Ethos as the new strategic resource.
with Stephen Cummings (*)
V° is a Phantalic living in 2332. He had a chance to talk to us, men of the
past, to help us in changing the future where he lives: a dramatic and
hopes that we will succeed in changing the future. Even though he’s well aware
that changing the future means killing his existence.
who may be interested in Aleph V° story, can read the paper published on 19th
January 2004 by www.bloom.it and written by
newsletter is the medium Aleph V° uses to talk to the today ruling class about
decided that the first issue should present a dialog between two guys living in
the opposite regions of the earth.
need another future
great opportunity thrown away: is that a possible synthesis of contemporary
I read on the most influential Italian economic newspaper an institutional
communication were a major bank reported its “table of involvements” drawn
up by an audit company. This table certificated that bank activity has no
environmental impact and the bank does not finance “critical” businesses
such as weapon business, pornography etc.
considerations have been very gloomy.
of all: this bank .. well let me use an euphemism had something to do with
recent problems in private banking services
apart from that I would have been more trusting if that bank, for example, had
informed that it:
in other words, I would have been more trusting if the bank had described
positive initiatives to change the present mode of doing business. May be with a
greater involvement of internal and external stakeholders.
this kind of communication gives me a sense of bureaucratic, artificial way of
dealing with the ethic issue.
as if an unknown person asked me for trust in investing my savings giving me a
certification that he has nothing to do with pollution. The strange thing is
that this bank activates very innovative behaviours. But they do not become
issues to be communicated. Communication follows traditional and trivial models.
“opposite” worlds a common contribution to build a different future
Stephen Cummings and I live in opposite parts of the world: New Zeeland and
Italy I never met Steve (and, of course, Steve never met me). Perhaps our lives
have been very different: I imagine that we know and work with different people
spite of that I bought a book edited by Steve “Images of strategy” and I
found a lot of common “cultural” friends and a lot of common ideas.
particular I found in his book a lot of exciting suggestions about some
heterodox hypothesis were running through my mind.
hypothesis were about:
many people (I would say: the entire ruling class) believe that crisis has been
generated by Fate. Starting from this belief the only conceivable strategies are
to resist and to wait for Fate changing its bad bent.
Institutions are changing, but towards a strengthen of their present identity.
They are not willing to change their identity. Stability is the first pursued
crisis diminishes available resources (financial, of consensus etc.) enterprises
and Institutions have to compete one against the other. Competitiveness is the
other pursued value.
me that analysis and pursued values are very immoral.
is ridiculous too: do we really believe in fate? In this case we should
construct temples and spend time in prayer.
for stability is just an attempt to maintain privileges and power. Search for
competitiveness triggers a vicious circle which wastes resources and crushes
synthesis we are pursuing perverse values (stability and competitiveness) in
spite of multitudes of people who wait and ask for a different world, populated
by very different enterprises and institutions.
In spite of every attempt to involve Fate, mankind is the only creator of the world. If the world is populated by poverty and injustice, it is up to us to change it. In concrete we have to change enterprise and institutions. To do that the ruling class has to start a new era of “projectuality”. I would say a new era of entrepreneurship, were new economic and social entrepreneurs take charge of designing and realizing new enterprises and institutions able to eliminate poverty, injustice and to generate happiness.
activate a new entrepreneurship it is necessary to have a more profound
comprehension of “mechanisms” of evolution of complex systems. During XX
century there have been huge progresses in understanding those mechanisms. The
“complexity metaphor” is a synthesis of all these results.
is strange (I would say irresponsible) that no one of these results is utilized
to manage enterprise and institutions. We still consider enterprises and
institutions as machines and we try to repair them with the hammer. The result
would be the same as if we tried to repair a television with the hammer: we
would transform images in fragments of glass.
aesthetics and strategy
activate a new entrepreneurship which uses the new complexity metaphor to create
new enterprises and institution addressed to generate wealth, justice and
happiness I imagined that ethics, aesthetics and strategy were the key words.
strategy must become the main activity of new entrepreneurs, ethics their
motivation source and aesthetics the only evaluation parameter.
we need new concepts of ethics, aesthetics and strategy .
that point I “met” Steve’s book and ideas. I found them both exciting and
complementary with mine. I kept pen and paper .. well outlook and two fingers
and wrote an e mail to Steve.
replied in few hours and we started a very cheering talk.
had an idea …
why don’t we write a brief synthesis of your ideas and mine? I am currently
publishing a News letter aimed at providing Italian and European ruling class
with a new managerial culture. I think that it will be a great idea to dedicate
the first issue of this News Letter to our reflections on ethics, aesthetics and
strategy.” Steve accepted and the present issue of my News letter was
immoral and dramatic vicious circle
suggested that when a problem is unsolvable it is essential to change point of
view form which to look at the problem.
present we are confronting a dramatic vicious circle that is more difficult to
solve than an apparently unsolvable problem.
we have to change very profoundly almost all our points of view ….
do that let’s start describing the vicious circle.
the book previous to Images of Strategy called Recreating Strategy,
I traced the development of management’s history and examined how by the end
of the last century our field had become locked into a belief in “best
practices” – the idea that there existed “best ways” that should be
copied by all organizations. This idea had become so widespread that companies
were becoming increasingly homogeneous. The trend toward best practice was good
in the sense that it weeded out inefficiencies (hence you will find very few
poor companies around today), however, it was bad in that it discouraged
companies from really taking risks, doing things differently, and standing out
from the crowd. Things had advanced to the point that some companies found
themselves in a vicious circle, where having become so similar to their
competitors the only variable that they could compete on was ‘price’. Their
competitors were in the same boat, price wars ensued, and industry margins
subsequently declined. To get out of this circle firms need to recreate the idea
of strategy as copying what’s generally “best”. Strategy needs to be
focused more on harnessing what is unique, personal and inimitable about a firm.
of the ways that I believe organizations can recreate strategy is alluded to by
Francesco above. In the book Images of Strategy a number of different
images are put forward for thinking differently about strategy. One of the
chapters looks at “Strategy as Ethos”. Here I describe how business ethics
has fallen into a rut similar to strategy. Companies feel that they must have a
code or a set of values because this is “best practice”. They are worried
that if they don’t they will be left behind. They use best practice techniques
(hiring consultants, copying other companies seen to be leaders in this area,
etc.) and subsequently come up with a standard list similar to the lists of
their competitors. In other words ethics comes from without rather from within
– subsequently, for most companies, ethics is a purely copycat exercise driven
by economic concerns.
one example from the book, which I’m sure most managers can relate to, a
finance company compares its list of core values, developed at great financial
expense, to those of its closest competitors. It finds that its list: Teamwork,
Cooperation, Integrity and so on; is almost exactly the same as the list of
their competitors. Confronted with this finding, the CEO of the company in
question declares: “If everybody has the same values then these are just
hygiene factors – what we need are some added-value values”.
ethics has become an economic hygiene factor for business. Hence, we should not
be surprised to hear of Enron, Worldcom, and other scandals. These companies had
core values and codes of ethical practice but they had almost no influence on
their strategies as they had no particular connection to these companies, which
is a great pity. We need, as Francesco suggests, to recreate our view.
me add two comments about two new immoral behaviours.
competition: an immoral behaviour
actors are actually building by themselves the competition that is destroying
their capacity of producing value. We have lost simple, but fundamental truth:
seems to me that these considerations drive to the conclusion that the most
immoral behaviour is to damage the capacity of producing value of an enterprise.
How ingenuous is the discussion about the egoism of entrepreneurs. Problem is
not the will of hoard resources at any conditions. Problem is the cognitive
incapacity of understanding the new dimensions of making business
innovation: another immoral behaviour
get out of the trap of thinking of the enterprise as the privileged term of
comparison to talk about ethics and let’s try to face the topic of Welfare
State. It became evident that we should find out a new model for the Welfare
State because the existing ones revealed themselves inadequate or unsustainable.
the new model of Welfare State that’s going to be built, there will be room
for private operators.. And for sure, amongst them, for insurance companies.
Well, how can an insurance company define its own strategy to partake the making
of the new Welfare State?
me, there’s only one viable way, even though it can look strange.
short, it’s necessary that insurance companies activate an entrepreneurial
action at system level.
me clear this point. Today, there are ever growing difficulties in defining a
new model of Welfare State because the actors involved in designing it, are
fighting among themselves and against the Institutions (The Government, above
all) just to shelter their own ideologies and power. Now, without a new Welfare
State as a context for strategy, an insurance company doesn’t really know what
to do. And it must wait for the fight to end over somewhere. But a solution can
require a lot of time and lead to a Welfare State that could even be patched and
contradictory. Thus making it impossible to conduct a business action for an
insurance company that would be willing to operate in the social business
services (health and social security).
the activity of insurance companies in social business is marginal and made on
at opportunistic level. Actually, insurance companies are waiting for somebody
to come out of this still situation.
I believe that this behaviour is “immoral”.
else can insurance companies do?
should activate a new kind of entrepreneurship not just imagining services to
deliver, but also creating the context for these services to become desirable
and feasible. They
should activate what I defined “social entrepreneurship”.
learn and use the new methodologies of social project-making available today.
Through these methodologies, they could transform the present conflict situation
into a social dialogue which can lead to a new model of Welfare State judged
good and appropriate by everybody.
this way insurance companies would have created the context in which they could
activate the normal strategic “projectuality” at company level to assume the
role that would be specified in the new model of Welfare State.
new social entrepreneurship shouldn’t imply trespassing the limits of the
entrepreneurial role. But the invention of a new entrepreneurship revealing
itself in the social, first, and then in the economy. A new entrepreneurship
required to whom who are willing to assume the responsibility of operating in
business with high social value.
kind of strategic disengagement is considered almost “natural” in several
other industries. Take for example banks. They are still devoted to their
traditional social role: financial intermediation and services. Which bank is
imagining a new role for banks in the development of economic systems? For
example a role in selling knowledge (mainly strategic metaphors, methodologies
and tools) instead of just financial resources and services?
I think that all kinds of strategic disengagement are immoral behaviours.
aesthetics and strategy to overcome vicious circle
strategic challenge is to build new economic actors.
means: no longer as in the past. I mean problem is not to be more competitive,
nor to be more ethic in the sense of a larger correspondence between ideal codes
of behaviour and concrete behaviours. Problem is to change profoundly identities
of economic and social actors. You, Steve, say that there are three main kinds
of resources to build the new identities that economic and social actors need.
how can we respond to this strategic challenge? In the chapter from Images of
Strategy that I started to describe earlier it is proposed that we should
perhaps think about “ethos” rather than what currently passes for
“business ethics”. The advantage about starting from ethos is that while we
tend to associate ethics with generally accepted norms and values that should be
followed by all members of society, we accept that these same members may have a
unique and individualized ethos. I’m not sure how the word translates in
Italian (perhaps Francesco can help me here?) but in English definitions of
ethos relate the term to a “distinctive spirit” or “particular genius”.
If we start thinking about ethics from this alternative ethos viewpoint we can
develop quite different, unique and inimitable ethical positions or added-value
values for companies.
is not a new approach to ethics. Rather a very old, but forgotten, one. It draws
upon Aristotle’s view of ethics as being about discovering one’s particular
virtues through self-reflection. Aristotle recognized that nobody could satisfy
all stakeholders or be good to all people all of the time. This was unrealistic
and those who sought to be all things to all people could only pay lip-service
to this idea. Aristotle suggested that the man who tried to be best friends with
everybody would be recognized as inauthentic – a true friend to nobody.
Aristotle claimed that because people were different we must realistically
expect that they would respond differently to the same situations, there could
be no realistic general code. Each individual must decide for himself what the
best course to him is and then avoid lapsing into extreme behaviors on either
side of this course. Between, if you like, not being oneself and an over-zealous
parody of oneself. But this individual virtuosity is a good thing, Aristotle
argued. If everybody did carry on in the same way the world would become a very
boring place – nobody would ever stand out and creativity would wither away.
Ethics, for Aristotle was about finding one’s proper “consistent
idea of a consistent individuality is, I believe, a very helpful attitude for
companies to adopt, and in Images of Strategy I offer a number of case
examples of companies who have not adopted this attitude and struggled and
others who have embraced it to good effect. These cases range from
British Airways’ decision to become the “world’s favorite
airline” and replace the Union Jacks on its tail fins, only to find that a
particular “British” type of style and service was one of the only virtues
that separated it out from the competition;
Nike’s response to complaints about its activities in developing
countries which started with the development a code of practice (which was a
good thing – a necessary hygiene factor) but then went too far into trying to
show itself to be a “caring, sharing” company – something which
compromised its particular virtue of being seen as “rebellious”;
How the BBC benefits by being seen as the “Queen Victoria” of
television channels, even though the Queen Vic ethos is not everybody’s “cup
And a brand of beer that developed such a strong association with a
particular gruff comedian that featured in its advertising that his character
began to focus the company’s strategic decision making (in effect, when
confronted with a decision manger’s asked themselves “well, what would Jack
book also looks at some alternative ways of thinking about an organization,
ranging from applying Nietzsche’s idea that “3 anecdotes” can convey a
character (be it a person or an organization) far more than any abstract list;
to thinking about simple questions like: “If our organization was a person,
what would our character be? and How would this character make us and our
actions different from our competitors?; to more complex frameworks that break
ethos into its constitutional elements.
throughout all of this thinking, rather than trying to generally good all the
time, the focus, from an ethos perspective, is individual and aesthetic: on how
an organization can develop its “legitimate strangeness” to use French
philosopher Michel Foucault’s term?; on how can it create a body or oeuvre
that is consistently different from the rest but which evolves over time – in
much the same way as the work of an artist like a Picasso or a Van Gogh.
can then provide ways out of the vicious circle described above. It enables
people within an organization to focus not on “what is best practice” and
how can we copy it?”, but on “what are we going to do next and how will this
be different from our competitors and difficult for them to copy?” If you
like, it enables a shift from best practice to next practice – something
similar to what you’ve talked about in your own work Francesco.
would like to finish our talk with … “free and strong proposals”. The
expression “free and strong” means something that has ideal assonances with
the more famous “We still have a dream”. So I am trying to propose free and
strong dreams … With the hope that realizing free and strong dreams will allow
us to recreate development.
illustrating my final proposals I would like to summarize the main message of
is time for proposals!
work out successfully the job of creating companies as works of art I think it
is essential to have in mind some
specific dynamics of evolution of complex systems that, unfortunately, for the
time being are completely unknown to managerial culture.
of people and organizations tends to become blocked.
As metaphor of auto poietic systems reveals every complex system (a human being
as well as an organization) tends to become autoreferential. So when an
individual or an organization is stimulated to reveal its profound ethos might
happen that this ethos is the continuous repetition of itself. A boring and poor
the challenge is clear: before utilizing
ethos to design new identities it is important to unblock them.
here is the first proposal. The basic
condition to nourish the strategy designing process with the ethos
“resources” is that top management become aware of main dynamics of
evolution of complex systems. That means
that an educational effort to supply top management with new knowledge on
complex systems is important and urgent.
and strong ethos are able to develop ideas and proposals to design new
identities of companies. But as ethos are free and strong it might happen that
their proposals are very different one from the other. So these proposals have
to be coordinated and synthesized all together.
this process (which must become the core of the new process of strategy design)
of coordination and synthesis to be successful, mainly in large organizations
structured in network, it is important that top management:
social designing methodologies, that I have mentioned when I described the
possible and desirable new social entrepreneurship of insurance companies, are a
concrete example of methodologies to manage social knowledge creation processes.
is my second proposal
top management is more accustomed to consider strategy designing as a personal
affair. Other people in the organization can and must become protagonists just
in making top management strategic objectives being realized.
top management prefers to use tools and culture of power and he does not care
about methodologies and technologies to manage knowledge.
is a signal revealing that top management is more oriented to power rather than
to knowledge: the state of the art of exploitation of potentialities of Web
technologies are considered important but operative transactional tools. So
decisions about Web Technologies are delegated by top management to operating
managers who look at web technologies as tools to solve their problems and in no
way as enabling technologies to change the way of making strategy.
of e-learning and knowledge management: they are considered as tools to
distribute operative competences and knowledge. The consequence, at least in
Italy, is that experiences of e-learning and knowledge management are realized
having in mind the word “costs” and not the word “investments”. So:
primitive systems and poor results.
one look at e-learning and knowledge management systems as the only tools
through which it might be possible to stimulate and manage social knowledge
back at ideas expressed in this dialog and to my proposals I am forced to this
surprisingly and nasty conclusion: the old, but very diffuse way of thinking of
and practicing strategy is the main obstacle to recreate companies unique,
ethically inspired and aesthetically superb. So the very diffuse way of thinking
of and practicing strategy is the main obstacle to build development and,
consequently, the most “immoral” attitude.
is professor of strategy at Victoria Management School,
Victoria University of Wellington, New Zeeland. He was a lecturer in strategic
management at Warwick Business School from 1997 to 2002. His research interests
include the history of strategy and management and the development of corporate
ethos. He is the author of “Recreating strategy” (Sage 2002) and co-editor
of “Images of strategy” (Blackwell 2003)
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