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The Elephant in the Economy

My favorite change management projects are those where no-one denies there’s a big problem and yet no-one has made any mistakes. You know what, often times they’re right! Everyone is just doing what they’re expected to be doing but once I paint them the bigger picture perspective some activities stop making sense.

The same applies to the Economy; we know we have a big problem but no-one really made any mistakes …. well, apart from some rotten apples that spoiled the barrel. Let’s see if that’s really true or not. Everyone is talking about how “Bad Economic Times” are destroying businesses, like the Economy is some awesome outside power over which we have no control; it just happens to us without us having a hand in it.

As a consultant I look at an organization as a collection of actors that display a certain behavior. Actors can be identified as people, systems, departments, etc. Their behavior is how they perform their tasks and how they relate and interact with other actors, revealing their relationships and interdependencies. Then, the problem or challenge emerges as a discrepancy between what we say we’re doing and what we’re actually doing.

So, in painting the bigger picture of the Economy, we can identify all businesses as the actors and their performance as their behavior. We know there are no accidents, just cause and effect relationships. That means that the Economy is bad because of bad business rather than the other way around.

Ah, I can see some people straightening up and getting ready to fire back for attacking free enterprise. Please bear with me a little longer while I explore our common interest. We want a healthy Economy, right? Progress and prosperity for everyone, isn’t it? The problem, as I see it, is that everyone wants to win and our mindset has been programmed through sports that one can only win if someone else looses; a zero-sum game.

This form of mental programming dictates organizational behavior that defends its rights to exist and they show determination to doing whatever it takes to defend their territory from being invaded by “the enemy”. Although this line of reasoning is logically correct, it may be morally reprehensible. It might be legal or not illegal or there is no law prohibiting it but that does not make it morally sound. Morally sound refers to contributing in a positive way to the health of the Economy.

Perpetrators are typically few in number and highly motivated by the prospect of reaping big, certain, and immediate profits, while the losses are spread over large numbers of individuals. There’s only little push-back because each loses only a little and would receive only small, uncertain distant profits even from successfully undoing the minority’s grab. These measures benefitting a small minority at the expense of a large majority is often celebrated and studied as Best-Practices. Most leaders aspire to emulating these “great wisdoms and insights” of big-business. They pay large sums of money to learn these “Secrets” from experts at institutes of higher learning. That’s why there’s a distinct pattern in failing organizations; they’re all practicing the same secrets, one way or the other.

The dominating thought that celebrates winners is that the Ends justify the Means. Experiencing a winning streak makes us feel invincible; no-one can touch us! Then, when one does get caught with their pants down, we are outraged. However, nothing really changed, except for exposing the fraud; it’s okay as long as we don’t know its a fraud.

Good Economy originates from good business. Good business originates from creating real value for buyers. Real value is created by people who care about the welfare of other people. Okay, you might point at the rotten apples, the executives of the companies that failed, making them the scapegoats for the bad Economy. However, if you’re following the same “secrets” then you need to remind yourself of the law of cause and effect; look at the relationship between your thoughts about doing business and your employee retention rate, the relevance of your products and services to the lives of your buyers (Top-Line results) and how well they appreciate your contribution to the Economy (Profit margin). It might be a coincidence that employee retention, top- and bottom line results are the top three challenges that most organizations complain about. On the other hand it might not. That’s the elephant in the Economy and it’s not going away until you wake up and take action!

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