alien to him or her. Finally, we want to define what we call ‘social intrapreneurship’, as a new mode of management. But before doing so in the last chapter, we want to draw some lessons from a very interesting kind of comparable species: the social entrepreneur.

Bibliography and further readings Advanced Practical Thinking Training, Inc., 2001. Baets, W. (2006) Complexity, Learning and Organizations: A Quantum Interpretation of Business, Routledge. Baets, W. and Van der Linden, G. (2000) The Hybrid Business School: Developing Knowledge Management Through Management Learning, Prentice Hall. Bartholomew, D. and Knott, M. (1999) Latent Variable Models and Factor Analysis, Edward Arnold Publishers. Basilevski, A. (1994) Statistical Factor Analysis & Related Methods: Theory & Applications, John Wiley. Bisqueira, R., Sarriera, J., and Martinez, F. (2004) Introdução à estatística: enfoque informático com o pacote estatístico SPSS. Artmed. Chopra, D. (1994) The Seven Spiritual Laws of Success, Amber Allen Publishing. De Anca, C. and Vazquez, A. (2007) Managing Diversity in the Global Organization, Palgrave Macmillan. Hair, J., Anderson, R., Tatham, R., and Black, W. (1998) Multivariate Data Analysis with Readings, 5th edn, Prentice Hall. Kofman, F. (2006) Conscious Business: How to Build Value Through Values, Sounds True. Malhotra, N. (2004) Marketing Research: An Applied Orientation, 4th edn, Prentice Hall. Nierenberg, R. and the BBC Orchestra, (1999) Music for Money, BBC DVD. Stacey, R. (2000) Strategic Management and Organizational Dynamics, Prentice Hall. Stone, D. (1999) Understand Accounting, Pitman.

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Social Entrepreneurship: A Micro Example

One last step remains before defining social intrapreneurship and rolling out a methodology for implementing it. That is to draw some lessons from the experience of social entrepreneurship. Doing so will show how much social entrepreneurship is embedded in the new paradigm described in this book. Social entrepreneurship, and social entrepreneurs, have for a long time been considered as something at the sideline of economy and society. However, in terms of both numbers and value, this is no longer the case, and increasingly social entrepreneurship gets attention even within the classical business school curricula. The following business schools, for example, all have chairs or research centres in social entrepreneurship: Fuqua School of Duke University (http://www.fuqua.duke.edu/centers/ case/) Essec in Paris (http://www.essec-entrep-social.com/fr/index.html) Stirling University (http://www.stirling.edu/academics/academicdepartments/business/social-entrepreneurship/) Alberta Business School (http://www.business.ualberta.ca/CCSE/). There are no doubt many others, but this is only an illustrative list. Little has been published about the concepts of social entrepreneurship, most probably because it is not so very different to the basic principles and techniques of entrepreneurship. Bornstein (2004) summarises most of it in the subtitle of his book: Social Entrepreneurs and the Power of New Ideas. Questions remain, however: What is typical of social entrepreneurship and/or social entrepreneurs and how could this help us to understand how to deal differently with management and leadership 176

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within a more classical corporate setting? First, it all turns around entrepreneurship: those companies that seem to be successful in sustainable performance share an open and entrepreneurial culture. Creative and innovative leadership brings management back to its essence: being the creator of value, real value that is added for the society (or the economy). If a social entrepreneur disappears (or goes bankrupt), the society and the economy really lose something; they really lose added value. As a business concept, innovation – in products, services or processes – is sought to create value. At this point, it is useful to connect reactions to speed for speed’s sake which have been made across a number of areas – notably in Honore’s (2004) In Praise of Slowness: How a Worldwide Movement is Challenging the Cult of Speed. Within this context – the question whether we need a slow innovation, as opposed to fast innovation – is part of the wider slow/fast debate. Of particular relevance is Derek Cheshire’s article ‘Slow Innovation’, which defines innovation as ‘a blend of creativity (generating ideas) and knowledge or know-how (the things that we already know)’. Instead of knowledge or know-how, this book proposes the concept of enacted cognition (as dealt with earlier): action and creation. It is not only what is already known; it is rather what can be done with experiences and what can be learned from them. Cheshire uses slow innovation as opposed to fast innovation with reference to the fast food industry. What is the difference between fast food and slow food? In the managerial world, there is a huge pressure to deliver ‘results’ fast, and therefore to take decisions fast. But with fast food we know what we lose: the pleasure of sharing our food and a nice moment together. We no longer enjoy food and we do not give it the time necessary for its nutritional role and contribution to our health. The quality of fast food is highly questionable; there is a clear addictive effect (it asks for more); that ‘always more’ works in highly toxic fashion. Similarly, management seems to go from crisis to crisis, and only becomes more severe. Unfortunately, the unhealthy fast food metaphor fits with fast management. The word ‘value’ has already appeared a numbers of times. As a business concept, innovation is sought to create value. Indeed, management and business is about creating value and that is not something that goes fast. If and when value creation again becomes the main purpose of business, business will have to slow down. What most probably happened while business sped up over the last decade was the end of value creation. Management no longer cared for value creation. Instead it created money and worked with numbers. Today, the fact that fast

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has become too fast can be seen in the vastly increased exploitation of natural resources and the possibly irreversible pollution of our planet. This can be seen in language change as we now talk about sustainable development, corporate social responsibility, and even ethics. But what is lacking in practice are the concept and paradigm which give the willing manager the framework to change and the tools to manage more slowly. That is the real challenge for business today and, of course, it is the same challenge for Business Schools today. Can we make a shift to slowness and can we become aware again that we are here to create value, value for all, and not money for a few. To use again Cheshire’s words: ‘In the world of slow, there will be less waste as there’s time to be more resourceful and to use materials already available.’ This chapter suggests that is what characterises social entrepreneurship. As previously mentioned, Whittington (1993) wrote a prize-winning book titled What Is Strategy and Does it Matter? He sketched the history of the company starting from the entrepreneur/owner of the company who took the risk (brought in the capital) but at the same time managed the company. Risk taking and management were in the same hands; so was possible excess value creation and hence excessive revenues. Over the years, at the same time as companies grew bigger and more international, many owners (with the exception of some successful multinational family-based companies) felt the need to separate the ownership and management roles. They felt that they did not always have the correct qualities and insights to manage a company of the size and the structure that it had become. Owners sought so-called ‘professional’ management, but if risk is the main reason and driver for profit, professionalised management does not have the risk that the owner/manager had. This evolution had a few of the following consequences: • Ownership (and the related risk/reward system) was split from corporate management. Shareholders and shareholdership were introduced, and there was no need any more for shareholders to have anything to do with the company and its management. These moves created the conditions for a blind drive for shareholder value (with its possible devastating consequences). • Professional management needed to invent its ‘profession’ and it invented strategy: something natural and inherent for the entrepreneur. And for that profession, a company needed to pay, and not pay cheaply. • The manager, having a view on strategy and not on creation, is no longer the driver for creativity and innovation, but rather for risk

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avoidance and certainty. Shifting the emphasis to control led to the birth of the ‘administrator’ (this developed into Master of Business Administration). • The manager who has no risk concern as a driver for his behaviour, as the entrepreneur had – with all its possible related benefits – needs to be motivated by the results of the company and the interest of the shareholders. This forms the foundation for a devastating policy of stock options and the like. Answering the question that Whittington asks himself in the title of his book: no, strategy does not matter, at least not in the way it is discussed in the 1990s management school (and is it so different nowadays?). There were two sorts of economic players: the entrepreneurs and, often, the Small and Medium Enterprises (though some of them also have ‘professional’ management), and the larger corporations (with only professional management). We have had some unfortunate experiences with such corporations and films like Enron or The Corporation sketch, albeit in an exaggerated way, a very real problem intrinsic to such businesses. Social entrepreneurs react against this. They not only reinstall entrepreneurship as the driver for creation and innovation, but they also reinstall the idea of social and economic value. Social entrepreneurs try to address real issues or problems in society with solutions that really add value. They are not necessarily philanthropic (some might be), but they go back to the basics of value creation within a societal context. What can be learnt from social entrepreneurs? The Schwab Foundations (http://www.schwabfound.org) defines a social entrepreneur as a different kind of leader (and the word different almost automatically arises if one talks about a social entrepreneur). He or she identifies practical solutions to social problems by combining innovation with opportunity (using responsibly the resources). A social entrepreneur is most often an innovator, coming up with a new product or service. The social entrepreneur focuses first and foremost on social value creation (as if there would be any other). Therefore, social entrepreneurs are often very willing to share their knowledge and learning. All they want is that more people will become better as a result of their idea. They do not live in a classical competitive world, the way our liberal economy functions today. Value creation is central in their approach. Often a social entrepreneur is not going to wait for resources to be available. They start small and grow while progressing. They continuously refine and adapt what they are doing. They are averse to ideological or

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disciplinary constraints and they are fully accountable for what they do. They have a clear vision, but equally a plan for how to realise that vision. The vision seems to drive the social entrepreneur. When the Schwab Foundation defines social entrepreneurship they say it is an approach to a social issue (as if there are other issues in a society). It is an approach which is highly multidisciplinary (medicine, engineering, education) and holistic, and it is often not limited to any specific sector (health, transport, finance). The success of social entrepreneurship is related to leadership, according to the Schwab Foundation, and not that much to management. One could again see here the opposition between the manager/administrator and the entrepreneur/creator. They do not see social entrepreneurship as a discipline that could be learned in academia. What does it mean then to practise social entrepreneurship and to be a social entrepreneur? The Schwab Foundation suggests the following: social entrepreneurship has to do with applying practical, innovative, and sustainable approaches in such a way that the society in general benefits from it. Often, though this is not always the case and it is not a mandatory quality, the focus is on the marginalised and/or the poor. Often we find uniqueness in its approach; one that cuts across sectors, disciplines, etc. In fact, the Foundation suggests that social entrepreneurship takes away some of the barriers which have been placed between disciplines and sectors in the past. Social entrepreneurship is also grounded in certain values and processes. Those values and processes are, to a certain degree, common between social entrepreneurs, independent of the sector in which they operate, and even independent of whether or not the social entrepreneur is a not-for-profit or a for-profit organisation. It is these characteristics that make the difference between the managers and the social entrepreneurs, and also between the social entrepreneur and the many well-meaning people (and organisations) that dedicate their lives to social improvement, or to the marginalised in the society. The social entrepreneur seems to be the pragmatic visionary who aims for, and achieves, systemic and sustainable social change. It may be through a new invention, a different approach, a more rigorous application of known technologies or strategies, or any combination of these. Successful social entrepreneurs achieve large-scale social change, though that is not an essential characteristic of social entrepreneurship per se. The Schwab Foundation suggests that the social entrepreneur combines characteristics of the kind represented by Richard Branson and Mother Teresa, and even if that would be very difficult in real life, it is clear as metaphor for the kind of traits involved.

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Concerning the social entrepreneur him or herself (and that is of course interesting if we want to develop these kind of qualities for the manager), the Schwab Foundation has identified certain characteristics. Social entrepreneurs would have a strong belief in the almost natural capacity of all people to contribute meaningfully to economic and social development. No person is a priori excluded and motivation is a stronger driver than technical skills. They show a passion that drives others in order to make things happen. They have a practical stance to a social problem, though very often this stance is also innovative. They are strong in using market principles and forces, and they show a very strong determination. This is what allows them to break away from constraints imposed by ideology of field or discipline and that equally allows them to take those risks which others would not dare to take. They want to have a clue about their impact and they want to achieve high standards: standards for internal operations, as well as standards for the communities they serve. They certainly have a good follow-up system, involving pursuit of both quantitative and qualitative data. They practise a learning organisation: they seek continuous feedback and they use it for continuous improvement and learning. Social entrepreneurs seem to share a healthy impatience. Of course, they do extremely badly in bureaucracies. They cannot sit back and wait for change to happen, or they don’t want to. In summary, they are drivers for change. Most other sources will very much reinforce the qualities of social entrepreneurs and the role of social entrepreneurship as described above. According to Ashoka (by many considered as one of the founding fathers of social entrepreneurship http://www.ashoka.org/fellows/ social_entrepreneur.cfm), social entrepreneurs are also ambitious and persistent. They tackle major social issues and they offer new ideas for wide-scale change. Rather than leaving societal needs to the government (or to business if they would already be interested), social entrepreneurs seem to seek what is not working in a society and try to solve the problem by changing the (economic) system. They are not revolutionaries, though, but entrepreneurs. They come up with a different business model, they attempt to spread the solution, and they then persuade entire societies to take new leaps. They seem to be obsessed by their ideas and they commit their lives to their projects. Though they are visionaries, they are at the same time ultimate realists. They want to implement their vision practically. A common characteristic of social entrepreneurship problems identified by Ashoka is that they are user-friendly, understandable, ethical.

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Accordingly, social entrepreneurs engage widespread support in order to maximise the number of (local) people who will support and implement solutions. A successful social entrepreneur is a mass recruiter of local changemakers. In his or her entrepreneurial capacity, the social entrepreneur is no different from any other entrepreneur: there is nothing as powerful as a new idea in the hands of a first-class entrepreneur. Whereas entrepreneurs change the face of business, social entrepreneurs are the change agents for society. They create solutions to change society for the better, and then implement them, or have them implemented, on a large scale. Ashoka gives a few historical examples of ‘leading’ social entrepreneurs that illustrate how social entrepreneurship is not at all a new or fashionable idea: • Susan B. Anthony (US): Fought for Women’s Rights in the United States, including the right to control property, and helped spearhead adoption of the 19th amendment. • Vinoba Bhave (India): Founder and leader of the Land Gift Movement, he caused the redistribution of more than 7,000,000 acres of land to aid India’s untouchables and landless. • Maria Montessori (Italy): Developed the Montessori approach to early childhood education. • Florence Nightingale (UK): Founder of modern nursing, she established the first school for nurses and fought to improve hospital conditions. • Margaret Sanger (US): Founder of the Planned Parenthood Federation of America, she led the movement for family planning efforts around the world. • John Muir (US): Naturalist and conservationist, he established the National Park System and helped found The Sierra Club. • Jean Monnet (France): Responsible for the reconstruction of the French economy following the Second World War, including the establishment of the European Coal and Steel Community (ECSC). The ECSC and the European Common Market were direct precursors of the European Union. Not everybody would call Jean Monnet a social entrepreneur, but it is interesting to consider what qualities he shares with the social entrepreneur characteristics discussed above. Social entrepreneurship also seems to use a vocabulary of its own. A number of its concepts that are less known in classical managerial or

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Social Enterprise Lexicon Social enterprise: An organisation or venture that advances its social mission through entrepreneurial, earned income strategies. Earned income: Payments received in direct exchange for a product, service or privilege. (Earned income for a non-profit-making organisation includes such elements as tuition and fees for service, commercial products or services, government contracts, consulting fees, membership dues [when dues purchase tangible benefits], sale of intellectual property, agreement to use the non-profit’s identity, property rentals, etc. Earned income does not include such sources as corporate, foundation or government grants or subsidies, contributions from individuals, or in-kind donation of products or services.) Financial sustainability: The extent to which a non-profit-making organisation is able to pursue its mission indefinitely through any or all of the following: earned income, charitable contributions, and public-sector subsidies. Self-sufficiency: The extent to which a non-profit-making organisation is able to pursue its mission indefinitely through earned income alone without relying in whole or in part on charitable contributions or public-sector subsidies. Double bottom line: The definitive benchmark for a social purpose business venture – the simultaneous creation of both a financial and social return on investment. Triple bottom line: A business venture’s simultaneous pursuit of beneficial outcomes along three dimensions: economic, social, and environmental. Social return on investment (SROI): The non-financial outcomes created by a social enterprise, measured in terms of the non-profit-making organisation’s mission; e.g. people served or jobs created, average salaries paid, amount of transfer payments eliminated, etc. Social entrepreneurship: The art of persistently and creatively leveraging resources to capitalise upon marketplace opportunities in order to achieve sustainable social change. Social purpose business: A discrete division, subsidiary, or related corporation of a non-profit-making organisation or for-profit company

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entrepreneurial language are given at: (http://www.managementhelp. org/soc_entr/soc_entr.htm#anchor46206). They are indeed important if and when we talk of the realisation of values. A social entrepreneur also knows an return on investment (ROI) and the like, but s/he pilots as much if not more by other values such as seem on even a short lexicon.

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that deliberately pursues financial and social returns within a specific industry segment in the commercial marketplace. Earned income strategies: Attempts to capitalise on the earned income potential of a programme or other organisational asset (property, intellectual capital, reputation, etc.) in order to cover part or all of the programme’s costs or to offset a portion of the organisation’s overall expenses. Unrelated business income: Earned income derived from the sale of products or services that are not directly related to the charitable purpose of a non-profit-making organisation. Such revenues may be subject to federal tax and, at significant levels in proportion to total non-profit income, may jeopardise the tax-exempt status of a nonprofit corporation. Engaged philanthropy (see Venture philanthropy): The application by donors of principles traditionally associated with venture capitalists to improve the capacity or performance of a non-profit-making organisation or social enterprise. Engaged philanthropy practices typically involve a combination of funding and expertise, more direct engagement with leadership, long-term funding relationships (three–six years), performance monitoring, and an exit strategy. Social entrepreneurs exchange ideas with each other as much as with other interested parties. Today this also happens via the Internet, and (http://www.socialedge.org/) is an example of a blog made by social entrepreneurs for social entrepreneurs. It gives a lively overview of the issues that social entrepreneurs are confronted with, just as much as it gives ideas on the projects themselves. Unlike traditional business entrepreneurs, social entrepreneurs primarily seek to generate ‘social value’ rather than profit. They correctly draw a distinction between the need for cash flow (working capital), which is an entrepreneurial concern, and the demand for profit, which is an issue of reporting, taxes, share value, etc. Compared to nonprofit-making organisations, their work is targeted not only towards immediate, small-scale effects, but also towards sweeping, long-term change. Social entrepreneurs identify resources where people only see problems. They see villagers as the solution and not just as passive beneficiaries (as NGOs often do). They begin with the assumption of competence and unleash resources in the communities they are serving (Bornstein, 2004). Others express it differently by describing the job of a social entrepreneur as recognising when a part of society

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is stuck and providing new ways to get it unstuck. According to Bill Drayton, CEO, chair and founder of Ashoka: ‘Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionised the fishing industry.’ This kind of revolution is fundamentally changing the way society organises itself and how social problems are approached. The stories featured in The New Heroes and in How to Change the World showcase the work of social entrepreneurs whose innovations are bringing electricity, water, medicine, and other life-changing tools and resources to people in the developing world. Each story illustrates the results possible when an innovative idea is coupled with a strategy for action and an entrepreneur’s strong will (http://www.pbs.org/opb/thenewheroes/ whatis/). And isn’t that what we seek and need if we want to rethink growth? What can be learned from these so-called social entrepreneurs, in order to identify or define what we in this book like to call social intrapreneurs: people who make the difference in a company, who innovate and create to deliberately provide value added and a contribution to society? In line with the observations made, what is a social intrapreneur and what is managing for sustainable performance? Summarising this chapter, the main characteristics of social entrepreneurship are: • Creating an open and entrepreneurial culture; • Innovating as a blend of creation and know-how (or rather enacted cognition: action and creation); • Positioning the generation of social and economic value as central; • Addressing real issues or problems in society; • Providing solutions which really add value; • Forming practical solutions to social problems; • Not living in a competitive world; • Continuously refining and adapting; • Rejecting ideology and disciplinary constraints; • Envisaging with a clear plan to realise that vision; • Acting in a highly multidisciplinary and holistic fashion; • Applying practical, innovative, and sustainable approaches; • Grounding one’s activities in values and processes; • Correctly differentiating between the need for cash flow (working capital), which is an entrepreneurial concern, and the demand for profit, which is an issue of reporting, taxes, share value, etc.

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• Creative and innovative leadership • Bringing management back to its essence (i.e. being the creator of value, real value added for the society, or the economy) • What can be done with experiences (the concept of learning) • How the creation of value takes time • Generating value for all, not money for a few • Taking a risk: professional management does not incur any risk any more (the manager, having a view on strategy and not on creation, is no longer driver for creativity and innovation, but rather for risk avoidance and certainty) • Being open to share one’s knowledge and learning • Being fully accountable for what one does • Having a clear vision; that drives the social entrepreneur • Success related to leadership (and not much to management) • Removing barriers • Pragmatic vision • Achieving systemic and sustainable social change • Strongly believing in the almost natural capacity of all people to contribute meaningfully to economic and social development • Trusting that motivation is a stronger driver than skills • Showing passion that drives others • Strongly using market principles • Determined action • Breaking away from constraints imposed by ideology of field or discipline • Taking risks that others would not dare to take • Achieving high standards • Using appropriate follow-up systems: gathering quantitative and qualitative data • Acting as a learning organisation • Healthy impatience, especially with bureaucracies • Drive for change • Ambition and persistence • Committing one’s life to one’s projects • Being user-friendly, understandable, and ethical • Setting out with the assumption of competence. And now we have all the elements to go to the final step that is the definition of the social intrapreneur as the manager able and interested

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to manage for sustainable performance. The concerns mentioned here as those for the social entrepreneur, of course, perfectly fit the development made in this book towards the definition of a more socially responsible manager, managing for the realisation of sustainable performance. The ontology, the building blocks, the managerial competencies, and the understanding of sustainability principles and leadership culminate in what we have labelled a ‘social intrapreneur’. The next chapter not only defines this social intrapreneur, but gives a number of aids and checklists for the manager who is ready to make this shift. Next chapter is a ‘hands-on’ one. The reader is warned!

Bibliography and further readings Bornstein, D. (2004) How to Change the World: Social Entrepreneurs and the Power of New Ideas, Penguin. Cheshire, D. (2007) ‘Slow Innovation: A Savour-y Way to Success’, http://changethis.com/pdf/40.06.SlowInnovation.pdf. Honore, C. (2004) In Praise of Slowness: How A Worldwide Movement is Challenging the Cult of Speed, Harper Collins. Whittington, R. (1993) What Is Strategy and Does It Matter?, Thomson Learning, Routledge.

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Some Tibetans believe our present world of war, disease, corrupt inequality and environmental desecration, is the self-destructive age of Kali, to be followed by a new age of peace, ethnic harmony, environmental balance, and human dignity, yet to come. This future is Shambhala, sometimes called Shangri-la. (Laurence Brahm, 2006) Reckless growth, growth for the creation of shareholder value, is increasingly questioned. Or at least, the consequences are. The oil prices are skyrocketing, not least due to an ever growing demand for oil, particularly from the emergent economies. We cannot decently criticise them since it is our economic model that has created the dream of unlimited growth. But that same drive for growth is going to cause the depression through its recklessness. This book has developed an understanding of growth and how it could, and should, be rethought. It has defined a number of rather new managerial concepts, like management by values, non-violent communication, co-creation, sustainable performance, and sustainability in the first place. Above all, it aims to present a coherent new management paradigm, a systemic management paradigm. This paradigm is, on the one hand, embedded in the latest scientific development, and on the other hand creates space for concepts like corporate social responsibility and sustainable development. It also gives managers the framework within which they are not only able to develop responsibility, but to make responsibility an important component of sustainable performance. With a systemic approach, as argued in previous chapters, sustainable performance supersedes financial performance. 188

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However, in order to support managers who are willing to make this paradigmatic shift, there is a need for a methodology, a set of tools that fits the stakeholder paradigm of management. In the Appendix we suggest a blueprint for a road map: a methodology and a number of checklists. These are designed to help managers to get the process started, to support co-workers, and to give tools for continuous monitoring. The road map adopts a very down-to-earth approach to assist managers who have opted for the paradigm shift with starting the change process. A real paradigm shift in a company, and a relevant managerial approach that fits this new paradigm, is indeed a major change project. We do not want to repeat here all that has been written on change processes. However, the first step of this change process is the manager’s paradigm shift, since it is his or her belief in this new paradigm that will become the driver of the change process. This belief, this view, this energy, this meaning, which the manager aims to give the company, becomes the heartbeat of the company. The Appendix ‘only’ gives a number of supporting tools; it does not replace that necessary change process. Misuse of this Appendix, and, in particular, its application without the paradigmatic context, might make the tools useless and even counterproductive. A company interested in this shift, a shift towards responsible management (corporate and individual) that by definition will be sustainable (see the Ben-Eli definition), aims at sustainable performance. Sustainable performance, in turn, targets fulfilment of all the stakeholder interests and is a learning and change process that usually needs some support and coaching. The methodology described here is able to give that support, provided a well-trained consultant-coach (trained in the Cassandra approach) coaches this process. Laurence Brahm (quoted at the start of this chapter) has noted a parallel shift in the world of spirit. This chapter is not so much concerned with such a metatheoretical perspective but rather with the role of business in the world. Accordingly, the focus is on social intrapreneurship, which in parallel with social entrepreneurship, revalorises the creator, and the entrepreneur in the manager (instead of the administrator). It aims to make a concrete contribution to society, and to realise one or more values. Social intrapreneurship has to do with creation, innovation, learning, and making a difference, but always with the purpose of adding value to the stakeholders (at large) and the society. The world would miss a social intrapreneur if he or she were no longer there. The social intrapreneur makes a difference, not only for the shareholders, but for all the stakeholders, and for the environment of the company.

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Although suggested a few times already, it is worth saying a last time explicitly. Social intrapreneurship, managing for sustainable performance, and social responsibility need a new paradigm. This book’s project differs from other books around social and environmental responsibility and the like in two ways. First, it puts all these concepts in the framework of a new paradigm, and, second, it makes clear that that paradigm shift is the single most important move to make. The rest follows automatically. The mainstream paradigm does not give mental and financial space for sustainable development or responsible management. Without the shift, responsibility and sustainable development will ultimately end up in the mainstream paradigm as marketing actions, or to put it crudely: corporations are doing no more than attempting to say ‘Look how nice and kind we are; we do have programs on social responsibility and we do deal in fair trade products’. Despite the rhetoric and relatively marginal actions, their baseline remains the same. And it is this devastating baseline that eventually, over the long term, makes responsibility in management and sustainable development impossible. The concept of sustainable performance cannot coexist peacefully with the mainstream paradigm. This can be clarified in more detail though Draper et al’s (2007) ‘Key hallmarks list of a business leader’ and, especially, the following ‘Memorandum of the social intrapreneur’: • A genuine commitment to contributing value to the economy and the society is visible at the highest level of the business, with values and sustainability principles present in core strategic goals. • There is a clear vision of the organisation in a future (a long-term view) where sustainability is core to creating value. • Key sustainable performance indicators are fully integrated into the governance system of the business. • Staff are encouraged to deliver the sustainability programme through effective performance management, incentives, and provision of appropriate tools and resources. • Future products and services will deliver value to society, sustainability, and profits. • Marketing campaigns and pricing structures help customers make more sustainable choices. Transparency is a key value. • Close partnerships with suppliers, which improve standards and stimulate innovation, are in place. • The environmental impacts (and the stakeholder impact) of the business, both direct and indirect, are well understood.

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• The business has a clear understanding of what it would mean to operate within environmental limits. • There is a clear comprehension of the value of stakeholder engagement. • Stakeholders are involved in identifying and prioritizing the company’s material issues and values at a strategic level. • The business demonstrates consistency in public messages and ‘behind-the-scenes’ lobbying, with policy proposals reflecting policies and commitments on sustainability and transparency. • Progressive government action towards a higher degree of sustainability is sought at a national and international level. • Business risks and opportunities associated with sustainable development are well understood and communicated. • Environmental and social cost accounting methodologies are recognised and understood by investors and used in describing material realities. • Community activities have strong links to the core business, its brands, and its products/services. • Reporting focuses on material issues and the system for prioritising these is robust and transparent. The organisation doesn’t shy away from difficult and sensitive issues. • The report forms an integral part of management systems, driving performance, engaging stakeholders, and challenging the industry. The five shifts required to facilitate the development of sustainable performance in business are: Shift Shift Shift Shift Shift

1: 2: 3: 4: 5:

Take up a systemic view of the company by the mainstream. Promote the sustainable performance business model. Valorise the intrapreneur in the manager. Accept that whatever is done should have value for society. Re-engineer the metrics of business.

If the reader morally subscribes to this memorandum, the time is ripe for a managerial paradigm shift.

The methodology The Appendix proposes how to operationalise the concepts developed in the book. It offers a set of checklists and questionnaires – discussed in earlier chapters – which together act as a kind of a road map to sustainable performance. This roadmap is available for use, either as a step plan for implementing social intrapreneurship, or alternatively for

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benchmarking one’s own performance, or the sustainable performance, in comparison with other companies. However, in order to be able to make best use of its potential, either training or tutoring is necessary. The checklists indeed fit a wider concept (as the book argues in depth) and, without a thorough understanding of this concept, the checklists themselves will be less effective and have less impact. The Cassandra methodology has five constituent components: The values and the vision: what is the contribution of the company? Benchmarking: from dream to reality (do ‘we’ make a difference?) The leadership’s checklist: do ‘I’ make a difference? Cassandra: a diagnostic for sustainable performance (where are we and where do we go from here?) • The learning coach: continuous work on the mutual selves (‘on the road’). • • • •

Wanderer, your footprints are the path, and nothing more; Wanderer, there is no path, it is created as you walk. By walking, you make the path before you, and when you look behind you see the path which after you will not be trod again. Wanderer, there is no path but the ripples on the waters Antonio Machado Chant XXIX Proverbios y Cantares Campos de Castilla, 1917 Those five constituent components form a continuous loop of evaluation, designing, laying down the path by walking (Machado), learning, re-evaluation, redesigning, etc. The Appendix itself mainly focuses on assembling a number of checklists and tools that together make up the roadbook.

Some afterthoughts A new paradigm needs an adapted set of competencies for managers who want to manage in this new paradigm. Management in complexity

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193

(not of complexity), management in diversity, management in respect for multiple solutions and multiple truths, and management in paradoxes. These are the necessary skills of today’s manager. ‘Wave or particle?’ It only makes a difference in the eye of the observer, in this case, the manager. Machines cannot realise values and cannot make intuitive choices. Machines cannot choose between multiple possible truths; managers who behave and think as machines cannot do either. Personal involvement, personal development and consciousness in management are all central to this book. Parallel integrations with quantum science and perennial wisdom can be found in the following quote: First, understand that truly knowing the field, the natural world (prakriti), is not simply a process of listing the myriad items that comprise it. To understand nature itself it is necessary to know something about human consciousness. To know something is to be conscious of it. You become conscious of things in the world (that is, you ‘know’ things) through the mechanisms of perception in your nervous system – sight, hearing, feeling, mind, and so forth. But the nervous system is itself a part of nature; that which you use to know the world, nature, is also nature. Thus, that which is known cannot really be separated from the knower of it. (Bhagavad Gita, Chapter 13, 5–6) Social intrapreneurship for sustainable performance is a similar mind shift, a conscious choice to be part of a larger whole, to be each day again aware of the interconnectedness of people, Nature, in the larger ‘Gaia’. Gaia, as an (ecological) hypothesis which views living and nonliving parts of the earth as a complex interacting system that can be thought of as a single organism, is not New Age, for those who might still retain that impression. It can no longer be discarded, the reality is clearly visible. The reckless growth worshipped as the ‘golden calf’ for decades, mainly in Europe and the US, is now being taken over by others (e.g. China), and it is rapidly exhausting our resources, natural and human. The choice is stark: to continue, to do nothing, or to change radically. Changing radically, however, is only possible with a change in ontology of that same Gaia. This book has made an attempt to introduce a new management paradigm, firmly embedded in science, but at the same time, courageous enough to challenge the devastating mainstream ontology. It offers the paradigm and concepts for the manager who is conscious of his or her role in the world, and who would like to make

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Social Intrapreneurship for Sustainable Performance

Rethinking Growth

a positive contribution to development, not at any price, but for any person. But the book aims to go further. To change practice also requires new practical tools. A shift often needs a new paradigm; it is a necessary but not sufficient condition. The methodology developed in this book complements the sufficient condition for change with the manager’s toolkit to attain it. We have enjoyed researching this book; we hope you have not only enjoyed reading it but will use it. Together we really are able to provoke a shift to a more responsible world.1 Philosophy that cannot be understood, scriptures that are not practical – the present world has plenty of these; it is a waste to talk of them (Sathya Sai Baba)

Bibliography and further readings Brahm, L. (2006) Searching for Shangri-la, Higher Education Press. Draper, S., Hanson, L., and Uren, S. (2007) Hallmarks of Sustainable Performance, www.forumforthefuture.org.uk.

Internet site Sathya Sai Baba: http://www.sathyasai.org/

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The methodology This Appendix proposes how to operationalise the concepts developed in the book. It offers a set of checklists and questionnaires – discussed in earlier chapters – combined to act as a kind of roadbook to sustainable performance. This roadbook is available for use, either as a step plan for implementing social intrapreneurship, or alternatively for benchmarking one’s own performance, or the sustainable performance, in comparison with other companies. However, in order to use its full potential, either training or tutoring is necessary. The checklists indeed fit a wider concept (as the book argues in depth) and, without a thorough understanding of this concept, the checklists themselves will be less effective and have less impact. The methodology has five constituent components: • • • •

the values and the vision: what is the contribution of the company? benchmarking: from dream to reality (do we make a difference?) the leadership’s checklist: do ‘I’ make a difference? Cassandra: a diagnostic for sustainable performance (where are we and where do we go?) • the learning coach: continuous work on the mutual selves (‘on the road’). Wanderer, your footprints are the path, and nothing more; Wanderer, there is no path, it is created as you walk. By walking, you make the path before you, and when you look behind you see the path which after you will not be trod again. Wanderer, there is no path, but the ripples on the waters. Antonio Machado

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Appendix: Blueprint of a Workbook

196 Appendix

Do we make a difference?

Do we make a difference? Contribution of the company On the road

Do we make a difference? Contribution of the company On the road

Do I make a difference?

Do I make a difference?

Do I make a difference?

Where are we? Where do we go?

Where are we? Where do we go?

Where are we? Where do we go?

Figure A.1 The roadbook to social intrapreneurship

Those five constituent components form a continuous loop of evaluation, designing, laying down the path by walking (Machado), learning, re-evaluation, redesigning, etc. (see Figure A.1). The remainder of this Appendix will mainly focus on assembling a number of checklists and tools that together make up the roadbook.

The values and the vision: What is the contribution of the company? Sustainable performance starts in the bottom-left quadrant of Wilber’s systemic model, (i.e. with the identification of the [shared] values). Since, very often, they remain hidden or unknown, and since they are the drivers of the sustainable performance process, a first step involves making them explicit and discussing how far they are shared. We try to answer the questions of what the company’s values are and/or what it contributes to society. If the company were not to exist anymore, what would society miss? If the creation of employment were a value for a company, then bankruptcy would certainly cause a loss of value. However, this would imply that the creation of jobs would be a core value of the company (and not a necessary resource constraint). Sustainable performance will be driven by those shared values. A first stage might just, in order to make it easy for people to start choosing, start from a very exhaustive list of possible values. In a second

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Contribution of the On the road company

stage, those values will be negotiated in order to discover the shared values. Once these are agreed, they can be translated into personal development issues like leadership and learning. It does not take that much of an effort to come up with a whole list of possible corporate values such as: liability, availability of information, involvement, reliability, conflict solution, consensus, creativity, democratic process, sustainability, ecological awareness, honesty, ethics, organisation as a family, decency, shared identity, shared vision, shared values, equal chances, community services, harmony, humour/pleasure, innovation, integrity, quality of living, long-term perspective, emphasis on global thinking, nature conservation, humility, mutual support, openness, training possibilities, optimism, personal growth, personal satisfaction, personal freedom, political involvement/ activism, recreation possibilities, respect, respect for the law, riskmindedness, social justice, social cohesion, social responsibility, social security, solidarity, spirituality, strategic alliances, strict moral/religious rules, tolerance, transparency, responsibility, diversity, to make a difference, faith, public health and security, prosperity, continuing improvement, peaceful cooperation, friendship, freedom of expression, consciousness as a value, world peace, employment, and many other values. This list is not in any way presented as exhaustive, but as suggestive, and a means to sparking discussion. Once the real shared values are identified (via an iterative process of workshops or brainstorming session), the next stage is to start questioning how they can be translated into the necessity for personal development and leadership. This questioning should clarify the extent of an employee’s (any employee’s but at the same time all employees’) involvement and engagement. Only conscious employees, as Kofman calls them, are able to really contribute to the realisation of the values. Afterwards, a conscious manager needs a space (a workspace) that gives the possibility, the support, and the drive for the conscious employee to contribute to the realisation of values. Kofman, talking about the necessity for personal involvement and/or engagement, and of personal development, uses seven qualities to distinguish conscious from unconscious employees. Together with each employee (or manager) the task is to try and see how far this person has reached in becoming a conscious manager, and if not, how this could be changed. The first three are character attributes: unconditional responsibility; essential integrity; and ontological humility. The next three are interpersonal skills: authentic communication; constructive negotiation; and impeccable coordination.

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Appendix 197

198 Appendix

• • • • • • •

unconditional responsibility essential integrity ontological humility authentic communication constructive negotiation impeccable coordination emotional mastery.

Once comfortable with the fact that employees/managers should be conscious (and therefore able to contribute to the realisation of values), the next step is to consider the supportiveness of the environment for enabling that realisation. Buckingham and Coffman’s studies of organisational effectiveness came up with an interesting checklist. According to them, exceptional managers create a workplace in which employees emphatically answered ‘yes’ to the following questions: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Do I know what is expected of me at work? Do I have the materials and equipment I need to do my work right? At work, do I have the opportunity to do what I do best every day? In the last seven days, have I received recognition or praise for doing good work? Does my supervisor, or someone at work, seem to care about me as a person? Is there someone at work who encourages my development? At work, do my opinions seem to count? Does the mission/purpose of my company make me feel my job is important? Are my co-workers committed to doing high-quality work? Do I have a best friend at work? In the last six months, has someone at work talked to me about my progress? This last year, have I had opportunities at work to learn and grow?

It is almost enough to count the number of yes responses to get an idea of the organisational effectiveness, or the degree to which employees

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The seventh quality is an enabling condition for the previous six: emotional mastery. In other words, the idea is that each employee/manager evaluates him or herself on those seven qualities.

Appendix 199

and managers feel supported by the company in their endeavour to realise the corporate values.

Imagine an organisation has been able to identify values, or the anticipated value added of its existence or activity. The next step in our continuing journey becomes the interest in establishing some kind of benchmark. Compared to other companies, activities, or industries, does the organisation deliver something that is not yet delivered elsewhere? Can a number of elements, which would give a certain concrete idea of the directions to follow, be identified? Would they really be different and capable of forming the industry standard? This kind of benchmarking is not for competitive reasons, not for finding blue-ocean strategies (as in Kim and Mauborgne, 2005), but for helping to identify the difference that makes a ‘real’ difference: in very detailed and very down-to-earth fashion. It is this analysis that will help enable our marketing support, our commercial argumentation, our commercial message, etc. It is going to help to translate values, mission and value added into communication (internal, as well as external). In a two-step procedure, the first makes a rather classical benchmark analysis. The second attempts to evaluate the innovative potential. Is it possible to ensure that what is offered is a real innovation (rather than just a copy of an existing product or service)? Does the proposal have the potential to innovate the market, the industry, and to make a social difference? In aspiring to this new development, what resources are needed? For the first step, we base our analysis on an extended version of Kim and Mauborgne’s (2005) blue-ocean concept. For the second step we use part of an innovation roadbook methodology (designed earlier within the innovative learning-by-doing platform and approach for practising managers to learn about management while creating, while managing, and captured under the framework called the Innovation School). The roadbook itself contains more steps than the ones used here, but these are restricted to the most essential ones that fit the methodology proposed here. The first step is based on the following figure (see Figure A.2), that is itself based on the blue-ocean concept. The blue-ocean strategy invites a company to go for developing products and services that tap into a

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Benchmarking: From dream to reality (do we make a difference?)

200 Appendix Extended from Blue Ocean Strategy by Kim and Mauborgne

Eliminate: Which of the factors that the industry takes for granted should be eliminated?

What other ‘sectors’ should we involve?

Reduce: Which factors should be reduced well below industry standard?

A new value proposition

Raise: Which factors should be raised well above the industry’s standard?

What partners should we involve?

Create: Which factors should be created that the industry has never offered?

What factors are in the way of realising our values?

Figure A.2 Blue Ocean Strategy extended

blue ocean (an ocean without fierce competition, where it is nice to live, compared to a red ocean of ‘bloody’ competition). The approach proposes the following four questions: 1. Which factors that the industry takes for granted should be eliminated? 2. Which factors should be raised well above the industry’s standard? 3. Which factors should be reduced well below the industry’s standard? 4. Which factors should be created that the industry has never offered? The answers give an idea of how the company, new product, or whatever, positions itself in the market. Equally, the answers, especially to the fourth question, give a first indication on the innovative potential of the company, service, etc. Although these factors can be identified individually, this is typically an exercise done in an animated workshop, since some of the questions may be rather challenging. But we want to extend the blue-ocean approach with a further four questions which position the company (or its new product or service) within a broader network (of partners), relate to the specific purpose

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Values: What values and value added do we want to realise?

Appendix 201

• What values and valued added do we want to realise, compared to what exists (this time)? • What factors are in the way of realising those values? • What partners (companies, organisations) should we involve? • What other ‘sectors’ should we involve in our activities? It is worth recalling that one of the remarkable observations in social entrepreneurship is that companies and services are often not limited to one specific sector or industry. The social intrapreneurship advocated here aims to realise the same openness to the others and to enrol solutions into a holistic focus on the company’s value added (that will be reinforced by the use of Cassandra later on). The second step in the process from dream to reality involves introspection on the innovative potential of the value-added to be created, and identification of a reasonable list of resource issues that would be related to the desired value added. The realisation of this step is based on the ‘innovation roadbook’, a methodology designed and used for guiding innovation processes of any kind. The original specific aim of the innovation roadbook was to support the manager in the development of a grounded business plan of a creative idea. With that, most attention will go to the translation of the idea into a project that can be communicated to, and shared with, others. Attention is on a screening of the innovative potential of the proposal, before translating it into the necessary resource inventory. Eventually, that resource inventory, with the proposed solutions for the possible snags, is translated into a business plan which investigates and reports on the economic and financial viability of the project. Creation, innovation, and intrapreneurship are skills, capacities, and approaches which are typical for anyone seeking to stay competitive. During a project, the innovation roadbook supports the manager in order to facilitate the discovery of his or her own approach. The support given by the roadbook should be seen as a kind of structure and checklist; one will still need to walk the talk: one needs – as Machado says – to lay down the path in walking. In the overall innovation literature, a clear distinction is made between the phase of creativity and the follow-up phase that is commonly addressed as the innovation phase (detailed planning and

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of realising values, and demand a more intense and varied innovation focus:

production). The first phase receives low priority (in the innovation literature), though most of that literature also agrees that success and failure of new-product development is often already ‘genetically imprinted’ at the start of the so-called innovation process, which is based on the quality of the creativity phase. A second commonly identified reason for failure can be found in the process of the creation phase. While we certainly stress the importance of time and effort spent on the first creativity phase, we do require at least an inventory of the resources and limitations to be overcome. In short, based on what common theories suggest, an innovation process contains roughly five different phases: 1. Idea generation 2. From idea to real world (how to translate an idea into a concept that can be communicated) 3. Assessment of the innovative potential (annex the commercial feasibility) of the project 4. Inventory of the internal capacities and constraints in order to assess technical feasibility 5. The economic (and mainly financial) feasibility: the business plan. Though a certain progression in time seems logical (certainly in the first three phases), some feedback loops will emerge as necessary and are extremely good in adding value. However, at a certain point in time, and after a number of feedback loops, one should continue in the development phase and the economic viability study. The following diagram (see Figure A.3) pictures the process, which will be detailed – with the help of some checklists and relevant issues/questions – further on in this Appendix. For the purpose of social intrapreneurship, we take only the third and fourth stages of the entire innovation roadbook. The figure above establishes the context of the approach. The innovation process starts with a phase of idea generation and/or creativity. This is the phase in which the wildest dreams can be transformed into ideas. Very often, this process is much more effective if it can be undertaken creatively in groups (rather than by individuals). A difficult step, very often, is to then translate the ideas into the real world. The idea can be clear in the mind of the idea-owner(s), but requires translation into a form which can be communicated to wider audiences. That is not a typical problem for the innovation process, but it is of paramount importance and key to further successful development. In order

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202 Appendix

Idea generation

Economic feasibility (Business plan)

From idea to real world

Creativity

Assessment of innovative potential

Inventory of internal capacities and constraints Y/N Inventory

Figure A.3

The process of creativity and innovation

to support this vital step, techniques such as soft systems methodology (SSM) are methodology-designed to transform ideas into the real world, with the aim of eventually designing Information Systems. Once the idea is translated from the owners’ mind into a form which can be communicated (with sentences, activities, to-do things), its innovative potential has to be assessed. It is difficult to evaluate the innovative potential of an idea as long as it is not somehow embedded into a message and descriptions on paper. Therefore, this step can only be undertaken after the ‘translation’ from idea into activities. The logical progression from idea generation, via translation into a communicative action and description, in order to evaluate its innovative potential is a cycle which does not necessarily generate immediately the eye-catching new product or service. Indeed, frequently, it is the insertion of a feedback-loop that probably brings the process back to the phase of idea generation. Creativity and innovation very often proceed in a process of incremental steps, rather than achieving single world-shocking breakthrough ideas. Indeed, this feedback-loop often needs to be taken a number of times but its cycle of three phases remains the backbone of the creativity process. In our social intrapreneurship approach, we take up the innovation roadbook methodology, presuming that a workable form of the project or the entire company is available.

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Appendix 203

Once a ‘go-decision’ is taken, the following phase is to research the internal capacities and constraints that are key to a future successful implementation. In this phase an inventory is made of resources and constraints and, in case constraints may hinder, possible solutions need to be considered. Needless to say it is possible, though not indicated in the figure, to have additional feed-back loops, bringing the participant from the inventory phase into (again) the idea generation (and its subsequent steps). The more the innovation process can be kept dynamic, the higher the chances for innovative products. This fourth phase is also one to integrate into the social intrapreneurship approach. Finally, the economic and financial feasibility study converts ideas, capacities, and constraints into a business plan. The business plan very often acts as the communication tool for going to the market to find support, finance, etc. for proposals. It is best considered in that way. It is also a communication tool and should, accordingly, be made attractive and clear. Though the business plan deals with economic and financial aspects of the project, most of these have already been identified earlier in the process. Therefore, we say that the business plan is more about financial feasibility and justification than about economic viability which, implicitly, has already played a role much earlier in the process. Therefore, it is rather an outcome than an input. The important role of the business plan as communication tool, in the process from development to real market, needs to be kept in mind.

Assessment of the innovative potential Many definitions of innovation exist, and there are many different foci. In general, however, they tend either to concentrate on the creativity phase, the idea generation phase, or the process innovation side (i.e. describing more how to get from an idea to a realised product or service). A second criterion on which most of the definitions differ is the focus either on breadth or on depth with which innovation is associated. Certainly, in the first phases, breadth is important, and this is captured by West and Farr’s definition of innovation ‘as the intentional introduction and application within a role, group, or organization of ideas, processes, products or procedures, new to the relevant unit of adoption to significantly benefit the individual, the group, organization or wider society.’ Their definition of innovation also fits strongly with the concept of social intrapreneurship. In fact, in this definition, social intrapreneurship becomes a perfect example of an innovation. Accordingly, this part of

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204 Appendix

the innovation roadbook can assess at this stage the innovative potential of the project. Possible outcomes could be to reiterate the project (given the outcome of this phase) and go for new or further idea generation; or, alternatively, to go for the inventory of constraints and capabilities for successful realisation inside the company and to continue the procedure. Lessons learned from existing research are given as useful checklists which can help in assessing the innovative potential of the project. The next section provides some general lessons (taken out of standard literature) and is followed by a section focused more on specific experience-based lessons.

Some general lessons learnt about innovation (that the user should turn into questions about his or her company or project) • Character and culture are human creations, not facts of life. Context, therefore, is important. • All people have creative potential. • One cannot distinguish between creativity and the possibility of generating new products (sometimes called the capability to transform ideas into viable solutions). • Creativity is different from creation (production, reproduction, etc.). • Creativity often needs motivation. • Creativity has to do with freedom of choice and choice itself. • For creativity, multiplicity is important because multiple realities always exist. • Recognition of demand is a more frequent factor in successful innovation than recognition of technical potential. Already in this phase (and not for the first time in the business plan) demand should require sufficient attention. • Training and experience of people inside your company are crucial for innovation. • Were any lessons learned from other (external or internal) innovations? • Don’t innovate for the future, but for the present. • Effective innovation starts small and is often not revolutionary. • Innovation and learning go hand-in-hand; innovation and management are a different ballgame. The recommendation is to make a list of those lessons that the company explicitly takes into account (and to comment on them, describe their

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Appendix 205

206 Appendix

• • • • •

Why (goals)? What (product novelty)? When (timing)? Where (targeting)? How (marketing mix)?

Certain identified potential fail factors are worth considering during this stage, when they can still easily be avoided: • • • • • • • • • • •

go for the ‘better’ product (without clients) a me-too product (is often too slow) obstruction (unexpected) of the competition products for low-margin markets badly prepared introduction fast introductions the newer, the better position a new product as the successor of another one change the positioning of the product (too fast) too low pricing organisational limitations and barriers, such as culture, limited managerial support, lack of competencies. Though those aspects get much more attention in the next phase, some initial exploration should take place here.

Moreover, those observations should be turned into questions that merit responses, comments, and contextualising. Potential success factors worth considering at this stage – are they present in the company, project, or product? – include: • intrinsic value of the product • structured and well-managed development and introduction process, insofar as there is already a clear idea about this (perhaps a wish-list could be made) • understanding the users’ needs • attention to marketing and publicity • efficiency of development

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context, etc.), and those that might need more attention. Not all of them are always equally applicable. Questions always to be addressed concern the innovative potential of the project:

Appendix 207

The strongest positive correlations with success are: • product advantage (costs, innovativeness, quality, satisfying needs) • proficiency of predevelopment activities (initial brain-storm, screening, thorough market analysis, technical assessment, financial/ business analysis) • good protocol of all specifications. Ticking all those questions/issues should ensure a reasonable potential to indeed add value to the market.

Inventory of capacities and constraints Once the concept is ready for checking against the capacities and constraints of the company, the creativity phase gives way to the inventory phase. In this phase the project is assessed against the expected strengths and weaknesses which your company has in respect to innovation. In some cases, the corporate environment, for many different reasons, is somewhat hostile to new, truly innovative projects. This can be due to a range of factors from the organisational structure, through the lack of commitment from top management, to the culture of the company itself. Support in this phase can again be provided by a few checklists. The first ones are more general in nature and are based on what is commonly known as the new product development (NPD) literature. They mostly have to do with the expected origination of the further innovation process. By recognising possible pitfalls early on, firms can possibly avoid them. The latter checklists, and some of their lessons, are based on research into some real-life projects. Some challenges for the future NPD process of your project: • Not everything can be realised. Therefore, making trade-offs between different ‘important’ aspects of a new idea is essential. Attempt to identify these aspects and prioritise them. • Dynamics: how to deal with changing technologies, preferences, opinions, ecology, economy. Is your project vulnerable to rapid changes?

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• effective use of outside technology and external scientific communication • seniority and authority of responsible managers – commitment • team composition • individual creativity.

208 Appendix

• Details: small decisions can have large consequences (possibly on an even larger scale). • Time and timing. How crucial are these?

• • • •

team that is not empowered enough political (hidden) agendas, on all different levels inadequate sourcing incomplete design team.

In essence, the NPD process, which will eventually follow your project, is an uncertainty reduction process. NPD also involves seeking and keeping sponsorship. Often, innovation needs sufficient cash and five other critical success factors are: • • • • •

commitment of top managers to the project planning and design involvement of employees in the project education and training internal communication.

If those are not addressed, then this is the stage to spend some time on them. The introduction of social intrapreneurship is, at the end of the day, a large change management project, as well as a new ‘concept’ development project, hence the deployment of lessons learned in the new product development experience. For certain cases and companies, this phase might be less adequate. The book leaves it to the judgement of the reader, or of the consultant using this methodology, to decide whether this might be a value-adding part of the process.

Some experience-based lessons learnt The checklist presented here is based on lessons learnt from a number of real-life innovation projects that have been studied. Since the cases were ‘assembled’ at the end of the innovation project, some of the issues are clearly related to the process itself. Hence, not all of them are applicable to any particular project. For improving a social intrapreneurship change process, certain lessons will add more value. Reasons for delays often mentioned are

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Some possible fail factors:

• changes in the project team, insufficient resources (availability of people), no clear specifications, insufficient interface between teams, universal optimism and opportunistic planning, outside influences • insufficient project-management skills • insufficient communication on decisions • frustrations of team members • unclear responsibilities • not all expertise required is available • reinvention of the wheel • insufficient management commitment that contributes to stress, pressure, and insufficient resources • contracting problems if third parties are involved • no proper risk analysis available • changes in the concept that occur during the project realisation are often not checked for risks and consequences • market tests are often executed far too late Having detailed what all this is, and deciding to go for it, the next areas upon which to focus are the leadership’s checklist and the management diagnostics.

The leadership checklist: Do I make a difference? As argued earlier, the role of the leader, and what it might involve, are vital for successful social intrapreneurship. Accordingly, this section limits itself to repeating the ‘leadership’s checklist’ developed in an earlier chapter, which contains the list’s context and interpretation. This checklist has been designed to help identify how close one is to becoming a real leader, instead of just a manager. Part of this checklist will be used in the overall holistic diagnostic tool Cassandra that was also developed in an earlier chapter. An honest and detailed reflection on this checklist allows its users to progress consciously on the way to sustainable leadership. • Are we able to take many ‘decisions’ in parallel? • Are we able to balance between activity and restraint; are we capable for ‘slow’ management? • Do we base our leadership on the belief in each individual’s ability to perform his or her task?

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• Do we consider any ‘instrument’ we use as an extension of our enacted leadership? • Do we engage all senses? • Do we see management as an extraordinary act of coordination (and not control)? • Are we really able to work together in a team? • Do we have a constant sense of awareness? • Are we aware that organisations are made of ‘positions’, and that there is a different level of information related to each position? • Are we aware that only the leader has the global view and do we act accordingly? • Are we assuming the responsibility of the ‘podium’? • Are we aware that the orchestra doesn’t really need the conductor? • Do we accept the self-organisational capacity of the organisation? • Do we see the company as an intense network of communication? • Do we behave as the conductor who sends signals and receives signals back; are we open to receiving these signals back? • The energy that makes the company turn comes, ultimately, from its purpose: do we have a purpose and do we manage the related energy in that sense? • The energy, created by the purpose, is conducted via the people: do we manage people accordingly? • As managers, do we create the space for others? • As managers, do we say what should be done (rather than what should not be done)? • As managers, do we project a vision or do we correct people’s behaviour? • Are we aware that power always goes with responsibility, and do we take that responsibility of power? • Are we able to perform ‘slow’ management, knowing that there is a response time? • Leadership is committing to what has not yet happened; is that our daily practice? • The leader should commit first: do we do that? • Rigid leadership creates confusion. Are we flexible enough in our leadership style? • Rigid leadership chops off the line (the purpose). Can we identify when we chop off the line? • Unnecessary movements can create confusion. Do we actively limit confusing messages and actions?

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• Lack of clarity causes tension and underperformance with people. Do we strive always to be crystal clear in our communications? • Are we aware in what areas we are rather internally oriented (e.g. to the technicality of processes)? Do we see where this limits our client focus? • Are we sufficiently externally focused? Are we aware that it is the external focus (the desire to serve a client who is waiting and paying for your service) that gives meaning to our work?

Cassandra: A diagnostic for sustainable performance (where are we and where do we go?) With the adapted leadership necessary for social intrapreneurship, we are now able to deal with the diagnostics through Cassandra (discussed in an earlier chapter). Cassandra serves a triple purpose: it gives an instantaneous picture of the situation; it allows the identification of the development path (where to go to); and it is a follow-up tool to guide that development. Cassandra has two versions. The first is a personal (development) version for any individual manager who would like to self-manage (or be coached) about his or her potential for sustainable performance (as a manager). At the same time, the second version makes it possible to monitor corporate sustainable performance. Both checklists are reiterated here. They are integrated in a tool (as described earlier) that allows visualisation of the results. The checklist could be further developed in more advanced reporting tools and questions are scored on a 1–5 scale. Of course, these questions can equally be used as a simple checklist.

The questions in the corporate version: What is the sustainable performance level and potential of the company? Values Diversity • • • • • • •

Does your company have ethical codes. Does your company produce sustainability reports. Does the company have anti-discrimination policies. Does the company have Corporate Social Responsibility indicators. Should the company maintain a dialogue with all stakeholders. Assessing the work environment is important. Our company has a human resources policy that pays attention to talent retention.

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Variety in opinions is a value. The company pays a lot of attention to internal communication. Our leadership is strongly committed. We have active interest groups in the company.

Complexity • • • • •

The dynamic of a company is situated at the edge of chaos. Evolution needs both the new and extinction. Diversity is a prerequisite for the emergence of the new. Radical unpredictability is an essential characteristic of business. The self-organisational capacity of a company is an indicator for sustainability. • Interaction between ‘individual agents’ is essential for selforganisation. • Agency (the action) is located at the level of interacting individual entities.

Personal Development Personal well-being • We have an active policy and programmes for the development of individual competencies and skills. • The company also values time that is not immediately productive. • The company practises a policy of non-judgement on appearances (facts, humans, etc.). • Joy is an active element of our corporate life. • I feel valued in my company. • Managers in our company have a real responsibility and a space to manoeuvre. • There is space for the realisation of my desires in my function. • Courage is valued in the company. • I feel an essential part of the whole.

Leadership and teamwork • • • •

Each individual is well trained and prepared to do his/her job A constant sense of awareness is essential for success. Our company is an intense network of communication. The purpose in our company is always clear and shared.

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• • • •

• Our managers create space for others. • Our managers project a vision rather than correcting what has happened. • Rigid leadership creates confusion. • Lack of clarity causes tension and underperformance. • We have an external focus which gives meaning to our work.

Mechanistic performance Financial performance • • • •

Our profit margin is above average in our industry. Our return on capital employed is above average in our industry. Our liquidity position is above average in our industry. We generate enough cash in order to auto-finance our activities and growth. • Our cash-flow generation is above average in our industry.

Innovative potential • We have a distinct methodology/process in place for developing new ideas. • We are able to produce creativity on demand. • Our culture regards idea generation as a key business practice. • I personally develop new ideas on a regular basis. • Our leadership models and rewards innovative thinking. • We have a deliberate, structured process for thoroughly evaluating/ refining new ideas. • Our culture values idea assessment/refinement as a core competence.

Systemic performance Sustainable development and social responsibility • • • • • • •

Our Our Our Our Our Our Our

company company company company company company company

values values values values values values values

unconditional responsibility. essential integrity. ontological humility. conscious behaviours. authentic communication. constructive negotiation. impeccable coordination.

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• Our company values conscious responses. • Our company values emotional mastery.

• Project managers use other than financial factors to measure success. • The rigidity of processes gives people very little possibility for correction. • Interaction is important, so harmony between people is crucial. • Confidence and control are two contrary variables. • Confidence and motivation have a strong influence on exchange and the creation of knowledge. • Confidence must always be built; the level at the start is never enough. • Interaction without knowledge, does not allow learning. • Interaction without confidence and motivation does not allow learning. • Motivation and organisation seem to interact positively. • Interaction is always necessary for the construction of confidence. • If there are agents at group level who do not cooperate, the learning of the group stops.

The questions of the personal (development) version: What is the individual manager’s potential to take up the role of the leader in sustainable performance? Values Diversity • Do you base your actions on ethical codes? • Do you sometimes make a reflection on the sustainability of your actions? • Do you pay attention to being anti-discriminatory? • Do you have a Social Responsibility reflection in your actions? • We need to take care for all the parties involved in what we do. • Assessing someone’s work environment is important. • In an organisation it is important to pay attention to retention of talent. • Variety in opinions is a value.

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Complexity • • • •

You are most dynamic and creative at the edge of chaos. Evolution needs both the new and extinction. Diversity is a prerequisite for the emergence of the new. Radical unpredictability is an essential characteristic of any organisation. • The self-organisational capacity of any group is an indicator for sustainability. • Interaction between ‘individual agents’ is essential for selforganisation. • Agency (the action) is located at the level of interacting individual entities.

Personal development Personal well-being • I value an active approach for the development of individual competencies and skills. • One should also value time that is not immediately productive. • I practise a policy of non-judgement on appearances (facts, humans, etc.). • Joy is an active element of my professional or societal life. • I feel valued in my professional environment. • I have a real responsibility and a space to manoeuvre. • There is space for the realisation of my desires in my function/ activity. • Courage is valued in my professional environment. • I feel an essential part of the whole.

Leadership and teamwork • Each individual (surrounding me) is well trained and prepared to do his/her job. • A constant sense of awareness is essential for success.

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• You pay attention to correctly communicating with those around you. • Leadership should be strongly committed. • Active interest groups are an asset for society.

• My professional environment is an intense network of communication. • The purpose in my professional environment is always clear and shared. • My managers create space for the others. • My managers project a vision rather than correct what has happened. • Rigid leadership creates confusion. • Lack of clarity causes tension and underperformance. • I have an external focus that gives meaning to my work.

Mechanistic performance Financial performance • My appreciation of my revenues is above average in society. • My appreciation of my belongings is above average in our society. • My liquidity position is above average in society (I can spend what I really want). • I generate enough cash in order to be financially self-sufficient for what I want to develop. • My cash-flow generation gives me a comfortable feeling.

Innovative potential • I actively pay attention to developing new ideas. • I am able to produce creativity on demand. • My professional environment regards idea generation as a key business practice. • I personally develop new ideas on a regular basis. • Our leadership models and rewards innovative thinking. • An organisation should have a structured process for evaluating/ refining new ideas. • Our professional culture values idea assessment/refinement as a core competence.

Systemic performance Sustainable development and responsibility • I value unconditional responsibility. • I value essential integrity.

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• I value ontological humility. (My basic starting point is to be humble.) • I value authentic communication. • I value constructive negotiation. • I value impeccable coordination. • I value conscious responses. • I value emotional mastery.

Knowledge and learning • Project managers should use other than financial factors to measure success. • The rigidity of processes gives people very little possibility for correction. • Interaction is important, so harmony between people is crucial. • Confidence and control are two contrary variables. • Confidence and motivation have a strong influence on exchange and the creation of knowledge. • Confidence must always be built: the level at the start is never enough. • Interaction without knowledge does not allow learning. • Interaction without confidence and motivation does not allow learning. • Motivation and organisation seem to interact positively. • Interaction is always necessary for the construction of confidence. • If there are agents at group level who do not cooperate, the learning of the group stops. After Cassandra has been used to make the diagnostic in either version, it immediately visualises the areas where most progress is necessary. From that observation onwards, we can define a path to follow, in order to develop towards the desired goal. Next we could re-use Cassandra in order to check whether, after a certain time, we did indeed progress towards our goals. Alternatively we could use part (or all) of Cassandra to build a management tool for continuous monitoring and/or corrective action.

The learning coach: Continuous work on the mutual selves (‘on the road’) The last element of the methodology for social intrapreneurship focuses on the role of the manager as a learning coach. In some way, this is the

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Figure A.4 The learning contract

process that we need to install in order to get the supporting methodology and to maintain momentum. We would like to define the ‘learning coach’ as a contract and a contract follow-up about a methodology and a developmental trajectory. Each and every individual involved in the process has to identify a personal developmental trajectory and a series of management competencies that they would like to develop, using all possible activities as a tool for that development. These can be considered as a learning contract, an engagement, which a manager or employee can sign with him or herself and, if applicable, with his or her coach. Such a learning contract is visualised in the following diagram (Figure A.4). A learning contract can be usefully understood as a contract about his or her learning that the learner signs with him or herself (but of course, in practice, at the same moment with his or her educational support or coach). However, in case of any coaching or tutoring, or formal training, this learning contract will have a third party involved to sign up: the coach, or trainer, or tutor. Area to be addressed can be gathered from the following question. What is it that I expect to learn in this course/activity/question? If somebody chooses to enrol for a course, for instance, what does that person expect to learn? And what does he or she commit to focus on for learning? What is it that the coach, the tutor, the manager can hold the ‘learner’ accountable for? The same type of questions should be asked before starting a coaching session. What is the person’s ambition to learn? Is he or she committed to focus on achieving that ambition? Can the coach keep the learner accountable for that focus? In a managerial context, that focus, or learning goal, could easily be expressed in a series of managerial competencies which the learner wants

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Managerial competencies

Activities, courses, projects, experiences

to acquire. Then a lot of different activities can take place which are, in themselves, tools allowing the learner to progress in their learning. These tools could be courses or activities (whether job-related or not). In fact, the nature of the activity is much less important. Any activity has the potential to contribute to the creation of learning moments for the ‘conscious’ learner to learn from. During the learning or coaching process, it is part of the exercise to validate the progress in the learning contract. Has there been progress in the acquisition of some desired managerial competencies? If yes, what others are desired? If not, why not? What needs to be done to improve the learning? In fact, a check is regularly made on the progress of the realisation of the learning contract (see the description of the nature and content of the learning contract in the figure above). In the second place, the learning coach is a technique, a methodology of co-coaching, which can easily be taught in order (importantly) to improve the efficiency of co-coaching in companies. Co-coaching could take place between managers of the same level, but it could equally be used by a manager in his role as a coach for his co-workers. Co-coaching is the technique that might help the learner to progress on a day-to-day basis (and not only via tutoring or coaching). The aim is that the participants (managers, learning individuals) learn in order to realise their individual learning goals, based on a personal responsibility (which we should have developed by now). The result anticipated is that managers are better able than before to manage their personal development plan. The methodology consists of a number of steps briefly described here, although it might need some initial coaching to get started. At the beginning of the learning trajectory, there is an intake interview which roughly deals with the following questions that aimed at guiding the participant to explore their own current feelings: Who am I? What do I want to reach or learn? What do I need for that? How do I anticipate reaching that? When do I want to have reached this? The aim is to translate, in a very detailed and down-to-earth way, a number of individual wishes, intentions, and expectations. Based on the results, a personal learning coach is (ideally) appointed. In a corporate setting, this might be the ‘learning coach’ who takes this role on him or

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herself. Next the participants start working on the more content-driven parts of their job (in fact on any activity, assignment, or possibly even a course), though always using a learning-by-doing approach. In this context, a course can never be a simple teacher-driven knowledge transfer. Personal development can only flourish when learners are confronted with new insights and by preference challenging insights. This combination of new insights and personal development will return all the time. The earlier identified trinity of insight, form, and meaningfulness (science, art, and spirituality) is the guiding principle for the entire methodology and approach. During the intake, one could use competency criteria and behavioural criteria in order to facilitate the interview (see example below). The knowledge and innovation approach advocated in this book is clearly and exclusively one based on competency development. Possible interesting competencies for a manager to review are: courage, initiative, independence, the capacity to deal with stress, capacity to convince, organisational sensitivity, cooperation, flexibility, ambition, and energy. Of course, these criteria need to be adapted to each different company or organisation, and to what each individual wants to learn. During the progress of the (job-related) assignments, or what could be called projects, the participants can share different (virtual) meeting places. This can be illustrated through the metaphor of a house, in which different groups of participants can be each other’s mirrors and sounding boards concerning their own learning. All this takes place in a self-organising way. Within the different ‘houses’ there are different ‘rooms’ and it is the people inside who decide whom they allow in. Hence somebody knocks on the door, and possibly someone opens it. The further details of the organisation are less important here. The sounding-board function needs to be understood as follows (see Figure A.5). We consider here a triangular situation in which somebody is confronted with what he considers to be a problem – comparable to the ‘problematique’ in Soft Systems Methodology. That is the basis of the triangle. A third person comes into the game and that person can take a number of roles. The first classical role, indicated by the dashed line, is that the third person gives his advice concerning the problem. The third person takes the role of the consultant and in fact takes over the problem instead of allowing the person to learn. The second possible role that the third person can take is indicated by the dotted line and is the one of the therapist. The third person gives his advice on the behaviour and decisional power of the person in question. Often this does not help

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Person having a problem Figure A.5

Problem

The learning coach

the person to learn, since the therapist (consultant) again takes over, but now he takes over the learning potential. The role as learning coach that we suggest is illustrated by the grey arrow. The coach spurs on the person in his learning-by-doing and in solving his problem by himself. The coach leaves the full responsibility to the person and only mirrors certain observations, contextual information, etc. This approach of being, or becoming, a learning coach is not evident and needs to be taught. Therefore such an approach, which has been used successfully for many years in certain ‘schools’ of personal development, needs some initial training/coaching from a professional, after which, in principle, everybody could take this role of learning coach amongst his or her peers. The attempt of the professional is not to stay in the picture for the entire learning loop, but rather to pass on the competencies for becoming a learning coach. The role of the coach is hopefully clear now: to stimulate, to activate, to motivate, to inspire, and to raise enthusiasm. The pillar of this approach is and remains the responsibility of the learner for his own personal learning. The learner decides where to go; he takes the steering wheel in his hands; the learner reacts to what is offered, but also creates (first); the learner respects others’ opinions; the learner listens to the others; the learner contributes to the learning processes of each and every other participant; and the learner respects the privacy of the others. In practice this list is longer, but this gives some insight into the basic rules of the game.

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Third person (coaching manager)

This rather external approach to personal learning and development can only succeed if the emotional component in this learning and developmental process is not ignored. Learning without emotions is like training a monkey for the circus. Again, it is suggested that a set of managerial competencies to be developed could help to make this process more concrete. In certain cases companies have identified the managerial competencies their managers require. In other cases, those competencies need to be defined. However, monitoring the process of the learning coach will need a kind of tool, some identifiable goals, and competencies that the learner aims to develop. In order to give a first possible hint on such a list, the following offers an example of a list of managerial competencies appropriate for developing a manager with the ambition to be able to manage within a more systemic context; in other words, for a social intrapreneur (the list is not exhaustive): • analytical skills • problem-solving skills • • • •

identification of variables and constraints identification of information sources information management creation of solutions and their prioritisation

• project management skills – – – –

scenario building identification of multidimensional solution spaces risk management structuring and controlling

• vision development – – – –

understanding the economic context anticipation of competitive evolution imagination and creation of innovative actions production of coherence/holism

• managing performance – management of indicators – translation of ideas into actions that create value – management of information and information systems

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• client orientation

• accepting diversity as a creative power – – – – –

stop ethnocentric thinking make use of cultural diversity use diversity as a constructive principle learn about diversity (cultural, religious) facilitate networking

• decision-making skills – – – –

operationalising installation of a Management Information System anticipation, correction, and analysis propose actions

• communication skills – management of communication supports – organisation of communication flows – anticipation of communication needs • groupworking – – – – – – –

mastery of team-oriented parameters and attitudes understanding and identification of each other’s roles enrich roles anticipate hurdles share knowledge and experience flexibility adaptability

• leadership/motivation – – – – – – –

propose and assume responsibility create synergy listen construct convince motivate support and back-up your co-workers

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– don’t produce for yourself – master and develop quality – satisfy customers (internal and external)

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• coaching

• respect for the human being – – – –

cultivate an open mind be aware of and accept differences be tolerant and show humility be sensitive to context

• self-motivation – be able to motivate yourself in all circumstances – be involved, more and more • creativity/innovation – – – – –

be open for and apply change dare to innovate embrace complexity and variety (don’t limit) be a continuous ‘learner’ allow and support others to learn continuously

• entrepreneurship – be an entrepreneur – be an actor in development • management learning – progress your own ‘ knowing’ – learn from your errors – incorporate continuous learning • personal mission • stress management – time management – conflict management – prioritisation of difficulties and opportunities

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– evaluate – inform – organise and support workplace learning

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• social responsibility and sustainable orientation – take societal responsibility for your actions – societal/environmental engagement

Bibliography and further readings De Bono, E. (1993) Serious Creativity, Using the Power of Lateral Thinking to Create New Ideas, Harper Collins. Draper, S., Hanson, L., and Uren, S., (2007) ‘Hallmarks of Sustainable Performance’, www.forumforthefuture.org.uk Drucker, P. (1999) Innovation and Entrepreneurship, Butterworth-Heinemann. Kim, W. and Mauborgne, R. (2005) Blue Ocean Strategy, Harvard Business School Press. Stowell, F. (1995) Information Systems Provision: The Contribution of Soft Systems Methodology, McGraw Hill. Van de Ven, A., Angle, H., and Poole M. (eds) (2000) Research on the Management of Innovation – The Minnesota Studies, Oxford University Press. West, M. and Farr, J. (eds) (1990) Innovation and Creativity at Work: Psychological and Organizational Strategies, Wiley.

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• ethical mission

3 Emergence and Dynamics: A Quantum Ontology of A-causality This chapter is a full version of a paper presented at the 3rd International Workshop on Complexity and Philosophy, Stellenbosch (SA), 2007. A previous version of this chapter can be found in the proceedings of this conference: Richardson, K. and Cilliers, P. (eds) (2007) Explorations in Complexity Thinking, ISCE Publishing.

7 Sustainable Performance 1. 2. 3. 4. 5.

Carlos Ghosn quoted in a Renault–Nissan internal document, March 2007. Renault–Nissan Alliance Report, February 2007. Renault–Nissan Alliance Report, February 2007. ‘Renault Tries to Ease Tensions’, Ward’s Auto World, 1 April 2007. CFDT workers’ union statement, quoted in Automotive News, 21 February 2007.

9 Social Intrapreneurship for Sustainable Performance Social intrapreneurship, as we have defined and detailed it, is definitely a method for personal and organisational development. For those who would like to use the methodology, training seminars can be organised. Workbooks are also available with the checklists for easy use in real-life situations. For further details, please contact the authors.

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Notes

Abiola, Hafsat 108 ABN AMRO Bank 106 aboriginal peoples 109 acausal relationships 69 adaptive systems 55 added value per unit 52 Advanced Practical Thinking Training Inc 148 advertising 107 pharmaceutical companies 18 Africa 127 suppression of trade unions in 83 agency 146 agent networks 49 agent-based simulations 2, 69, 88–95 aggregation 44, 60 Ahold collapse of 104 air traffic control 8 Algeria suppression of trade unions in 83 Alice in Wonderland 6, 37 Allen, Kate 78 Alliance of the New Humanity 107–8 Amnesty International 77–8 analytical skills 222–5 Annan, Kofi Atta 123 Annual Survey of Trade Union Rights Violations 81 Anthony, Susan Brownell [1820–1906] 182 anti-corruption Global Compact principles on 123–4 anti-discrimination 145 antidepressants increased sales of 18 apartheid 76 Argentina suppression of trade unions in 83 arms industry 43

art quantum logic applied to 66 Arthur, William Brian 26, 51–3 artificial intelligence 2–3, 33–5, 48 artificial life 2, 47–8 Ashoka 181–2, 185 asset and liability management 1 Aswad, Du’a Khalil [1990–2007] 77 atomic phenomena 57 attractors 42–3 Australia adopts ecological footprint 12 hostility to workers’ rights in 81–2 privatisation of railways 7–8 Austria economic development 127 autonomy 101 autopoiesis 30–1, 37, 49 Avant le big bang 63 awareness 64 Ayurvedic (holistic) medicine 65, 67–8, 70 Azerbaijan suppression of trade unions in 84 background physics 61 Baets, Walter 1, 149 Bahrain moves towards trade union rights 83 Bangladesh hostility to workers’ rights in 82 murder of journalists in 80 banking 105 Barings Bank collapse of 102–3 Bartlett’s sphericity test 152 Bebermeyer, Ruth 80 Belarus suppression of trade unions in 81, 84 belief knowledge distinguished 61

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Index

Index

belief systems 77 Ben-Eli, Michael 107–8, 111–2, 143–4, 189 benchmarking 199–204 Benin suppression of trade unions in 83 Beyond GDP Conference (2007) 5 Bhagavad Gita 75 Bhave, Vinoba [1895–1982] 182 biology recent developments in 121 relationship with business 29–53 Birkhoff, Garrett [1911–96] 56 blue-ocean strategies 199–200 Bogdanov brothers (Igor and Grichka Bogdanov) 63, 67, 70 Bogdanov Singularity 70 Bohm, David 66–7, 70 Bohr, Niels Henrik David [1885–1962] 57–8 bonuses as incentives 8 Borstein, D. 176 Bosnia-Herzegovina interference in trade union activity in 84 Brahm, Laurence 188–9 Branson, Sir Richard Charles Nicholas 180 Brazil adopts ecological footprint 12 Brownian motion 23 Brundtland, Gro Harlem 122 Buckingham, M. 118, 198 Burma suppression of trade unions in 81 burn out 7 business quantum interpretation of 131–2 relationship with biology 29–52 business economics 24–6 business risk 191 Business for Social Responsibility 19 buying behaviour 42 calculated risk 46 calculations 40 Cambodia hostility to workers’ rights in

82

Canada adopts ecological footprint 12 cancer food-related 16 research into 18 capacities 207–8 capitalism 3, 103 rise of 17 carbon dioxide emissions 16 market for 144 Cartesian attitude 39 Cassandra case study using 157–75 corporate version of 154–75, 211–4 methodology 192 tool for sustainable performance 143–75, 195, 201, 209, 211, 217 validity testing 151–3 catalysts 23 causal coherence 62, 69 causality 62 chaos theory and 56 notion of 57–9 Centre for Sustainability and Excellence (CSE) 11–2 chaos theory 38–50, 86 causality and 56 Chaplain, Sir Charles Spencer (Charlie) [1889–1977] 20 Chemezov, Sergei 85 Cheshire, Derek 177–8 chief executive officer (CEO) role of 135–36 China adopts ecological footprint 12 economic development 4, 6 emergence of as major market 20 population growth 16 suppression of trade unions in 81 choice sustainable 190 Chopra, Deepak 67–8, 114, 147 clan choices conflict between individual choices and 90–5 client choice 60 client orientation 223

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climate change 20 Club of Rome 9–10 coaching 217, 219–24 Coffman, C. 118, 198 cognition 55 cognitive connections 33–4 coincidence 62, 69 collective destiny 128 collective unconsciousness 61–2 Collins, J. 118 Colombia murder of journalists in 80 murder of trade unionists in 81 Committee on Freedom of Association 82 Committee to Protect Journalists (CPJ) 80 common purpose 13–4 communication 64–6, 137–9, 146, 223 role of 32–3 Communism perspective on 44 community activities 191 companies consciousness of 60 learning in 37–8 stakeholders 105–06 company growth 6 company management 9 paradox of 40–3 company performance corporate version of Cassandra 154–75 values 154–5 company reorganisation 36 competition 20 values of 116 competitors’ behaviour 41 complementarity physics 61 complex adaptive systems (CAS) 2, 69, 71 complex behaviour 47–8 complex systems characteristics of 42–53 quantum ontology 56 complexity 145–6, 154, 169, 212, 215 sciences of 69

229

Complexity, Organisations and Learning: A Quantum Interpretation of Business 3 complexity studies 2 complexity theory see chaos theory computer applications self-generating 31 computer programming 1, 31 conflict theoretical concepts of 86–88 connective structures 33 conscious attitudes unconscious attitudes distinguished 119–20 conscious business 117–20 Conscious Business: How to Build Value through Values 118 conscious employees unconscious employees distinguished 197–8 consciousness 60–1 constraints 207–8 constructivism 31, 60 consumerism 6, 15–7, 102 flying as example of 8 contextuality 58 continuity discontinuity and 57 control 41 no division between ownership and 24–5 controlled growth 46 coordination 137 Core Principles of Sustainability 107–8 corporate governance 190 corporate social responsibility (CSR) 5, 13, 19, 21, 27, 178 differing definitions of 21 Corporation, The 5, 179 correspondence learning 37 Costa Rica suppression of trade unions in 83 costs knowledge of 25 Cramer, Aron 19 creation 201 creativity 52–3, 224 process of 203

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credit market debt US 18 cross-generational equity 109–10 Cuba suppression of trade unions in 81 customer orientation 101 Dalla Chira, Maria Luisa 66 Darwin, Charles Robert [1809–82] 48 de Bono, Edward 148 de Broglie, Erwin Rudolf Josef Alexander [1892–1987] 57 de Broglie-Einstein wave theory of moving particles 57 de Klerk, Frederik Willem 76 death penalty 79 decision making 6–7, 223 economic laws governing 10 through dialogue 41 defence sector 43 delocalisation 126–7 Delsol, C. 127 determinism 57 diagnostics sustainable performance 143–75 dialogue 113 decision making through 41 Dirac, Paul Adrien Maurice [1902–84] 57–9 discontinuity 57 continuity and 57 distance learning 37 distributed intelligence 35 diversity 145–6, 154, 169, 211–2, 214–5 as creative power 223 integration of 127 Djibouti union centre 83 Dolan, S. 116–7 domain of life sustainability principle 110–1 Dominican Republic suppression of trade unions in 83 DOS system 52 double bottom line definition of 183 Draper, Stephanie 190 Drayton, William (Bill) 185

dyadic model 63–4 dynamic reproduction dynamic systems 40

35

e-learning 37 earned income definition of 183–4 Eastern bloc 127 ecological footprint 12 ecological risk 15 economic domain sustainability principle 111–2 econometric models 1 economic crises 15 economic development 127 China 4, 6 drive for 188 France 6 India 4 unlimited 3 economic theory 51–3 economic-pragmatic values 115 economics main assumptions of 21–2 Economist, The 23 economists seldom asked to help managers ecoproducts 16 Ecuador suppression of trade unions in education level of 4 education systems 20 efficiency theory 19 Egypt suppression of trade unions in Einstein, Albert [1879–1955] 21, 59, 62 El Salvador GDP 4 suicide 4 suppression of trade unions in embodied mind concept of 35 emergence 60 emergent behaviour 33, 69 emotional mastery 198 emotional-developmental values 115–6

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83

83 57,

83

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employees 190 collaboration 41 relations with 113 enacted cognition 33, 36 engaged philanthropy definition of 184 Enron 9, 104, 179 entanglement 19, 56, 59, 63–4, 70 entrepreneurship 224 entropy notion of 46 environment 20 Global Compact principles on 123–4 environmental limits 191 environmental impacts 190 EPA Victoria 12–3 Equatorial Guinea suppression of trade unions in 81 equilibrium 45–6 espaces de sens 127 ethical codes 145 Ethical Markets Media 10–1 ethical-moral values 116 ethical-social values 115–6 ethics 178 Ethiopia suppression of trade unions in 83 Ethiopia Teachers’ Association 83 ethnic groups escalating clashes among 17 European Constitution debate on 87–8 European Environment Agency 13 European Foundation for Management Development (EFMD) 144 European Union (EU) 5, 127 experimentation with the living 15 Export Processing Zones 82–3 externalities cost of 144 factoral analysis (FA) 151, 153 fatal diseases eradication of 17 field of action 69 fifth dimension suggestion of existence of 70

231

final values 116 financial markets 21, 103 failure to predict 45 financial performance 148, 155, 170, 213, 216 financial stability definition of 183 financial theory 22–3 Finland adopts ecological footprint 12 Finnish Ministry of Environment 13 fitness 48 fixed cost allocation 25 fixed cost theory 26 flying necessity of 8 Fortran 1 France adopts ecological footprint 12 economic development 6 GDP 4 suicide 4 freedom 128 freedom of association restrictions on 83 French Employers’ Federation (Medef) 6 fuzzy logic 2, 66 Gaia hypothesis 193 Galilei, Galileo [1564–1642] 21 Galtung, Johan 87 game theory 26 Gandhi, Mohandas Karamchand [1869–1948] 75, 112 General Electric (GE) 113 genetic algorithms 2, 47–8 genetic software 31, 48 geopolitics 126–8 Georgia interference in trade union activity in 84 Germany adopts ecological footprint 12 Ghosn, Carlos 173 Giuliani, Rudolph William Louis 107 Giuntini, Roberto 66 Global Citizen Award 10

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Index

Global Compact benefits to participants 125 objectives of 125 programme of 123–6 summit 121, 144 Global Footprint Network (GFN) 12 Global Reporting Initiative (GRI) 11 globalisation 20, 126 Gödel, Kurt [1906–78] 39, 45 Goodall, Jane 114 governance poor public 20 government action requirement for 191 Greece economic development 127 green cars 16 green electricity 16 gross domestic product (GDP) 7 El Salvador 4 France 4 Honduras 4 Norway 4 groupworking 223 growth see economic development Guatemala suppression of trade unions in 83 Guinea suppression of trade unions in 83 Harman, Willis [1918–97] 17 health care 4 US 18 Heisenberg, Werner [1901–76] 57–9 Henderson, Hazel 10 hidden-variables theories 59 high-risk loans international banks and 144–5 Hoffding, Harald [1843–1931] 57 holism 60, 67–8, 129–35 applied to management 132–5, 145–51 definitions of 68–70 human action and 133 reductionism and 122 holistic medicine see Ayurvedic (holistic) medicine holistic performance 171 Holland, John Henry 46–50, 69

holographic information 64–5 homoscedasticity 25 Honduras GDP 4 suicide 4 suppression of trade unions in Honore, C. 177 ‘honour killing’ 77–8 household expenditure 15–6 How to Change the World 185 human action holism and 133 human being respect for 224 human colonies 48 human emotions 60 human interaction 42, 131–2 human organisation 50 human resources 7 human rights 17, 79 Global Compact principles on 123–4

83

Identity and Violence 86 illiteracy 4 imaginary time 70 immunisation 18 implicit order 66–7, 70 In Praise of Slowness: How a Worldwide Movement is Challenging the Cult of Speed 177 incentives bonuses as 8 income disparity 17 increasing returns law of 25 Index for Human Development 4 India economic development 4 emergence of as major market 20 hostility to workers’ rights in 82 population growth 16 India-Pakistan conflict 88 indicators from case study using Cassandra 158 indigenous wisdom disappearance of 17 individual agents 146

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individual choices conflict between clan choices and 90–5 individual freedoms 17 individual-network dichotomy 133 Indonesia hostility to workers’ rights in 82 Industrial Revolution 127 infant mortality reduction in 17 information from case study using Cassandra 158 importance of 22 synchronicity and 62 ING 103 inherent chance 57 innovation 52–3, 60, 70, 201–2, 224 experience-based lessons learnt about 208–9 general lessons learnt about 205–7 process of 203–4 to create value 177 innovative performance 213 innovative potential 148, 156, 170, 206–7, 216 assessment of 204–5 Institute of Neotic Sciences (IONS) 17 instrumental values 116 integration of diversity 127 intelligence organisation and 35 interaction rules 69 interdependence 19 interdeterminism concept of 57 interest groups 146 interlocution language and 33 internalised-externalised dichotomy 133 international banks high-risk loans and 144–5 International Council for Environment Initiatives 13 International Labour Organisation (ILO) 82, 84, 125 International Trade Union Confederation 81

233

International Work Programme (UNBSD) 16 Internet 22 interpretation of findings from case study using Cassandra 160–61 intrapreneurship 201 Iran suppression of trade unions in 81, 84 Iraq murder of journalists in 80 Iraq War 18 irreversibility of time 44–5 Israel use of non-violent communication in mediation 95 Israel-Palestine conflict 88 Italy adopts ecological footprint 12 economic development 127 job description 9 Jobs, Steven Paul (Steve) 113 Johnson, President Lyndon Baines [1908–73] 75 Jordan suppression of trade unions in 83 Jordan, Pascual [1902–80] 57 journalists murder of 80 Jung, Carl Gustav [1875–1961] 61–2, 69 just-in-time, just-enough learning 37 Kaiser Family Foundation 18 Kauffman, Louis H. 56 Kayser Meyer-Olkin’s (KMO) test 152 Kenya suppression of trade unions in 83 KidsHealth 18 Kierkegaard, Soren Aabye [1813–55] 57 Kim, W. Chan 199–200 King, Martin Luther [1929–68] 75 knowledge 156–7, 171, 214, 217 belief distinguished 61 creation of 45

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Index

knowledge (Continued) developing 34–6 economy based on 22, 51–2 power and 128 knowledge management 148–9 Knowledge Society 10 knowledge-based markets 26, 52 Kofman, F. 118–9, 197 Kolmogorov, Andrey Nikolaevich [1903–87] 56 Kouwenhoven, Guus van 85 Kuhn, Thomas Samuel [1922–96] 21 Kumar, Satish 112 Kuwait suppression of trade unions in 83 labour Global Compact principles on 123–4 Laïdi, Zaki 126–7 Langton, Christopher 47 language creation of formal 32 interlocution and 33 role of 32–3 law of diminishing returns 51 Le Moigne, Jean-Louis 2 leadership 102, 150, 155, 170, 212–3, 215–6, 223 checklist for 140–1, 209–11 commitment 146 force for sustainability 135–42 sustainability and 121–42 teamwork and 147 learning 37–8, 55, 156–7, 171, 214, 217 as basis of management 49 learning coach 217–22 learning contract 218 Leeson, Nicholas (Nick) 102 legal systems 31–2 Lernout and Hauspie case 9 Leu, L. 96 Levenson, Edgar A. 56 Liberia civil war in 85 Libya suppression of trade unions in 83 linguistics 32

liquids characteristics of 45 dynamics of 44–6 Lithuania interference in trade union activity in 84 Lorenz, Edward Norton [1917–2008] 39–40, 42–3 Lukashenko, Alexander Grigoryevich 84 Maastricht Treaty (1992) 127 Machado, Antonio [1875–1939] 2, 37–8, 201 McKinsey & Co 20–1 macroeconomics 23–4 Maghreb 127 Malaysia hostility to workers’ rights in 82 management by values 100–20 competencies for 192–3 evaluation of 8–9 holism applied to 132–5, 145–51 learning as basis of 49, 131 new paradigm for 50 Newtonian view on 122 phenomena studied in 41–2 self-organisation 36 separation from ownership 178–9 strategy 106–7 sustainability and 121–42 sustainable performance 143–75 theory 10, 19, 21, 55–72 tradition 38 Management by Instructions (MBI) 100 Management by Objectives (MBO) 100–1 Management by Values (MBV) 100, 116–7 management learning 224 managerial ontology 19 managerial thinking 3, 61 managers cornerstone competencies for 74 seldom consult economists 23 Mandela, Nelson Rolihlahla 76 Mandelbrot, Benoît B. 39

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Mandelbrot set 22–4 Marcuse, Herbert [1898–1979] 86 Margalit, Avishai 78 market behaviour 26, 41–2, 50, 131 market penetration 26 market share 26, 41, 46 marketing 15, 21, 107, 190 Marshallian demand economics 61 material domain sustainability principle 111–2 Maturana, Humberto 29, 49 Mauborgne, Renee 199–200 Mauritius repression of women workers in 82 measurement 7, 42, 58 problem of 58 mechanistic performance 148, 155–6, 170, 213, 216 mediation use of non-violent communication in 95–6 medical science holistic concepts in 67–8 medicine research and development 52 Mediterranean region 127–8 increased interest in 126 Meijgaard, Harry van 62 mental illness 18 Mexico adopts ecological footprint 12 suppression of trade unions in 83 Microsoft Windows development of 52 Middle East suppression of trade unions in 83 migrant workers exploitation of 82 mission statements 24 Mitchell, Edgar Dean 63–4 models use of by managers 41 Modern Times 20 Moldova interference in trade union activity in 84 Moment of Complexity, The: Emerging Network Culture 3 monetary theory 24

235

Monnet, Jean Omer Marie Gabriel [1888–1979] 182 Montessori, Maria [1870–1952] 182 Morin, Edgar 2 Morocco repression of women workers in 82 suppression of trade unions in 83 morphogenetic fields 64–67, 70 morphogenetic resonance 70 Mother Teresa of Calcutta [1910–97] 180 motivation 223 Muir, John [1838–1914] 182 multicollinearity 25 multinational companies anti-union activity of 82 multipliers 23 murder journalists 80 trade unionists 80–81 Muslim fundamentalism perspective on 44 National Annexes 11 National Labor Relations Board 82 national wealth 10 natural resources 20 use of 113 nature 113–14 Nepal hostility to workers’ rights in 82 Netherlands collapse of Ahold in 104 Network of Regional Governments for Sustainable Development 13 networks 19 neural networks 2, 50 neurobiology 29, 49–50, 56 New Guinea 109 New Heroes, The 185 new technologies 17 Newtonian business model 19–20 Newtonian physics 21, 45, 56–7 Nicaragua suppression of trade unions in 83 Nierenberg, Roger 135, 139, 147

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Index

Index

Nigeria use of non-violent communication in mediation 95 Nightingale, Florence [1820–1910] 182 noetic sciences 3 non-linear determinist systems 56 non-linear dynamic systems 40 non-linear systems 40, 69 non-linearity 40 non-locality 56, 63–4 non-verbal communication 33 non-violence 74–95 Non-Violent Communication 79 non-violent communication use in mediation 95, 99 workplace and 95–8 North Korea suppression of trade unions in 81 North-modernity-industry versus South-tradition land 128 Norway GDP 4 suicide 4 obesity 16 objective uncertainty 57 observational reality 23 Oldenboom, Erna 95 Oman moves towards trade union rights 83 One Dimensional Man, The 86 opportunity 191 opposition 128 optimisation models 1 orchestra as company 136–7 conductor as manager 135–40, 147 organisation intelligence and 35 organisational change 113 organisational effectiveness 198 organisational flexibility 55 organisational learning 148 organisational strategy 38 Oriental Timber Company (OTC) 85 Osanloo, Mansour 84

overconsumption see consumerism owner-managers 105–06 ownership no division between control and 24–5 separation from management 178–9 Palestine suppression of trade unions in 84 use of non-violent communication in mediation 95 partnerships 190 Pauli, Wolfgang Ernst [1900–58] 57, 61–2, 69 peace definition of 87 theoretical concepts of 86–7, 89 performance driving 191 sustainable see sustainable performance performance management 222 performance measurement 9 personal development 147–53, 155, 169–70, 212–6 personal mission 224 personal well-being 155, 169–70, 212, 215 Peru suppression of trade unions in 83 pharmaceutical companies advertising 18 Philippines murder of trade unionists in 81 physics thinking remains Newtonian 45 triad of 62 Planck, Max [1858–1947] 61 Planck’s Wall 63 Podolsky, Boris [1896–1966] 59 Poincaré, Jules Henri [1854–1912] 39–40, 42, 56 points of stability 42–3 Poland hostility to workers’ rights in 82 pollution 4, 17, 113 cost of 144

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population growth 15–6 portfolio management 1 Portugal economic development 127 positivism 35, 38–9 potentia 59 power knowledge and 128 Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set off a Tornado in Texas? 43 prediction 41, 58 prefinancing 52 preschool education United States 18 prescription drugs increased sales of 18 presidential election campaigns United States 52–3 Prigogine, Ilya [1917–2003] 38, 44–7, 49, 56–7, 69 privatisation Australian railways 7–8 problem-solving skills 222 processes 41 product development 207–8 production 52 products 190 professional autonomy need for 101 professional responsibility need for 101 profit 7 profit maximisation principle 24 project management 149, 222 Protocols 11 quality 101 quality of life 10 quantum arts 65 quantum holograms see morphogenic fields quantum interpretations 63–4, 70 business 131–2 quantum logic applied to truth and art 66 quantum mechanics 21, 45, 56–7, 60

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interpretation of 59 philosophy of 56–63 recent developments in 121 standard (Copenhagen) interpretation of 58–9 structure of 58 quantum ontology complex systems 56 essence of 56–72 quantum states entanglement of 59 quantum structures 70 quantum systems holistic character of 59 Quarks and coaches 23 railways privatisation of Australian 7–8 rationalism 24 reality concept of 59 reason 35 reductionism 63 holism and 122 Rees, William 12 regression analysis 26 relative calm 42 relativity 45, 56–7, 60 religion 61 religious fundamentalists escalating clashes among 17 Renault Commitment 2009 164–65 Renault Contract 2009 172 Renault European Automobiles (REA) subject of case study using Cassandra 157–175 Renault-Nissan Alliance 161–5 reporting 191 Reporting Framework 11 research continuing agenda for 70–2 Resolution 1343 85 resources alternative use of 22 limited 22 responsibility 101, 216–7 emergence of as major issue 19 revenues knowledge of 25

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Index

Index

Richards, Carina 157, 173–75 risk 46 risk management 1 risk taking 178 Rosen, Nathan [1909–95] 59 Rosenberg, Marshall 78–9, 96 Rosoboronexport 85 Royal Timber Company (RTC) 85 Russia adopts ecological footprint 12 interference in trade union activity in 84 murder of journalists in 80 Rwanda use of non-violent communication in mediation 95 Ryder, Guy 81, 84 Sanger, Margaret Higgins [1879–1966] 182 sanitary risk 15 Sara Lee Corporation 107 Saudi Arabia suppression of trade unions in 83 scenario analysis 1 Schrödinger equation 58 Schrödinger, Erwin Rudolf Josef Alexander [1887–1961] 57 Schwab Foundation 179–80 Sector Supplements 11 self-creation 50, 94–5 self-generating computer applications 31 self-learning 33 self-motivation 224 self-organisation 19, 30, 36, 50, 70, 146 existence of 29 management 36 self-production 30, 36 self-sufficiency definition of 183 Sen, Amartya Kumar 76, 86 services 190 Shambhala (Shangri-la) 188 Shaping the New Rules of Competition 20 shareholder value 9, 102

shareholders 105 recommendation to potential 171–73 Sharma, Monica 20 Sheldrake, Rupert 64, 66–7, 70 Sheldrake’s morphogenetic fields 56 Shift report (IONS) 17, 20 short-term efficiency 122 Sierra Leone destabilisation of 85 use of non-violent communication in mediation 95 Simon, Herbert Alexander [1916–2001] 2, 25 simulations 39–40 Slow Innovation 177 social domain sustainability principle 110–2 social enterprise definition of 183 Social Entrepreneurs and the Power of New Ideas 176 social entrepreneurship 176–87 definition of 183 historical examples of 182 roadbook to 195–6 social intrapreneurship 19, 76 blueprint of a workbook for 195–225 key features of 190–1 methodology 195–6 role of learning coach in 217–22 for sustainable performance 188–94 social phenomena quantum interpretation of 56 social purpose business definition of 183–4 social responsibility 15, 145, 148, 156, 171, 213–4, 225 implementing 19 social return on investment (SROI) definition of 183 social systems fundamental concepts in 68–70 socially responsible investment (SRI) 13 market share 16–7 Société Général 102 societal processes 42

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Soft Systems Methodology 220 software see computer programming South Africa adopts ecological footprint 12 apartheid 76 suppression of trade unions in 83 South-tradition-land versus North-modernityindustry 128 Soviet Union perspective on 43–4 space 62 space-time concept of 59, 122 Spain economic development 127 species loss 17 spirit shift in world of 189 spiritual domain sustainability principle 110–11 Sri Lanka hostility to workers’ rights in 82 stability points of 42–43 Stacey, R. 149 stakeholders company 105–6 engagement of 191 impact of 190 stock market forecasting 1, 43 Stone, D. 148 strange attractors 42 strategy management 106–07 strategy studies 55 Strengths, Weaknesses, Opportunities, and Threats (SWOT) 117 stress 7, 18 management of 224 subprime mortgage market 46 Sudan suppression of trade unions in 83 suicide El Salvador 4 France 4 Honduras 4

239

Norway 4 rates of 18 survival of the fittest 48 sustainability 9, 19 definition of 110 management and 121–42 principles 110–2 Sustainability Reporting Guidelines 11 sustainable consumption 16 sustainable development 4, 13, 156, 171, 178, 213–4, 216–7 concept of 108–14 sustainable loans 108 sustainable orientation 225 sustainable performance 5, 143–75 definition 144 diagnostics 143–75 social intrapreneurship for 188–94 sustainable projects 108 Switzerland adopts ecological footprint 12 hostility to workers’ rights in 82 synchronicity 56, 62–3, 69–70 information and 62 Syria suppression of trade unions in 83 systematic performance 216–7 systemic performance 148, 156–7, 213 systems behaviour of 45 talent constraints 20 talent retention 146 Talk the Walk study 15–6 tax policy 23 Taylor, Charles McArthur Ghankay 85 Taylor, Frederick Winslow [1856–1915] efficiency theories of 19 Taylor, Mark 3 teamwork 137, 155, 170, 212–3, 215–6 leadership and 148 Ten in Ten Campaign 12 Theory U 20

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Index

Index

time 62 irreversibility of 44–5 togetherness-in-separation 62–3 torture 79 trade unionists murder of 80–3 trade unions suppression of 81–84 training 20 triple bottom line definition of 183 truth quantum logic applied to 66 Turkey suppression of trade unions in 84 UN Global Compact Summit (2007) 19, 27 uncertainty principle 58 unconscious attitudes conscious attitudes distinguished 119–20 unconscious employees conscious employees distinguished 197–8 United Kingdom adopts ecological footprint 12 United Nations Commission on Sustainable Development (UNCSD) 16 United Nations Development Programme 4, 125 United Nations Environment Programme 125 United Nations High Commissioner for Human Rights 125 United Nations Industrial Development Organisation 125 United Nations Office on Drugs and Crime 125 United Nations Security Council 85 United Nations University 18 United States credit market debt 18 health care 18 hostility to workers’ rights in 82 preschool education 18 presidential election campaigns 52–3

unpredictability 40, 146 weather 43 unrelated business income definition of 184 value innovation to create 177 value added 101 values 169, 196–8, 211–2, 214–5 definition of 114–6 management by 100–20 Van der Linden, D. 149 Varela, Francisco Javier [1946–2001] 2, 29, 46, 49–50, 67 variable cost theory 26 variance 153 venture philanthropy definition of 184 VHS/Betamax battle 52 Vigeo Group 13 violence 74–95 vision 76–80, 196–8 development of 222 Viverot, P. 15 Vuthy, Hy 82 Wackernagel, Mathis 12 war 17 conflicts since end of World War II 18 costs of 18 war zones use of non-violent communication in mediation 95 waste production 16 water 127 water shortages 16 wave crest 57 wave function collapse of 59 Way of the Explorer, The: An Apollo Astronaut’s Journey Through the Material and Mystical World 63 wealth 127 accumulation of 17 distribution of 18 weapons development 17

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weather unpredictability of 43 Welch, John Francis ( Jack) 113 What is Strategy and Does it Matter? 106, 178 Whittington, R. 106–7, 178–9 wholeness 19 Wilber, Kenneth Earl (Ken) 68–9, 118, 129, 131, 133, 145 Wilber’s systemic model 196 Wolf, Joachim 17 women repression of workers 82 work environment 146 workers’ rights hostility to 81–2 workplace non-violent communication and 95–8

241

World Commission on Environment and Development 108 World Health Organisation (WHO) 18, 68 World Institute for Development Economics Research 18 World Press Freedom Day 80 WWF 13 Yemen suppression of trade unions in 83 Zamora, Pedro 83 Zimbabwe suppression of trade unions in 81 Zimbabwe Congress of Trade Unions 81

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Index