SPOTLIGHT ON STUART
Stuart Berman, a fairly new addition to the blogroll had an interesting post where he managed to work in creativity theorist Mihaly Csikszentmihalyi, The Lord of the Rings, The Pentagon’s New Map and economic theory. Not a bad combination I’d say. In this excerpt, Berman asked:
“2) If free and democratic governments are more viable than socialist (or other top down authoritarian regimes) does it also make sense that corporations should also become ‘free and democratic’?
My impression of many large corporations today is that they are run like benevolent dictatorships or other centralized planning regimes. If a corporation can be structured like a democracy where there is limited government (management which has a core function, specific responsibilities, term limits, transparency) we might see the corporation of the future. I believe this may be viable for the same reason that socialist societies are far less effective and enjoyable than free market societies – our society functions remarkably well despite it complexity and lack of centralized planning, the market knows better than any individual or committee. Mihaly says take the hand off the worker and let them (workers as the market) decide what is best. I am not advocating anarchism or a lack of governance but rather a rebalance – management needs to be very disciplined about where it should tread and where it should not. [Barnett's rule sets again - and as he notes that in a democracy or horizontal organization you are given free reign unless you cross certain defined lines of action - whereas in a vertical organization (autocracy) there is an attempt to constrain what you think or are exposed to. Corporations are not that extreme but somewhere in the middle - I think there is more room to move toward Mihaly's democracy.]“
A good question. I’m of two minds in terms of the answer which could be divided into matters of principle and matters of practice.
In principle there is a fundamental difference between a corporation and its employees and a State and its citizens. Namely that while in the case of the State the citizenry forms the only interested party in the case of the corporation it exists as property held by shareholders in addition to being a legal entity and an employer of labor.
To make corporations truly” free and democratic ” would be to effectively take all the rights of ownership of property away from the shareholders and bestow it, unearned, upon the employees, leaving the shareholders voiceless and powerless. Of course, in the case of employee owned corporations, this is a moot point. I realize in the case of the small investor this is not unlike the current situation where most do not bother to exercise their current stockholder voting rights anyway and are holding the shares purely as a speculative venture; but there is a not insubstantial number of venture capitalists who really do make significant investments to build and grow corporations whose contribution, vision and risk-acceptance is the vital part of the free-market.
That being said, in terms of management practice Mr. Berman is correct, in my opinion. Hierarchical and bureaucratic forms – vertical organizations – are rigid, uncreative, power-centralizing organizations that by preferring autocracy, sacrifice huge creativity gains by not allowing and trusting to a flexible, autonomous, collaborative and horizontally organized work environment. Much employee utility remains untapped as workers are merely cogs in a machine. It was a good model for the second-wave, mass-production, industrial societies circa 1800 -1950 once decried by Ortega y Gasset but today it is an anachronism headed for the graveyard of history.
Excellent post by Mr. Berman, I encourage you to make his blog a regular stop.