The modern financial system traces its beginnings to the Middle Ages. As commerce passed a certain sophistication threshold that extended transactions beyond “right here and right now”, bartering broke down as an effective means for exchanging value. Since that inflection point, the world embarked on an ever increasing liquidity quest. As ever more sophisticated financial instruments emerged, they in fact substantially increased the mobility of assets.
Let’s take a simplified scenario of the mechanics underlying the remuneration relationship between a corporation and an employee in the knowledge economy.
The corporation pays a white collar employee a certain salary and benefits. The corporation in turn charges its clients for the work performed by said employee a much higher rate, double or more (!) what the equivalent cost of the employee’s salary and benefits. This difference pools into a so-called “overhead” budget. The overhead budget covers things such as facilities’ rent, but by far, the largest chunk goes to indirect labor, i.e. executives. They in turn are supposed to make life better for everyone: customers – innovative products and services -, employees – job security -, shareholders – profit.
Emotions – sometimes they save the day, and at other times are the source of embarrassment or outright disaster. Whether regarded as an initiator of success or source of failure, emotions are necessary. That is because emotions provide the illogical response necessary to address that portion of reality that is non-deterministic. When reality exceeds our ability to make sense, in lieu of emotions, we would behave like computer algorithms, stuck in infinite compute loops. For humans, emotions represent an effective mechanism for dealing with high uncertainty and complexity circumstances that would otherwise constitute veritable traps of logic. Quite simply, we have been able to get where we are today more based on our ability to ignore logic than follow it. Every leap of faith that preceded a ground breaking innovation had an emotional impulse behind it. Progress is in effect humanity’s recurring impulse to cut the Gordian Knot.
Since the dawn of human civilization, every time a new technology gets invented, enthusiasts claim that the world will never be the same. And yet, from a societal and human experience point, it always is.
Many knowledge firms sell skills, embodied by the omniscient subject matter expert. While this may seem like a robust business model, it in fact scales quite poorly. Revenue being directly coupled to the number of “heads” or the firm being held hostage by star “primadonnas” are just two such examples.
The sensible consensus is that communism became all but extinct with the end of the Cold War. I say it may be so, but the mindset that fueled it continues to live unhindered. Your next thought may be that I am referring to North Korea. But I have something much closer to home in mind: the U.S. corporate sector. Yes, you didn’t misread. I will dare to say that the mindset of the corporate sector in 2014 is eerily reminiscent of communist thinking.
The tagline “people are our most valued resource” has been so abused by the corporate world that it no longer means anything to anyone. I suspect that in the near future it will be eventually qualified as an offensive truism, and rightfully so. The sooner it disappears off the face of the planet, the better of humanity at large will be.
The debate on the humanism of business continues to be part of a public discourse infused with various degrees of political innuendo – see the 99% movement, the shareholder value argument, etc.
I propose a simple new take on what business is: a form of human expression.
I remember vividly a meeting that took place a few years ago. I was a management consultant tasked by the owner of a large corporation with overseeing the creation of a new profit and loss business unit. My nemesis was a Vice President who did not want to see his power and “territorial” claims diminished by the new venture. Typical power games and office politics were very much at play. The owner liked to delegate and had a “survival of the fittest mentality” to mediating conflict.
The three of us had gotten together because the named Vice President was overtly sabotaging my efforts. He was making the case to the owner that, while the idea of the new business unit was great, the consultant was poorly fit for the job.
Back in 2006 I was part of Lockheed Martin’s strategy department. I had been with the company for 6 years, and had successfully graduated their 3-year long Leadership Development Program that groomed young professionals into future executives.
I would be traveling regularly to Europe, California, Florida and New York, overseeing a number of advanced research projects and international business partnerships. I was a firm believer in strategy, and the strategic planning process that was so carefully coordinated by smart, battle hardened people with white hair.
That’s when an idea took hold: would all my strategy acumen give me an edge in an emerging economy? Could I be a successful entrepreneur there as opposed to an employee in the U.S.?
If democracy should eventually fail, it will be by popular vote!
No totalitarian or fundamentalist regime has the means to challenge the military might that results from the wealth generated by free enterprise. What crazed ego-maniacal self-proclaimed leaders opposed to freedom and free enterprise might be unable to do, advanced societies might still achieve on their own.