Corp Unc & Philos

Mary Douglas, institutions and management

Mary Douglas, the british anthropologist, passed away last may. Her researches have greatly contributed to a better understanding of how institutions work.

In 1986, she wrote in her book : "How institutions think"

"Institutions fulfill the same tasks as theories." *

According to her, institutions, including business corporations of course, are made of the same representations as those that are produced by individuals. This observation helped her develop a deep understanding of institutional dynamics. As she said :

"Individuals tend to leave important decisions to their institutions and deal only with tactical matters and details." *

In other words, individual behavior is mostly instrumentalised by institutions. This approach naturally reminds us of what the french philosopher Gaston Bachelard said :

"Scientific instruments are materialised theories." *

The common point between institutions and scientific instruments is their capacity to materialise mental representations and give them an opportunity to become active, in the social world and in the physical one, respectively.

The german sociologist Max Weber had an intuition of this phenomenon, when he wrote in 1913* :

"Not a single average consumer has the least idea about the production techniques involved in the goods he uses everyday. The same can be said about social institutions." *

This reality is still too often ignored in contemporary management practices. As they act, leaders tend to forget how their decisions are highjacked by the institutional processes that keep repeating themselves. They prefer to believe that the gap between their intentions and the results stem from imperfect collective execution.  This is how the concept of Human resources is meant to conceal  what actually is the corporate unconscious .

* My translation from french

Renault : the meaning of meaning

Following the tragical events that took place in Renault, C.Ghosn declared :

"Renault does not have the right to fail, unlike one of its employees."

The meaning of these words is uncertain. When reading them, I understood that the suicide of a person is not important compared to corporate performance. I was wrong of course ; C.Ghosn meant the contrary. The coporate performance must be flawless whereas persons are allowed to make mistakes.

However, my reaction seems to be shared by others like this  Spanish blogger,  who strongly reacts.

This is a good example of the way words produce their meaning. The content is part of the clue, the context does the rest. A warning that the buzz around Renault may harm the corporate image, specially on the net.

The role of business in society and corporate meaning

I recently came across an article by Ian Davies of Mc Kinsey & Co, written a year ago. It raises an issue which is bound to become crucial for business leaders in the near future : business's role in society.

There are two extreme ways to look at it : the first is Milton Friedman's phrase, "the business of business is business". The second is the so-called corporate social responsibility (CSR). According to Ian Davies both attitudes fail to match the requirements of the coming business environment because they do not integrate social issues in the core of strategic management.  Examples, obesity for food producers or the danger of cigarettes for tobacco companies.

To me, the interesting point in this article is : "there is an implicit contract between big business and society". This is even more relevant than it sounds just because, by definition, all businesses stem from a social question, provided one goes back to the entrepreneur and his or her personnal implication.

What strikes me more and more when working with entrepreneurs, is their relentless will to make an idea become a reality. Apart from a few exceptions, the idea that drives them is nothing else than a contribution to social questions. What I find astonishing, and it is a consequence, is their tendency to consider personal profit as secondary. 

It is a myth to believe that entrepreneurs are money-driven ; what drives them is achieving a long-lasting and efficient contribution to social processes.

Ian Davies suggests that CEOs should "articulate publicly the purpose of business in terms less dry than shareholder value".  Which is a necessity. The only question is how and where the purpose of their business is to be found ?

There is only one direction to look into : the corporate history. This is where its basic and genuine intention lies, as close as possible to the founder-entrepreneur. The most serious limit to what Ian Davies recommends is to believe that you can decide what the purpose of a business is without going back to why it has come to existence.

There is a lot of evidence based on experience that an increasing concern for the business's role in society will require above all a deep understanding of the corporate goal and meaning as it has developped and not only as one would like to shape it up for the future.   

The pearl : meaning and value

The elements of the Meaning Capital of a firm are worth their meaning. Each of them means something and plays an active role in the context of a community. Here is a clear and simple example how .

“The pearl” is a short novel by John Steinbeck. Kino, a poor fisherman finds a pearl. He knows it is valuable and thinks his life is going to change. As he wants to sell it, the merchant claims it hardly has any value because it is too big.  Kino refuses the bargain and goes to town for a better deal.  The pearl attracts thieves and jealousy and Kino’s journey  becomes a march to evil.  He ends up throwing the pearl back into the sea.

The main character of the novel is neither Kino nor the pearl ; it is the value of the pearl. But Kino ignores the rules of demand and supply and things will not work according to what he wants.

The pearl has no value in itself apart from the system of exchange which is organized collectively around it.  To every actor, it means something by convention like any currency. Kino’s belief in the real value of the pearl is but a dream which drives him to misfortune.

The value and meaning of the pearl are outside it, not inside ; they totally depend on the collective structure using it as a sign. The same goes for the Meaning Capital of a firm ; it is full of "pearls" that would be meaningless outside its context.

Steinbeck’s “The pearl” is both an efficient and enjoyable introduction to the way it works.

What is the "Meaning Capital" of a firm ?

So far, the business model of the firm has been looked upon as an idea. In fact, it also has a meaning. Because it speaks for itself, the "Meaning Capital" involved, usually remains unconscious.

The concept of « Meaning Capital » is an outcome of my consulting experience supported by research on management issues, done within DIT.

I have always been puzzled by the fact that no two companies are alike, even within the same branch : atmosphere, processes, management, client relationship … Usually, the “human side” of the firm is supposed to make the difference.

But in fact, two competitors never develop the same business model. The same product may have different purposes which remain unconscious. I think of an example ; I came across two suppliers of mobile phones, the first one actually offering a communication means, the second one a communication filter. You could read the difference by comparing the functionalities of each product. But on the surface, both of them were supposed to be identical.

I soon realized that the corporate product or service is loaded with an original intention which exceeds its perception by the market. The product always has a meaning, whether perceived or not. This meaning is shaped by a set of items called the “Meaning Capital”, always brought by the founder-entrepreneur of the firm.

Why “Meaning Capital” ?

Simply because the elements of this capital are “meaningful” ; like any currency, they have a value which is collectively recognized. Just an example : developing mechanical devices was not only a technical activity for Louis Renault, it was above all a means to go against his father’s will who wanted him to become a trader in the textile branch.

This supplement of meaning is a sort of signature underwritten by the entrepreneur on the things of reality. The “Meaning Capital” just as the financial one, is a working capital. It is the key to the actual meaning of the business model of the firm.