Competing with Competition and the Wisdom of Starlings

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Photograph from Flickr. See the incredible original gallery here

Once upon a time, in a land not-so-far-away, a gaggle of economists thought very hard about the best way to bring the greatest happiness to the greatest number of people. They came up with some pretty smart answers: Among other things, in an attempt to increase the level of innovation, they identified competition as a useful spur and set up a system that legally protected competition, and rewarded those that won.

Except – as with all economic models – the idea is based on an approximation of reality. And while that approximation might be quite close at one point in time, the longer the model stands, the further from reality the model is likely to go. And more than that, the longer a model stands, the more likely people are to treat means as ends in themselves. In this case, competition was identified as a way of bringing about the greatest happiness for the greatest number, not as a goal to be pursued for its own sake. This is exactly what Christopher Meyer and Julia Kirby argued earlier this year in the Harvard Business Review.

With all the focus on competition, policy makers and organisations have forgotten, or overlooked the value of collaboration. In his excellent TED talk, Don Tapscott outlines his vision for an open society, based on collaboration, sharing, transparency and empowerment.

While the potential benefits for business are massive (as Tapscott’s Gold Corp example demonstrates), there is a lot of work for businesses to do to get to a place where they can make a difference. Rick Lash has argued that businesses produce the behaviours they reward; and at the moment, they reward employees who work in silos and will turn the world upside down to achieve the objective they have been set. Lash argues that a totally different competence is needed to build a collaborative organisation – one that rewards teams forsaking their own objectives for the sake of the broader organisation. He offers the example of how Apple were able to develop the i pod far more quickly than Sony developed their MP3 Walkman, because they recognised the potential of the product for the company as a whole far outweighed the projects they were working on in individual functions. Beyond that, a collaborative organisation might genuinely commit time to crowd-sourcing and incentivise employees for proactively look to connect disparate strengths in the organisation. Most importantly, organisations would put their best ideas and their biggest problems in the public domain, acting as a focal point and moderator, rather than a secretive, cannibalising black box.

The shift in mindset is massive, the legal infrastructure for it to work is nearly non-existant; but it looks to be the right model – the means to our ends for our time. And it’s on its way (see the UK government’s brave decision to make all scientific papers free to view)! If we can build half the enthusiasm for collaboration that we have had for competition over the last century, the possibilities are massive.

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Profit – an end to a means?

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In 2011, Bob Diamond laid out his view of what organisational culture means, and what it should look like at Barclays:

“Our culture must be one where the interests of customers and clients are at the very heart of every decision we make; where we all act with trust and integrity.”

Much has been made of these comments over the last couple of days, and how the LIBOR-fixing scandal has made a mockery of his words.

While there can be no doubt that Barclay’s behaviour in fixing LIBOR rates has not put their customers and their clients at the heart of their decision making, I find myself more depressed at the limited scope for good – even in this, what should have been Diamond’s most aspirational address. Diamond gave plenty of good examples of CSR, and ways that Barclays could contribute to society while also continuing a relentless drive for its own profitability; but surely there must be a real debate at this stage about the viability of organising society around businesses driven primarily by profit.

It’s a concern that is not limited to Barclay’s by any means – indeed most blue chip companies would take a similar view of their purpose: Delighting customers and producing value for shareholders. The traditional argument says that the role of business to fuel economic growth, and this helps society by creating jobs and wealth.

There is truth to this – and it is not surprising that the financial system has produced hermeneutic knowledge to justify its behaviour. What is left out of this narrative however is that in pursuit of growth, this capitalist system has also produced a range of negative unintended side-effects whose consequences now significantly outweigh the positives produced by economic growth.

Klaas Van Egmond has articulated the obvious, in highlighting capitalism’s “tendency to reverse ends and means”. He suggests the financial system has become an end in itself, rather than being the means it should be to further human happiness and social value.

What is truly frightening is how embedded this topsy-turvy capitalist narrative is. Even this week Bob Diamond has been praised for masterminding a “British corporate success story”. National newspapers are peddling the argument that he should stay because he would be too difficult to replace.

Just why are we putting such value on his job?

Barclays exists today, to enrich itself, and by so doing (it would say), improve society. We need to re-imaging Barclays, and every major business so that they exist to improve society, and in so doing enrich themselves in a sustainable way.

If Diamond was leading on organisation that thought and acted in that way; then maybe, just maybe you could begin to fathom his £17 million annual pay packet. As it stands, I find myself slack-jawed as people formulate arguments for continuing to pay a man 649 times the average wage in Britain so that he can continue to increase the profitiability of an investment bank without thinking beyond his immediate “customers and clients”.