Corp Unc & Philos

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.

Renault : suicides in search of a meaning

Within the past two years, five engineers working for Renault committed suicide ; four of them did it at their office. They were all employed in the R & D division (Le Technocentre) which is located near Paris.

The corporate management was more than cautious and immediately condemned the possible association between the facts and the working conditions. The unions on the contrary, point out the widespread feeling of anxiety among the personnel. They blame it partly on the workload and partly on the management style which too often consists in publicly humiliating the individuals.

Comments, specially on the net, focus the criticism on economic liberalism and on Carlos Ghosn, the CEO : the environment and the leader of the  firm are both seriously incriminated ; not the firm as such.

Yet, Renault has a long history which deserves attention. A french psychiatrist, known for his research on the causes of professional distress, gives us a clue in a few words : "Suicide is a signature. The place where it happens is meaningful, and says something to someone."

Precisely, the company follows a number of indicators of stress but as a human resource manager said :"We have not perceived the signals beforehand." It shows how dealing with the symptoms only, is inefficient, when it comes to human nature. Even worse, a global inquiry was conducted among all the employees of the firm, a few months ago, to check their involvement in the corporate strategy.

There is something missing obviously : the corporate unconscious is far more involved than liberalism or Mr Ghosn himself. Since it was created in 1899, Renault has always been a difficult working environment. Louis Renault, the founder, was a genius in mechanics but a very awkward manager diffusing anxiety across the company. Renault is an ideal case study regarding the mechanism fostering the duplication of personal behaviors, management style, organisation structures and corporate strategy, over the years. Changes in the environment, ownership and management, did not help.

The reality of corporate unconscious is all too obvious to be perceived, just like the letter sent to the queen in Edgar Poe's "The puloined letter". It is actually experienced by all those who work in the company ; what is missing is just talking about it.  The reason why it does not happen is the mystery of  the unconscious.

Five persons are dead, but as William Faulkner brilliantly wrote : "The past is never dead"

Technology and addiction

This is an add for a distribution company, seen in the corridors of the parisian subway. Comment :

"Information technology becomes a second nature"

Indeed, it is getting "under the skin", reminding us of a famous song by F.Sinatra.

An illustrated evidence that  the debate about how technology-based products and services might contribute to the development of addictive behaviors, is legitimate and necessary.

Free or unconscious will ?

Read in The Economist (Dec 19th) :
Free to choose ? Modern neuroscience is eroding  the idea of free will.  Excerpts :

"Only in the past decade and a half, has it been possible to watch the living human brain in action in a way that begins to show in detail what happens while it is happening. "

And : "Shrinking the space in which free will can operate could have some uncomfortable repercussions".

Three observations :  first, the relevance of free will is not a new topic. Philosophy has questionned it for centuries. What about these words from Pascal, the 17th century French philosopher ?  "The heart has its own reasons that reason does not know".

Secondly, human sciences over the last hundred years have produced evidence against the idea of free will. The unconscious, as Freud has shown, follows its logic which entirely drives the behavior of individuals. More recently, one has become increasingly aware of the social origin of the unconscious. I think for example of Mary Douglas's essay "How institutions think". In particular, the corporate unconscious proves to be a major actor in the business environment.

Thirdly, this awareness, it seems, helps better understand the mechanisms of collective actions and behavior. Warning about its "uncomfortable repercussions is a surprising conclusion. Another example of the wide-spread confusion between positive science and human practice. It is a fact that  the progresses of neurosciences are still subject to misinterpretations which indeed, may lead to "uncomfortable consequences" if not urgently corrected.    

What drives an entrepreneur ?

Recently, I wrote the following : "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."

I have found this out through the years, working closely with entrepreneurs. It is not a surprise any more, experience confirms it every day. What I find increasingly amazing, is the persistence of the myth. I never miss an opportunity to denounce it. Here is one, by Neal Thornberry a Professor of management at Babson College Mass.(Business Week, Aug 9 2006) : "  Most people I know desire to start something, but most of them ... are not in it for money."

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.   

About the unconscious

Judging from the trafic and comments on this blog,  the notion of "unconscious" remains unclear to some of the visitors. Here are some elements that may help clarify a concept which is not as complex as one thinks.

1. The unconscious is neither individual nor collective. Freud wrote :

"Mass psychology is the most primitive human psychology. Individual psychology is a more recent development"

2. The unconscious is not a second, deeper and more intimate ego, but :

"made up of pure externality"

3. Once this "myth of interiority" is done with, the unconscious reveals itself as being part of the social link, therefore closely related to language. Jacques Lacan :

"The unconscious is what you say" given also that "an act is a speech"

4. The question is who speaks ? Vincent Descombes :

"Institutions supply the meaning that individuals, in turn, make their own" so that

"Individuals are the authors of the sentences they make but not of the meaning of these sentences."

The business corporation being an institution, the role distribution becomes clear : what individuals say or do in their daily activity is suggested by the corporate unconscious, without being known to them.

This, I hope, will help. Comments are welcome.

The Wallenberg : a symbol of family-owned capitalism

The Economist has just released an article on this 150 years old family whose role in the swedish economic history has been predominant.  Today, the fifth generation manages the family multi-businesses, with Jacob Wallenberg running Investor, the family holding company and Marcus, his cousin, leading Skandinaviska Enskilda Banken, a bank which was created by their ancestor.

Here  is a list of the participations held by Investor.

There is an obvious gap between the percentage of ownership and the voting rights. The shares are estimated to be traded at only 75% of their value due to this discrepancy.

The origin of the family business is purely financial. It started with the foundation of SE Banken. However, the family has played a key role in the development of a large number of the swedish industrial corporations.

The story of this family is interesting in many regards, and not only by the long-lasting success of its investments. Apart from the Bonnier group, with a dominant position in the publishing and press business in Sweden, not a single family with an industrial tradition is to be found anymore in such a developped country.

Moreover, and it is perhaps a symptom or our time, the stakes of Investor are slowly converted into Private Equity (16 % of its Net Asset Value today). The swedish business community is wondering now whether the trend will carry on. This is another interesting case showing the growing importance of  Private Equity against the stock markets, to be followed by any means.

The unconscious meaning of a business model

In a recent post, Jonathan Schwartz, the CEO of Sun, points out an important trend among mobile phone users. They spend more time processing data on their screen than actually speaking on the phone. Conclusion : mobile phones will increasingly be used to surf on the net.

This is a highly probable future for this product as regards its utilization. The question which is not clearly mentionned in this post, but which comes next, is : will writing replace speaking through the handset, or will it be an additional function ?

As a business consultant, I have worked over the past years with handset manufacturers. Though the approach may differ from one to the other, I have come to the conclusion that the meaning with their product is not as simple as one thinks. It is widely accepted that a mobile phone facilitates and therefore develops communications between persons. My observation tend to indicate the contrary. Why ?

After nearly ten years of existence, Internet has proved to be a substitute to verbal communication. This is obvious within the firm, where an infllation of e-mails replaces verbal communication. But it is also true privately. There is evidence that a lot of teen-agers spend more time chatting with one another through the net than talking on the phone, let alone meeting physically.

The same is happening with mobile phones. One tends to forget that when it becomes possible to reach someone anytime, the necessity to meet physically decreases. Not only that, it is striking to see how the handset developpers devote efforts to data management and storing for their product. One realizes that memorisation is as important as transferring the actual voice signal in real-time. In other words, if the handset is a communication tool in real-time, it is also a means to select and postpone exchanges ; it is a filter and as such, a protection device against real-time and physical "here and now" confrontation.

The web and mobile applications are exploding, giving the impression that communications are also globally developping. It is true but under certain conditions, namely the possibility to avoid direct contact with persons. On the whole, communications multiply in the same proportion as the possibility to avoid direct contact.

This paradox is a perfect example of what a business model stands for.  It is a response to three questions : what is offered (classically called a product), to who is it offered (classically refferred to as the client) and how does this happen (organisation and management) ?

Most of the time the "offer" is an oversimplification of what it really means, if not a way to hide it. The development of mobile communications is the latest illustration of this rule.  A business model is not an idea ; it is an intention, which is the reason why it means something. As always the meaning of what is actually said or done is far more complex and richer than what it is believed to be.       

How about Ford and Renault ?

After K.Kerkorian’s initiative to consider a Renault / GM collaboration, some talks are supposed to take place, obviously in a much more secretive context. Far less spectacular but potentially full of unexpected outcomes, some contacts have been organized between C.Ghosn and Bill Ford, according to this article of the NY Times.

The future is uncertain since, the article reports, everybody in this industry is now interested to talk to C.Ghosn. Apparently, Jaguar is for sale, and J.Nasser, former CEO of Ford, backed by a fund, might be interested.

The case of Volvo is unclear. The failure of a merger with Renault in the 90’s is still a painful memory. Particularly since the take over by Ford which took place in 1999. Since then, not much has been reported on this collaboration.

Here are some comments by swedes reacting on an article in Dagens Industri, the leading business newspaper in Sweden, about Ford. A reader finds it funny if the missed merger with Renault in 1993 was completed now, which he sees as a possibility. Another is convinced that in case Renault and Ford decided to collaborate, Volvo would be sold to Renault.

Finally, here is what an engineer from Volvo says : “We might as well achieve what P.Gyllenhammar had planned 13 years ago. For Volvo, Renault is a partner which is more secure than Ford. It is a solid group, which has proved its capacity to work internationnaly.” Let us remind that in 1993, the project had failed because the state-owned Renault was rejected by the swedish shareholders.

The same Volvo manager then declares publicly what everybody has known in Sweden for years : “Within Volvo, the Ford culture, with its reporting and top-down management, is more and more experienced as destructive.”

This automotive saga will keep on with interesting perspectives ahead of us.