A better way to think about business


WHILE rereading Robert Solomon’s A Better Way to Think About Business during the holiday, I was reminded how important it is to think about business in the right way.

Business is not a battlefield, a jungle or a well-oiled machine. Customers are not territory to be occupied and held at all costs. Jungles are uncivilised. Machines are not human. Yet we regularly use the language of warfare when we think about business strategy, evidenced by the number of books that link Sun Tzu’s thinking to business.

We also use the language of natural selection when discussing competitive sustainability and we often focus on process re-engineering using mechanical analogies, forgetting we are dealing with people and their emotions.

Metaphors and analogies matter, as does the type of language we use in everyday conversation. Inappropriate metaphors may lead to the wrong conclusions, and if we use brutal language and imagery, we give ourselves permission to think in brutal ways.

So we should not be surprised if we brutalise ourselves and lead others into thinking that businessmen are immoral and not to be trusted. If we think in terms of legalities and the language of contracts only, we forget the human aspect of business.

If we talk of human capital, we risk forgetting we are dealing with individuals with their own unique strengths and weaknesses who need to be managed accordingly.

Businesses are not at war

Even though competition is essential for business because it promotes innovation and gives customers greater choice, this does not mean that businesses are at war.

Success in business does not require the elimination of the competition, whereas success in war requires the destruction of the enemy as a fighting force.

In fact, warlike success only invites regulatory intervention to maintain customer choice. Moreover, capturing territory always harms its occupants, even if it is euphemistically called “collateral damage” – innocent people get hurt; people get killed.

What businessman in his right mind would wish any prospects or customers to be worse off as a result of his actions?

Successful businesses look after their customers – they offer products or services that meet their needs, and they look for ways of continuously improving their offer as well as the total customer experience.

They seek to improve the customer value proposition focusing on increasing customer loyalty. This is hardly the mindset of a conqueror seeking to maximise territory and power.

Business is not a jungle

Business is not a jungle where everyone fends for himself. It is above all a human enterprise requiring people to work together for the greater benefit of all concerned.

It is a social and civilised community, requiring clear rules of behavior and a sense of continuity amongst those within the company – achieved through shared values and a shared history of both success and failure, often captured in formalised documents such as codes of conduct.

How people behave towards one another is a critical ingredient in attaining sustainable competitive advantage, as is the tacit knowledge of “how we do things” that comes with long-term relationships and loyalty.

Teamwork is the opposite of “each man for himself” and in today’s world of increased specialisation, the ability to create and manage cross-functional teams is more important than ever in creating value.

This ability to combine generalist thinking with specialist expertise – at the heart of effective cross-functional teams – is the equivalent of different species in the jungle collaborating to achieve a common objective, which has yet to happen.

Business is not a machine

It is a pernicious legacy of Frederick Taylor and Henry Ford that people think of business as being some kind of impersonal well-oiled machine.

The failure to understand that business is not some unfeeling piece of machinery that can be optimised to achieve higher standards of efficiency is why Business Process Re-engineering (BPR) did not deliver the improvements in productivity it was supposed to.

James Champy and Michael Hammer, the two creators of BPR, totally misread the human dimension of business and people’s ability to sabotage well-meant performance-improvement programmes that did not answer the question: “What’s in it for me?”

People are people, not human capital

HR has progressed from discussing human resources – a language of exploitation – to human capital, which at least has the merit of recognising that companies must invest in their people.

But people are not human capital – an economist’s way of lumping everybody together into a factor of production that fails to differentiate between individuals.

Yet as every good line manager knows, making the most of people requires recognition of each individual’s unique abilities to contribute and then managing accordingly. As they consider the next decade, boards would do well to remember these four simple truths and ensure that management does so too.

·The writer is CEO of Securities Industry Development Corp, the training and development arm of the Securities Commission.

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