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

How business models collapse : the case of music

Nearly a year ago, Pascal Nègre, the CEO of Universal Music France, declared: "The public has never listened to music so much as today while paying so little for it."

To solve the problem : "We are currently looking for alternative sales models that are more adapted to the latest technological innovations."

In other words, a business model is dying. Technology is being blamed. Suddenly, it has taken the professionals by surprise. The debate on what is called illegal downloading always concerns payments and sales, never the music itself. New business models are explored when it comes to the sales transaction while the evolution of the product over the past years is totally ignored.

Since the radio developped on a large scale, nearly a century ago, music has actually been free. We are so used to it that no one cares to mention the fact anymore. What the consumer pays for when buying a record is not the music itself but the capacity to control its consumption by reproducing it at any time.

Constantly on the air, music can also be heard in elevators, lounges or shops, and it is most often related to advertising. It has become a background noise which is part of the scenery of the merchant environment. Through a low but steady process the function of music has become less and less esthetical and more and more pragmatical.

"The shift of affects towards the use value creates a situation where nothing is expected from music anymore. " This was written by Theodore Adorno in 1937 !  Anticipating the future, he added : "The listeners behave like children. They repeatedly request the same recipe that has already been served to them." This is an accurate description of the present situation.

By selling music to the broadcasting companies, the producers  have contributed to turn it into a free product, at least for the consumers who in the meantime have become addicted to it.

The development of digital music, therefore, is not the real cause for the downfall of the classical business model.  It is only a strong revealing factor of a situation that has developped throughout the 20th century.

This example is an opportunity to point out that a business model is not a pure transaction device. It always develops around a supply to the public which is unconscious and likely to change as society evolves.  The purpose of strategic innovation is to anticipate this kind of evolution before  things change suddenly out of control.