How to avoid nasty surprises

by Kevin N MurphyThe company had a “uniquely entrepreneurial culture” that made it a paragon of business success. According to management guru Gary Hamel, it was ‘leading the revolution’. Unfortunately the company in question was rotten to the core and ultimately became one of the most notorious business failures of the decade. The company, of course, was Enron. Hamel later said,

“Virtually everyone inside and outside the company was surprised.”

The message of grid-group cultural theory is that a focus on one means of organising to the exclusion of all others will tend to look like success – at least to those who share that worldview. But in the long run, the pressure of reality will impinge, and what looked like an asset will be revealed as a liability. The theory holds that there isn’t just one worldview – there are four, and we ignore this plurality at our peril.
Alan Greenspan had a similar surprise at an even larger scale as the US economy began to unravel. In April 2008 he wrote that events had left him ‘surprised and appalled’, and yet

“My view of the range of dispersion of outcomes has been shaken, but not my judgment that free competitive markets are by far the unrivalled way to organize economies.”

By October 2008, though, this shaken intellectual edifice had fallen completely:

“Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity — myself especially — are in a state of shocked disbelief.”

From the perspective of the Four Cultures, Greenspan’s one-eyed, single-minded pursuit of deregulation, far from being a positive attribute, was surely going to end in tears. As Joseph Stiglitz put it,

“key regulators like Alan Greenspan didn’t really believe in regulation; when the excesses of the financial system were noted, they called for self-regulation — an oxymoron.”

Stiglitz says,

“This is not the first crisis in our financial system, not the first time that those who believe in free and unregulated markets have come running to the government for bail-outs. There is a pattern here, one that suggests deep systemic problems…”

Sadly, though, Stiglitz’s solutions to the financial crisis are cosmetic, not systemic. Worthwhile though they may be in their own right, they will do little to improve the systemic problems with a political and financial culture that refuses to see that there is more than one way – or two at a push – of doing things. Stiglitz’s approach – a financial product safety commission, a financial systems stability commission and so on – is typical of the now commonplace shift from an Individualist culture (deregulation, free-market, unbridled competition) to a Hierarchical culture (re-regulation, constrained market, suspicion of competition).

Mary Douglas, the originator of the grid-group paradigm, showed that there is far more to life than just hierarchies or markets, but neither Greenspan or Stiglitz seem able to see that. Set in proper context, markets and hierarchies are just two of a wider suite of responses to the challenge of organising.

And until we move beyond the limited range of responses currently on offer, towards solutions that make the best of all four of the cultures Douglas identified, we’ll just keep on being surprised.

See also:

Mutual alternative to markets and hierarchies

A mutual alternative to markets and hierarchies

science pendulum by midiman

The trouble with a bi-polar view of the world is that there only ever seem to be two rival ways of doing anything. The choices are strictly limited. In the midst of the financial crisis, the pendulum has swung from the private sector ownership of banks to public sector ownership, as though these were the only two conceivable possibilities.

Grid-group cultural theory offers an analytical prism through which to see that there are not two but four ways of organising (and of disorganising) anything. The Individualist approach (Privatise!) and the Hierarchical approach (Nationalise!) are complimented by the Fatalist approach (it’s all a lottery!) and the Egalitarian approach. For reeling financial institutions it’s this latter that now has great potential.

While private banks are go under and governments struggle to work out how to salvage the wreckage into nationalised institutions, the mutual sector has survived relatively unscathed and remains robust. Now it the time to consider expanding it, not least by re-mutualising the institutions that were aggressively de-mutualised during the zenith of free-market triumphalism.

The mutual option has been overlooked or denigrated for a long time because it reflects neither the Individualist nor the Hierarchical worldview. It is an Egalitarian way of organising, with owners, tellingly, being termed members.

But mutuality doesn’t really need cheerleaders. As mortgages and other forms of loans increasingly dry up, people are likely to get together to solve the problem themselves. After all, this is how the mutual sector arose in the first place. The chief question is whether or not those who are opposed on ideological grounds to Egalitarianism, will now get out of the way.

Having said this, it would surely be damaging to the overall ecology of finance if mutuality, or for that matter any other model, were to come to dominate. This is unlikely in the long term, given the fluid and dynamic nature of the environment in which it finance operates. The short term danger is that, refusing to see that we always have four options, we may seek to promote one alone, to the exclusion of all else. This is the recent history of the financial sector and it hasn’t been pretty. As the Cultural Theorists might say, the only thing worse than a clumsy but workable solution is the elegant but disastrous failure we see all around us.

See more on clumsy solutions.


Dear Davos, How much is there?

Rupert Murdoch at the World Economic Forum
Rupert Murdoch at the World Economic Forum

News channel  CNN is giving ‘influential bloggers’ a chance to ask world business leaders a burning question at the forthcoming world economic forum.

The question Fourcultures would ask is:

How much is there?

This question is deceptively simple. Think about it for a moment, then if you like, take the little poll to the right of this page.

The answers given at Davos would increase awareness of the way our assumptions are conditioned by the four biases described by grid-group cultural theory. Given the context – a meeting of world business leaders – it can be predicted that the most popular answer by far would be:

‘There is plenty, as long as we  harness our ingenuity and hard work’.

It would speak of, in Rupert Murdoch’s words, ‘what happens when human talent, ingenuity and ambition is given free rein’. This is the world view of the individualists, for whom the world is a cornucopia, to be unlocked by innovation and personal prowess.

The second most popular answer would be:

‘There is enough, as long as we regulate it properly’.

This is the hierarchical approach, and it is to be remembered that, internally,  many large businesses are effectively hierarchical bureaucracies.

Way behind would be

‘There’s not enough – we’ve got to change our values, share more and be more frugal’.

Unfortunately this is the answer of most egalitarians, including a large part of the green movement. I say unfortunately, simply because it’s hard for them to see that when they speak with business leaders they’re often speaking a different language.

Also unpopular would be

‘How should I know how much there is, let’s just spin the wheel and see where the ball lands!’

This is the fatalist worldview, and it’s extremely populareverywhere except Davos. But in their spare time, the business leaders of Davos may well apply exactly this approach to life; indeed there was something of this about the financial markets prior to the recent crash.

These four answers to the question ‘how much is there?’ don’t just contradict each other, they actively compete.

So when the Transition Culture website (a meticulously egalitarian and wonderful endeavour) works out its question for CNN, it’s hardly surprising that the question chosen starts with the words

‘On a finite planet…’

Picture the business leaders at Davos rolling their eyes and saying ‘Let’s just stop right there – who says it’s finite?’

For as long as business leaders think the environmentalists are really just defeatists, we have a big, big problem. Conversely, when the environmentalists learn to translate their words for the benefit of their hearers, we begin to have a solution.

Grid-group cultural theory and hierarchical churches

The Gag WarehouseIt came to my attention recently that there are still churches which don’t let women preach or lead worship.

Choosing the leaders because they are men is a hierarchical approach to social organisation and needs to be set in a context. The other ways of choosing leaders should be noted:

Egalitarian – ‘priesthood of all believers’ (become more like the Quakers and be suspicious of activities that require structured leadership)

Individualist – ‘work out your own salvation’ (become more like the new age and construct your own tailor-made religion out of bought pieces. Leaders are entrepreneurs).

Fatalist – ‘the lot fell upon Matthias; and he was numbered with the eleven apostles’ (Acts 1.26) (become more like a lottery and embrace chance. After all, leadership is pointless –  who remembers what Matthias ever did?) Continue reading “Grid-group cultural theory and hierarchical churches”

So… what should I believe?

Psychologist Dorothy Rowe has a book out about religious belief, entitled What Should I Believe? She says,

it is possible to create set of beliefs, which allow us to live at peace with ourselves and other people, to feel strong in ourselves without having to remain a child forever dependent on some supernatural power, and to face life with courage and optimism.

What I find interesting about this is the acceptance of the idea that belief  as such presents itself as some kind of choice, while the content of belief is in need of construction by each and every would-be believer. It seems that DIY religion is not so much an option – it’s the only real possibility.

But I think there may be at least three alternatives… Continue reading “So… what should I believe?”

Contingency Plans for Peak Oil

Should national governments make contingency plans in case of peaking oil? In a recent report of an interview he did with Fatih Birol, head of the IEA, the journalist George Monbiot appears shocked there is no such plan for the UK. Why?

In about 1973 you could collect three vouchers from the side of a cornflakes packet and send off for a little plastic model of a North Sea oil rig. For a child, this was the brave new frontier, the UK’s answer to the space program. It was exciting. And even then it was common knowledge we had ’30 years’ of oil so there was no need to worry about the future. Since then, we’ve always had ’30 years of oil’ because most policy makers saw this not as a prediction about reality but merely as code for ‘not on the policy radar, ever’. Then (after 30 years, note) North Sea oil began its steep and irreversable decline and policy makers were actually surprised.
Unfortunately for Reason with a capital R, humans don’t look at the facts and then decide what is going on. Instead we collect and filter data on the basis of preconceived notions of what must surely be going on. Egalitarians such as George Monbiot generally believe things must be running out and our options are narrowing. The by-line to the article says he was ‘shocked and alarmed’. He would be – it’s in the egalitarian job description. In contrast, Individualists are quite sure they know that there are limitless opportunities just waiting to be unlocked by human ingenuity and that all talk of scarcity is defeatist nonsense. Then there are the Hierarchists and the Fatalists who have their own take on the argument. These four poles are the four ‘cultural biases’ of grid-group cultural theory. An understanding of this goes a long way towards making sense of the way issues such as peak oil and global warming are such a lightning rod for debates about how society ought to be organised. A great primer on the basics of grid-group is Christopher Hood’s The Art of the State (1998), and the FourCultures blog looks at the world through a grid-group lens.
At the very least, this approach helps us recognise that we’re not really debating how much oil there is. We’re really promoting conflicting visions of social organisation, and using oil (or carbon dioxode, or whatever) as the pretext.

Pirates: just acting rationally?

pirate sunset

Economist Peter Leeson has a new book coming out about the economics of piracy in the late 16th and early 17th century ‘golden age’. He uses piracy as a test case for the claim that rational choice economics is what motivates much of human behaviour. In an article on the same subject, he writes:

‘“Pirational choice” differs from rational choice only in that it deals with rationally self-interested decision making in the uniquely piratical context.’ (Leeson, 36)

The book has a great title, But is he right?

Continue reading “Pirates: just acting rationally?”

Can hierarchical thinking fix climate change?

A recent article about business responses to global warming highlights the extent to which hierarchical thinking can respond adequately to rapid changes in the climate. 

And it neatly illustrates the preoccupations of a hierarchical world-view, as understood by grid-group cultural theory.

The article, written by Leon Gettler, centres on the increasing role of ‘Chief Carbon Officer’ in businesses. 

‘The job of the future will be the chief carbon officer, or CCO. That’s because global warming is no longer an environmental issue.’

The author sees not only the CCO, but also new job titles like Director of Sustainability Strategy as ‘just the beginning’.

According to grid-group cultural theory, first established by anthropologist Mary Douglas, and expanded by numerous writers in several different disciplines, there are four fundamental world-views, related to social group strength and rule maintenance. The hierarchist position is ‘strong grid, strong group’. In other words it is both highly group-orientated and highly regulated. For this way of thinking, the crisis (any crisis) is less about external factors and more about who is in charge, and how the social structure is to be maintained. Continue reading “Can hierarchical thinking fix climate change?”

Why shouldn’t the Pope wear Prada?

Is there a sense in the Vatican’s reply to the rumours about the Pope’s clothing choice that he shouldn’t be wearing designer accessories? Why not? It is restated that he’s a ‘simple and sober’ man, when in point of fact he isn’t: he’s the Pope. A simple man wouldn’t wear all the outfits that popes traditionally wear, Prada or no Prada.//www.flickr.com/photos/miqul/\">miqul</a> The reason for the disclaimer is that the Catholic Church is the quintessential Hierarchical organisation, and as such the leadership must be seen to be institutionally splendid while also personally unremarkable. Opulent vestments are permissible but signs of individual ostentation, or indeed, individuality, are slightly distasteful and  off-message. This is in stark contrast to the way the mass media treats the Pope. With its Individualist orientation, the media obviously sees the Pope as a celebrity, and his shoes and shades are to be celebrated as making him more uniquely him. Anything the Pope does to subvert the uniform is great, and newsworthy – at least to Esquire Magazine, which made him ‘accessorizer of the year‘ (‘have a signature… make it your own’).

This seems a fine line to tread. The trick seems to be to act like a star while denying you’re one, and hope we won’t notice the incongruity. How’s he doing?