Delta 10

Take Off Your Glasses

2012-01-29T11:29:00.005+01:00

We all develop since early childhood a “culture bias”: what we perceive as similar to our own culture values, we consider to be “good” or “right”. Whatever we perceive to be different from our own culture values, we consider to be “bad” or “wrong”.
We look at the world through colored spectacles or sunglasses, which distort our perception. We see everything through these tinted sunglasses, and each culture has its own biased vision, shared by members of that culture. This has been demonstrated repeatedly in research, it’s not just some “pipe dream” or somebody’s opinion.
In order to understand the world outside of your own culture, you first need to be aware of your own culture bias. You first need to be aware of your glasses and take them off, in order to see other cultures as they really are.
Media content generators in the English language are largely wearing “Contest” culture glasses. This means that the main providers of news on a global scale (CNN, BBC, Fox, Sky, NYT, FT, Economist and others) are wearing tinted glasses and we should all be aware of that. Let’s take a look at the glasses they are wearing and what the world would look like if these glasses were removed.
“Contest” Culture Glasses
Hofstede’s 5D model revealed in research that the Anglo-Saxon culture (“Contest”) is egalitarian, individualistic, performance-oriented, relatively comfortable with ambiguity, and it is normative. Knowing this allows us to see the type of glasses usually worn by people from this culture. The glasses they wear affect their perception, thus affecting the content they generate and disseminate in the media. Here are some typical issues which get distorted and/or overblown by “Contest” culture glass-wearers.
Privacy
We see in the media (TV, internet, newspapers, magazines) that “privacy” is a big issue. People are worried about surveillance cameras, phone hacking, identity cards, because these things represent a threat to privacy. They constitute potential invasions of privacy, and that’s a big thing.
Well, actually, it’s not… Or, rather, it is an issue indeed in the “Contest” culture and also in all “individualistic” cultures. However, these cultures account for less than 15% of the world’s population. This means that 85% of the people on the planet are not really that much into the whole “privacy” thing. I’m not saying that invasion of privacy is not an issue; I’m just saying it is not such a BIG issue as you would be led to believe from what you see in the media.
When the BBC reports on “invasion of privacy” being a major concern in the Middle East or in Asia, they are actually talking about the BBC’s (English) bias when looking at what is happening there. The reporter’s outrage may be genuine, but it is not necessarily the outrage of the people who are affected by happenings in that location. It’s in the eyes of the beholders, and if the beholders are all wearing tinted glasses (also people watching in London and New York), the picture being painted will seem real to all of them, but not to the subjects being portrayed.
People in “collectivistic” cultures are not that worried about privacy; they will easily share details of their lives with complete strangers, something unthinkable to members of an individualistic culture. The reaction of “individualists” to such sharing is often “Whoa! Too much information! I don’t need to hear that!” To collectivists, they are just trying to be friendly, and the negative reaction is perceived as “rude” and “cold”.
So, if you are part of a “Contest” culture or any other individualistic culture, please remove your glasses before getting riled up on privacy issues outside your own culture. For most people on the planet, it’s not THAT important. They are more concerned with gaining intimacy rather than protecting their privacy.
Polarization
This gives the expression “polarized glasses” a different meaning… In a “Contest” culture there is a tendency towards seeing two opposing forces confronting each other. Issues are easily seen as “bi-polar”, that is: there is always a thesis and always an antithesis opposing it. In such cultures there is less value ascribed to multilateral thinking: the coexistence of many different forces or opinions regarding a certain issue. The “Contest” culture generates typical expressions such as: “you are either with us, or against us”, “it is ‘us’ versus ‘them’”, and “there are two kinds of people in the world”.
This leads to a certain oversimplification of complex issues. The situation in Europe is a good example of such a complex issue, which is usually oversimplified by American and English media reporting on it. To the UK and US, European leaders are incompetent because they are unable to decide between two options when confronting issues. Leaders in Europe look at situations and see many different options, equally important, rather than a confrontation between “A” and “B”. By definition, a multilateral perspective is more complex than a bi-lateral one, so it is no surprise that discussions take longer and a conclusion is difficult to reach. Alliances are necessary, and these require time, plus they may add to the complexity.
The “polarized distortion” applies to other issues in other parts of the world, as well. The “Contest” culture sees two opposites everywhere: it’s “the haves versus the have-nots”, the “capitalists versus the communists”, “New School versus Old School”, “macho versus feminists”, etc. In other cultures, such as the Dutch and Scandinavians, or the Latin Americans, or the Africans, the same situations are viewed as “multilateral”.
This difference is very evident in politics: while “Contest” cultures are typically “bi-partisan”, other cultures have many equally relevant parties and need coalitions to govern. It is less evident but equally true in other aspects of life. For instance, gender issues are not “just” about men and women, but they are also about gays, and lesbians, and people who are gay-lesbian sympathizers, and people who think gender equality actually depends on age, or on the nature of the role, or who consider sexual preference as different from gender, and so on. Religion is not viewed as “Christians versus Muslims”, but rather as the many Christian and Islamic sects, plus the Buddhists, Hindu and others still.
Meritocracy
Management textbooks seem to take meritocracy as a given, but we tend to forget that the majority of them are produced in “Contest” cultures, which are clearly performance-oriented. Cultures which are more “caring-oriented” and “quality-of-life” oriented will pay lip-service to meritocracy (to comply with the textbooks) but will act very differently in practice.
Actually, in these cultures, meritocracy is “de facto” trumped by caring. People get promoted because they have been longer with the firm, or because they belong to an influential family, or because they went to a renowned business school. People from the “Contest” cultures will look at these situations and express outrage. They will think that their outrage is shared by “the locals”. In reality, “the locals” will also express outrage when they are on the losing end of a decision, but will typically decide according to the same criteria they criticize, when put in a deciding position in a similar situation. Don’t be so quick in promoting meritocracy and deriding other approaches—look at the context first, take off your glasses and then try to see what would be best in a certain situation.
Urgency
In “Contest” cultures speed is valued: acting fast, deciding quickly. There is usually a great sense of urgency, time is of the essence. When decisions take a bit longer, people get anxious. When looking at decision making processes in other cultures, often “Contest” people are irritated when things do not happen as quickly as they would like to see them happen. The concept of “time is money” is deeply ingrained in a culture which is performance-oriented, and performance can be easily appraised by measuring time spent and the amount of money made.
Yet, in “Network” cultures such as the Dutch and the Scandinavian, urgency is trumped by other factors: making sure that all stakeholders are included and heard is more important than making decisions quickly. Deadlines are often not met, but this is not important, if missing the deadlines was necessary to ensure quality of output or satisfaction of stakeholders.
“Contest” culture media will typically report that missing a deadline or delaying a decision are signs of failure (refer to discussions on the Euro zone). Yet the people involved, if they are members of a “Network” culture, will not consider this necessarily as a problem. They may simply think that stakeholder satisfaction is more important than deadlines. What is portrayed as failure in one culture may be portrayed as success in another.
Women’s Rights
The “Contest” media is filled with items about women’s rights. It seems, sometimes, that the only reason for NATO to be in Afghanistan is because of women’s rights. Yet the issues of gender equality most often are seen from a different perspective by women from other cultures. I’ve always found it amusing that some cultures look at the US and see it as a matriarchy, a culture in which women dominate men… To an American feminist this seems to be utter nonsense, but we all need to take off our glasses and look at cultures more objectively.
Since “Contest” cultures are performance oriented, caring for the family is seen as less important, it is less valued. Family reunions such as Thanksgiving are often portrayed as unpleasant affairs. Feminists fight for equality in the workplace, because work is more valued than quality of life.
In some other cultures, quality of life is more valued than performance. Women are less interested in work, and men are also less interested in work. Gender equality discussions focus on asking men to be more active in taking care of the family and doing home chores; they are asked to be more “caring-oriented”, rather than to support equal pay at work.
I was pleased to read that a woman in Libya rejoiced at the downfall of Colonel Khaddafi, because he had forbidden the wearing of bhurkas. Now this woman was celebrating the fact that she could wear a bhurka, like she wanted…
“Contest” culture feminists tend to think that women all over the world share the same struggle for equality. Actually, gender equality has different meanings and connotations in different cultures, and these need to be considered carefully. Depending on the culture, the objective of gender equality will be reached through shifts in the roles of both men and women, in ways which are consistent with that culture. Women’s ambitions also may be different from one culture to another.
Democratization
Churchill once said that “Democracy is the worst form of government, except for all those other forms that have been tried.” This, of course, is a very Anglo-Saxon point of view, and as such it has been often repeated and amplified in the Anglo-Saxon media. People from other cultures may also take a similar view, especially if they are coming from an egalitarian society. However, the same is not true in hierarchical societies, in which many people take the view that a form of “enlightened despotism” is preferable to democracy.
This is considered totally undesirable in a “Contest” culture. People from “Contest” cultures tend to misinterpret protests against government in hierarchical societies. They tend to see them as movements demanding democracy, when actually most of the times these protests demand simply the replacement of government by someone who will do a better job of running the country.
There are more than enough examples of this, the most blatant ones to be seen in Russia and China, both hierarchical societies. In both countries there was a long history of despotism, for centuries. In both countries, the despots were overthrown and replaced by communist regimes, in the 20th century. The communist leaders proceeded to lead with as much authoritarianism as their predecessors, with support from the majority of the population.
In both countries, again, there was a point in time in which the communist regimes were challenged. In Russia it was replaced by a capitalist republic, yet the same ruler has led the country for almost 20 years with an authoritarian style (and the support of the majority). In China the economy is becoming capitalist, while the political regime is authoritarian communism. In both cases, a form of democratization may be happening, but in a way not at all similar to what is seen in the US or the UK. Democratization, if it happens at all, will take a very different shape in each country, according to the respective culture.
Research has shown that it is people who “make” dictators. A hierarchical culture will generate strong rulers with absolute power, regardless of the political regime. An egalitarian culture will generate rulers who are less authoritarian, because authoritarianism is not accepted.
“Contest” culture people look at hierarchical societies and see people who are oppressed by force and who are yearning for democracy. The reality is, the ruler can only keep himself/herself in power with support from the people. As soon as that support is lost, dictators are overthrown, and replaced by another strong ruler. Every dictator has support from a large part of the population, most often by the majority. “Contest” culture people may find dictators despicable, but in hierarchical societies most people feel that strong rulers are needed to maintain order. They just want a strong ruler that is also inspiring and effective.
Equality
Underlying the concept of democracy is the concept of equality, the idea that all people are equal and should have the same amount of power in society. “Contest” cultures hinge on the notion that life is a competition, but all people should have an equal opportunity to “win” this competition through their performance and fair play on a level playing field. Any idea straying from this notion is extremely annoying to “Contest” culture individuals.
However, Hofstede’s research revealed that only 9% of the world’s population live in “egalitarian” cultures (basically the Anglo-Saxons, Germanics (includes Swiss, Austrians) and Dutch-Scandinavians). Everybody else lives in hierarchical societies. In these societies, people consider that there is an unequal distribution of power in any community, no matter how large or how small, and that this is just a fact of life. It is a reality to be accepted.
This doesn’t mean that people like it; it just means that they consider it unavoidable. Therefore, many focus on making their way to the top of the pecking order. They may oppose the current rulers or bosses, but once they are able to replace the incumbents, they will exercise power in a very similar way and maintain its unequal distribution.
It’s a mistake to think that people from hierarchical cultures have a desire for equality; more often then not, they are simply striving to improve their own position in the hierarchy.
Supremacy Of Reason
In “Contest” cultures there is a notion that people should be rational, and that emotions are a “lesser” aspect of human beings. Emotions interfere with the efficiency and effectiveness of making rational decisions., therefore they should be suppressed. Values are seen as a “fluffy” subject, in conflict with the pragmatic aspects of life. Discussing values simply delays concrete action, so such discussions should be avoided or kept out of the way.
In other cultures, such as in Latin America and the Middle East, emotions are equally important as reason, if not more. Decisions are often taken due to emotional motives. People are often admired for doing that, rather than for “keeping their cool”. Being “hot blooded” is regarded as a positive quality, rather than a weakness. When the “Contest” culture media criticizes someone for “being emotional”, they should realize that in many parts of the world such behavior is encouraged and praised, rather than punished.
As for the values discussions, pragmatism often is used as a justification for unethical behaviour. The need for acting swiftly should not be such that it means choosing for rapid action which is unethical, rather than carefullt considering ethical implications before deciding on action.
The financial mess that happened in 2008 was brought about precisely for looking at “rational” business issues and not looking at ethics, nor at the emotional basis and consequences of economic behavior. Cultures which put reason in perspective and which regard it as just as important as, but not more important than, emotions and values, may be in a better position to cope with the complex issues we all need to face in the 21st Century. Being comfortable with emotions and values is just as important as being comfortable with rational analysis.
Wear Sunscreen, But Take Off Your Glasses
Years ago an article by Mary Schmich went viral. It dispensed many life lessons and pearls of wisdom, but the main one was wearing sunscreen, repeated several times. Here we emphasize not sunscreen, but tinted glasses; and we don’t recommend wearing them, but rather taking them off… Wearing “Contact” culture glasses all the time leads to serious misinterpretations about what is really going on in the world outside the Anglo-Saxon culture. Wearing tinted culture glasses does not improve your vision, it distorts it.
This, of course, is a problem not only in Anglo-Saxon cultures, but in any culture. In order to improve cross-cultural understanding, the first thing we must all do is take off our glasses. In other articles, we will look at the glasses worn by people from other cultures.

Europe without the UK?

2011-12-11T11:57:00.000+01:00

The future of Europe is integration. Not cultural integration, but economic, fiscal, legal integration. The challenge will be to develop this kind of integration, while simultaneously preserving the diverse identity of different cultural groups, which are even more numerous than the countries involved.

Cultural diversification will increase, and that means that among the 27 nation-states which form the EU, we must recognize that there are over 40 different cultures.

However, these 40-plus cultures can share the same legal framework, the same fiscal policies, a single retirement plan, and the same currency (why not?).

In order to do that, people will have to accept a loss of sovereignty, of course! It is no surprise that the country which scores highest in Individualism (UK) has the greatest difficulty in accepting this loss of national sovereignty... Plus, the UK is a "low-Power Distance" culture, and not as likely to accept a central authority based elsewhere.

From a cultural perspective, it is only natural that France and Germany are leading the push for EU integration. For the French (and other high Power Distance countries) there is no problem in accepting strong authority. They can even accept it AND value Individualism simultaneously. Perhaps this is the best example of the values underlying an integrated EU, this co-existence of high-PDI and Individualism.

For the Germans, the driver is order. The EU needs to be better organized. It makes sense to have a common currency, common fiscal policies, a common legal framework, etc.

For the Dutch and Scandinavians, the key is "leveling". If all stakeholders are heard, if there is a relative balance among members of the EU and all opinions are taken into account, then why not?

The UK are the only Anglo-Saxon culture among EU members, and they risk becoming isolated because of that. Being an island doesn't help. However, all sides stand to lose more than gain from an EU without Britain and Britain stands to lose the most.

Perhaps the discussion should be about the reasons why Cameron has decided to withdraw from the treaty agreed last week. Was it about Britain or was it about the banks operating in the UK?

Even "The Economist" has clearly stated this was about the banks.

Comment on "Three Ways To Overcome Career Anxiety" by Daniel Gulati on Harvard Business Review

2011-12-03T12:00:00.006+01:00

Interesting article, touching on the issues we discussed on a call with AIESEC International on Wednesday...

The article, of course, is very biased by culture: don't forget HBR is very culture-biased, with all the pros and cons this entails.

The three issues mentioned in the article are typical of the problems young Americans face now. Are they also faced by people in other cultures? Perhaps yes, to a lesser extent. The problems are felt with greater intensity in the "Contest" cultures (US, UK, Canada, Australia, New Zealand) because the culture of these countries emphasize that life is a competition, and you have to be a "winner" in that competition or else be considered "a loser", a failure. This basic concept can be very motivating for young people, because it simplifies the complexity of life. It boils everything down to one thing: being successful, as measured by making a lot of money.

The problems arise later in life, when people who have made "a lot of money" find themselves feeling empty and lost... Many turn to psychotherapy, but many more turn to drugs, alcohol, religion or other forms of dependency. The problem is that the "Contest" cultures (Anglo-Saxon) do not provide deep, long-term answers to existential questions. Actually, these cultures hardly recognize the existence of existential questions in the first place!

The three issues

Gulati identifies three typical issues that are specially difficult for American youths:

1) large companies are not safe options anymore - after the Enron and Wall Street busts, belonging to "the biggest" companies is not synonymous to "having it made"; Gulati emphasizes the "safety" aspect, but I think he is a bit off track in this aspect. What motivated young Americans to work on Wall Street (or on big corporations in other industries) was not "safety"--if that was the case, youngsters would aspire to work as civil servants. The real motivation was (and still is) "success" in that competition that life is supposed to be.

2) social networks increase anxiety - comparing yourself to peers and competing with them is reinforced in "Contest" cultures, though you may also find it to a lesser extent in "Network" cultures like the Scandinavian and Dutch, plus a few others in Europe;

3) too many options - as we discussed, people today need to find a sense of meaning/purpose to guide their choices. Making more money than your neighbors does not provide spiritual gratification. With so many options available, what's to guide a young American in making choices (when the culture tells them it's all about competing and WINNING!)...

So the three issues identified by Gulati may be important issues across cultures, in different parts of the world, but they are especially relevant in "Contest" cultures because they are magnified in these environments.

Advice given

The three bits of advice given by Gulati are "spot on":

1) de-emphasize prestige and compensation (easier to do in other cultures, more difficult in the "Contest" cultures, as it means swimming against the current);

2) start experimenting - this is a great advertisement for AIESEC! Go abroad, experience other ways of doing things, other forms of learning, find out which things touch you deeply, emotionally, look beyond the "Contest" perspective;

3) Spend time defining your passions - It's all about answering those two basic questions: who are you and what do you want? The "AIESEC Experience" should help people find those answers.

As Gulati rightly points out, it's not about finding "that one answer" (another "Contest" culture trap is to seek that "ONE" answer, like "one ring to rule them all"...). Life is more complex than that.

Be satisfied with two or three valid answers and learn to live with them as they change and evolve over time. Be more flexible and less normative. (Hofstede's 5th dimension of culture). There is more to learn about that from the Asians and Latin Americans than there is from the US and Europe.

The fact is that today, as we transition from 2011 to 2012, you can connect with anybody else on the planet... But can you connect with your inner self? That is what you will need to do in order to find out who you are and what do you want. That is what will guide you in making career choices and life choices.

Democracy in China

2011-11-18T14:56:00.002+01:00

The press in the US and the UK keep bitching about the lack of democracy in China and in other parts of the world, notably in Africa, Asia and the Middle East. Recently, when totalitarian regimes (supported by the US, by the way) were overthrown in Tunisia, in Egypt and Libya, the press was quick to label it as the “Arab Spring” and hail a new era of democracy coming to Northern Africa. As other popular revolts began to appear in Bahrain, Yemen and Syria, again the press interpreted that as movements demanding democracy. Soon there were articles asking whether China would be next, or how long until democracy would begin to be demanded also in China.
None of those article authors seemed to be aware of the most important factor underlying all these different situations: culture. All those authors looked at the situations through their own culture biases, failing to be aware of that. And all failed to comprehend what was going on in North Africa, as they also fail to understand what goes on in China.
Even though Geert Hofstede published his first research studies in the 70’s, many people still do not understand the implications and continue to ignore the influence of culture values in politics and in the way societies organize themselves. It may come as a surprise to those authors that other cultures do NOT share the same values as the US and the UK.
High Power Distance Cultures
A few years ago I was facilitating a workshop on managing across cultures for a group of people coming from several different cultural backgrounds. We were well into the discussion of the five dimensions of culture identified in Hofstede’s research, and we were specifically dissecting “Power Distance”. An American lady asked what could be done to remove the present rulers from power in China, in order to change the culture to a lower Power Distance Culture. Obviously, she didn’t get it…
Power Distance is defined as “the extent to which the less powerful members of institutions and organisations accept that power is distributed unequally in society.” Therefore, Power Distance (PDI) in a society is not determined by its rulers, but rather it is determined by the values of the people.
She still didn’t get it. She argued that the rulers in China, enjoying absolute power, were manipulating the culture to ensure that it continued to be “high PDI”. That is the mistake often made by people brought up in “low PDI” cultures, or should I say, the chain of mistaken assumptions usually made:
1. High PDI is “evil”
2. High PDI is created and maintained by the individuals in power
3. “The People” want their culture to change and become a “low PDI” culture
What this American lady failed to realize was that, in fact, high PDI is not “evil” per se. It is only perceived as such by people coming from a different culture. Conversely, people from China (or any other high PDI culture) might look at the US (or any other low PDI culture) and say: “How terrible! People show no respect for authority! What an evil, chaotic society!” They might even add “how could we overthrow their incompetent leaders and replace them with someone who earns the respect they deserve and restores the natural order of things?”
It seems that it is difficult to accept, in low PDI cultures, that it is not the dictators who define their power, but rather it is the acceptance of others who defines it. And yet, the fact that people accept a strong leader, with a lot of power, does not mean that they are happy with their current leader. They may very well protest and rebel against the current regime, and replace it with a different leader. However, the new leader will be empowered by the people to enjoy a high level of authority, just as the previous one. People in a high PDI culture are not necessarily longing for it to change into a “low PDI” one. Most often than not, all they want is a change in leadership, not a change in leadership style.
Understanding the “high PDI” mentality
People in high PDI cultures believe that some people have much more power than others, and that is just a fact of life. It is readily seen in all kinds of situations, beginning with the family (where the elders hold more power than their children) and extending to work, schools, public institutions, everywhere. Leaders, managers, bosses, teachers, all are authority figures. They have “ascribed power”, through their positions, which is seldom challenged, rather than “attained power”, which can be challenged (and frequently is) in “low PDI” cultures.
Along with that ascribed power, they have privileges and responsibilities. The people in that culture believe that these things go together: power, privilege and responsibility. Figures of authority have power and they are entitled to privileges. It is only fair, since they also have the burden of bearing huge responsibility. All decisions are made by authority figures. All responsibility lies also with these authority figures. They are in charge of taking care of their people.
“Até amanhã, se Deus quiser… João Francisco e a mulher. E os filhos que tiver!”
This old regional Brazilian saying, from the South, means literally: “Until tomorrow, if God wills… João Francisco and his wife. And the children they may have!” João Francisco was an army General in charge of protecting the border between Brazil and Uruguay. For almost 30 years (1893-1923) he not only did that but in fact ruled the region exerting extreme power. He was known for taking no prisoners in the many fights that broke out among Uruguayans and Brazilians who disputed the demarcation of the border line, the revolutionaries who challenged the local governor, and cattle rustlers who smuggled sheep and steers from one country to another (often these three groups were the same people). Such was the respect people gave him, that this expression became popular: nothing would happen without him willing it (and also his wife and kids). In high PDI cultures power is assigned to the position and to the family members around it. Family members do not need to earn respect, it is their right simply from being part of the power holder’s family.
The “great responsibility” that goes with it means that anything that goes wrong is basically the power holder’s fault and he/she has to fix it. The power holder is responsible for everything. The power holder also is responsible for taking care of the people who are loyal to him (or her). If someone is sick, or has an accident, the power holders need to take care of the situation. If the accident was caused by a reckless driver, it is up to the power holders to punish the person who caused the accident. If the roads were in bad conditions, it is the responsibility of the power holder. If the driver didn’t have a driver’s license, it is the responsibility of the power holder to ensure that people without a license are not allowed to drive. The power holder needs to have police on the streets, constantly controlling if people have the proper drivers license, etc. If a building collapses, it’s because the power holders should have ensured that it was being properly built by people with the proper license/authorization.
This creates a rather comfortable situation, which helps to explain why these societies continue to function in this way. People with no power (or with less power) have no responsibility (or less responsibility). There is always “someone higher up who is actually accountable, not me!” And those “higher up” guys are entitled to privileges, in line with the responsibility they bear.
Years ago I proposed an “egalitarian” health care plan in the company I worked for, in Brazil. The existing health plan, which had five levels of increasing coverage as one went up the hierarchy, would be replaced by a plan with only two levels. The proposal was shot down. Why? Because “people expect to get more privileges as they go up the corporate ladder! How can you propose to take that away from them? This is what motivates them in their career progression.” Less privileges in hierarchy was perceived to be de-motivating.
China will never become the US
In China, a high PDI culture, people have ascribed power, rather than “achieved power”. Such ascribed power lies not only at the top of hierarchies: it begins with the first levels of hierarchy, such as policemen on the streets, teachers in classrooms, first-line supervisors in factories and offices. It is often in these lower levels of hierarchy where one finds the most common abuse of power. These lower-level power holders are the most sensitive to challenge and the ones who most often avoid such challenge by abusing the power they have. They are the stalwarts of a high PDI culture, not some evil creature tucked away in a palace at the top of the civil service hierarchy. Power in China is not exerted by a handful of people at the top; it is exerted by hundreds of millions of people in every rung of the societal ladder.
If Barack Obama magically replaced the Prime Minister of China, he would be totally powerless to turn China into an American democracy. This would not be because his fellow cabinet ministers would oppose it; this would be because hundreds of millions of Chinese would oppose it, from the bottom up.
Changing the culture would mean giving responsibility to the millions who currently have little or no responsibility at all. It means they would have no one else to blame but themselves, for the big and the small things alike. It would mean removing the privileges that every middle manager has fought so hard to get. It would mean changing everybody’s role in society, not only in government, but also at work and in the homes. The complexity and reach of such a change is beyond imagination.
Will China ever become a democracy? Well, yes, it might… but not a democracy as described in the US or UK, with only two political parties who are in constant conflict alternating in power. A democracy in China is more likely to resemble the democracies you see in Latin America, in Africa or in other countries in Asia: dominated by one political party and a coalition of supporters, who remain in power for decades before a different party with its own coalition of supporters takes over and reigns for the next couple of decades. A democracy in which rulers enjoy more power, privileges and responsibility, than their counterparts in the Northern Hemisphere.
Right now, the paradox is that China has never been so democratic in its entire history (which, by the way, is four times longer than the UK’s history and forty times longer than the US’s). Never before have so many people in China enjoyed so much individual freedom of expression, equality of income and distribution of power… It may still seem very hierarchical compared to the US, but it has never been less hierarchical than in the past ten years.
It is likely to continue to move, very slowly, towards even greater egalitarianism. Just how slowly? Chinese slowly. The time perspective in the Chinese culture is longer than perhaps any other culture in the world. It is especially the opposite of what you see in the US and UK, where people think in terms of weeks, rather than decades.
When the Chinese say “the US Dollar should be replaced as an international currency by a basket of currencies managed by the IMF”, they don’t mean “by the end of next year”. They mean “over the next 20 years”.
When they say “China is ready to help Europe resolve their financial issues” they don’t mean “by the end of next quarter”. They mean “over the next 20 years”.
The Chinese do have the ambition to rule the world, eventually. But they intend to do it peacefully, without firing a shot. They will do it through the power of their economy, their values, their culture. When do they expect that to happen? Very shortly: by the end of this Century

Boat versus Shopping Mall

2011-08-19T12:22:00.002+02:00

Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, National University of Singapore, has written an article on the IHT titled “A rudderless world” (19 Aug 2011). He describes the world as “…people living in more than 190 cabins on the same boat. Each cabin has a government to manage its affairs. And the boat as a whole moves along without a captain or a crew.”
According to Mr. Mahbubani, “the demand for global leadership has never been greater. The world is truly lost in trying to find a way out of the current crisis.” I would like to provide a different perspective.
Who needs a leader?
The need for leadership is culturally determined. Different cultures express different needs for different kinds of leaders. Research shows that in Singapore hierarchy and respect for authority is much more highly valued than, for instance, Northern Europe and North America. For every Singaporean who wants strong leadership to “run the boat”, there is an American Tea Party member who wants less leadership, and more autonomy and freedom for all those different people living in the 190 different cabins. The “need for leadership” needs to be qualified.
Margaret Thatcher once said “There is no such thing as ‘society’. Everyone should look after themselves.” A fine example of individualist, “low power distance” thinking, which is predominant in North America and Northern Europe. Research also shows that, on the other hand, most of the world’s population live in “hierarchical” societies. Outside of Northern Europe and North America, practically everybody else is in a “hierarchical” culture, totaling 91% of the world’s population. Only 9% of the world’s population live in “egalitarian” societies, which include Australia, New Zealand and Costa Rica, in addition to the aforementioned NA and NE.
If we lived in a planetary democracy, indeed we would choose, as a planet, for a strong leader as Mr. Mahbubani seems to be asking for. However, the reality is that those 9% of “egalitarians” in the Northwestern corner of the world account for 36% of the world’s GDP. Their share of production is proportionately much higher than the rest, and that gives them more political clout.
The US alone spends more on its military budget than all the other nations combined. This also tilts the scales towards the Northwest. Still, what has changed in the past 20 years is that connectivity has grown exponentially, and the share of GDP held by “the Northwest” has actually decreased (it was much more in 1970) as emerging markets have developed at a quicker pace (notably China and India, but others as well). Moving forward, the trend is that the economic imbalance between “the Northwest” and “the Rest” will decrease.
Mr. Mahbubani points out that “geoeconomics require consensus”, but “geopolitics of the world are running at cross purposes with the geoeconomics of the world.” He concludes that “The world is adrift”. This is where I think we need to look at this from a different angle. The need for leadership is different, depending on whether you come from Asia or from North America. And if geoeconomics require consensus, maybe that means we need a different analogy to guide our thinking.
Ship or Shopping?
The metaphor of being on a ship and needing a captain to tell the crew how to run the ship and how to “look after” the passengers in the cabins is a very hierarchical one. It assumes that all parties involved share “hierarchical” values, which is not the case. It also plays down the notion of sovereign states. Granted, that notion is outdated and will be replaced by a different political order. However, that will be a long process, lasting perhaps yet another 20 or 30 years, if not more.
Our situation at present is more akin to that of 190 shop owners in a shopping mall. We form a kind of condominium that needs to be managed, but the mall manager does not hold the same kind of authority as the captain of a ship. The shop owners may appoint someone for the role of mall manager, but they have complete authority in managing each their own shop. From time to time, they need to meet in a sort of assembly, to decide on certain broad issues, such as opening hours, shared services such as security, cleaning, waste management, energy consumption. The analogy to Planet Earth is more clear than thinking of a ship.
The mall manager of Planet Earth needs to be more of a coordinator, rather than a captain. Mr.Mahbubani argues that Barak Obama is “the best candidate for global leader”. I agree, but only if he relinquishes the presidency of the US (to Sarah Palin? Rick Perry? Hillary Clinton?). The mall manager cannot manage the mall and simultaneously manage the largest shop in the mall.
One might argue that the mall manager is the Secretary General of the United Nations. I would say that the UN has become too bureaucratic and has lost much of its legitimacy. It needs to be replaced by another institution, with a similar purpose but a different mandate. We need a fresh institution with a different governance model, perhaps with an Economic Council made of the G20 and a different arrangement for the Security Council.
The irony in the US is that Obama may not get re-elected, because people in the US want a leader that is aggressive, decisive and bold. They want a cowboy type like a Texan, but with the intellect of a Bostonian. Those two archetypes seldom come together… and having to choose between the two, Americans may go for the stupid cowboy rather than the wimpy intellectual. Yet, if there were global elections to appoint a global leader, Obama would win by a landslide.
The Crisis OF Democracy
Mr Mahbubani asks: “Have democracies become dysfunctional?” I would say the short answer is: “Yes. But only temporarily and only in very specific parts of the world.” Anglo-Saxon democracies, notably the US and the UK, have become dysfunctional. For how long, we don't know. The US is paralyzed due to their “Competition” model of governance pitting Democrats against Republicans. They need a “third force” to solve the impasse. The UK is in crisis because of their similar model, pitting Labour against Conservatives. None managed to secure a majority in the last election, so they had to form a coalition which has found it difficult to manage the economic issues.
However, one should not judge Europe by looking at the UK. And we should never judge Europe looking at it through the eyes of the UK, either. The European Union is all about trying to reach consensus through coordination. This profoundly irritates advocates of the Anglo-Saxon model of decisive leadership, and it also annoys very much all those living in hierarchical societies, who expect a strong, authoritarian leader, even if they might not like the person currently in that position and would prefer someone else. However, the EU is not hierarchical and it is not Anglo-Saxon. It has a diversity of values and of governance models which demands something different from the simple “top-down” approach found in hierarchical societies and also different from the decisive model valued in the US and UK.
Northwestern democracies need renewal, yes. The bad news for the Anglo-Saxon advocates and for the hierarchical advocates is: in a multilateral world with a more balanced distribution of power among the US, Europe, China and a couple of other key players, the more appropriate leadership style may be the coordinator, the” mall manager”, rather than the ship captain.
The Dutch and Scandinavian cultures have had such governance models running for at least a few hundred years, maybe more. They have some of the best Human Development scores in the world, so they must be doing something right… We need to look at that more closely, for therein may lie the best alternatives for the world going forward.

New Virus Threatens The US & Europe

2011-08-13T12:08:00.004+02:00

The US & the EU have been struggling awkwardly to resolve the world’s economic woes for three years now and what is most appalling is the epidemic of stupidity that has claimed thousands of victims among world leaders on both sides of the Atlantic.
A New Health Threat: The VSL-2 Epidemic
Only just recently scientists have been able to identify a freak strain of a virus that has been linked to the economic crisis that began at the end of 2008 and continues until today. The virus (named VSL for “Very Stupid Leadership) has been known for years in its milder form: VSL 1, which is as usual as the common cold and affects many business leaders. VSL-1 is easy to diagnose and to treat. The usual symptoms are narrow-mindedness and short-term thinking, often accompanied by selective amnesia (forgetting past mistakes or commitments made just a few days ago).
Treatment of VSL-1 affected patients is pretty straightforward, consisting basically of workshops and coaching. However, when treatment is interrupted after only a few applications, the symptoms usually return and blame is cast upon the treatment. In reality, the cure can only be obtained if one persists with the treatment systematically for at least a year. In some cases, up to three years of regular treatment are necessary before the patient can be safely declared to be free of the virus.
The form identified now is a different strain (dubbed VSL-2) and has some peculiar characteristics which make it far more dangerous than the previously known form:
1. The main symptom is a severe decrease in intelligence as in the ability to solve common problems. This can easily be verified by using IQ tests, which will show a negative impact of 30 points or more when compared to scores obtained before the infection. The main difficulty is convincing the subjects to take the test once they have been infected (see next item).
2. It is far more difficult to recognize and isolate in a laboratory, because it is accompanied by strong denial and feelings of righteousness
3. It affects especially leaders in senior political positions, policy makers and regulators. Apparently people under 30 are immune to it, and so are investment bankers. The reason behind the immunity of investment bankers is still a contentious issue among researchers: some say that it is a function of the nature of their activity, others say that it is a function of their age (most are under 30) or of their mental age (certainly most have a mental age well below 30). Still other specialists have even claimed that investment bankers are not really immune, they just look smart when compared to regulators who have been deeply affected by VSL-2.
4. The short-term thinking is not as severe, eluding first efforts at diagnosing it. VSL-1 patients think in terms of quarters, while those affected by VSL-2 have a management horizon of 12 months. The pathology is determined by the fact that the 12-month outlook is applied even to issues that require thinking in five-year terms (or more), such as economic recovery and managing government debt.
5. VSL-2 brings about selective blindness to economic data, specially unemployment data, and damages the perception of social unrest.
It’s The Stupidity, Stupid
The main problem world leaders face right now is not political, it is the economy. However, the real problem beneath that, the root cause of the prolonged economic crisis, is the stupidity caused by VSL-2. Apparently the virus also causes leaders to avoid taking measures that are consistent and “go all the way” in a certain direction. Rather, they end up implementing “half-baked” solutions or “watered-down” compromises which are insufficient to address the issues as needed.
In the US, leaders struggled to decide for economic stimulus packages and “quantitative easing”. Basically, they opted for injecting billions of dollars into the economy, when the need was for much more: trillions of dollars were needed in order to capitalize the banks, create jobs and allow companies to hoard cash (and be less dependent on the banking system). The chosen solution proved to be insufficient, but since it increased the national deficit (DUUHH!) politicians quickly shifted their attention to decreasing that deficit, rather than increasing to the point where it would actually have an impact in job creation. The situation now is that banks and companies have excess cash, but not enough to invest in production and expansion (creating jobs).
In the UK, conservatives blamed the crisis on the Labour Party (a smart move, before the virus affected them), won the election by a narrow margin and proceeded to implement a programme of economic reform. That’s when VSL-2 set in, and the programme went off-track. Rather than cutting expenses intelligently, leaders made the cuts in all the wrong places, totally overcome by VSL-2 (poor bastards!).
These symptoms are quite similar to what I have encountered in private companies, where leaders affected by the common VSL-1 have made stupid investment decisions (spending on the wrong things) and later have reverted to cutting expenses indiscriminately, across the board (which results in cutting expenses in the wrong items). In both cases, rather than deciding to invest smartly or to manage expenses with intelligence, affected leaders choose the easy (and stupid) option of doing it across the board. Eventually they are replaced by healthier substitutes, when it’s not to late to save the company.
Stupidity on one side of the Atlantic (US: spending badly, on the wrong things, and not enough, then reverting to expense-cutting across the board). Stupidity on the other side of the Atlantic (UK: refusing to invest in job creation and cutting expenses across the board). The VSL-2 epidemic has become a pandemic.
Continental Europe has also become affected in dealing with the Greek-Irish-Portuguese-Spanish-Italian-French crisis. Leaders have failed to inject enough money in the economy, have failed to commit enough money to bail out Greece and the other countries involved. Rather than issuing Euro-bonds which would solve the problem in the long term, they are still debating as if the continent was still made of sovereign countries. The future lies in strengthening the European Union as such, but leaders affected by VSL-2 fail to see that.
Meanwhile, the investment bankers, who are immune to the virus, are playing the international financial system and having a ball! They pick targets each week:
IB1 - “Ok, let’s do Italy next week, then Spain again…”
IB2 – “Not Spain again! There’s more potential in doing a different country. How about the US?”
IB1 – “Not yet. Wait until we’re closer to the elections, then we can really make a killing! Let’s do France instead.”
Up until now, China seems to have avoided contagion. Some say that their cultural DNA is immune to narrow-mindedness and short-term thinking, but there have been some signs of contamination. Can they remain immune or is it a matter of time? No one knows for sure.
The Cure
In the 80’s, the band “The Cure” had a number of hits, one of which was the song “A Forest”. Therein lies the remedy against VSL-2.
Leaders need to look at the forest, rather than the individual trees, to fight against narrow-mindedness. In Europe they need to look at Europe as a whole (including the UK!) and not at the outdated and obsolete concept of sovereign countries. In the US, they need to look beyond partisan divisions and local states interests, focusing on the American economy which stretches beyond national boundaries and spans the whole planet.
Everywhere, leaders need to think long term, as if they were planting a forest which will take years, maybe decades to develop. Someone once remarked to a man planting a tree: “Are you planting a tree? That’s going to take years to grow and provide a return on your investment, in terms of shade, shelter or fruit!” To which the man replied: “Then I’d better do it now, rather than wait any longer!”
Until someone discovers a pill that removes stupidity caused by VSL-2, let’s launch a campaign inspired by another “The Cure” song, called “Close To You”. Let’s each of us get close to a leader we know and let’s try to help him or her fight against narrow-mindedness and short-term thinking. Let’s do what we can to influence these leaders in a positive way, looking at the bigger picture. By helping them we will be helping society as a whole, both in the short term and in the long term.

London Riots

2011-08-08T15:26:00.001+02:00

The BBC and the NY Times say that people are “puzzled” and “trying to make sense of sudden outbreak of violence” in Tottenham in early August. I’m not sure if it is “people” who are puzzled or is it the journalists writing about the events…
It seems clear that what sparked the violence was the killing of Mark Duggan, a 29 year-old black man, by police officers on Thursday, August 4. The headlines on August 7 might have well been: “Police Violence Spark Public Outrage”. Rather, the local media chose to under-report the incident, and also the reactions to it, until it became impossible to ignore the scale of what was going on.
If this had happened in China, I’m sure the headlines in the US and UK would have blared against government censorship of the local media, who was kept from reporting fully on the incident. When the same thing happens in the UK (or the US) what do you call it? Self-censorship? Are government officials actively involved in “giving a call” to media editors, asking them to “be careful not to over-react” or “blow this out of proportion”?
It’s not just the censoring that we should worry about, it’s the broader attitude of trying to ignore the seriousness of the unemployment issue, trying to sweep it all under the carpet.
Reports from London talk of people saying that “This country has changed. We’ve lost something”.
DUHH! Of course the UK has changed. Guess what? All countries have changed. All countries have lost something. Or did they have it, in the first place?
The NY Times has reported that people ask “where has common decency and respect gone?”. Well, common decency and respect was not there, in the first place, as something demonstrated to all. There was racial discrimination for centuries. There was a class distinction between “the ruling class” and “the working class”, also for centuries. These things, unfortunately, do not go away at the blink of an eye. And, in terms of culture, a decade is equal to the blink of an eye.
Blame it on the outsiders
It’s amazing how, all over the world, there is this “knee-jerk reaction” to blame outsiders for all your troubles. Foreigners are the favourite “outsiders”. It’s a tribal reaction, to blame the outsiders. The funny thing is to realize that people in cosmopolitan cities like London, New York, Paris and Berlin, are all still subject to this type of tribal behavior. “Blame the immigrants” is the reflex reaction. Ironically, the “immigrants” are blamed equally by Muammar Gaddafi for what happened in Libya, as well as by Tory leaders for what happened in London.
Even the local residents of Tottenham have said that “these people who are looting and rioting, they don’t live in this neighbourhood”.
That is one of the issues of our times: people move around. People communicate (facebook, twitter, mobile phones). It’s no use blaming the outsiders, in a global world there are no “outsiders”. You cannot cordon off neighbourhoods. Would you like to introduce Apartheid in London? I don’t think that would solve anything, it would only aggravate the problems.
The fact is that when financial disaster struck in 2008, the Labour Party was blamed for it. The irony is that the crisis was caused by speculation gone wild among investment banks, run by people who typically vote and support the Conservative Party. So the conservatives caused the financial melt-down, blamed the progressives, then got elected to run government and quickly set about to implement a series of policies that shifted the impact of the crisis away from “the ruling class” and on to “the working class”. This is not only ironic, it’s also tragic.
Unemployment has grown tremendously and is likely to continue at high levels for years, because of the policies adopted by the Tories. Reducing government spending immediately increases unemployment, as any second-rate economist will tell you. More important, still, is where are the spending cuts directed. According to the BBC, programmes to prevent crime have been cut harder than programmes to repress violence. Is this just stupidity or is there an evil mind behind all this, manipulating politicians to ensure that they make the worst possible choices in economic and social policy?
Conservatives were quick to “do unto others, before they do unto you”, so they blamed the integration policies. According to their views, the “outsiders” are simply “bad people”, and the integration policies of the past decades have failed to turn them into “good people”. The failed integration policies are blamed on Labour.
The case for real integration
Unless economic policies AND social integration policies are changed dramatically, the situation will get worse before it gets any better. The first step is to recognize how serious the situation is. The UK is not on the road to recovery. Unless policies are changed, they will continue to have an increasing negative impact on unemployment, and that will stir more social violence.
The priority of economic policies needs to shift towards job creation, even if it means increasing government debt. Creative policies are needed here. Think about Schumacher’s book “Small Is Beautiful”. We need to create millions of job opportunities for young and old. Unemployment turns millions of people into outcasts and turning to crime is just one step away, especially when figures of authority are demoralized.
Right now, the police are demoralized. They’ve shot innocent people more than once in the past three years and stood idly by while the riots spiraled out of control. The politicians are demoralized: the hacking scandal revealed more than hacking, it uncovered a web of corruption in which press officials and politicians exchanged money and bought favours from each other. The police are also involved in that web, and all parties are also guilty of trying to keep a lid on the whole thing, withholding evidence and delaying investigations. The Church has also been demoralized, most recently by accusations of pedophilia and covering up investigations about it.
David Cameron has been said to favour “a shake-up” in London police. I’m afraid it has to be more than just a “shake-up” and it has to involve other institutions as well, including Parliament, government and the Judiciary Power. The reform needs to involve private institutions too, such as media companies, and also the whole education system. We have a crisis of values, and this means the issue is broader and deeper than normally portrayed. It is still manageable, but it needs broad and deep action, not just your usual “panis et circensis” (“give them bread and entertainment, and people will behave”).
Integration policies need to change in order to foster real integration. This means gradually shaping a society which is the product of all social forces involved. It does not mean turning the UK into a Muslim society, but it also does not mean turning all Muslims into Anglicans. What it does mean is turning the UK into a pluralistic society in which the diversity of cultural backgrounds is seen as a strength, rather than as something to be avoided.
Yes, this country has lost something. It has lost the acquiescence of minorities to social abuse. Minorities have been taught the Anglo-Saxon values of egalitarianism, individualism and performance orientation. Guess what? They learned these values and adopted them! They believed the people who told them that “all people are created equal”, “freedom is an individual’s most important right” and “all people should have the same opportunities to progress at work based on performance and merit”.
Now, this country can gain something. It can gain the richness of diversity. It can realize the benefits of learning from people who are different from you. It can learn to show respect to all people, even to those who share a different religious belief, to those who come from a different ethnicity. It can renew its Anglo-Saxon values by ensuring that indeed society is egalitarian and does not privilege those who live in certain neighborhoods. It can ensure that individuals are held accountable, no matter how high in government their positions. And it can enforce the value of performance as being the criteria for progress at work, rather than sharing the same club with a government official.
The UK of the 21st Century will be perhaps more balanced in its values. It may evolve into a kind of balanced egalitarianism in which there are no longer distinctions between “the ruling class” and “the working class”, yet there is still respect for authority. It may come to value freedom of expression in balance with maintaining group harmony. And it may temper performance orientation with quality of life and caring for others, so that people get a better work-life balance. The answer to its social issues lies in looking ahead, looking towards new solutions, rather than trying to return to the past. We need to respect and understand the past, so that we can avoid repeating it. We need to create a future that is better than our past.

Helping People Cope With Change

2011-08-08T15:19:00.002+02:00

Life is, by definition, equal to change.
Human beings are quite complex organisms and, as such, they change a lot, they grow and develop a lot, even though they don’t go through the same metamorphosis as a caterpillar turning into a butterfly. Yet, as people grow and change, they need to retain their sense of identity, they need to be able to still recognize themselves in a mirror, even though they have grown a moustache, changed their hair colour, or both.
If people change too much, to the point of not recognizing themselves, physically and mentally, then we say they “go crazy” or “loose their mind”. We are all a bit afraid of “going crazy” when we experience too much change in our lives. We all need to maintain a balance between remaining the same, keeping our identity, and turning into someone completely different, losing our identity. Not changing at all, means death. Changing all means madness. We need to grow AND keep our identity, maintaining that dynamic balance.
Learning is change (a form of change). Not all change is learning, but all learning is change. Whenever we learn something, we become a little bit different from who we were before learning what we did. Yet we can still recognize ourselves as being the same person. We also need to maintain our balance in terms of learning, avoiding the loss of identity. We all have a certain fear of learning, as we have a fair of changing (too much). Keeping that balance is key.
When we look around at the world in 2011, we can see that a lot is changing everywhere. All that change requires a lot of learning, just to keep up, and all of this is very threatening (to our identities). The more changes, the more threatened people feel. The paradox, then, is that change can trigger a conservative reaction. The more a person is exposed to change, the more this person feels threatened, and the more this person turns to conservatism in order to avoid change and maintain a sense of identity.
The more we challenge people to change, the more threatened they feel and the more defensive they become, fleeing from change towards the certainty of continuity. The best approach is to provide support for such people, strengthening their sense of identity. The paradox here is that people who have a strong sense of identity are actually more open to change. They are capable of managing change in their lives without losing their identity of feeling afraid to lose it.
We cannot stop change from happening and most of the time we cannot even slow it down. What we can do is help people strengthen their sense of identity by making them aware of their core values (which tend not to change). The better you know who you are, what you stand for, what do you want, the better you will be able to cope with changes around you without losing your identity.

Fear Of Change
The biggest obstacle in all this is balancing support and challenge, balancing the need for continuity to maintain identity and the need for change to adapt to new realities. On one side of the spectrum you have “progressives” who push for change, on the opposite you have “conservatives” who resist change.
This is a different dimension from being “right wing” or “left wing”. Conservatives are basically fundamentalists, and the “clash of civilizations” between “West” and “East” is actually a misnomer… In reality it is a clash between conservative Christians and conservative Muslims.
Progressives have nothing to do with that. Progressives are about integrating religions and values to build a better future. Conservatives are about fearing the future and thinking that the past was better, therefore we should preserve it and try to return to it. Progressives are about “up, up and away”; conservatives are about “back, back and stay”.
We need both identity AND change. We need to balance both in order to move forward without loosing our minds and going crazy.
In that sense, the craziness of Oklahoma and Oslo are a signal that, for some people, progress is going too far, too fast, too soon. That doesn’t mean we should stop social progress. It does not mean we should stop immigration and miscegenation, it does not mean we should go back to the notions of apartheid, “pure” races and Nazism.
It does mean that we must address the social discontents and misfits who turn to violence. We must manage social change in such a way as to avoid that the Geert Wilders of today turn into the Adolf Hitlers of tomorrow. We need to acknowledge that the “Tea Party” movements all over the world are expressions of the fear of progress, and these movements, when not addressed, may spin out of control (even out of control of their own creators and leaders) and generate mass murder, genocide and even destruction of the whole planet.
Sarah Palin did not order the Tucson shootings, but the rhetoric she uses gives crazy people justification for doing crazy things. Nobody told the Oslo attacker to go out and murder 76 people, but the rhetoric of extremist right-wing parties in Europe gives a crazy mind reinforcement to go out and do crazy things.
In the US and UK media people talk about avoiding that “rogue governments” or “terrorists” (as in Muslim terrorists) gain access to nuclear weapons or chemical weapons and wreak havoc and destruction among millions. I am equally concerned that some crazy Christian fundamentalist in Utah may do the same thing!
People who are afraid of social progress can be very dangerous, whether they pray in a mosque, in a synagogue, or in a cathedral. To avoid the madness we must turn to acknowledging it, recognizing it, understanding it and treating it. It’s no use trying to control it by force, by imposing an Orwellian police state. We do need to address it through education (and I mean radically changing traditional education practices), through social and political debate, through innovative approaches and policies.
If we ignore the craziness next door, we run the risk of becoming their next victim, or worse: we run the risk that our children become the victims of the social craziness we did not address.

When Fear of Change Turns Into Mass Murder

2011-07-28T12:59:00.002+02:00

The attacks in Norway on July 22 were a tragic illustration of madness empowered in our modern society. They showcased just how crazy an individual and our society can both be, and they raise some important issues we need to face and manage going forward. And I do mean going forward, not going backward.
Power to the people?
We have all heard the mantras of empowering people, repeated endlessly in the egalitarian societies of Northern Europe and North America, and trumpeted across the globe as THE way to manage people in communities and in organizations. Never mind the fact that only 9% of the world’s population live in egalitarian societies and 91% live in hierarchical societies, the egalitarians think they have it right, and everybody else has it wrong. It has come to the extreme of trying to impose “Northern” values on the rest of the world by employing military force.
The truth is, no culture in itself is better than any other. They are not “right” or “wrong”, they are just different.
To each and every culture there are “positive” and “negative” aspects that must be acknowledged and dealt with. No set of cultural values should be imposed on another community.
For decades the Scandinavian model has been touted as an utopia by many media voices. The tragedy in Norway puts the spotlight on some of its shortcomings. The tragedy also raises important issues about the “right” versus “left” movements in politics and about leading change and managing integration in modern society, in all cultures.
Technological advances in communication (the web, social networking, mobile devices) has given enormous power to individuals. This enables people to find their friends and keep in contact, instantly, no matter where they are. This empowerment of the individual has been hailed by the individualistic and egalitarian media as the apex of “Northern” values come to life, utopia becomes reality: everyone is powerful and free to express themselves as individuals.
The popular revolts I the Arab World have been hailed by such pundits as “Facebook Revolutions” and welcomed as a shift towards egalitarian and individualistic values, leaving hierarchical and collectivistic values behind.
However, we need to realize that social networking is not a value in itself. It is just a technology, and it may be equally used for evil purposes as well as for noble purposes. You can find your friends to conspire, to commit crimes against humanity, just as well as you simply agree to meet on Saturday night to have fun together.
Empowerment of individuals may not necessarily be a good thing, when it also empowers the crazies of Oslo and of Arizona, as well as the jihadists and Al Quaeda. The real issue is not “Facebook”, but rather what is it being used for.
People have criticized the Chinese government for trying to control the internet, but the issue all societies need to tackle is: how do you strike the balance between individual freedom and collective harmony? And how do you resolve the dilemma between equal distribution of power and respect for authority?
Every society has to resolve these dilemmas, and each has done so in a different way. That is the basis of the research and analyses made by Hofstede, Trompenaars and the many social scientists who study culture.
Dark Side of Individualism
The dilemma between Individualism and Collectivism, as enounced by Hofstede, or between individual freedom and group harmony, has actually been approached by many philosophers throughout history. It is sometimes summarized as “my rights go as far as where the rights of my neighbor begin”. Hofstede’s research went as far as measuring exactly how far do societies go in terms of choosing between extremes, and he identified (through factor analysis) five dimensions of cultural values, one of which is precisely the “Individualism versus Collectivism” dimension.
Looking at that research we can see how 100 different countries score as compared to each other, and we can see that the cultures who most treasure individual freedom are the Anglo-Saxon, the Dutch-Scandinavian and the Germanic. These are also very egalitarian cultures, as opposed to the collectivistic and hierarchical cultures found in places such as Guatemala and Malaysia, to mention just two examples on the opposite side of the spectrum.
My point here is that extremes tend to be dysfunctional, no matter on which side they are. When you are sitting in one of those extremes, culture-wise, you tend to think that the other side has got it “wrong”, while you have it “right”. However, it is very important to look at the downside of these extreme cultural choices, as we strive to develop cultural values that will make our world a better place for generations to come.
Individualistic and egalitarian societies offer many benefits to individuals, such as freedom of expression and a sense of empowerment. They also value individual accountability and the respect of individual privacy. However, the downside is sometimes the isolation of individuals and a feeling of loneliness in the crowd.
The empowerment of these societies means that anyone is free to buy automatic weapons and “express himself” by shooting random people. Of course, no society deliberately endorses that, but we need to realize that distortions result from the values we espouse.
Whenever a madman goes on a rampage (Oklahoma, Tucson, Oslo, etc) or when we suddenly find that an individual has kept someone as a prisoner in his basement for years (Austria, Germany, California, etc.), we ask each other: how could that happen? How could this have been averted? Why was this not detected earlier?
The answer lies precisely in the values treasured by these cultures. The extreme valuing of freedom goes overboard and the respect for privacy translates into “not noticing” that someone next door is keeping prisoners captive for 20 years. (!)
Similarly, a guy acts crazy, starts sending all kinds of signals that he is psychotic or a psychopath, but people around fail to see that, or fail to act on that.
People fail to see the signs, because they have been brought up to look at explicit communication, rather than implicit communication. They look for content, rather than format. While people in Guatemala and Malaysia (just to use my previous examples) have been brought up to strive for “group harmony” and therefore are keen on body language, non-verbal communication and implicit signs of expression, people in Scandinavia, the Us and in Germany disregard such signs and focus on the explicit content of messages.
People fail to act on the signals they perceive (if they perceive them) because of the respect for privacy and the unconscious voice that tells them “I am responsible for my own actions, not for anybody else’s… this is none of my business”.
And then disaster happens.
This “individual responsibility” taken to extremes leads to social isolation and even lack of solidarity. It breeds individuals who go crazy and turn against those around them.
The opposite example was shown to me recently in Singapore, where a Chinese presenter stressed the importance of “mindfulness” when leading groups in Action Learning. To my request for clarification, she explained that “mindfulness” is “an awareness of the people in the room, of the situation as it unfolds, being sensitive to what is going on”. Collectivistic cultures (such as the Chinese) foster this “mindfulness” in everyone, since childhood. Individualistic cultures do not.
Best Of All Worlds
I am not saying that the Chinese culture is better than the Norwegian. Nor am I saying the opposite. Let’s just stop advocating that this cultural model is better than that one. Let’s start by becoming aware of our own culture bias and how they lead to prejudice. Let’s start looking at the pros and cons of our respective cultures, and let’s explore ways in which we could make them less extreme, in both sides of the respective spectrum.
Right after the Norway tragedy, BBC reporters where suggesting that Norway should “change its policies” regarding police not wearing guns and lacking surveillance and control of public spaces. These reporters did not realize that they were asking Norwegians to become more British, in terms of reacting to the incident as if they were British. They failed to see that they were judging the situation from their own cultural perspective, rather than trying to take an impartial stance or simply asking open questions and allowing the interviewees to express themselves freely.
Perhaps I am asking too much when I long for news reporters who do not strive to push their own agendas as they broadcast from different parts of the world… That would show some real respect for people!
What I am asking for is for us to look at our values and to discuss ways of improving the way we teach our children the notion of “right” and “wrong”, beyond what we were taught by the previous generations. Globalization means that we have the opportunities to explore and learn from all cultures. Globalization is not “Americanization”, it means exploring the full spectrum in each cultural dimension and forging different futures for each community.
It does not mean moving towards a “single global culture”, but it does mean tapping on the richness of exposure to all cultures, understanding where your own culture is coming from, and shaping your community’s future.
Fear Of Change
The biggest obstacle in all this is balancing support and challenge, balancing the need for continuity to maintain identity and the need for change to adapt for new realities. On one side of the spectrum you have “progressives” who push for change, on the opposite you have “conservatives” who resist change.
This is a different dimension from being “right wing” or “left wing”. Conservatives are basically fundamentalists, and the “clash of civilizations” between “West” and “East” is actually a misnomer… In reality it is a clash between conservative Christians and conservative Muslims.
Progressives have nothing to do with that. Progressives are about integrating religions and values to build a better future. Conservatives are about fearing the future and thinking that the past was better, therefore we should preserve it and try to return to it. Progressives are about “up, up and away”; conservatives are about “back, back and stay”.
We need both identity AND change. We need to balance both in order to move forward without loosing our minds and going crazy.
In that sense, the craziness of Oklahoma and Oslo are a signal that, for some people, progress is going too far, too fast, too soon. That doesn’t mean we should stop social progress. It does not mean we should stop immigration and miscegenation, it does not mean we should go back to the notion of “pure” races and Nazism.
It does mean that we must address the social discontents and misfits who turn to violence, that we must manage social change in such a way as to avoid that the Geert Wilders of today turn into the Adolf Hitlers of tomorrow. We need to acknowledge that the “Tea Party” movements all over the world are expressions of the fear of progress, and these movements, when not addressed, may spin out of control (even out of control of their own creators and leaders) and generate mass murder, genocide and even destruction of the whole planet.
In the US and UK media people talk about avoiding that “rogue governments” or “terrorists” (as in Muslim terrorists) gain access to nuclear weapons or chemical weapons and wreak havoc and destruction among millions. I am equally concerned that some crazy Christian fundamentalist in Utah may do the same thing!
People who are afraid of social progress can be very dangerous, whether they pray in a mosque, in a synagogue, or in a cathedral. To avoid the madness we must turn to acknowledging it, recognizing it, understanding it and treating it. It’s no use trying to control it by force, by imposing an Orwellian police state. We do need to address it through education (and I mean radically changing traditional education practices), through social and political debate, through innovative approaches and policies.
If we ignore the craziness next door, we run the risk of becoming their next victim, or worse: we run the risk that our children become the victims of the social craziness we did not address.

Pirates of Talent Across Cultures

2011-07-24T12:56:00.001+02:00

The war for talent in a global market has gone “nuclear”. Although there is unemployment in North America and Europe, that unemployment has not made it easier for companies to find the talented people they need in order to be competitive in a global world.
As companies strive to become more efficient, more competitive, they try to keep the people who can drive that efficiency. They shed the others, those who do not have the skills to be top performers. As a global society, we are facing some complex dilemmas: the more efficient we become, on a global scale, the more we end up differentiating between “talented” people and “less-talented” people. We become efficient as organizations, but we increase unemployment by shedding jobs and the less-talented occupants of jobs.
If you look at these issues from a local perspective, thinking of your country as being your “world” or being your “market”, perhaps the equation seems deceivingly simpler. At least the size of the labor and consumer markets will appear more manageable, counted in millions, and the boundaries of those markets seem clear.
However, when you look at it from a global perspective, the boundaries disappear and the whole issue multiplies in complexity and in numbers. The moral issue of efficiency versus unemployment also becomes more difficult to manage, from the sheer size of looking at a 7 billion people figure as the planet’s total population.
If you are a business person, a government policy maker or an educator, you don’t have to worry about being bored… But what can you do, in practice, to help your organization survive in such turbulent waters, and keep your own job from sinking in a sea ridden with pirates?
The Curse of the Black Pearls
As a company, your talented people are a treasure, on which your company’s future is dependent. This treasure, however, is a living treasure. It needs to be nurtured as it is made of living creatures, not inanimate objects like jewels and precious metals. This living treasure can be made to grow and develop, making it even more valuable. Yet it needs to be protected from pirates, the talent-poachers from competing companies, just like you would try to protect a treasure of gold and jewels. Perhaps you might think of talented people as pearls: they can be cultivated or they can be sought out in the wild. And there are some which are very rare and very valuable: we’ll call them “the black pearls”.
If you are a talent manager in any kind of organization, you need to ask yourself some basic questions, in response to which you will need to make some initial decisions, or choices. That will be your starting point to go out in the world in search of the black pearls to ensure your company’s survival.
Will you cultivate pearls or will you seek them out in the ocean (market)? There are pros and cons to both approaches, and in order to make your strategic choice, it might be good to lake at your overall corporate culture and business strategy, to make sure that your talent management is consistent with those.
In terms of corporate cultures, there are six basic types of cultures. Your specific organization may fall neatly into one of these six basic types, or it may be a combination of two or more of these types among the six basic models. The types are based on Hofstede’s pioneering research on culture and its continuous evolution over the past 40 years (see “Cultures and Organizations” by Hofstede at al. , 3rd Edition, 2010).
The “Contest” culture is typical of US and UK based companies. It emphasizes competition, internally and externally, it focuses on individual performance, measurable results, challenge as a way of motivating people, and financial rewards and prestige linked to individual performance. Since over two-thirds of management books are written and published in North America and the UK, most often people think that this is THE desired culture for any company, anywhere. Actually, it is not. American and British management practices may be very effective in their own markets, but they can be total disasters in other parts of the world.
The “Machine” culture is typical of Germanic societies (Germany, Switzerland, Austria and others). It emphasizes structure, organization and clear processes and procedures. The underlying assumption is that you have a well-designed and clearly communicated process, your company will perform excellently and be successful. It depends heavily on expertise for the design, communication and control of such processes, but once you have these in place, the system is practically foolproof.
The “Network” culture is commonly found in Dutch and Scandinavian companies. Its emphasis is on satisfying all its stakeholders. This means not only shareholders (return on investment), and clients (market share) but equally important: staff, suppliers, government regulators and the community at large. Maintaining this balance can be very difficult, but companies with this type of culture have become adept at doing that. Emphasis is not so much on performance, neither individual nor team performance, but rather on stakeholder management. There are huge implications on management practices, which may differ sharply from those found in a “Contest” company.
The fourth style is the “Pyramid”, found in most companies based in Latin America, Africa and the Middle East (also some coming from Russia and Eastern Europe). These companies are more hierarchical in the way their structures operate. There are clear lines of authority, communication is “top-down”. Business is done with an emphasis on relationships more than on tasks, internally and externally. Loyalty is essential. Leaders, at every level, determine the success of an organization or its failure, more than the quality of its teams or the expertise of its individual technicians. Again, huge implications for management practices, differentiating from the previous three corporate culture styles.
The fifth style is “Family”, more often found in Asia. Very similar to the “Pyramid” because of its emphasis on hierarchy and relationships, it differentiates from the “Pyramid” because the informal organization is often more important than the formal. “Family” companies also tend to be more flexible and “ulterior-motive” oriented. Positioning in the market for the long term is deemed more important than obtaining profit in the next quarter.
The “Solar System” is the sixth basic type, and it is characterized by a significant tension between centralized hierarchy and the autonomy of middle managers. On one hand the “sun” in the system pulls planets to follow centrally designed directives, communicated in a top-down fashion. On the other hand, the “planets” (middle managers) re-interpret these directives and keep their own “satellites” spinning around them, each of them acting as king of his own hill. This type of culture is often found in companies based in Southern Europe (France, Italy Spain), but also in Poland and Belgium.
So, as a talent manager, the answers you may have to the primary issues of your function will be influenced by your company’s culture.
If your company has a “Contest” culture, you will seek to identify the best performers as early as possible, who can deliver measurable results in the short term, and who are also the most confident and ambitious individuals yearning to grow and develop into larger roles. You may easily select a pool of talent among your broad employee base, perhaps just 5 or 10 percent of your total staff, and give them your total attention. Other staff members may yearn to be on that selected pool, but they are aware that there will be opportunities for them to be included, as long as they are committed to improving their performance and winning the internal competition to be selected.
If you are in a “Family” corporate culture in a Malaysian company, for example, it’s a different situation and a different approach may be needed. Selection criteria may be influenced by relationships as much as by performance. The sheer ability to relate to clients and colleagues is more valued as a part of excellent performance, rather than the “bottom line” only, “hard facts” approach of a “Contest” culture. You are likely to put more weight on potential, rather than on performance, when assessing talent. Your very definition of “talent” may be different, to begin with.
If you are in a “Network” company and you try to select just 5% of your staff to be in your talent pool, you will face enormous difficulties. “Network” companies are very egalitarian. They reject the notion of choosing a small group to be outstanding. They reject the sheer notion of “black pearls” being more valuable than “common pearls”, and they frown on whoever tries to stand out among the rest. Your “black pearls” will be cursed by their colleagues, rather than admired, and they are likely to be sabotaged and ostracized.
All I am saying is: be aware of your company’s culture bias, as you start thinking about the way you wish to manage your talent; and be aware of the culture bias behind each of the procedures and tools that you are considering. Avoid using approaches that may clash with your corporate culture. If you choose for the clash, do so at your own risk and be prepared to dedicate a lot of energy to manage the clashes involved.
Talent Management 2: Dead Man’s Chest
As you progress in your talent management endeavours, you need to ask yourself about how you are planning to develop your identified talent, and even before that: what will you be developing them for. By that I mean: what kind of positions will be filled by these “black pearls” (whether you cultivate them or decide to find them in the depths of the ocean (I mean, “market”).
You need a succession plan, in terms of identifying key positions, for which you will need to hire or groom talent to be ready when those positions become vacant, in the near or distant future. Think of each key position as a role whose current occupant will eventually “die”; that is: the occupant will leave the position, to take another position in the company or in another company, or to retire. For each person who “dies” for that position, you need to have a chest of potential candidates, identified as capable (or almost) of filling that position. For each key position you need to have a “dead man’s chest” of candidates, hopefully with a few “black pearls” among those candidates.
Because, if you don’t match your pearls with open positions, you run the risk of losing your pearls to the pirates. Your talent will leave the company to work elsewhere if they feel they will not get the opportunities they deserve.
What are these positions like? Are they positions that require occupants to be “a mile wide and an inch Depp” (I mean deep, sorry…), as generalists, or should they be “an inch wide and a mile deep” as specialists? Should you develop your talent to be generalists or to be specialists?
Again, corporate culture determines different approaches to succession planning, to career development and to matching positions with candidates. In “Contest” cultures you can keep people motivated through challenging projects, recognizing individual performance, providing performance-linked bonus schemes. People may remain in the same job level for quite some time (hierarchy is not so important) as long as they feel that their performance is being rewarded in a way that makes them feel proud.
In a “Family” culture, motivation is more linked to position (hierarchy), to the scope (responsibility) of the job, to how many people report to you. Motivation is also more linked to the importance you are perceived to have in the informal structure, rather than in the formal organization. This can be quite complex.
In a “Pyramid” culture the “dead man’s chest” is quite clear to all concerned. There are clear positions in the formal structure. In a “Family” structure the formal position may be rather irrelevant. It is more motivating to be a trusted advisor in a “side” role close to Senior Management, than to be a Director in a role with no real authority or autonomy in practice. Managing talent in a “Family” culture requires more nuanced approaches, which may be more demanding for some people less comfortable with that kind of situation.
Generalists are easier to develop in a “Contest” culture. Successful performance is valued for its results, so a good manager needs not be an expert on a specific line of work, as long as he (or she) can deliver the expected results on the bottom line. In “Pyramid” cultures it is important that a manager demonstrates knowledge of the subject, since the way his department operates is more important than financial results.
At World’s End
When your company is operating in a global marketplace, things get more complex and more difficult. You will have positions in different corners of the world. They will be occupied by very different people, perhaps by people coming from parts of the world which are different from where the positions are located. The criteria for measuring success will be different, the criteria for attracting and retaining talent will be different. Successful companies are the ones capable of adapting their practices to the different locations they are operating in.
Historically, “Networking”, “Machines” and “Solar System” companies have done better at adapting their practices to far-flung parts of the world. The Dutch can be quite good at it, perhaps because they come from such a small country and have learned to do business “at world’s end” centuries ago. Some argue that the Dutch “East India Company” was the first multinational corporation, established in 1602. Others point to the fact that, in the Middle Ages, Holland was regarded by many as “the end of the world”, being on the tip of Europe. Groningen, a village at the Northern edge of the Netherlands, was referred by the Dutch as being “the end of the world”. Locals argue that, actually, it is not; but from Groningen you can see it…
The fact is that, by contrast, “Contest” companies have a scattered record in that respect. Some have been very successful as global companies, others failed miserably and had to retreat back to their home markets. Nowadays more and more “Contest” companies are learning to be more adaptable. Even McDonald’s, once proud to serve the very same products all over the world, has in recent years adapted its menu to cater to different tastes in different countries.
When you manage talent “at world’s end” you will need to adapt your practices, and perhaps make good use of the fact that young people are asking for international opportunities, more and more. Europeans and North Americans are eager to travel, to get international exposure, and to return to their home countries with that added experience.
However, when your talent is originating from a developing market (such as Paraguay or Pakistan), then often people prefer to continue their careers in the US or Europe, rather than returning home. This becomes a problem for those companies based in emerging markets and who perhaps financed the development trips of their “pearls”, only to lose them before reaping the fruits of the investment made.
On Stranger Tides
The new, stranger tides, which we see in 2011 are due to the rise of emerging markets, which are increasing their share of the global trade flows, of the global consumer markets and of the global labor market as well. Europe and North America are still struggling with the financial meltdown of 2008. Asia, Latin America and Africa are booming and driving the global economy’s shaky recovery. Young people all over have flocked to Europe and the US to get a better education, and have often stayed there to get better jobs, refusing to return to their home countries. Now the tide is changing.
The jobs in Europe and North America are scarce. Barriers to immigration are being erected, higher and higher. Opportunities in emerging markets are becoming more abundant and better paid, more competitive than before. There are also more continuing education offerings of comparable quality, with many American and European universities setting up campi in Asia, for instance. Emerging market companies are also becoming global companies, competing for leadership in the global market whether their head offices are in Sao Paulo, New York or Kuala Lumpur. These companies tend to have “Pyramid” and “Family” corporate cultures, and they are just as effective in the global markets as other culture styles. Their talent management practices are also different, but just as effective, as long as they are consistent with company culture and business strategy.
For a talent manager, managing talent “on stranger tides” means that you have to search for talent in all seven seas and be able to fight off the pirates in all of them as well. Companies are hiring Vietnamese engineers to work in Africa for Brazilian companies. How do you manage people from a certain culture, working in a different culture environment for a company based on still a different culture environment?
If you are in Malaysia, a young nation formed as such less than a century ago, itself combining Malay, Chinese and Indian cultures, how do you decide on your talent management strategy? Is your company a “Contest” company like the British and American companies, or is it more of a “Family” corporate culture, closer to the values found in the Malay, Chinese and Indian cultures? Or is it (probably) a combination?
You need to develop your own approaches, consistent with your corporate culture and business strategy. Don’t feel compelled to follow a text book produced in a different culture. Design your own models and adapt them when applying them in other countries. Use them daily and Knightely (sorry, nightly…) and watch your talents Bloom!

Culture in the News #6: The Murdoch Farce

2011-07-22T09:55:00.002+02:00

The rage in the UK seems to be about the phone hacking (invasion of privacy) rather than about the fact that Murdoch has been corrupting police, news media and politicians all the way up to Downing St. 10... This is linked to a very high Individualism score in the UK, which accounts for the invasion of privacy being considered more of an offense rather than the millions of pounds in bribes payed out to government officials.

Arab Spring Misread

2011-03-08T18:59:00.001+01:00

The media in Europe and North America have been cheering the anti-government protests in North Africa and the Middle East as “a victory for democracy and freedom” and as “the beginning of a new era”. “A New Arab World” read the headline in Paris. Before toasting to this “new era” and risking disappointment by the time 2011 is over, people should take things into perspective and try to understand what is really going on there.
Looking at it from a culture perspective, we should realize that what is happening is actually not that new, nor will it necessarily lead to transformational change. As early as the 70’s, Geert Hofstede pointed out that, in “High Power Distance” (Hierarchical) cultures, changes in politics happen “by revolution”, while in “Low Power Distance” (or “Egalitarian”) cultures such changes happen “by evolution”. Research shows that Arab cultures score high on Power Distance (PDI=80). In the UAE PDI can be as high as 90, while in Egypt the researched score was 70. So we are definitely talking about High Power Distance (Hierarchical) cultures in North Africa and in the Middle East.
It’s important to note that the toppling of governments by popular revolutions is not something unprecedented in Hierarchical cultures. On the contrary, it happens rather often. By doing so, the Tunisians, Egyptians and Lybians are not “becoming more American”, or more “Egalitarian”; rather, they are confirming their respective national identities and their basic values, which are different from those found in the US and in Northern Europe. Basically, they are protesting against their governments which have failed to cater to their basic needs and aspirations. These basic aspirations are not “to install an American-style democracy”, not even “to choose their leaders in free elections”… Their basic aspirations are simply to have jobs that enable them to raise their families and give them a certain standard of living.
In a sense, what is happening in the Arab cultures is not very different from what has been observed in Latin America in the past century or two: strong, long-lasting government leaders facing revolutions that ousted them by force. The Americans even coined the derogatory term “Banana Republics” to label these Latin American countries in which governments were constantly changing through military “coups d’état”. Perhaps the Arab cultures are going through a similar phase. They don’t grow bananas in North Africa, so maybe the process is not linked to that fruit…
On the surface, the Arab and Latin American cultures seem very different: the external (visible) layers of culture are quite different. The traditional clothing, eating habits, music, religion and rituals are very different. The underlying values, however, are somewhat similar. Practically all Latin American, North African and Middle Eastern cultures are of the “Social Pyramid” type. Research has shown that they share high scores in Power Distance and in Collectivism (as the opposite of Individualism) and also in Uncertainty Avoidance (UAI). This is not anybody’s opinion, this is the result of statistically robust research conducted by different scholars in these cultures over the past 40 years. Anecdotal evidence merely confirms what research has revealed since decades ago.
The Fake “Facebook Revolution”
The story in the media is a very enticing one: millions of youths, connected by 21st Century technology, changing the world for the better. A wonderful story, that most of us (myself included) find very attractive. A sort of “hippie revolution” of the New Millenium, powered by social networks. As the Brazilian humorist Jô Soares used to say: “the only thing that would be better than that, would be if it was true!”
The truth is that, indeed, technology has made it possible for people to communicate much more easily and connect constantly. But technology did not drive the revolutions, people with guts did that. The enhanced connectivity made it possible to organize crowds much more effectively in Cairo 2011, compared to Paris 1968. It’s not just about Facebook, or Twitter, it’s about the whole infrastructure of satellites, mobile devices and the internet. And this infrastructure works for all parties involved: for the freedom protesters and for the police force repressing them, for terrorists and for the military. The technology is available to all, and even though in Egypt the government managed to shut down communications among protesters for a while, there are so many ways around such blockades, and economies are so dependent on the continuous functioning of this infrastructure, that it becomes impossible to shut down protests without simultaneously shutting down all of society.
The technology, therefore, accelerated the social communication processes. In 1968, it took days to get in touch with youths at the Sorbonne and get the numbers necessary to fill the streets. This can now be done in hours, instead. By the same token, repression technology is also much more advanced: police use tasers, high pressure water, they are better organized and more adept at mobilizing platoons than they were 50 years ago.
What has not changed are the underlying values. The values driving culture dimensions change very little over time, and in terms of national culture, 50 years is but the mere blink of an eye.
The cultures in Egypt, Tunisia, Lybia, Bahrein, Yemen, Morocco, Jordan, Iraq, Iran and Saudi Arabia are still pretty much the same in terms of the underlying values, just like they also have remained quite the same in European and American cultures for decades. Mostly, the external layers of culture have changed; and it will be mostly the external layers of culture that will continue to change in the coming decades. The “inconvenient truth” in culture is that the underlying values change very slowly, even more slowly than the climate, because they are determined by the education of children. National culture values change only if the education of children changes. As long as families and schools continue to educate children in the same way, the underlying values of cultures will remain the same. As Belchior, a Brazilian songwriter of the 70’s lamented: “we are still the same, and we live just like our parents did”.
This does not mean that change is doomed. What it does mean is that change will happen according to the underlying values of each culture. Americans will continue to be Americans. Egyptians will continue to be Egyptians. And people will perceive others through their own cultural bias. We all see the world through the biased spectacles that were imposed on us as children by our own culture.
The Anglo-Saxons, the Dutch, Scandinavians and the Germans are all “biased” by their own cultures (like everyone is biased by their respective cultures) to see the world in terms of Low Power Distance, little or no hierarchy, flat social structures, egalitarian societies as an ideal; they also value Individualism and freedom, to the extent of abhorring government pretty much like the Anarchists used to profess in the 1900’s (the Tea Party movement in the US is the prime example). No wonder then, that when they look at the revolutions in Egypt and in other countries in North Africa and the Middle East, they perceive them as shifting towards their own values of individual freedom and equality.
I must disappoint them by saying that kicking Mubarak and/or Gaddafi out does not mean that Egyptians and Lybians are becoming American or German. They want the current leaders to be replaced by other leaders, of their own choice, but they still feel that some people in society should have more power than others (hierarchy) and should be entitled to certain privileges that accompany the greater responsibilities these people are burdened with.

Authority and Group Harmony
What brought down the dictators in North Africa was not the pursuit of less hierarchy and more individual freedom, but rather it was unemployment and the high price of food. People in a “Social Pyramid” want a strong, “undemocratic” government, as long as the situation allows them to enjoy a satisfactory standard of living. It is the Americans and North Europeans who have issues with authority figures, not the North Africans. People in the Arab world did not protest for democracy, they protested for better living conditions. When the situation worsens, they will take to the streets and replace their dictators with other, equally strong, powerful government leaders.
“Social Pyramid” cultures are also, by definition, collectivistic societies. This means that people belong to “in-groups” who take care of them in exchange for their loyalty. Group opinion is more valued than individual opinions, and group harmony (within the “in-group”) is a priority. When sufficient critical mass is mobilized, thousands quickly become millions, growing exponentially as we saw in Tahrir square. These millions may be crying out for freedom, but it is a different style of freedom. These people are not “Tea Party” advocates! They have formed one large group for the purpose of ousting the current leader, but they will revert to their usual group loyalties once the leader is replaced, and the large group will be fractured accordingly.
What we saw in Egypt was a fine example of a collectivistic society at work. As the crowds increased in numbers, more and more people raced to join them. The larger the crowds, the more people wanted to be part of that. And the way they handled the military was also a fine example of “Social Pyramid” values: avoiding confrontation, the crowds enticed the military to join them, to be part of the collective process. Also, the protesters had no problem in having the military take charge of an interim government (demonstrating respect for hierarchy). The issue was Mubarak and his allies, not the military per se.
A High PDI and collectivistic society does not mean that people enjoy being bullied by dictators; what it means is that people rarely voice their dissent individually (like they do in Individualistic cultures). Rather, they voice their dissent collectively, as a group opinion. Because they have a great respect for hierarchy, they will endure abuse from authority figures to a greater extent than people in Low PDI cultures; but there is a limit to what they will endure, and when that limit is crossed, people will gather in groups and not only “voice their dissent”: they will actually make a revolution and topple government.
None of this is “bad”, or “good”. It is simply consistent with the culture values of those societies.
“North-Westerners” may be surprised, but in two years time societies in the Arab cultures will look very similar to what they looked like in 2008, before the global economic crisis. The leaders may change, and some superficial aspects of culture will continue to change as they have been changing. However, the deeper aspects, less visible and related to core values, will change very slowly. The way people are managed, relationships are formed, business is conducted and communication is carried out, will continue consistently with each culture’s underlying values, and will only change over a longer time than we would normally expect.
Moving towards free elections in North Africa is certainly a change, there is no denying that. Looking at Latin America in 2011 and comparing it to 1911, anyone can see there have been changes. These changes, however, are more superficial than we think. The high respect for hierarchy is still there, much higher than in the US or Northern Europe. In the Arab World, a similar process is likely to occur: there will be changes, there will be more freedom. However, the basic values will continue to drive the way people behave at work, within their families, among friends, wherever they are. Changes in the political structures are much more superficial than we think, in terms of culture. The core values of a culture will only change very slowly, requiring a lot of patience.

Crystal Balls 2015

2011-02-08T10:31:00.002+01:00

At the beginning of a new year many people enjoy making predictions about what will happen during that year. This includes “futurologists” who make “scientific” analyses of political, economic and sociological trends, and it also includes somewhat “less scientific” experts such as astrologists, soothsayers, palm-readers and crystal-ball gazers.
To speak about the future it does take balls, not necessarily crystal balls… It takes courage to make forecasts and predictions which might eventually be totally wrong and leave the authors of such forecasts looking pretty stupid.
I will now join these people who have enough balls to make forecasts, and share with you my own predictions for the next five years. This is what I see when I look into my private crystal balls and tune them to 2015.
Europe
The European Union will continue to advance, hesitantly, towards further integration. There will be moves to align fiscal policies, pensions and other economic issues. They will be accomplished through extensive discussions and much haggling, and this will continue to annoy the Americans (most of all) and everyone who would prefer to see a more clear-cut, decisive process. The cultural diversity of Europe will drive the lengthy discussions, the difficulty in quickly reaching a conclusion. At the same time, the need to create regional unity in terms of economic and political issues, while maintaining diversity in terms of culture, is what will ultimately determine what happens.
Slowly the world will understand that globalization (and European regionalization) is desirable and inevitable in terms of economic issues (such as regional currencies) and political structure (such as empowered regional parliaments). This, however, does not mean cultural integration. Culture moves in the opposite direction, towards greater diversity.
Most analysts fail to realize that culture issues are separate from economic issues. This is why Europe will continue to integrate economically and politically, but will continue to diversify and devolve from a cultural point of view. Europe will have eventually (perhaps 50 years from now) a unified economy, unified legislation, unified structures. Yet it will be more culturally diverse than ever and people will strongly identify with their local “grass roots”, while feeling “European” at the same time. To feel “European” includes that feeling of identity with your local roots, it includes the rich cultural diversity which is a characteristic of Europe. European identity and local identities are not mutually exclusive concepts.
Globalization
This paradox, between centralization and unification of economic and political mechanisms, while culture values become more diversified and decentralized, has been previously spotted by Alvin Toffler, in the 70’s, when he debunked the Orwellian myth of mass production leading to loss of diversity. As pointed out in “Future Shock” and “The Third Wave”, new technologies mean that companies can mass-produce with increasing personalization. Customers can order products according to highly individualized specifications. Rather than buying your Ford Model T only in black, modern consumers can choose from a rainbow of colours and also customize everything about the cars they wish to buy, from what kind of motor to what type of cup-holders they prefer. The beauty of modern production techniques is that you are not restricted to three choices of tennis shoe models: there are thousands of possible choices and you can create your own unique model.
As Sumantra Ghoshal pointed out in the 90’s, global companies will need to excel simultaneously in three different axis: global efficiency, regional responsiveness, and innovation. The same forces described in his “Ghoshal Mattrix” are at play regarding globalization (and European regionalization). To gain efficiency, economic mechanisms such as sharing a common currency, bringing down trade barriers, allowing for free movement of labour across borders, aligning fiscal policies and retirement policies, will need to be put in place. This will continue to happen, first in Europe, and then in other parts of the world. Global unity will eventually happen, not five years from now, but perhaps a hundred years from now.
At the same time, global responsiveness will increase, driving a different set of issues in the opposite direction, towards decentralization and individuation. This will be about culture, values, personalization, identity. Local culture differences will become stronger, and so will the sense of personal identity, and identification with idiosyncratic groups, which might actually not be “local”, but will be groups that share specific values though they might be geographically dispersed.
The paradox will be made possible through innovation, the third axis. Technology will make viable the coexistence of global efficiency and local responsiveness. Innovations in communication, connectivity, production, will make many things possible: the personalization of education, the production of customized consumer goods, the polling of opinions, voting on specific issues (not only at elections). We are barely beginning to experience the benefits of this customization trend.
The rise and fall of nation-states
In this process, the concept of “nation-states” will gradually change and become much weaker than it has been in the 20th Century, when it had its peak. Already in the beginning of the 21st Century we can see that-nation states are decreasing in power. When you think about it, nation-states are a fairly recent and short-lived concept. They were invented in the 19th Century and reached their peak less than 200 years later, in the late 20th Century, declining afterwards.
By 2015 it will be increasingly clear that nation-states have been caught in the middle of a “scissors” process: centralization of economics and political structures on one hand and decentralization of culture and identification in the other. The paradox will continue to be stretched.
In politics the paradox will be quite evident. On one hand, there will be increased centralization through the formation of regional blocs such as the European Union. The driver behind that will be the economic issues and a wish to avoid armed conflict. At the same time, new forms of political representation will drive democracy towards greater decentralization. Local representation will gain strength and there will be greater empowerment of local institutions and local control of budget issues wherever that makes economical sense. Scale will still drive certain issues towards centralization (such as building highways and high speed trains), while whenever possible, local residents will decide on local issues (such as parking regulations and noise levels).
Currencies
By 2015 the Euro will not crumble, rather it will become more robust. The Euro will co-exist with the American Dollar, the Chinese Yuan, and a few surviving “exotic currencies” struggling in different corners of the planet. Perhaps we will already have an international “basket of currencies” along the lines of what the Chinese proposed to the IMF in 2009. If not, at least we should be moving in that direction and away from the “currency wars” seen in 2010.
Geopolitics
When applied to geopolitics, the paradox of the Ghoshal Mattrix means that we will move from the polarization of the 20th Century (Allies versus Axis, US versus USSR, Capitalism versus Communism) towards multilateralism. By 2015 it will be clear that political and economic issues will be driven by the co-existence of major powers: Europe; the US and its closer allies; China and its closer allies; and a host of “non-aligned” countries such as Brazil, India, Indonesia and others.
It will be interesting to see the impact this will have on American and British diplomacy. Both these cultures are driven by a polarized vision of the world; it is to be expected that dealing with a multilateral world does not come naturally to them, but rather requires greater effort, compared to the Scandinavians and Dutch, for instance.
Democracy will continue to spread by 2015, driven by connectivity. Democracy will be increasingly fractioned into multiple groups, rather than polarized. It will be more nuanced, rather than “black and white”.
China will be more democratic than today, more democratic than it has ever been, but still quite different and unique in its culture and political-economic model, further annoying the “Western” media and analysts who would like to see it behave differently. It will continue to grow, perhaps not always at the fantastic rate seen in the past decade, but I don’t see China crashing economically, socially or politically.
There will greater democratization of other countries in Asia, Africa and Latin America. However, they will have each their own political model in tune with their cultures. This means, in most cases, very hierarchical structures, whether “right-leaning” or “left-oriented”. It also means multiple political parties in each country, rather than the “two-party model” favoured in the US and UK.
New models of democratic representation will emerge in the Middle East, in different parts of Africa, in Asia. They will challenge the known models being used in the US and in Europe, relying more heavily on NGOs and other forms of representation such as web-based social networks and mobile phone polling.
Business and Values
By 2012 the global economic recession will be over and recovery will be well on its way. Growth will continue from then on to 2015, driven by continuous demand in the “emerging” economies. Profitability and unemployment will be less of a problem, so companies will return their attention to “the war on talent”.
Talented people will put increasing pressure on global businesses to be socially and politically relevant. Companies who do not address these issues will have difficulty in hiring the best and brightest. That will also require managers to address issues about values, political stances and the balance between individual needs and corporate objectives.
People need meaning and a sense of belonging. In past centuries both were provided by religious and political institutions. Increasingly, they will need to be provided by employers, whether private or government-led institutions. As retirement ages are delayed, due to the collapse of pension funds, the generation gap will increase. It will be felt more intensely as the speed of change continues to test human limits to adaptation.
In 2015 “soft” issues such as having meaningful work, corporate social responsibility, sustainability, will all dominate corporate and individual agendas. New labels will replace the existing ones, but the essence of issues will remain the same. What used to be called “citizenship” will be represented by a new set of “buzz words”. Whatever the labels in fashion, the issues of meaning and belonging will be the most important ones, underlying all political discussions and determining the outcomes of the "war for talent" in the corporate world.
Connectivity
Connectivity extrapolated will raise new issues. Everyone will be able to talk to everyone, all the time.This will bring about the end of separations we’ve grown used to: the separation between “life” and “work”, so clear in many Northern Hemisphere cultures, will become blurred, as people remain connected to their work while commuting, while at home, while on holidays. And people will remain connected with their leisure activities while at work, frustrating corporate attempts to stop people from doing that. Most Southern Hemisphere cultures are better equipped to deal with this, since they already have less of a separation between work and leisure today.
Another separation that will fade pertains to geography: it’s easy today for people to ignore what is going on in Africa if they live in a different continent. As connectivity continues to increase, no one will be able to say “that is not my problem, I don’t live there”. Issues will come to you, wherever you are, whenever you are. We’ve had glimpses of that with live broadcasts from the Iraq invasion, from the protests in Cairo, and the conversations going on between all parties involved, through twitter and facebook. This changes the face of war and of social interaction. Would World War II have happened if people had then the connectivity they will have in 2015? Probably not.
Leading and managing people will be changed forever because of connectivity, both in the private sectors and in the public sectors. We should start thinking about this and preparing for it.
Before I bust my (crystal) balls, let me stop here for the time being. There is someone ringing at my door who I had not foreseen would come to see me today…

Language and Culture

2010-09-03T16:35:00.000+02:00

In America there seems to be a notion that language actually shapes values and culture, rather than the other way around… It should seem fairly obvious to most people by now, that indeed values are at the core of culture and they determine the outer layers of culture such as overt behaviour, rituals, symbols and language.
The pioneer scientific research studies of Prof. Geert Hofstede, which revealed the role that values play in this process, are almost on their 40th anniversary of publication, yet the general public, and most of the press, remain quite ignorant of this, plus the fact that extensive research has been carried out throughout these last four decades, by many independent behavioural scientists, basically confirming Hofstede’s initial findings.
Guy Dechter has recently published an essay on the NY Times concluding that, indeed, language does NOT shape perceived reality, yet he fails to go beyond the general notion that “cultures are different”. Dechter expands on the notion that language limits the expression of certain concepts and feelings, mentioning a couple of examples illustrating how each culture develops certain terms which are difficult to translate to other languages and cultures. Perhaps the main difficulty he would need to address is the fact that he is trying to express himself in English, a language which imposes many limitations.
English has become the most widely dispersed business language in the world, the “lingua franca” used by business people to do business across borders. Yet it compares unfavourably to other languages such as Portuguese, which enjoys a wider range of vocabulary and expressions to convey nuances much more precisely.
There are some obvious limitations of English which are frequently mentioned, such as the lack of a proper term to translate “saudade” from Portuguese (meaning the feeling you have when you “miss” someone, some place or some time), or the lack of a term to translate “gezelig” from Dutch (meaning a psychological atmosphere of togetherness, coziness and warmth when you are with friends and/or family). A couple of examples refer to the lack of proper translations from German, like “Weltanschauung” (a way of perceiving and approaching the world around you) or “Schadenfreude” (relishing someone else’s misfortune).
Yet the limitations of English are more basic, such as the fact that there is only one verb (“to be”) to translate from the Portuguese “ser” and “estar”, which make important differentiations in Portuguese. “Ser” means “to be in an abstract sense, in an absolute, timeless and placeless sense, such as in Shakespeare’s “to be or not to be, that is the question”. By the way, this has been accurately translated into Portuguese as “ser ou não ser, eis a questão”.
What about “estar”? It means “to be” in a concrete, time bound, place bound sense. When I say “eu estou feliz”, it means “I am happy” here and now; I may not be happy somewhere else, and I Iwas not happy yesterday and may not be happy tomorrow. When I say “eu sou feliz”, it means I am a happy person, existentially, regardless of place or time.
This was once brilliantly illustrated by a Brazillian professor who had been appointed Minister of Education and was leading a wide reform of public education in Brazil. He was challenged by a TV reporter on certain aspects of this reform and whether those aspects were not contradicting some of his stances as a professor. His reply was: “eu estou ministro, eu não sou ministro!” Meaning, I am a Minister (in the time-bound, place-bound sense) now, I am not a Minister (in the absolute, timeless and placeless sense) forever, and I was not a Minister before. Such a statement can never be made in English without an elaborate explanation.
The distinction is made more important by the fact that “ser” and “estar” are both auxiliary verbs, just as “to be” is an auxiliary verb.
Similarly, Portuguese has two verbs “ter” and “haver” which are both translated as “to have” in English. “Ter” refers to possessing something, as in “I have a purse” or “I have an idea”, while “haver” is more used as an auxiliary verb, as in “it has been a while since we have seen each other”, (“há tempos não nos vemos”). This has been brilliantly simplified by the Americans as “long time, no see”!
This simplification of the language is a major factor in explaining the dissemination of English all over the world as a business language. It is much easier to learn simplified expressions in English than to learn the many complex nuances of Portuguese.
The economic factor, of course, is the other factor, perhaps most important: English was the language used by the British as they spread their culture across a global Empire, and English (or something quite close to English) has been the language spread through American economic domination during the second half of the past Century.
The question now, of course, regards the future: as China increases its role in world trade, will that be accompanied by a substitution of English by Chinese (Mandarin) as the international “lingua franca”? Probably not. It seems much easier for the Chinese to learn English (and they are already doing it by the millions) than for most people in the so-called “West” to learn Chinese.
The real issues which need to be addressed are the core values which lie beneath the surface in culture. It is the different values which determine behaviour, practices and policies, not language. The Americans avoided the core issues of culture in the 70’s and 80’s, just as Hofstede’s research was beginning to make an impact in other parts of the world. Meanwhile, in the US, people were finding that “language shapes our way of thinking”, so there was undue emphasis on avoiding certain terms relating to diversity issues.
That’s when it became “politically correct” to use certain terms and “politically incorrect” to use others. It became “incorrect” to refer to people as “black”; rather, the “hyphenated Americans” were introduced in the language: “African-Americans”, and later “Native-Americans”, “Italian-Americans” and so on.
Also, it became derogatory to address adults as “girls” or “boys”… To most cultures around the world this politicization of the American language seemed a bit ridiculous. You don’t find these aspects in other cultures.
The core problem of basic values was being skirted by focusing attention on a superficial aspect of culture (language).
It’s like the old joke about the husband who comes home to find his wife cheating on him having sex on the living-room sofa with the next-door neighbour. So the husband decides to replace the sofa with a new one…
Rather than addressing the core issue (the wife and their relationship), the husband focuses on an accessory (the furniture).
Culture can only be understood (and eventually changed, which is a very difficult and long-term process) by looking at the underlying values supporting the behaviour observed on the surface.
These values were defined by Hofstede as “broad preferences around one state of affairs over another, to which strong emotions are attached”. His research has identified initially four dimensions of culture values, then a fifth was discovered in the early 90’s, and now a sixth dimension has been identified in 2010.
These value dimensions reflect the way different cultures have unconsciously resolved six basic dilemmas of people living together:
1. Power Distance – The degree to which the less powerful people in society accept the fact that power is distributed unevenly in that society.
2. Individualism – Whether people should feel responsible only for themselves and their immediate family or whether people should feel taken care of by groups, in exchange for loyalty.
3. Performance (Hofstede called this “Masculinity”, but such a label opens a totally different can of worms) – Whether a society values performance and awarding status to high performers, rather than valuing quality of life and caring for others.
4. Uncertainty Avoidance – The degree to which people feel threatened by ambiguity and develop mechanisms to avoid it.
5. Long-Term Orientation – Whether a society takes a pragmatic, long-term approach or instead takes a normative, short-term oriented approach.
6. Indulgence – Whether a society allows indulgence in the natural pleasures of life, or whether it restrains that in general and to certain places and times.
The issues in American culture are linked to its core values: the belief that power should be distributed equally among people; the incentive for people to feel responsible for themselves and immediate family, rather than being loyal to a group; the emphasis on performance rather than caring; the relatively low concern over ambiguity; the normative and short-term orientation; and the preference towards indulgence versus restraint.
It’s important to realize that these characteristics have been researched with tens of thousands of Americans, many times, in many samples, compared with samples taken from other cultures. They are not the product of someone’s opinion: they are the product of many research studies.
Most important is the combination of these characteristics, not the individual analysis of each dimension in separate. For instance: the combination of Individualism and performance orientation says more about America than looking at these dimensions in isolation. By examining the research diligently, one can better understand America and have an intelligent discussion about where it is and where it wants to go in terms of national culture. Ignoring the research is just another way of avoiding the real issues that need to be addressed.

Six Visions on Leadership

2010-08-29T18:43:00.004+02:00

Six People In A Bar – Part 2
Joe: Let’s start a drinking game!
Jan Kees: Why are you always turning everything into a competition? We don’t need a game to start drinking… All we need is a discussion, and we are already discussing, so let’s start drinking!
Heinz: OK, let’s get organized: who wants beer? I will take note of what each person wants and I will get the drinks at the bar. Next round will be taken care of by Jean Pierre, who is sitting on my left, and so on, in a clockwise fashion.
Zé Pedro: My dear friends, let’s not argue about something so pleasant as drinking among friends. Go ahead and order beer for everyone, Heinz. I have something to talk about with all of you, I need your help.
Jean Pierre: That’s fine, Zé Pedro, but I want an Amstel beer, not a Heineken, Heinz.
Hu Tan: It’s the same thing, Jean Pierre. Heineken bought Amstel years ago and they’ve changed the formula, now Amstel tastes the same as Heineken.
Jean Pierre: Maybe it’s the same to you, but not to me! Heinz, get me an Amstel, not Heineken!
Zé Pedro: Enough with the discussion, guys. I’ve been asked to write an article about “Leadership” and I don’t know where to start… Any ideas?
Jean Pierre: That “leadership” stuff is bullshit! We don’t even have a word for it in French… It’s just another American stupid idea. Somebody says “leadership” and suddenly the whole world is following the Americans without understanding what they are talking about.
Joe: I’ll tell you something about leadership: it’s about taking action! You know why there’s no word for “leadership” in French? It’s because the French are still discussing about whether there should be a word for it or not, and what kind of definition should there be, and is it a noun or a verb, and so on! Meanwhile the Americans are just doing it!
Jan Kees: According to me, leadership should be a rotating function in a team. Everyone should have a chance to be a leader, depending on the situation. The leader should not be always the same person.
Jean Pierre: What do you mean “according to me”? What is this, “Dutchlish” again? Just state your opinion, say “I think…” and so on and so on!
Jan Kees: I will drop the “Dutchlish” when you drop your accent, OK? Hu, what do you think? Give us an oriental perspective.
Hu Tan: Lao Tse said: “In order to lead a people, walk behind them!”
Joe: That’s weird!... How can you lead anybody if you’re not in front of them? You have to be out in front, in order to face the challenges, bite the bullets, make the decisions and show the way! You can’t do that from behind…
Hu Tan: Both these things are true… They are not mutually exclusive.
Jan Kees: Hmmm… I don’t know… They look mutually exclusive in my opinion. You either lead frpm the front or from the back, so what is your position? It looks like a dilemma to me. Where is Heinz? He didn’t say what he thinks…
Zé Pedro: He is still getting the beers… Maybe he needs help. I will go and help him. (leaves and goes to the bar)
Jean Pierre: We were having the discussion for his sake, and then he leaves…
Jan Kees: I think a leader should understand three things: that we are all in a situation together, that you need to be frank and honest with yourself and with the people around you, and that…
Heinz: (interrupting) Here we are, six beers! They didn’t have Amstel or Heineken, so I got Jupiler for everyone.
Zé Pedro: It’s not bad, it’s my boss’s favorite beer.
Heinz: Now we can start the discussion.
Joe: We’ve already started! We’re way ahead of you…
Jan Kees: I didn’t finish what I was saying! I think a leader should understand three things: that we are all in a situation together, that you need to be frank and honest with yourself and with the people around you, and that you need to communicate a vision.
Jean Pierre: That sounds very Dutch to me…
Jan Kees: It can be very Dutch and it can also be very right!
Heinz: It’s better if each of us gives our definition of leadership, speaking one at a time, with no interruption. Everyone else should listen, until we finish going around the table.
Zé Pedro: That’s fine by me, I’ll go along with that.
Joe: Anything, as long as we move! Let’s get on with it.
Heinz: Wait! Let’s do something creative, now: let’s go counter-clockwise!
Jean Pierre: (rolling his eyes) Beautiful, Heinz! OK: Hu, you start. What is leadership?
Hu Tan: Maybe the question should be: “How is leadership?”…
Joe: Oh, great! Answer a question with another question!...
Heinz: No interruptions! Mr. Tan, do you want to say anything more?
Hu Tan: The worst deaf is the one who refuses to listen…
Heinz: Thank you. Mr. Poireau, it is now your turn.
Jean Pierre: The concept of leadership actually comes from the middle ages, when horse-drawn coaches were traveling along the countryside in Brittany and other parts of France, at a time when a portion of France was unduly occupied by English invaders, before Jean D’Arc defeated them at the battle of Orleans and later helped the Dauphin to become the rightful king of France. In those days…
Joe: Will you come to the point?!
Heinz: No interruptions!
Jean Pierre: (rolling his eyes again) … In those days it was common for the coach to be driven by someone who was called a “manager”, his job was, in French “manager les chevaux”, that is: to handle the horses. He would steer the horses, take care of them when the coach stopped for the night at a roadside inn, feed them, brush their hide, prepare them in the next morning to continue the trip, etc. This French verb “manager” (in English: to handle) was wrongly adopted, or adapted, by the English as a noun, meaning “the administrator”, or “manager”. The person in charge of ensuring that the horses are properly treated and that the coach is going along the way that it is supposed to go.
Joe: What’s that got to do with leadership? Come to the damn point!
Heinz: Mr Peartree, no interruptions! Carry on, Mr. Poireau.
Jean Pierre: (rolling his eyes again and sighing deeply) … D’abord, it was usual that the coach was not traveling alone, only with its passengers. There was usually one or two other horsemen, maybe more, who traveled with the coach. They could protect the passengers against highway robbers, go for help if the coach broke down, all kinds of things.
(Joe taps his fingers on the table impatiently; Heinz gives him an annoyed look; Jean Pierre pretends not to notice; Zé Pedro suppresses a smirk)
Jean Pierre: One of these additional horsemen was there to lead the way. As you can imagine, the roads in those days were not always clearly marked. They did not always have a map, and there was no GPS… The Dutch had not invented the Tom Tom yet…
(Jean Pierre smiles at Jan Kees, who pretends to be humbly embarrassed, but feels secretly proud)
Jean Pierre: So one of the riders would ride ahead, making sure they were still on the right way. His job was simply to show the way, or “to lead the way”. This role was named by the English as “leader”.
Heinz: OK, good. Anything else?
Jean Pierre: I just want to emphasize that the term “leadership” is actually a distortion, because there was never such a word in French… This is something that the Americans created after the war, but it doesn’t make sense, in terms of the concept. I will stop here because Joe is getting angry, so we can discuss this later when everyone has spoken.
Heinz: Gut! Mr. Peartree, you may speak now.
Joe: Well, like I said, leadership is about action. When people are kind of lost, a leader is someone who will take charge of the situation, make a decision and lead the team out of the woods, to victory! A leader will not only show the way out, he will also be the example, the role model for what needs to be done! He will be brave, and focused, and committed to results. ‘Cause in the end, it’s the results that count, and a leader will drive the team to overcome obstacles and achieve the target, get the results and win!
Jean Pierre: Does all that come with Sylvester Stallone, with Bruce Willis or with both?...
Heinz: Please, Mr. Poireau, allow him to finish.
Joe: I’m through. Next guy.
Heinz: That would be you, Meneer Peerboom.
Jan Kees: I’ve already spoken. Zé Pedro is next.
Heinz: Please, Mr. Pereira. What are your ideas about leadership?
Zé Pedro: Well, I started by asking all of you to help me… I guess I think that a leader is someone who should take responsibility for the team, show the way they should go, but also make sure that they are all following him, and that they continue to work as a team. I mean, if people start scattering along the way, then that leader is not a good leader. He has to keep the team together, and they should trust each other and trust him as a leader. There needs to be trust before they can follow him anywhere, and the leader also needs to be respected and followed.
Heinz: Gut! Anything else?
Zé Pedro: No, tudo bem, that’s all for now. So tell us, Herr Birnbaum, what is your expert opinion on this?
Heinz: (clears throat, sits up straight) Leadership can be very simple, as long as there is a structure and a process in place. The leader should be an expert in the subject at hand, but if he is not, then he needs to listen to the experts and subsequently make an informed decision. That is all there is to it!
Zé Pedro: Thank you all for your input. Who wants another beer?
Jean Pierre: I think I’ll have a Cognac instead…
Joe: Bourbon for me. On the rocks.
Jan Kees: I’ll have a wittebier this time.
Heinz: I will have a schnapps!
Hu Tan: Maybe I will have any beer made by Inbev… a Budweiser, Stella Artois, Brahma, Beck’s, Leffe…
Zé Pedro: Why does it have to be made by Inbev?
Hu Tan: We are buying the company, so I might as well taste one of their products…

The Next 100 Years

2010-04-29T13:20:00.001+02:00

George Friedman’s Book

Friedman wrote a book with this title at the end of 2008. I have always enjoyed reading the work of “futurists” and I read this with eagerness, thinking it would rank among other greats such as the writings of Alvin Toffler, John Naisbitt, Arthur C. Clarke, Herman Kahn.

What a disappointment! It turns out that Friedman is an “armchair admiral” who bases all his forecasts on geopolitics, a concept that was already deemed outdated by Toffler in “Powershift” (1990), twenty years ago…

How did Friedman’s book become a bestseller, then? Quite simply, because it says what a lot of people would like to hear. It caters to everyone who thinks that war is inevitable and even desirable to spur economic growth, regardless of which countries or cultures are involved. A lot of people at the Pentagon must have loved it, plus everyone who makes money from making and selling arms and weapons.

The main predictions that Friedman presents make captivating headlines. They are:

1. The “Muslims vs Christians/Jews” conflict will fizzle out before 2020, no need to worry about that

2. China will not become a world power, but will be fragmented into smaller countries by 2020

3. Russia will attempt to revive the Soviet Union and will fail, fragmenting again and losing territory to its neighbors

4. The US will engage in World War III against Poland, Japan and Turkey in 2050 (these will be the four major powers in the world by then)

5. World War III will be fought by missiles fired from “battle stars” in space and from secret bases on the dark side of the moon

6. The US will dominate the world throughout all of the 21^st Century and will emerge from WWIII even stronger and more dominant

7. Germany and France will slowly lose relevance from 2020 onwards, and South America and Africa will remain irrelevant at least for the next 50 years

8. In 2080 American power will be challenged to war by Mexico (with Brazil as an ally) in an attempt to dominate North America and regain the territory it lost to the Americans in 1848

The author does some fairly good analysis work. He raises some interesting issues. He tries to spot “underlying trends” which drive his analysis. However, he fails miserably when drawing conclusions, often contradicting his own initial assertions. And the reason for that is that he has some basic assumptions which are quite biased and mistaken. These biases throw his conclusions off track.

Friedman’s vision has a strong Anglo-Saxon bias. It comes from a “Contest” culture, in which the underlying values are performance, competing to win, bigger is better, and the use of force is the best way to reach your goals. He makes the basic mistake of assuming that all cultures share these same values. This is a gross mistake. Scandinavians do not think like Americans, neither do the Chinese, the Indians, the Arabs. Not even the Russians think like Americans (this may come as a surprise to some folks at the Pentagon…).

Friedman identifies (correctly) some important social trends, though all of them already widely known and explored in today’s media, such as the “graying of the workforce”, the decrease in population growth, the increased participation of women in management and politics, the fact that this will impact the structure of the family. In one of the most disappointing features of his book, he fails to take his social analysis further. He fails to predict how the greater presence of women as business and political leaders all over the world might affect diplomacy and mitigate the risk of all-out wars (Sarah Palin excepted). He fails to predict how a population who will be 30 years older on average might affect the way politics are carried out or how that will affect decisions about war.

Friedman also neglects some other very important underlying trends, such as:

a) the inter-connectedness of the new generations: as people all over the world are able to remain connected instantly, 24x7, anywhere, how will that affect people’s disposition to go to war? When war victims can broadcast instantly videos of the horrors of war, live to the whole world, how will that affect the support of such attacks?

b) The increase in travel: as people travel more and more and interact directly with other cultures, wouldn’t that make it less likely to “demonize” distant “tribes”? If more Iranians visit the US (and vice-versa), won’t that make it evident that Bush and Amadinedjad had more in common than they had in contrast? (We’d be better off without both of them…)

c) The globalization of business: if one third of assets in the US are actually owned by the Japanese, Turks and Europeans, wouldn’t that make them less prone to attacking the US? If American companies have their manufacturing done in Turkey and Poland, how likely are these companies to support bombing their own plants?

Because of his military bias, Friedman fails to see that:

a) generals do not rule the world

b) wars will be fought in very different ways in the future (forget about playing “Star Wars” on the moon…)

Let’s take the cynical view that “money makes the world go around”. Businessmen rule the world, not generals. Generals are manipulated by businessmen to serve business interests. Businesses elect politicians. Candidates cannot get elected without significant business support, nowhere. When countries go to war, it is because enough businessmen stand behind it. This basically means that there have to be enough businesses involved in selling weapons and war supplies compared to businesses who will make more money if a war is avoided. The trend, therefore, is that poor countries, with low acquisition power, are the ones targeted (Africa, Middle East). The more affluent a country, the more consumers of global products it has, the less interested businesses will be in attacking these consumers, since there will be more money to be made from selling goods to them then from selling weapons to attack them. The game has changed. We’re not playing “Battleship” or “Combat”, we’re playing “Monopoly”.

I won’t even go into the moral & ethical aspects of war. Both generals and businessmen tend to consider such aspects as being naïve and unrealistic.

Will everybody be nice to each other in the future? Will the beauty pageant candidates’ ideal of “world peace” finally come true? Will we finally have beauty pageant candidates whose IQ will exceed the sum of their body measurements (36+24+36)?

I’m afraid the answer to these questions is negative.

Countries (and international businesses) will still compete and fight each other. However, it is very likely that:

a) countries as “nation-states” will have less relevance than today, making way for “regional economic blocks”

b) rather than shooting missiles or laser ray-guns at each other, fighting is more likely to take the shape of cyber attacks. The most relevant environment will be “cyberspace”, rather than the moon or the seas. Friedman, as a retired naval officer, correctly realized that the seas will be less relevant in war, but he replaced them with outer space in his military thinking. He would do better to focus on “cyberspace” instead.

c) Szun Tsu, the Chinese military genius of another millennium, described “the art of war” as the art of avoiding combat. That is very likely to be the trend (still) in the next 100 years. We are more likely to have economic wars or cold wars, but the likelihood of involving developed societies in combat will be less and less likely.

Aggression is a part of human nature. However, the evolution of mankind has brought about socially smarter ways of expressing aggression, such as competing in sports. War is not only morally wrong, it is also very stupid. Competition and aggression will continue to exist, but they will be more and more about “mind games” which involve subjugating others, rather than destroying others.

Perhaps the biggest unanticipated change we will see in the next 100 years will be a shift towards new ways of education and the search for meaning, rather than clinging to superstition/religion and shooting anybody who does not agree with you. But that’s another story, to be explored elsewhere and at another time.

The most worrying aspect of Friedman’s book is that so many people are still thinking like him. So many people are still looking at reality using a 19^th Century perspective, based on nation-states, geopolitics, and “shooting to survive”. Unless we decide to make significant investments in education reform, we still run the risk of seeing some of Friedman’s deranged predictions come true.

Friedman’s overture

His main point in his introductory remarks is that the US is not decreasing in power, but rather the age of American domination is just beginning. I can see how that point came across quite well at the Pentagon…

According to Friedman, the 20^th Century was not dominated by the Americans, it was dominated by Europe. American domination only began with the fall of the Berlin wall and the collapse of the Soviet Union. He seems to think that from 1945 t01990, although the US had the largest share of World GDP, had the most powerful armed forces, and spread American products all over the planet, still it was not “dominating”… There was still the perceived threat of the Soviet Union, although it never matched any of the American achievements by any standard.

I guess the main problem with this line of thinking is that it fails to look at economic data, focusing only on military power, expressed as military spending. Friedman thinks the US “dominates” only when its military spending exceeded the rest of the world combined.

It gets worse. Friedman explains that the main reason for American domination in the next 100 years will be the fact that it has access to both the Atlantic and the Pacific Oceans, thereby it dominates world trade.

Nothing about American entrepreneurship, ability to innovate, nothing about having the best universities in the world, nothing about technology, politics or democracy, nothing about culture. It’s location, location, location, as if Friedman was a retired naval officer who turned into a real estate agent.

He goes on to say that the 21^st Century will “revolve around… secondary powers forming coalitions to try to contain the US… and the US acting preemptively to prevent an effective coalition from forming. The 21^st Century will see more war than the 20^th…”

What Friedman fails to see is that the American share of world GDP already peaked in the 70’s and has been decreasing ever since, along with the UK’s. It is not so much that the US and the UK are not growing, but rather that many other countries are growing faster, and economic output is gradually being redistributed more evenly among nations. This is being fostered by the globalization of companies, who manufacture products in many different parts of the world, proceeding to distribute and sell them to the whole planet. Ultimately, this means that nation-states will be less relevant in the future, since economic interests (including the labor force) will be distributed internationally. Is General Motors still an American company when its cars are made in Germany by Turkish immigrants and the shareholders come from India and the Middle East?

The underlying trend, therefore, is one of greater balance among several powers. It will be more about “multilateralism”, a concept discussed prior to the invasion of Iraq, and which the American government failed to see then, just as Friedman continues to be blind to it almost ten years afterwards.

The decline of the British Empire followed a similar path. The UK held a huge share of world GDP in the middle of the 19^th Century. Although they started the Industrial Revolution, the English did not realize that one of its consequences was the decentralization of production, away from the UK, leading also to the independence of its former colonies. By the end of WWII the UK had already ceased to have the largest share of world GDP, replaced by the US. The American share continued to climb until the 70s, when the first oil crisis brought a shift of income to the Middle East and subsequently other developing countries accelerated growth (notably BRIC and Southeast Asia).

Friedman also chooses to completely ignore the European Union as if it never existed… He talks about Germany and France as separate, individual entities. Maybe he thinks the European Union will collapse before 2020 (another idea that would go down well at the Pentagon!).

Friedman does acknowledge the existence of different cultures, but his mistake is to conclude that”…national identity matters a great deal…, the relationship between nations is a vital dimension of human life, and that means that war is ubiquitous.” This is like saying that neighbors will necessarily shoot each other, sooner or later…

People do organize themselves in groups larger than families, but their loyalties lie deeper in certain groups with shared values. These groups do not necessarily coincide with nation-states, which is why, for instance, the so-called “United States” are so deeply divided about certain things (like abortion, health-care, religion, the so-called “culture wars” within America). Politicians try to promote “nation-states” to serve economic interests, with varying degrees of success (or failure). Nobody is fighting over the “Chaco” (the swamplands of Paraguay), because it has no economic value. If somebody finds oil down there we will have a different situation. Not driven by the military, not driven by politicians, but driven by business people.

At the beginning of the 20^th Century, the British still felt that they were ruling the world “…not by the might of its navy nor by the power of its armies, but by its sheer presence!”. When Roosevelt and Stalin sat down to re-organize the world at the end of WWII, the most amazing aspect of that meeting was that Churchill maneuvered himself to be there with them… Britain had been declining already for half a century, yet they were not fully aware of it and neither were many other leaders.

Similarly, the US is also declining slowly in terms of World GDP share, yet it still sees itself as absolutely dominant.

I am not saying that the US is not powerful, or that it will cease to be the most powerful nation on Earth. All I am saying is that it will no longer be “absolutely” powerful. The European Union already has a larger share of World GDP than the US. In 50 years, what we will see is simply a host of economic blocks, similar in size, all trying to co-exist, rather than trying to annihilate each other. Military power will still be important, but it is a very limited solution to conflict. The US has been more successful (and will continue to be) by using economic power rather than military power. However, since other blocks are gaining in economic power, the result in 50 years will be a greater balance in the distribution of this power.

Friedman’s vision is biased by a “Contest” culture point of view, hinged on conflict and a “polarized” perception of reality. The future of the world will be more akin to a “Network” culture (Dutch-Scandinavian) point of view, a multi-lateral clash of forces which try to keep each other in check. There is constant arguing and dissent, but violence is not as frequent. This will be further enhanced by the ascension of women in business and politics, all over the world. What John Lennon called the “femininization” of society, beginning in the 60’s, will continue well into the 21^st Century.

The Dawn of the American Age (or rather: Don’t Wake Me Up, I Want To Finish My Dream)

Friedman explains on his first chapter why American power is just beginning. He even mentions some figures, such as that in 2007 US GDP was 14 trillion, or 26% of World GDP. He fails to point out that the European Union already had 14,5 trillion in GDP, and that the American share had peaked at 30% in the 70’s and has been going down ever since. In 2050 it will be around 15%, while China will be roughly the same. Both will be slightly less than the European Union, which should have about 16%. These projections take into account the estimate that China will not continue to grow at rates of 9% a year, but rather will de-accelerate its growth gradually. By the time China reaches the size of the US and Europe, it will be growing at a similar pace (1-2% a year).

Friedman focuses on American self-doubt and argues against it. The problem is that his arguments are all about how important military power is, most especially naval power. No mention of American capabilities in terms of technology, business acumen, entrepreneurship or educational institutions. Nothing about American culture and how it is changing because of immigration, disenchantment with religion, the ascent of women, the impact of the internet. Perhaps these other factors might justify the belief that America will continue to dominate the world. However, Friedman prefers to ignore all this, just as he ignores the existence of the European Union. It seems he was just dreaming about American dominance, not even making a proper case for it.

Earthquake – The US – Jihadist War (or rather: the real American Strategy from 1900 to 2100)

This is perhaps the soundest chapter in the book, basically because its focus is not on the future, but in the past instead. It contains a good analysis of the Monroe doctrine and explains in laymen’s terms why the purpose of American intervention in foreign lands is to stop other nations from becoming a threat to the US.

“So long as the Muslims are fighting each other, the US has won its war”. (p49) The purpose of the interventions in Iraq and Afghanistan has been to strengthen local factions so as to keep them fighting among themselves and not with the US.

Population, Computers and Culture Wars (or rather. Promising Title, but Conclusions Fall Short)

This is the chapter in which Friedman talks about the ascension of women and how traditional families have changed radically because of that. Very good points are made and some important statistics about the increase of women in the workforce. This is having a great impact on the population explosion, or rather: it explains why the planet’s population will cease to increase, since women are having less children all over the world. The effect is already being felt in the most developed countries of Europe and in the US, where population is growing only through immigration.

Disappointingly, Friedman fails to explore the consequences this will have for the future. For instance, if Anglo-Saxons have less children and their population decreases in the US, in Canada and the UK, while the proportion of immigrant population in these countries continues to increase, how will this affect the culture of these countries? If non Anglo-Saxons made up 22% of the American population in the year 2000, what will happen if in 2050 non-Anglos make up 45% of the population? What will happen in Europe if instead of having 6% Muslims they go to having 18% in 2050?

Friedman stresses that computers are simplifying rational tasks all over the globe, and that this will enhance American dominance because computers use the English language for programming. This seems to be a very short-sighted argument… If millions of Indian and Chinese programmers design fantastic computer programs, does that enhance American dominance because they are doing it in English? If they did it in French would it enhance French dominance? It just seems like an infantile, unfortunate argument.

Friedman finishes the chapter with a lucid awareness: “Old institutions have shattered, but new ones have not yet emerged.” (Duhh!) “The 21^st C will be a period in which a range of new institutions, moral systems and practices will begin their first tentative emergence. The first half of the 21^st C will be marked by intense social conflict globally.” (Duhh! Duhh!).

And… Friedman leaves it there and changes the subject. (!!!??) Just when it was beginning to get interesting! These “new institutions, moral systems and practices” are precisely what should be discussed! Will they push us towards a more primitive state, in which we all try to shoot each other and the world turns into chaos? Friedman seems to think that, but he does not even suggest it, let alone say it in so many words. He simply wanders off to explore his geopolitical “fault lines” and drops the sociological discussion.

Yet it is precisely this vacuum which might be filled by analyses and forecasts which could justify (or dismiss) the arguments for wars and global conflicts. Apparently, the implicit conclusion is that these “new institutions, moral systems and practices” will turn out to be not “new” at all, since Friedman goes on to describe how countries will behave like they did in the 19^th Century. As he says later in the book “History repeats itself”.

The New Fault Lines (or rather: Trying to Find Conflict Even Where There Is None)

In this chapter Friedman attempts to justify why China and Russia will try to assert themselves (nothing wrong with that prediction) to the point of posing a threat to the US (everything is wrong with that prediction, because it assumes that the Russians and Chinese would want to annihilate the US). American paranoia seems to drive Friedman into thinking that Russia and China are not interested in peaceful co-existence. Rather, they live and breathe to fight the Americans, as if there was no alternative for their own survival.

This kind of American thinking gets me really worried. Paranoid people are dangerous. Paranoid people with weapons are very dangerous.

China 2020 – Paper Tiger (or rather: No Need To Be Afraid Of China)

Napoleon once said: “China is a sleeping giant. Let China sleep, for when China awakes, the world will tremble”.

Well, China has awakened. And the Americans are trembling. Apparently, to the Anglo-Saxon point of view, as China grows it will necessarily attempt to be the only major power in the world. That is the “Contest” culture perception, thinking that necessarily there needs to be a conflict between two opposing forces (in this case, China and the US). Friedman does not think that there might be a balance of multilateral forces in the world.

He proceeds to downplay China’s capacity to remain unified, once again looking at it with spectacles tinted by American history, failing to see how different China (a “Family” culture) is from the US (a “Contest” culture).

Friedman sees China torn between the rich coastal regions and the poor interior. He thinks Beijing has only two options: “either weakens and loses control or clamps down so hard that it moves back to a Maoist enclosure of the country. The critical question is which outcome is more likely.”(p.97)

I beg to differ. The critical question is how to avoid both outcomes, which is not that difficult at all. Brazil and India have faced similar dilemmas for centuries, yet managed to remain whole. India had Bangladesh and Pakistan spinning off, but that actually helped it grow rather than hindered its development. Why would China not be able to pull off something similar? It is a matter of balancing control, perhaps something that Friedman is not very good at, since he tends to see things as opposite poles.

Perhaps the issue here is the Anglo-Saxon perception of “control”. Americans have a particular issue with it, having even coined the phrase “I think George is losing it”, when they mean “I think George is losing control of the situation”.

“Being in control” is something quite subjective. In some cultures, a group of people may be engaged in lively discussion and think of themselves as “having a friendly argument” or not even having an argument; they see themselves as “just talking”. Typical examples may be found in the Dutch/Scandinavian cultures and in the so-called “Solar-System” cultures such as the French, Italian and Spanish. People talk simultaneously, they interrupt each other frequently, they are loud and express emotions openly.

To an outsider coming from the Anglo-Saxon or the Germanic cultures, the situation is perceived as chaotic, and “out of control”. Interruptions are perceived as rude. Expressing emotions is seen as a sure sign of “losing it”.

To the people engaged in the situation, they are not interrupting each other at all and they are not being “emotional”. They are just being themselves…

The Chinese can be very loud and engage in lively debate, all talking at the same time. I’ve facilitated workshops with all-Chinese participants. It may seem chaotic to an outsider. Yet, when a leader within the group asks for silence, people are quick to comply. There is a lot of respect for authority (high Power Distance), very different from Anglo-Saxons (and others) who score low on Power Distance and where often people show less respect for authority.

Leaders in High Power Distance cultures can actually allow greater freedom to people, because they know that when they need to rein them in, authority will be respected. People from Low Power Distance cultures will look at these situations and perceive them as being “chaotic” at first, and leadership intervention as being “dictatorial”. The participants in the situation may see it simply as “normal.”

Beijing has room to manoeuver. It can continue to gradually relax its grip on the provinces, yet maintain national unity. Isn’t that what America is all about, in terms of giving States a certain autonomy, yet maintaining the grip of Federal Government?

The real reason why it is not necessary to fear China may actually be because China is not intending to invade anybody else, nor does it wish to annihilate anybody else. Would that be so difficult to accept?

The main goal of China is to develop its economy in order to provide a comfortable life for its citizens. It has stated that it aims to develop a strong middle class by 2020 and looks well on its way towards achieving that goal. As long as the US leaves China to be free, China will leave the US alone. Sure, they will compete. The Chinese are just as competitive as the Americans are. But they are more long-term oriented and tend to be more graceful both in defeat as in victory. Perhaps the Americans could learn a thing or two from the Chinese, starting with peaceful coexistence.

Competition does not necessarily lead to war. It may occur in sports, in developing technology, in winning clients over. Since Friedman points out that population explosion will no longer be a problem, the need for territorial expansion to accommodate a growing population will not drive military conflict. Perhaps the only driver remaining will be the greed of arms dealers.

Russia 2020 – Rematch (or rather: We Want To Beat Them Again!)

“In geopolitics, major conflicts repeat themselves. France and Germany, for example, fought multiple wars, as did Poland and Russia” (p101).

The mistaken assumptions here, once again, are: geopolitics as the sole base for analysis; and failing to see that history does not always repeat itself, most often it does not. Otherwise, there would be an American Civil War every Century, the French and the British would never be allies, and

Friedman provides an extensive analysis of Russia and its relationships with its neighbors. He even recognizes (p106) that “The Soviet Union was held together not simply by force, but by a system of economic relationships that sustained it in the same way that the Russian empire before it was sustained.”

However, he immediately forgets his own assertion and goes on to describe how Russia will invade several adjoining nations between 2010 and 2020, but the Russian military “will collapse once more shortly after 2020.” History does not necessarily repeat itself, but Friedman certainly does… He assumes that Russia will necessarily resort to military action in order to exert its influence, rather than continue to develop the economic relationships that sustained its empire 200 years ago.

I think that Russia is actually aware that it can exert influence through economic means, more effectively and efficiently than by using the military, and it has been doing just that in the past five years. It will undertake military action (like in Georgia) when it feels that a neighboring country, especially a former Soviet Union member, threatens to break away from its sphere of influence. To go from that to an invasion of Poland, an European Union member, is quite a stretch…

Friedman’s denial of the European Union’s existence is quite extraordinary. The existence of the EU gets in the way of many of his predictions about Russia, Poland, Turkey and other countries. So he chooses to pretend it is no longer there…

American Power And The Crisis Of 2030

In this chapter Friedman again turns to the past in order to explain his forecasts. In a nutshell, he predicts that from 2015 onwards immigration to the US will be encouraged rather than hindered, culminating with a huge immigration effort in the 2030’s in order to stem a labor shortage.

This is no major feat of forecasting. For the past five years advocate of immigration policy reforms have been saying that “a country without Mexicans” would be a national disaster. Friedman is simply setting the scene, in 2030, for his “War with Mexico” scenario 50 years later. He is simply stating that immigration will be significantly increased from 2015 to 2080.

The main shortcoming is that there is no analysis whatsoever about the effects of an immigration surge on the American culture itself. Friedman assumes that immigrants would simply adopt Anglo Saxon values and “the American Way Of Life”. Yet it would be quite plausible to predict something different.

Perhaps because immigrants will come in much larger numbers, they would have more of an impact on American culture rather than the other way around. Because interconnectedness would be even greater than it already is today, immigrants would stay in touch with their home values and replicate them in the US. Since they have higher birth rates, immigrants would soon become the majority of the population in the US: mixed races enjoying mixed backgrounds and mixed culture values. The Anglo-Saxons could wake up one day to find that they are actually a minority group.

This is not so far-fetched as it may seem. The situation in Brazil and in some other countries is pretty much like that already, with “whites” constituting less than half the population. Forecasting the same for the US 70 years from now does not require a lot of imagination. However, this would totally upset Friedman’s predictions. He maintains that the US will keep its culture immune to immigration influence, and that when the bigger crisis comes in 2080, there will be a war with Mexico, who will wish to regain the territory they lost in 1848. Again, this is 19^th Century thinking applied to forecasting for the 21^st Century. I think we can do better than that.

A New World Emerges (or rather: Back To The Future – 2040 looks a lot like 1940)

The big assumptions here are the collapse and fragmentation of both Russia and China, accompanied by the inexistence of the European Union. This then leads to the emergence of Poland, who gobbles up neighbors very much like a reincarnation of Nazi Germany, while at the same time Japan decides it should re-build the Asian Empire it used to dream about 100 years before, plus the emergence of Turkey trying to rebuild the Ottoman Empire.

Once more, the paradigm is that “history repeats itself”. Friedman’s prediction is that Japan needs to import raw materials so badly that it must expand its borders by conquering bits of China and Russia. I fail to see the probability of this happening, considering that:

a) the forecast (made by Friedman) is that the Japanese population will decrease, therefore putting less pressure on the need to expand;

b) the forecast (also made by Friedman) is that energy will be generated in space and that Japan will be one of the technological leaders of exploring those sources, plus mining on the moon. So why would they need to invade China?

c) Occupation of a foreign country was popular until WWII but was quickly demonstrated to be unfeasible in the second half of the 20^Th Century (and in WWII itself). The interconnectivity of the occupied people makes it too easy for them to resist occupation (think Iraq 2003-20010) and too expensive to suppress that. The Japanese should not be stupid enough to attempt that.

d) Furthermore, Friedman predicts that a united Korea will be allied with China opposing Japan. Why not Koreans and Japanese forming a commercial alliance to compete with China (rather than going to war?).

All in all, it boils down to the basic premise of countries easily undertaking military campaigns against each other, as if we were still in the 19^th Century.

The situation with Turkey is similarly improbable, but it rests on a big “if” (which Friedman does not mention, but I think needs to be mentioned as the crux of the matter). That is the admission (or not) of Turkey into the European Union. Friedman makes no reference to that, keeping consistent in ignoring the EU’s very existence.

If Turkey is admitted into the European Union sometime before 2020, then we can assume that most of his scenarios become downright unlikely. A broader and stronger EU would affect the multilateral balance of power and might even bring into consideration the participation of Russia in the EU.

On the other hand, if Turkey is shut out of the EU and is pushed by France to form an economic block with the Eastern and Southern Mediterranean countries, then Friedman’s “Turkish Delight” becomes a natural evolution of that situation. As a matter of fact, I would even recommend Europeans to read Friedman’s book in order to support the case for Turkey joining the EU. Otherwise, the emergence of Turkey as a hostile player in 2040 might become quite likely.

The Polish scenario, however, remains very far-fetched. It hinges on the collapse of the European Union altogether, and the decline of France and Germany as “Old Europe” goes under. It seems like George W. Bush’s pipe dream coming true after those countries refused to support the invasion of Iraq. It also seems more like wishful thinking from revengeful Republicans, rather than unbiased forecasting of a likely scenario.

This Friedmanish “New World” leads to the formation of a “coalition” against the US, led by Poland, Turkey and Japan. Any resemblance to “the Axis” formed by Germany, Italy and Japan in 1940 is NOT a coincidence… It is merely “history repeating itself”. To me, it reeks of American TV’s summer re-runs and bad Hollywood remakes of classic films. Surely humanity can come up with something better, wouldn’t you say?

The 2040s – Prelude to War (or rather: Here We Go Again)

Friedman starts off well on this chapter, asking. “The question that will come to the fore in 2040 will be this: What will be the relationship between the US and the rest of the world?” That is indeed the right question, but Friedman’s answer is shaped by his tainted predictions for the period 2010-2040. Therefore, in a world where China has been split into smaller countries, some of which form an alliance with Japan; where Russia has no relevant role any longer; and where the European Union does not exist, the natural outcome is the emergence of the anti-American “JaPolKey Coalition”.

This notion, of course, feeds well into American paranoia: “We are the greatest, so naturally other countries will envy us and will band together to destroy us. However, they will not succeed, because we are the greatest and will emerge from the conflict even greater!”

Paranoia is a serious mental illness, all the more serious because it leads to behavior which is dangerous for the people around the ill person, and eventually leads to the self-destruction of the person. Most, if not all, of the kooks who undertake mass shootings in public places in America are paranoid, bringing death and destruction to those around them until either they commit suicide or are taken down by the police.

Imagine how dangerous things can be when a whole nation goes on such a rampage, believing that everyone else is out to get them and the only way to avoid it is to “do unto others before they do unto you”. And they have nuclear weapons.

This is why I am concerned with the ideas set forth in George Friedman’s book. They feed American paranoia, which represents a threat to the whole world.

The solution, however, is not to gang up on the paranoid guy and jump him before he starts shooting. This would only trigger Friedman’s WWIII scenario. The solution is therapy, and in this case, group therapy might be the best strategy.

Paranoid behavior has its roots in a deep inferiority complex. The person feels so inferior, and this hurts so much, that a defense mechanism is produced saying that actually the person is not inferior, but rather is superior to everyone else. In fact, goes the mechanism, I am so superior that I am envied by all others and they are trying to get me.

Psychotherapy of such cases involves allowing the person to experience that he/she is no better and no worse than anybody else. It involves allowing the person to experience giving and receiving love, and to realize that there is no need to fear others nor to feel neither inferior nor superior to them.

This is not an easy process. It’s complicated and it takes time. It requires tapping on resources the person has deep inside him/herself

Taking the analogy to the level of a country like the US (not the only paranoid culture in the world, but the biggest and most capable of bringing destruction to everybody else) the solution will most likely come from within, from the changes brought by the ascension of women in America and from transformations brought about by immigration which change the American culture from the inside out.

What Next?

Hopefully the rest of the world will not need to “contain” the US, but rather will help the US by interacting continuously with its culture and by supporting its healthier aspects.

If this happens, then we will not have a “Prelude to War” in 2040 nor a “Preparing for War” and neither a “World War”, which constitute Chapters 9, 10 and 11 of Friedman’s book.

Chapter 12 (“A Golden Decade”) describes how wonderful life will be (specially in the US) after they’ve beaten everybody else. An economic boom is outlined, like the 1950’s and 1960’s. History repeating itself yet again (this time, the good parts too).

The last Chapter of the book (13) describes the “Mexican crisis”, and Friedman leaves that one open-ended. Who will win the Mexican-American war of 2080? Maybe he intends to tell that story in his next book, which might well be titled “The 22^nd Century: America turns of age”, since he often points out that the US is still an adolescent nation and will continue to be one throughout the 21^st Century.

I am all in favor of making predictions about the future. I do not believe that “it’s hard to tell what’s gonna happen next quarter, let alone 100 years from now!”. It is always useful to discuss what might happen in the future. It is especially important because such discussions help us shape what is going to happen.

The future is not “something that happens to us”. We make things happen. We all live by choice, not by chance, even though we might not always be aware of it. The more aware of it we are, the better prepared we will be to make decisions that shape the future we want from us.

Therefore, I welcome more discussions about the next year, the next decade, the next century. This will help us develop a better world for our children and grandchildren.

The Meaning of Life

2010-02-06T12:51:00.002+01:00

Pupil: O great Khard, I have come a long way on the American Express all the way to Mount Visa in search of the meaning of life. Will you lead me further on this path? Tell me, Master, what is the meaning of life?

Master Khard: Life is its own meaning.

P: I don’t get it…

MK: Not very clarifying, heh? Let’s elaborate. The purpose of life is to live. All living beings share that principle, even the often despicable human beings, who have a reputation of selfish destruction of everything around them (including other human beings) as part of their effort to survive, to go on living.

P: Surely there must be something more to this. Why do we live?

MK: Maybe there is no why. Why do you need a “why”? Can you not accept that life is what it is, and try to enjoy it while you can, and fulfill its purpose? Can you not focus on “how”, rather than in “why”?

P: OK, let’s park the “why” for now and come back to it later. What about the “how”?

MK: The purpose of life is to perpetuate life. The purpose of my life, your life, our lives, is to make this world a better place for everyone to live.

P: OK, then how? How do I make this place a better place?

MK: Love and work. Love yourself. Love your neighbour (but not your neighbour’s wife; we come back to that later). Love life itself. Make love (but enjoy responsibly). Make children. That is making more lives and perpetuating life through your descendants.

P: What about gay marriage?

MK: Next best thing. Homosexual love trumps heterosexual hatred, every time. If people found out that Jesus never really had an affair with Mary Magdalene, that he actually had a thing with Judas and later dropped him to hang out with Peter (no wonder Judas felt betrayed), none of this should make a difference regarding his teachings. People should be less uptight about sex. Relax and enjoy it.

P: Sounds fun. What about work?

MK: Work to produce something that will benefit others. Your work is your contribution to the people around you. Combine love and work. This is not about making out at the office. This is about loving your work, loving what you do, doing things as an act of love to promote the life of others. It is also about loving in a productive way. Love should be expressed in a way that helps others, it is also a contribution. Ultimately, love and work may be different facets of the same thing. They are together.

P: What about death?

MK: Shit happens. There are only two things which are certain in life: death and taxes. Sorry, that was a joke for the auditors. Actually taxes are an act of love, they are a contribution to the well-being of the community we live in. But I agree with “The Economist”: fiscal policies allow room for improvement.

P: You’re avoiding the death question…

MK: Death appears to be the end of life, but it is the end of consciousness as we know it in this dimension, or this world. Our body continues to have life within it after our consciousness departs, in the form of bacteria and worms and what we call “decay”. They are different forms of life which continue living to consume the body when our “soul” is no longer there.

P: But what happens after death? What happens to the soul?

MK: We don’t know. We make assumptions, we make guesses. In fact, we do not know. And this ignorance about what happens bothers many people, it makes them anxious.

P: What about Heaven and Hell? Don’t our souls go to one place or the other?

MK: We don’t know. Because we don’t know, we invent things to fill in the gap of knowledge. We think: “there must be something”, so we imagine a wonderful place that is a reward for everyone who has been “good” and a terrible place that is punishment for everyone who has been “bad”. We call those “Heaven” and “Hell” and we make up all kinds of stories about those imaginary places. Some people believe there is a place in between them, where you suffer some punishment, but not forever, and you can eventually make the transition into “Heaven”. Some people call that “Purgatory”. Others call it “summer re-runs”.

P: But surely all this must have been created and organized by someone, some “God” who designed the world.

MK: It ain’t necessarily so. We do not know. We fill our gap of knowledge, again, by inventing the existence of a “God” or many “Gods”. We cannot understand a world which was not created by somebody, so we invent a character. We say that “God created Man in his own image” when it appears to be more the other way around: Man created God in his own image. The fact is that different people believe in different “Gods”. Maybe “God” is actually “life”, rather than somebody who created life. The fact is that we cannot prove it one way or the other. It is an act of faith, like supporting the New York Mets in American baseball, or supporting Feyenoord in Dutch football.

P: But what about all those paintings in churches?

MK: That’s just the way some people believe that God should be like. In Islam there are no pictures of “God”. In Hinduism there are many gods and many pictures. So who is right?

P: Good question. I was about to ask you that question.

MK: They are all right when they choose to believe in that. People who choose to believe that there is no “God” are also right. What is “wrong” is to reject and kill other people just because they believe in something different from what you believe in. Taken to the extreme, we should all be killing each other because we all believe in a “different” God. Faith in God is a very personal experience. Even people going to the same temple, professing the same religion, they have very individual and different interpretations about what “God” is like.

P: I feel like I’m losing my religion…

MK: The fact is that religions are undoubtedly created and developed by people, and most religions are used by people to manipulate other people. Most religions distort the principles set forth by their founders and use the founder’s name in vain, just to promote their own agendas. Jesus and Mohammad would be shocked to see the amount of bullshit that goes on today and that is attributed to them. Perhaps the Buddha would be the most shocked, because he was very clear in saying that he had found his own path to enlightenment and he wanted others to learn how to find their own paths, but he specifically asked: “don’t turn this into a religion”.

P: And they did it anyway.

MK: It just goes to show that you can’t ever trust your disciples. Better to get a lawyer to do all your writing for you and a publicist to be your spokesperson. And still they will screw it up, and still people will interpret it in a way that satisfies their needs, regardless of the intended message.

P: So the world is kind of screwed up, huh?

MK: Ask yourself this: are you helping to screw it even more, or are you trying to “unscrew it”? Imagine this huge screw: are you turning it in a way that helps to unscrew life or are you turning it in a way that screws it even more?

P: The screw of life…

MK: Speaking of that, let’s get back to “your neighbour’s wife”.

P: What does she have to do with all this? I swear, I was just trying to borrow a cup of sugar!

MK: I mean, figuratively speaking. Your purpose in life is to love all others and to work making a contribution to all others, and that includes respecting all others too. In practice, life is complicated. Your freedom stops at the limit when you face another’s person right to freedom. The interpretation of this is what gets us all into trouble. So many people interpret it in such a way as to authorize them to screw everybody else (in more ways than one). That is why you need the rule of law.

P: Now it’s bullshit. Why do you need to bring lawyers into this?

MK: The rule of law means that a group of people agree on a set of rules they will obey, as guidelines for their behaviour. They are interpretations that are meant to make life easier so that you don’t need to get into a long philosophical discussion every time you go out to buy bread.

P: I suppose it should make sense, though in practice it often doesn’t.

MK: Precisely. Rousseau called that “the Social Pact”: everybody gets together and agrees on how we are going to get along, in order to avoid long heated discussions every day. No wonder he was French. The problem is that people easily get caught up in differing interpretations of the laws, whether it’s about buying a “baguette” or about invading Iraq. As an overall guideline, we should never forget that our actions should promote life.

P: What about wars?

MK: That’s a no-no.

P: Not even Holy Wars?

MK: Especially “Holy Wars”. By definition, a war is not holy. To go to war “in God’s name” is to negate God, to negate life.

P: What about self-defense? And pre-emptive action?

MK: Do not apply. Christ never said “invade Afghanistan!” nor did Muhammad ever say “kill those American imperialist bastards”. These are all distorted interpretations of what is attributed to the founders of religions. People take things out of context and twist them around. You can find anything in the Bible or in the Qur’an to suit your selfish agenda and justify your purchase of a new Play Station 3, but the fact remains that it is a distortion. Pre-emptive action is very dangerous because you can start imagining all kinds of bad things in your mind about your neighbour, in order to justify shooting him and feeling righteous about it. Anyway, that is why there are tribunals and courts, and international courts and the UN. The purpose is to settle differing interpretations.

P: But the UN doesn’t work! It’s just a huge bureaucracy! And the legal systems are screwed up everywhere.

MK: Then act to un-screw them. Make changes to the system. Make the UN work. Re-shape the “Social Pact”. Ask yourself: am I helping to un-screw things or am I helping to get them more screwed?

P: Some times the only way to change things is through revolution.

MK: You say you want a revolution? Well, you know, we all want to change the world. But when you talk about destruction, don’t you know that you can count me out. It can be a peaceful revolution, like Gandhi demonstrated

P: Yeah, I know. You think it’s gonna be all right…

MK: In order to defend and promote life, you need to act. But your actions should be about love and work, not about hate and destruction.

P: How come there are so many people in the world involved in wars, hatred and violence? If it was not part of human nature, everybody would live in peace.

MK: Good point. Love and hate, life and death, they are both part of us, like “Yin” and “Yang”, like Obama and Cheney. One cannot exist without the other.

P: You mean Obama and Bush.

MK: Bush was just the front man. In order to preserve life, we need to kill. That is the paradox. Every time we eat, we are destroying some form of life, even the vegetarians. We incorporate the life of plants and animals for our own nourishment. This does not give us a license to kill other people for nourishment, nor does it give us license to kill animals for pleasure or sport, nor to destroy forests to make cardboard images of Britney Spears. We need to maintain balance. We are part of the circle of life. We need nourishment, but when we abuse our need, we are no longer promoting the circle of life, we are upsetting it. The balance involved is rather delicate, and people often are not aware of it. That’s why it’s so easily upset.

P: Yeah, but Man is the higher being in the food chain, so humans get to decide what to eat and what to change in their environment in order to survive.

MK: Careful. Those are very “Northern” concepts. Deep in the Amazon Jungle there are still many tribes which have never had contact with Europeans or Asians. Their culture is still intact. A few years ago a few explorers made contact with some of these tribes and were very careful not to disturb them, unlike previous explorers who either killed the natives, imprisoned them as slaves or, more recently, brainwashed them to behave like “civilized” people. Anyway, this time they just made contact and tried to learn as much as possible from these tribes. And they learned some interesting things.

P: Such as?...

MK: The natives called themselves “Masters of the Universe”, though they had never heard of Wall Street. They considered themselves Lords of the Forest, the centre of the world. However, they said that with great power comes great responsibility. They sang in groups about how as Lords of the Forest they were charged with maintaining harmony in the forest. They hunted, they fished, they planted and harvested crops. But they did all that in such a way as to maintain the circle of life, to keep the balance. They did not hunt or fish for sport, only for nourishment. They did not take “pre-emptive action” against jaguars or pythons or alligators. They just drove them away from their village. They felt responsibility for keeping balance, not only regarding their interactions with animals, but even regarding interactions among animals and between animals and plants. They realized, for instance, that fruit were there to serve as food also for birds and monkeys, so they had no right to pluck more than their share if it would leave animals wanting. These natives have been true to these principles for centuries, long before ecology was discovered by modern civilizations. We should think twice before we call ourselves “civilized” and before we consider them “primitive”. They may be “primitive”, but they are not “inferior” to our modern societies.

P: You sound like Greenpeace. Are you a member?

MK: Used to be. Left when they became a corporation. The lesson here is to keep the balance and to remain humble. When we start feeling too cocky, we end up abusing our freedom. The Social Pact needs to be broadened to include other species, respecting their rights and maintaining the balance.

P: Tell me this is not going to end up in a “Global Warming” discussion.

MK: Global Warming is a fact. What is still under discussion is how much of an impact do human beings have on it. Maybe we never did anything to accelerate it, and maybe there is nothing we can do to slow it down. I don’t know. What I do know is that, in the past, even the recent past, when people found out that there was something harmful being used (like lead-based paint), initially they were rebuked. Actually, it took years, even decades of discussions before everyone accepted that lead was harmful and stopped using it. There are always people interested in maintaining the status quo for economic reasons. The discussion on the impact of civilization on Global Warming is probably going to take a while, but the concerns about the environment go far beyond global warming. Even if we conclude that humans have no impact on global warming, we should continue to recycle plastic instead of dumping it in the oceans. We should balance our fishing practices, not only because we want to be “nice” to the salmon, but because if we don’t, there won’t be any salmon left for us to eat! Global Warming is one thing. Balance in the circle of life is another thing, regardless of global warming. We need to recover the balance (it has definitely been upset, nobody denies that) to ensure our long-term survival. Global warming is just one aspect of the picture. Even without global warming, pollution is bad for your health.

P: It’s just that it’s such a pain to have to recycle, to be careful not to upset the balance… It was so much easier to live carelessly, no worries…

MK: Sure. It was also easy to cross the road without looking, when there were only people and horses going about. The more technology we add to our lifestyles, the more safeguards we need, to maintain the balance and continue promoting life. This is not about stopping progress. It is about ensuring that progress continues to happen in a way that really benefits people, and not only benefits the makers of a hazardous product. For instance, we need to continue traveling and having vacation trips. They promote peace and understanding. If airplanes bring about pollution, then we need to improve the technology so that airplanes no longer cause pollution, but we should not ground all planes or refrain from traveling.

P: Shouldn’t we all just negate all worldly pleasures and join a monastery to develop our spirit?

MK: You should, if that’s what gets you off. Me, I want to enjoy red wine and chocolate while I am still trapped in this material dimension. I want to do that with balance, until it’s time for me to go ( either to another dimension or to simply disappear from existence). I want to enjoy life and make it more enjoyable for the people around me and for generations to come. I will not abuse my freedom. I refuse to pay a fortune for a bottle of wine, to me that would be a distortion. But I am quite willing to pay what I consider to be a fair price for good quality wine. Is alcohol bad for your health? Too much of it is bad. A glass or two keeps the balance.

Culture in the News #5 "Canadian miners go on strike against Brazilian mine owners."

2010-01-16T10:13:00.004+01:00

Not only Americans make blunders when managing people in foreign countries. In this case, it was Brazilian managers struggling to manage an American workers' union which branches out into Canada, as reported by the IHT on Jan 15.

After reading the half-page news item, you can see that the issues at hand are pretty straight-forward. The Brazilian owners (global mining company Vale, largest in the world) propose two things: 1) changing the pension plan from "defined benefit" to "defined contribution" (Hardly revolutionary--all pension plans have been moving that way for the past 20 years and all newly created plans are "defined benefit"); and 2) putting a cap on a bonus plan linked to the price of nickel (Again, this is plain common sense: the plan has a "floor", it's only logical that it should also have a "ceiling", though the parties involved will negotiate endlessly over the amounts to be set).

So what's the big deal?

Culture. (Surprised?)

Curiously, reporters asked the people involved whether different management cultures (Brazilian an Canadian) were the issue. They all denied it... As the saying goes "fish are not aware of the water they are swimming in". To an outsider, the culture issue is obvious.

The workers complain about the way management is behaving, and that has driven them to harden their stance. "The other owner, you knew where they were coming from" said Chris Shrower, a millwright. "These ones just want to show us that they're the boss."

Management is behaving in a way that is typical in Brazil (high Power Distance culture). They are no longer opening the books to the union, like the previous owners used to do. Such transparency is virtually unheard of in high Power Distance cultures, though it is often practiced in low Power Distance cultures like the US and some Northern Europe countries. They are making decisions at the top, with little or no involvement from the workers. This is normal behavior in Brazil (high PDI), but perceived as offensive in the US/Canada (low PDI).

It's interesting to note also how language reflects culture. The expression in English is "to make a decision". This implies doing something, making something. It also implies the possibility of making something with others, doing something as a group.

In Portuguese the expression is "to take a decision". This implies that there is something on the table and someone has to "take" it. Should the union be allowed to "take it"? Heavens no! (from a high PDI point of view). It is the responsibility (and the privilege) of management to "take it".

There are power struggles between workers and managers in all cultures. In a "mono-culture" environment such struggles take less time to be worked out, because the parties involved understand where they are coming from. In a cross-culture environment the struggles may last much longer than expected, because the expectations on both sides are frustrated, due to lack of understanding of where the other party is coming from. The strike in this case is lasting six months...

The Swiss Vote (culture differences in the news 4)

2009-12-02T09:42:00.002+01:00

The Swiss vote banning minarets is not at all surprising, when you consider: 1) Swiss culture scores 58 on Uncertainty Avoidance (UAI) in research; 2) the campaign against the minarets portrayed the "invasion" of Muslims as a terrible threat, mimicking the style of Nazi propaganda against Jews, and the reaction was "a vote of fear" (in the words of the French foreign minister); 3) research shows that the Swiss score low on Power Distance and high on Individualism, meaning they tend towards decentralized government and are resentful of any federal government initiatives, which they tend to see as an interference on local autonomy. Since the federal government was against the minaret ban, the natural attitude of the population majority was to be in favor of it, expressing their counter-dependence to federal authority; 4) research data also show the Swiss culture as being "normative" and focused on "what you are not allowed to do", so a ban is always quite appealing; 5) research shows the Swiss strongly valuing performance over caring for others, so the appeal about "freedom of faith" falls on deaf ears: it's about working hard and conforming to the norm, the rest is less important.

The polls prior to the vote painted a different picture. Most respondents said they would vote against the ban. This is misleading when the issue at stake is discrimination. As demonstrated during the presidential election in the US, people who discriminate do not admit in polls that this is what they do. There is a fear of expressing their discriminatory attitude in polls, because they fear being discriminated against for expressing an "anti-social" attitude. So people lie in polls and discriminate when voting. It happened in the US, it happened in Switzerland. There seems to be a "Swiss Connection" emerging with the US.

A huge debate has been revived all over Europe about discrimination. The findings of Hofstede's research (culture changes very little, very slowly, over centuries) are again confirmed: there was strong discrimination in many parts of Europe, a century ago. There still is. The irony is that, previously, it was against the Jews. Now, it is against the Muslims. Jesus Christ would be ashamed of these "false Christians" who are so hateful and intolerant of their brothers.

Moderates and advocates of freedom should not be silent or indifferent to what is happening. The silence of moderates allowed the rise of Nazism and Fascism almost a century ago. Let's not allow that tragedy to be enacted once again.

Fear breeds on ignorance. Stereotypes breed on ignorance. We need to foster knowledge, information, education, learning, interaction. Those are the only ways to avoid a slippery slide towards destruction and chaos. We need to promote cross-cultural understanding and build bridges across cultures. A bridge has just been bombed in Switzerland; let's re-build it.

Culture Differences in the news 3

2009-11-25T07:50:00.003+01:00

In the International Herald Tribune today (Nov. 25), David Brooks writes that the debate in the US over healthcare is actually a debate about values... Indeed! Perhaps the coin is dropping at last.

The people inbedded in a culture are the last ones to realize the underlying values that shape it, so it is no wonder that Brooks says that the values in question are "vitality" and "security". Actually, he is not that far off the mark. Research shows that the dilemma in the American culture is between "performance" (and the status assigned to it) versus "caring for others & quality of life". It is what Hofstede labeled as "Masculinity" versus "Femininity", two terms that most Americans have issues with, because they immediately link them to "macho" behaviour and "feminist" issues.

Research shows (not my opinion, nor anybody's opinion, this is simply research data) that the US culture scores higher on "performance" over "caring". No wonder it has taken them so long to adopt universal health care (and the discussion is not over)... In the American culture, performing and being a "winner" is much more important than caring for others or than leading a life of quality rather than quantity. It's all about competing to win.

By contrast, the Dutch and Scandinavian cultures (according to research) favor "caring" over "performance", and they've had universal health care for many decades.

Brooks urges Americans to "make a choice" about what kind of country does the US want to become, and he puts it bluntly about choosing between becoming more "vibrant" as an economy or providing more healthcare. He talks about having to decide between allocating funds either to stimulate the economy or to care for "the elderly" and "the vulnerable".

If you look a bit deeper, however, you can see that the US has actually managed to have the worst of all worlds: its healthcare system is the most expensive in the world AND it does not provide full coverage. How come? How is it possible that The Netherlands, the Scandinavian countries, and even England (an Anglo-Saxon culture like the US) are all able to provide universal healthcare, yet at a lower cost?

Perhaps because America has unwillingly combined the worst bits of "savage capitalism" into its current healthcare model. By allowing a lot of freedom to private enterprises, which in the US culture (more than anywhere else) means "making the most money at the expense of all else" because "performance" and "the bottom line" is all that matters, America has created a "monster" in which healthcare PRICES are artificially high. Prices are not exactly the same as costs.

Yes, in theory it is possible to extend healthcare to everyone in the US AND to lower the overall cost. However, this would require to rein the healthcare companies who are making too much money in the current situation. There lies the hard part of this dilemma, because it goes against the cherished value of freedom of competition in a free marketplace. Many people in the US fail to realize that "freedom to compete" should not be equal to "freedom to rip off" the population who have a health concern. "Ripping off" means overcharging, but it also means over-prescribing, over-testing, prescribing testing and treatment beyond what is really needed.

The right-wing shouts "rationing", but there should be a way to reconcile this dilemma.

The American culture will not change. OK, maybe in a hundred years, when there are more immigrants living in the US coming from other cultures and they have influenced the way children are being brought up. So we can discuss it again at the beginning of the 22nd Century.

In the meantime, the US has to find a way to reconcile its moral preference for "performance" with the need to provide at least minimum health care for the masses. You don't have to go very far. In South America, most countries provide low-cost, low-standard universal health care. And the wealthy are free to be ripped off by the providers of their choice when they want high-standard medical services. It is socialism for the poor majority and market capitalism for the rich minority.

However, this collides with the American value of "equality". In the US it is not morally acceptable to have a "privileged minority" entitled to better medical care, co-existing with an "underprivileged majority" that has no access to that. This makes it more difficult to reconcile the dilemma between "performance" and "caring".

The paradox is that, over time (in the past 30 years), income distribution in the US is becoming more concentrated, while in Brazil (for instance) it is becoming less concentrated (see "The Economist" of last week). Perhaps in the 22nd Century the situation will be reversed... The US will have a "de facto" unequal society, while in South America people will enjoy the economic equality that was a 20th Century ideal.

Actually, that is not very likely. Culture changes much more slowly than in a century. What IS likely is that the US will eventually adopt a healthcare system that will continue to combine the worst of "savage capitalism" with the emphasis on "performance", thereby increasing prices and overall costs, leading to a slow deterioration of the American competitiveness and "market share" in the global economy. The US will still be one of the large economies on the planet, (second to Europe) but less dominant than in 1970 (when Europe was still fractioned) and more interdependent with the BRIC countries.

Like in the rental car ads of the seventies, the motto will shift from Hertz ("We're Number One, we're the best!") to Avis ("We're Number Two, we try harder!").

Culture Differences in the News 2

2009-10-24T15:54:00.003+02:00

Should people be vaccinated against Swine Flu? Apparently culture has something to do with the issue...

In the Netherlands (low Power Distance, high Individualism) only 25% of nurses have agreed to take the vaccine soon to be made available. The overwhelming majority (75%) are suspicious of any "government-led" initiative, according to Radio Netherlands. "“For a start it is very difficult to really protect yourself against flu. Every flu jab targets a certain virus. And there are hundreds going around, so you are not protected at all. The side effects can be really serious. And it seems like there is a lot of panic-spreading going on. It is only the pharmaceutical industry that stands to benefit from it," said Ute.

Nannet van der Geest, company doctor at a Nijmegen hospital, is not keen on compulsory vaccination campaigns like the one in the United States. Instead she believes in providing the medical staff with the right information so they can make their own choices.

These opinions are typical of cultures scoring very high on Individualism and low on Power Distance. People show less dependent behavior and value dissenting opinions.

Meanwhile, in Brazil (high Power Distance, low Individualism) people are complaining that "the Government is not providing enough medicine against Swine Flu and the vaccination campaign is coming too late!" Typical of the Brazilian culture is to consider that it is the Government's responsibility (whether Federal or Regional) to "take care of the population". The vaccination campaign is perceived as "needs to be compulsory, otherwise people will not take the responsibility to be vaccinated. They need to be told!"

Very different approaches are needed to design public health policies...

Culture Differences in the News 1

2009-10-03T14:15:00.002+02:00

Barack Obama (whom I admire) made the effort to go to Copenhagen and pitch for the Chicago candidacy to host the 2016 Olympics. He demonstrated how a culture bias can wreck the best of intentions. His plane landed at 7:00 AM. He spoke to the IOC at 8:30, and left for the airport soon after, taking off before noon. When the first voting results were announced, he was already airborne.

This was published by the International Herald Tribune: "former IOC member, Kai Holm, told the Associated Press that the brevity of his appearance may have hurt. Mr Holm called it 'too business-like. It can be that some IOC members see it as a lack of respect.' "

Obama acted in a typical Anglo-Saxon way, going straight to the point, and then leaving. He forgot that, out of 97 IOC members, less than a dozen come from Anglo-Saxon cultures. The vast majority of the world have cultures that value relationships far more than "the bottom line".

No wonder Chicago got the least votes of the four candidate-cities and was the first to be dropped from the competition.

Kevan Gosper, IOC member from Australia (one of the "less-than-a-dozen" Anglo Saxon cultures) said "I'm shocked. To have the president of the United States and his wife personally appear, then this should happen in the first round is awful and totally undeserving."

Well, well, Mr. Gosper: what would be more deserving? To have the president of Brazil personally appear and Rio be dropped? Or to have the prime minister of Japan appear and Tokyo be dropped? Or perhaps to have the king of Spain personally appear, and Madrid be dropped?

In Chicago, news anchors were questioning whether the IOC was "anti-American"... That is not the issue.

My dear friends, welcome to a multilateral world, the reality of the 21st Century is just beginning. America deserves the same respect as other nations, no less, no more. The Anglo-Saxon culture is as important as other cultures, no more, no less.

Bear in mind that the population of Anglo-Saxon, Dutch-Scandinavian and Germanic cultures represent 9% of the world's population. The remaining 91% are "Solar-System", "Family" and "Social Pyramid" cultures (Japan stands on its own, but that is another story).

No culture is "better" than another, but those belonging to cultures which are minoritarian in the world stage should at least try to understand what is going on in the other cultures. Or risk other unpleasant surprises in the years to come.

If you can't do anything useful...

2009-08-31T09:57:00.004+02:00

A wise man dispenses advice to his son:

Go out and do something useful to make this a better world, my son.

If you can't do anything, become a Manager.

If you can't Manage, become a Consultant.

If you can't consult, write a book.

If you can't write a book, become a blogger!

...and keep me updated on Twitter.

Six Visions Of The World

2009-08-18T12:33:00.005+02:00

Six People In A Bar

P1: The world is a competition. There are always two opposing forces clashing against each other, and the outcome of that confrontation shapes the future.

P2: No, wait. That’s a narrow perspective. The world is a series of forces coming against each other, not just two. The world consists of many different forces that interact constantly with each other and from that multilateral interaction different outcomes are produced.

P3: Hmmm… This sounds a bit confusing. The world needs order. Actually, there is an underlying order to everything. We just need to uncover that, we need to discover the patterns and further improve on them. As we find out how things are processed in the world, and as we bring improvements to those processes, we are able to better understand the world, how it functions and how it can function even better, to make it a better world for all, eventually.

P4: Sorry, but that’s just too mechanistic for my taste… I think we need to look at the cosmos to understand the world. Planets orbiting suns, now there’s a pattern which is reproduced everywhere, all the way down to the atoms, with electrons orbiting a nucleus. Human society also mimics that, with certain people acting as “suns”, others as planets, moons, stars, and so on. Astronomy, if not astrology, offers a model to understand the world.

P5: My dear friends, I’m afraid you are missing the point. What matters in the world is human beings and their interactions. Forget about planets, forces, and other esoteric metaphors… Let’s focus on people, and how they interact. Yes, there are patterns. They basically involve hierarchy, a sort of “pecking order”. You see it in animals, you see it in human society as well. The individual is always part of a group, and in that group he/she has a place in its hierarchy.

P6: True, true… But this sounds a bit like a bureaucracy, a pyramid built by some technocrat with too much time on his hands and not enough sensitivity. Let’s look at the basics again: the basic unit of human society is the family. Humanity consists of parents and children, who grow up to become parents of other children, and so on, forever. This is a natural process which has been there since the beginning of the human race. We are all part of a global family, consisting of billions of families.

What’s Your Fancy?

The section above outlines (too briefly) six different visions of the world discovered through cultural research over the past 30 years, but not widely known outside the field of culture studies. Is the world a contest? A network? A machine? A solar system? A pyramid? Or a family?

The labels may be disputed (as all labels) but the visions of the world reflect the underlying values discovered by Geert Hofstede as “Five Dimensions” existing to different degrees in all cultures. Hofstede’s “5-D” model has been the most widely researched culture model for decades and its practical use is gaining ground in global organizations trying to broaden their scope in a “flat”, global marketplace. The five dimensions are: Power Distance (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance (UAI) and Long-Term Orientation (LTO). Over 100 countries have been scored on each of these five dimensions, so that each of these countries’ cultures can be described in terms of the underlying values that help to shape those cultures. This leads to a better understanding of the cultures and their differences, but it still leaves us with a very diverse and sometimes confusing picture as we try to compare different cultures.

In order to help the understanding of the differences and similarities among cultures, the notion of “clusters” has been offered by Huib Wursten, Bob Waisfisz and others from ITIM, the institute which has sought to translate the outcomes of culture research into practical management applications. The six visions of the world mentioned at the beginning of this article stem from the six culture clusters resulting from different combinations of the five dimensions researched by Hofstede and other culture specialists.

I have found these six “mental images” very useful in looking at culture from a broad perspective. As you go deeper into a culture, you find the idiosyncrasies that make each culture unique, just as meeting people and getting to know them makes you realize that each person is unique. Still, the six images makes it a lot easier to gain a broad understanding of culture differences. It also helps you to understand what the hell is going on around the world these days.

The contest – Cultures sharing these underlying values (low Power Distance, high Individualism, high Masculinity, low UAI) are basically those stemming from the Anglo-Saxons (ex: UK, US, Canada, Australia). In these cultures, the world is perceived as a clash between two competing forces (thesis and antithesis) out of which a resulting force ensues (synthesis). The fascinating aspect, to me, is to see how much this image actually shapes the way these cultures perceive the whole world, and not just the events in their own countries. It’s like wearing color-tinted glasses and thinking that everything you see has that color.

“Contest” countries have two-political-party systems (Labor and Conservative in the UK, Democrats and Republicans), a mirror of the “two opposing forces” vision of the world. The problem lies in when this vision is then used (as colored-tinted glasses) to look at very different realities across the world. Then you get people saying weird things, like “Afghanistan will only find peace when it develops a democratic political system based on two parties”. Why two parties? It’s your glasses, mate! You don’t really have to organize all the tribes in Afghanistan around two political parties in order to get stability in politics there…

The network – This is the cluster typical of the Scandinavian Region and of Holland. It shares low scores in PDI and UAI, high in IDV, just like the Anglo-Saxons, but unlike those, these cultures score low on MAS. The “network” countries see the world as a series of multilateral relationships in which many different forces come against each other and need to somehow be accommodated. Some form of consensus is required, and continuing monitoring of such consensus is necessary, for the process never stops.

They typically have multiple political parties and government needs to form a coalition in order to rule the country. When “network” cultures look at a place like Afghanistan, they come up with different approaches to the situation, like the “Dutch approach” of focusing on the tribal leaders and working with them to develop local governance and economic development, rather than fighting the Taliban. The Americans, of course, criticized the Dutch approach because it lacks the element of conflict, which under American-tinted glasses is the most important aspect. The Dutch wear other kind of glasses, so they see everything under a different color.

Which is the best approach? Well, the Afghan culture is neither a “contest” nor a “network” culture, so the answer is probably lying elsewhere… Don’t try to rule Afghanistan as if it were the US, and don’t try to rule it like Holland either!

The pyramid – These countries have high PDI scores, and low IDV. They are more collectivistic, rather than individualistic, and these cultures consider that it is simply natural that power is not equally distributed in society. Rather, some people have a lot of more power than others. In pyramid countries the MAS score is not relevant (in most of them it is neither very high nor very low). UAI scores are high, so they tend to be more religious, more superstitious, and they express emotions more often. This is probably the culture in Afghanistan (I say “probably” because there was no research yet carried out in Afghanistan. NOTE to UN: it would not cost too much to fund such research there, certainly less than a single bombing raid… And the research outcome would make all efforts to stabilize Afghanistan more effective!). There is available research data on neighboring Pakistan and Russia, which are both “pyramid” cultures.

In such cultures, the holders of power (like the tribe leaders), the groups to which people belong (such as the tribes) and the relationships among all these stakeholders are crucially important. Forget about equality. You need to involve the leaders. Forget about “taking individual responsibility” (this is the aspect in which the Dutch model also goes wrong). People expect the leaders to take responsibility, and they will follow them and be loyal to them, in exchange for being cared for. It’s a different model, a different way of looking at the world. Change in Afghanistan can only happen if their view of the world is respected and employed in bringing about change. Get some people with “pyramid-tinted” glasses to come in and work with the Afghan tribe leaders. Then you will see things happening, at a fraction of the cost of the present campaign, not to mention the cost of lives, which is priceless.

The other three – The “machine” cluster is typical of the German and German-speaking cultures (such as Austria and Northern Switzerland); the “solar-system” is found in France, Spain, Italy; and the “family” cluster is typical of India, China and its “culture-relatives”. I will not go into them here. I just want to stress that until we all are able to remove our “tinted glasses” or wear each other’s glasses to see the world from different perspectives, we will continue failing in communicating effectively. The Americans will continue to criticize Europe for being indecisive and lacking a single voice. Europeans will continue to criticize the US for being greedy and narrow-minded. The Arab countries (also “pyramid” cultures) will continue to criticize “the West” for meddling into their domestic affairs and doing more damage than benefit.

It’s about time people realized that there is no single “right” way to manage an organization nor a country. There are at least six different ways (actually, many more, when you get deeper into it), all equally effective, each with its strengths and weaknesses. We all have our preferences, depending on our own background, depending on the way we were brought up. Putting ourselves in someone else’s shoes is a step towards common understanding. This will help moving towards a second step, which will be to seek together solutions that make sense for both parties.

Graduate Speech

2009-06-08T12:53:00.003+02:00

It’s that time of the year again, when millions of students in the Northern Hemisphere are graduating from High School or from College, and the ceremonies that celebrate this rite of passage typically include speeches by invited figures, whose mission it is to articulate the rejoicement of communities involved and to express advice for the future. I’ve just been through the process of attending such ceremonies once again (I have four daughters, two of them already graduated from College, one from High School, and one to go).
Most of the speeches I have listened to or read on the media are quite inspiring and offer true moral value to youngsters and older people alike. They sort of reinforce our collective ethics and express the hope that the next generations will carry on the values that have shaped our culture, perhaps developing them further and creating a better world for generations to come. There are, unfortunately, a few of these graduation speeches which are just a bunch of crap.
By that I mean that there are some myths that are precisely the notions that make this world a terrible place to be in, that make this world in such terrible need of improvement. These myths are precisely what we and the younger generation need to fight against in order to make this a better world. Hearing these myths once again exalted makes quite upset, which led me to lash out against these attempts to perpetuate them during these rites of passage. These are crucible moments, in which graduating youngsters should be spared from hearing advice most likely to lead them to maintain a status-quo that demands changing.
So here are a few myth-busting comments I would like to make, in order to help graduates to make their own judgment about some of the stuff they are exposed to at these ceremonies.
Myth-Busters
Typically in many speeches you hear the exaltation of Focus, Discipline, Hard Work. People tell you to study very hard and to develop your Willpower and Rational abilities. I have to say that these notions are, at best, heavily biased by an Anglo-Saxon cultural perspective, which includes a tendency to think that there is “only one way to do things right”, and tries to impose that perspective upon the whole planet, even by force. Examples of that are the invasions of Iraq and Afghanistan, and the NATO operations in the Balkans, trying to force “democracy” unto people even if they are to be killed in the process. This rubbish needs to be stopped.
Focus can be a good thing, but you can easily get too much of a good thing. It’s like “the dark side of The Force”, as anyone who is a fan of “Star Wars” (or of “That 70’s Show”) can tell you. The exaggeration of a virtue quickly becomes a malady and the driver of disaster. Focus becomes narrow-mindedness. It alienates you from your surroundings. It drives environmental recklessness and irresponsibility (as in lack of response-ability, making you unable to respond effectively) regarding what happens around you. Margaret Wheatley points out that animals are not focused. Rather, they are always equally attentive to what they are doing (eating, drinking, hunting, playing, mating, nursing their young) and to what goes on around them. Which is why they are able to escape to safety when their predators (such as “Man”) approach them. Animals may dedicate 50% of their attention to one thing, but the other 50% is always dedicated to maintaining their awareness of their surroundings. When we exalt the need to focus we are distancing ourselves from our environment and making ourselves more vulnerable.
I’m not talking just about physical threats or the physical environment. It applies also to interpersonal relationships and to the economy. The investment bankers and traders who created the American mortgage bubble and the global credit crisis were all very focused! They were focused on making money and getting huge bonuses. They lost touch with the impact they would make on the economy and on society as a whole. They did not see the signs of the bubble bursting, though the signs were there. Many people even saw those signs of impending disaster, but chose to ignore them. They were too focused on saving their own assets and “didn’t give a chuck” about anybody else.
Therefore, rather advising graduates to “focus”, I would rather say “don’t focus!”. Never lose your ability to notice what is going on around you. Never lose your awareness of other people and of what they are feeling. Be prepared to drop what you’re doing and engage in interaction with somebody else. Jorge Luis Borges told us that on their deathbeds, people do not regret not spending enough time at the office. They do not wish they had had more focus on their careers. Rather, it’s the opposite. They regret focusing too much on work, and not dedicating time enough to interacting with the people and the world around them.
Discipline is exalted as a virtue as if enduring pain was a good thing. Self-limitation is a form of discipline, and it is also exalted. We hear that we should avoid the temptation to enjoy life and be free to do what we want. Instead, people are urged to “be disciplined”, which means sacrificing your own judgment and feelings on behalf of doing what some lunatic has ordered you to do. It’s the justification of all war crimes, from the Nazi concentration camps to the CIA torturing of suspects. Again, the dark side of the force.
If discipline comes from within, rather as engagement instead of commitment (the difference may be subtle but it is very important), then it is a different thing. Engagement stems from inspiration, not from following orders. It originates in passion, in emotions, rather than in obedience to external norms.
Class of 2009, I urge you to be engaged and not disciplined. Be true to your heart, more than to your mind. Be aware of what you feel as much as of what you think. Decide what path you wish to take, rather than following others blindly. Listen to your body and to your emotions as often as you listen to your mind.
Hard work can be pretty stupid, so it should not be exalted as a value “per se”. You can easily get yourself killed an end up bringing death to many people around you, if you simply work hard. Working hard just for the effort is a form of self-punishment. Think about what you’re trying to accomplish, rather than just exerting yourself to death. You’re not doing penitence. You should be trying to get some result from your work, something that will generate value for others. Work is a means to an end, and the ultimate end is to make this world a better place for those around you. If you consider work as an end in itself, you will just drive yourself crazy, and you’ll drive people around you crazy too. Plus, if you’re working on the wrong things, you may bring harm to others, rather than benefit. It will be like killing your allies with “friendly fire”, rather than hitting your targets. A bleak example: more French civilians were killed by Allied “friendly fire” in the Battle of Normandy alone, than there were British civilians killed by German bombing in all of WW II.
Smart work is better. Figuring out a better way of doing things is better than just repeating the same way of working, harder and harder. And don’t forget to dedicate time to love, also.
When asked by a journalist what was the criteria for mental health, Sigmund Freud gave a simple answer: “Loving and working”. Healthy people are those capable of loving and working. Expressing care for others and producing something. That’s the best advice for graduates: love and work. Personally, I would keep it in that order of importance, though I cannot say whether that was Freud’s intention.
Studying hard, to me, is also a myth, supported by the myths of the supremacy of rational thinking and of willpower and discipline. Don’t get me wrong, I am not saying that you should not study. What I want to say is that studying, to me, is about learning something that you are interested in learning. You don’t need to study “hard”. If you are not interested in something, you will not learn it by spending hours on end reading text when you would rather be doing something else. Simply sitting there reciting to yourself will not make you learn anything. Why? Because learning only happens when your emotions are involved. It is not about rationality, it is not about willing yourself into doing something which you are not genuinely interested in, or naturally capable of.
It’s more about engagement and talent, rather than willpower and commitment. If you are interested in something, you will learn it regardless of your teacher, no matter how bad he/she is. If you have a good teacher, he/she will allow your interest to arise, rather than attempt to impose “discipline” on you. The best learners are those who are passionate about the subject. That makes it so easy for them to learn it. The trick is to be in touch with your own feelings and senses, to be “whole”, rather than being a slave of your rational mind. Then you will discover the things that you are passionate about and you will have great fun learning more and more about them.
Conclusion
Class of 2009, try do discover the way you learn, as a person. Learning is a unique process for each individual, every person does it in a slightly different way. It involves your emotions more than your rational thinking. It’s got more to do with your talent than with your willpower. Get to know yourself (Socrates said that, it’s not new). Become “whole”, fully aware of what you sense, feel and think. Allow your natural talents to surface. This will help you find your own way. Suffering like a martyr is not a pre-requisite to success or to happiness.The best graduation speech I’ve heard this year came from Mr. Tweedie, a High School teacher at the International School of Amsterdam. It was not about “winning”, “focus”, “discipline” or any of that rubbish. It was about observing toddlers and young children in the playground, from his office window. He saw that sometimes a child would fall from the toys they were playing on, and bruise an arm or scrape a knee. He saw there was always a classmate that would run to them and help them get up from the ground, pat them on the back, comfort and encourage them. This was Mr. Tweedie’s advice to the graduates: be there for someone else when they fall down, comfort and encourage them. That will help make this a better world. It was a lesson learned from small children, rather than from some old fart. I totally agree with his message. I also believe we have much more to learn from our children than from our elders.

Are We There Yet?

2009-05-13T09:32:00.002+02:00

When my twins were seven we used to take them on a long drive (770 km) to spend a couple of weeks at the beach. By the time we did this three times, they knew what to expect (a long, boring drive), yet they still asked, after just 70 km of driving: “Are we there yet?”.
Throughout the current economic crisis, I’ve come under the impression that the media has the same mental age as my twins had when they were seven… Although, from the very beginning, there were several news items announcing that “we are going into a recession, and it’s going to be a long one”, still, every other day I read about people saying that there are “signs of recovery” and that “the worst is behind us” (which means we are going to see it getting better from now on).
Forget it. Get real. The global economy doesn’t turn on a dime. Not even the American economy is able to do that, although apparently some people believe it can. There seems to be a childish wishful thinking behind this, a desperate yearning to believe that everything that has gone wrong will suddenly disappear in a puff of smoke, like magic. If only!
I think it was in “MAD” magazine that I once read that “Of course psychoanalysis takes years until you get better: think how long it took you to get so screwed up!”. The same reasoning applies. The Dow Jones index peaked in October 2007, a year and a half ago. It bottomed in April 2009, at 50% of what it was. I don’t see why it would not take at least another 18 months to be back where it was (that means October 2010). Historically, it has risen to previous levels at least twice as slowly on the way up, comparing to how fast it came down. This means April 2012. Now there’s a realistic estimate for you. It might take even more, but to expect full recovery before April 2012 seems to be just wishful thinking, an emotional response, rather than rational analysis.
I met a consultant in Peru last year who said that “Economics is a branch of Psychology”. At first I thought he was exaggerating, but I see evidence that he was absolutely right. The idea that the economy is rational, or that people are rational, is an illusion which I find, to my surprise, some senior people are still clinging to. Their attitude is so infantile that it actually proves the opposing point: that people behave moved by emotions more than by reason. That includes people’s “economic” decisions. Professors at Harvard Business School and senile (sorry, I mean senior) editors at “The Economist” should take note. See also “Descartes’ Error”, by Damasio, “Animal Spirits: How Human Psychology Drives the Economy”, by Akerlof & Shiller, and "Engagong Leadership", by Marlier & Parker.
The truth is that emotions drive every single decision we make. The “rational” decision is a myth. People cling to that myth because they have difficulty coping with and controlling their own emotions. A purely “rational” world has the appeal of appearing to be more predictable, controllable and safer. The irony is that this is a totally infantile, at best romantic, point of view… Behind every action we undertake, no matter how simple (like, for instance, raising your hand) there is an emotional will to undertake that action.
Every choice implies emotional consequences. Every “rational” analysis brings with it the emotional consequences attached to the available options. We would do better to try to research and understand emotions better, rather than to underestimate their relevance or pretend that there are situations in which human action is devoid of emotion.
People who are afraid of their own emotions (and of the emotions of others) tend to have difficulty in making decisions (choices) of all kinds. They use excessive rationality as a defense mechanism against being in touch with emotions. They create a fantasy world of pure rationality. They join NESA (NErds Society of America).
Fear (an emotion) and anxiety (another one) drive people to wish for a quick solution to their problems, including a quick solution to their economic woes. In this case, the illusion will lead to frustration, since economic recovery just does not work that quickly. Why? Because in a recession people become more afraid, more averse to risk, less willing to invest, less willing to spend. This hurts economic activity, which only gets worse. Fear of the recession becomes a self-fulfilling process, as it deepens and prolongs the recession.
Recovery happens when more and more people become less afraid and more willing to invest in their own businesses, when more people choose a constructive attitude rather than a defensive one. This takes time. Fear usually comes very fast into our consciousness. Losing that fear usually takes much longer than it took to become afraid.
“We have nothing to fear but fear itself” were Roosevelt’s words about the Great Depression in the thirties. The difficulty is that reasoning alone is not necessarily enough to dissipate fear. Inspiring words are helpful, but inspiring actions will be even more effective. When people see others making money and being successful , that will do more to dissipate fear than any Obama or Bernanke speech. The media could help, by publishing more stories about the people who are making it, rather than broadcasting from “Gloom Central” all the time.The problem here is that fear sells more newspapers than hope does. So don’t hold your breath. Be patient. This is going to take time. We’ve barely done 70 km and we still have 700 km more to go before we get there.

Bankers & Bankers

2009-04-29T15:05:00.005+02:00

I’ve worked as a Human Resources executive in three different banks for a total of 28 years over the past 35 years of my professional life. The other seven years I’ve spent in consulting, most of the time for non-banking organizations. As a bank employee, I always took pride in identifying myself with the business I was in, rather than with my functional expertise. I introduced myself, filled in forms, and responded to questions as “a banker”, rather than as “an HR professional”. I believed (and still do) that the best way that all “staff” functions (such as HR, Finance, IT, Legal, Admin) can add value to their organizations is by fully identifying and understanding the business purpose of their organizations. I took courses on banking, on financial products and markets, I took part in discussions about risk management, distribution channels, pricing and cash flow management with my colleagues in these bank’s management teams.
I thought of banking as a gatherer of scarce (financial) resources in the economy, which then redistributed these resources in the form of loans to the most effective project proposals (private and corporate). In return for gathering money, analyzing the validity, risk, and potential return of different proposals, and deciding on loans to finance such proposals, banks were allowed to charge a fee for their services, in the form of interest. In other words, the social purpose of banks is to add value to the economy through risk management. When they do their job well, people will pay enough interest to cover the costs of a bank’s staff and infrastructure, plus provide enough profit to allow for a proper return on investment to its shareholders and leave enough money to re-invest in growing the efficient business of that bank.
Performing this role well means that a bank has more impact on society than any other industry, because it actually touches every industry in the economy, including other banks. We were able to recruit a lot of young talented people because they wanted to “change the world”. What better way to do that, than to join a company that had such big impact on all other companies and on all individuals as well?
If a bank does not perform well, it will loan money to the wrong projects, will not make enough revenue to cover its costs, and will go bankrupt. If a bank performs well, but charges too much money in fees for its services and is perceived as “ripping off” its customers (private and corporate), it will eventually incur in the wrath of clients and regulators, and lose its “license to operate”, either from the action of regulators, or from seeing its clients take their business elsewhere.
For several years this picture was clear in my mind and I often used it as a reference whenever I was involved in recruiting talented people for the organizations I worked for, especially for ABN AMRO in Amsterdam and Banco Real in Sao Paulo.
One day I was talking to my two youngest daughters, who were in primary school in those days, and they asked me: “Daddy, what do you do in your work?” I told them: “Daddy is a banker!”
They stared at me with wide eyes. One of them asked “what is a banker?” to which the other responded before I could say anything: “You know, those big guys with a big hat and a coat which throw the little girl out of her house!” I was stunned.
The youngest countered: “Nah, but Daddy’s not a bad guy… Right Daddy?” The other looked at me again, waiting for my reaction. My response was: “Well, there are good bankers and bad bankers. The guy you saw on TV was a bad banker, who throws people out of their homes if they don’t pay back the money they borrowed from him. But I don’t do that, in my bank we don’t do that. We lend money to people to make their dreams come true, like when they want to buy a new house, or a car, and they don’t have the money, we lend them the money and they can use it to buy what they want, and they can give me my money back later, a little bit at a time, when they get money from their work”.
This was already a long enough explanation for them, so they changed the subject and moved to something else. They were satisfied. I was not.
I kept thinking about it for several days. I discussed it with colleagues at work. I made a big issue about it.
This was the image my kids had about bankers. It was probably the image most people had: bankers are bad guys in dark suits, exploiting little girls and their grannies. They are greedy, heartless SOB’s, who derive satisfaction from driving people to the poorhouse. What happened to the story about redistributing scarce resources to develop the economy? It didn’t get told very often. Not many people heard it at all, and of those who did, probably very few really believed in it.
As I discussed it with my fellow bankers, I found that many of them did not care. I soon realized that there were, indeed, “good” bankers and “bad” bankers, or perhaps “soft” bankers and “hard” bankers, according to their style of behavior.
The soft bankers were those few who did care, and who believed their work was helping make this a better world. They were also concerned about the image that bankers had and they believed that the success of their business was actually based on trust, something rather “soft” and “fuzzy” that was difficult for a banker to cope with specially if you were brought up with hard figures and financial math as the needed skills for what you did.
The “hard” bankers had a very different mindset. They basically felt that life is a competition, and whoever makes the most money wins. These were bankers, who accepted the negative image of banking as a fact of life, something that they could do nothing about, and something that was in the mind of ignorant people who did not understand what life is really about. Why worry about what others think, especially if they are ignorant and not capable of making a lot of money in their own businesses?
The “hard” bankers had little concern about the “meaning” of what they did; it was all about doing a good job by making a lot of money, for the company and for themselves. They based their success on technical expertise and rational thinking. The “soft” bankers were concerned about the meaning of what they did; it was all about helping other people and businesses (though certainly not by giving away money for free). They based their success on relationship skills and building trust.
As I explored the issue further, trying to better understand the mindsets of “hard” bankers and “soft” bankers, I came across another division. Most of the “soft” bankers were in consumer banking (with honorable exceptions) and most of the “hard” bankers were in Investment Banking and Capital Markets (again with notable exceptions to confirm the rule).
…And Then Investment Banking Was Created
Bankers in general are a conservative lot. They are risk-averse. They are not innovative. In 1978 I was at an international conference on Organization Renewal, debating with Organization Development specialists who worked in different industries and different countries. When I described enthusiastically the innovative programs I was starting to run in my own company, they were all very interested. When I told them I worked in a bank, they practically laughed me out of the room. “You’re out of your mind”, they said. “Those things will never work in a bank! Banks are too conservative. They are huge bureaucratic, crystallized structures averse to change and innovation. The new frontiers of management are in chemicals, oil, consumer goods, the auto industry, not in banks.”
A few years later, Anthony Hourlihan, a consultant in Financial Services, addressed an audience of 200 young talents from an international bank: “I will not lie to you. Banking is boring. If you go to a bar tonight and you meet a beautiful girl, and when you tell her that you are in banking she smiles and says ‘how exciting!’, let me give you some advice: do not marry that girl! She is lying to you. Banking is not exciting, it’s boring. People may be attracted to the fact that you can make a lot of money in this business, but I can mention 50 other things that are more exciting then banking”.
If banking was so boring, how did banks create new products and services? They followed their clients. When clients starting doing international business, banks became international. When clients invented sophisticated cash management systems for their companies, banks copied those and offered them to all companies. Credit cards, ATMs, international money transfers, project finance, all products and services that we take for granted as “banking products” were actually created outside of banks and later adopted by banks when their clients demanded it. I’ve even seen companies who developed software, in-house, and came to their bank saying: “here, if you use this software which I am giving you for free, you can process our invoice collection much faster than you currently do, and turn out reports in a format that is much more user-friendly and useful for us. You will probably find it attractive for other clients as well.” I’ve been a witness to this.
In the late seventies and early eighties, companies started getting creative about finding sources of capital. They invented new ways of raising capital and passed it on to the banks. Why was it so? Banks were big fat cats, conservative and contented. There was no need for innovation. They were used to clients coming up to them and asking for finance, and they would just say “no” if they were not comfortable with the risk, or if they simply did not have enough capital available.
Necessity is the mother of invention. The necessity was on the companies’ side. Entrepreneurs needed capital, so they started inventing new ways of raising it, new creative formulas of enabling banks to lend more money. Entrepreneurs still needed the banks as vehicles. Only banks had the asset gathering capabilities and the distribution channels required by new ways of underwriting capital, organizing IPOs, syndicated loans, and securitization.
Banks also were the only organizations with the legal license to carry out some of these activities. Some entrepreneurs attempted to do some of this outside the banking industry, but they were sued out of the market, crashed down by regulators or boycotted by banks in such a way that none of them became significant players. A few banks were bolder than others, and started adopting some of this new-fangled stuff. This forced the others to adopt the new practices too, or risk losing clients to competitors. Many times I witnessed internal discussions in banks in which a proponent of a “new” product argued with risk managers and legal experts who advised against it: “But all our competitors are doing this! If we don’t do it too, we’ll be out of the market!”
In the US there was Glass-Steagall, a law separating “investment banking” from “commercial banking” activities, to avoid conflicts of interest and keep risk at bay, but in other parts of the world there was no such separation. American bankers lobbied intensely for years and finally got the law revoked.
Investment banking, as an economic activity, grew tremendously. The products that had been created outside of banks were creating a windfall for banks and firms involved in it. People started getting paid handsomely for the deals they made. Young talent flowed to “Wall Street” and to banks all over the world, and away from engineering, manufacturing and the caring professions.
The Human Side of Banking (not kidding)
Banking, suddenly, became attractive. Hollywood films started to show a new image of bankers: glamorous, smart, sexy. “Working Girl”, “91/2 Weeks” showed sexy, smart, young people doing all kinds of clever things. And they were bankers! Even “Wall Street”, in which the main character is the “bad guy”, who did they cast in that role? Michael Douglas, at the height of fame and glamour. “American Psycho” was a horror film about a serial killer, but it was also a panorama of investment banking and it cast young Christian Bale as the axe-wielding heartbreaker.
In the nineties, young talented people wanted to be in banking. And they didn’t mean consumer banking. They all wanted corporate finance. There were 10, 20 candidates for each vacancy. The more difficult it became to get into, the more attractive it became for young men and women who loved challenge. Soon there were 50 candidates to a single job. Only the best would get it.
And exactly who were “the best”? I can tell you: they were the “hard” bankers. The people selected were the ones who had the “hard” skills: strong in math, creative, quick, flexible, “driven” (as in willing to work long hours on special deals), persistent. Nobody was looking at “ethics” as criteria in those days. Relationship skills? Yes, that was “desirable”, but not a requisite. Engineers started dropping out of their jobs in mechanics, electronics, production and chemistry, and started moving to structured finance, treasury and capital markets.
Within banking organizations, “culture wars” began to emerge. Investment bankers looked down on commercial bankers. They saw commercial bankers as “old fashioned”, “back-slappers” who did not have the brains to make it in the “brave new world” of modern banking. Commercial bankers were good at making friends, that’s all. Anybody can do that. They couldn’t understand how to manage a “yield curve”, they couldn’t recognize derivatives if they bit them on their assets.
Commercial bankers, in turn, despised the young newcomers to the industry. They saw investment bankers as “back-stabbers” who would do anything for a deal, opportunistic SOBs who did not value long-term partnerships with clients. It takes experience to build trust and to be able to “smell” risk, it takes artful skills and a network in the market to be able to assess who are the clients you can trust, who are the ones you need to avoid. “These young kids think life is about ‘day-trading’ and mathematical models, they have no sense of history nor long-term perspective, they don’t realize that banking is all about trust!”
Most banks started to drift towards one end of the spectrum or the other. You either became very good at investment banking or you became very good at consumer and commercial banking. A few organizations tried to become “universal banks”, notably Citibank, HSBC and ABN AMRO, as pointed out by The Financial Times in a landmark article in 1997. However, within these three organizations (and elsewhere as well), the culture wars raged on.
The investment banking professionals wanted to emulate Goldman Sachs, Merril Lynch and Salomon Brothers (in those days). The consumer and commercial banking professionals had Bank of America, Deutsche Bank and Wells Fargo as models. These internal wars consumed a lot of energy which was diverted from providing better products and services to clients.
The Moral
In his award-winning book “Purpose”, Nikos Mourkogiannis outlined that all companies have a moral purpose, even though most often than not they are unaware of it. It is part of their corporate culture, though not always explicit.
Typically, a company’s moral purpose falls into one of four categories: Heroism, Altruism, Excellence and Discovery. Companies whose moral purpose falls under “Heroism” are those who focus on beating the competition, being better than anybody else, being “the last one standing” in a fight. Goldman Sachs is one of the examples mentioned by the author. I can say that “heroism” is not the moral purpose only of Goldman, but of most investment banks. The competition is fierce. The products offered are basically the same. In order to succeed, you need to be quicker, smarter, better than your competitor in offering and delivering the same things.
Commercial banking, though, falls under the category of “Altruism”. The focus is on the clients, rather than on competitors. Success is based on developing trusting relationships in which the clients believe that the bank is helping them to manage their daily finances, invest for the future and purchase what they want (buy now, pay later).
No wonder there were culture wars going on! When people have different moral purposes it becomes more difficult to work together. Sharing a common goal is a pre-requisite for any team, any company to be effective. These culture wars eventually brought ABN AMRO down from the international arena, and they have many times brought Citi to the brink of bankruptcy (they’ve shown an amazing capacity to bounce back from every crisis, but only to fall in another canyon shortly after recovering). HSBC has been less damaged by these wars and by the economic crisis, but it has often been “accused” of not being able to develop a strong investment banking business.
The crisis
What happened to cause the mortgage crisis in the US, and the bursting of the derivatives bubble all over the world? Well, it was more of an investment banking problem, rather than a consumer and commercial banking problem. And it was definitely caused by “hard” bankers rather than “soft” bankers.
The first myth that should be dispelled is that it was “surprising”, “unannounced” or “inevitable”. It was none of these. As early as 2003, I attended senior management meetings in which one of the topics was “the US housing bubble” and when it was due to burst. The discussion was when should we get out of that business, not “if”. It was the proverbial party that Warren Buffet often talked about. The party is going great. Everybody knows that it’s going to end badly, but nobody wants to be the first to leave and miss out on the fun that is still going on. Yet everybody knows that the last ones to leave are going to have to pay the bill. And, hell, they might even go to jail if they don’t have the means to pay the bill.
In the case of those management meetings, the decision was to stay in the mortgage business a bit longer, because the bank was making a lot of money on it. Shareholders were happy, staff got big bonuses, customers bought houses, it was so much fun for everybody. The people saying “this is going to go bust” were not able to persuade the others to leave the party.
A few years later, the people who wanted to leave finally persuaded the others. The business was sold to Citibank, a real “party animal” with a reputation for buying up everything that others did not want. Citibank lost billions in the mortgage crisis. Other banks avoided losses by selling the business before it went sour.
As the mortgage bubble burst, it triggered a bigger crisis in the credit markets. The problem was not lending money to companies and individuals, it was lending money to other banks. Banks rely on lending to each other to keep the flow of capital eventually reaching businesses and individuals. Suddenly it became very risky to lend money to certain banks, which could go under without paying what they owed, and trigger a domino effect across the banking system, bringing down many banks. The fear of a crisis actually brought on the crisis. When the credit markets froze in midair, Bear Sterns came down, then Lehman Brothers. The domino effect began and it was panic at the disco, I mean, on Wall Street.
This was no surprise. In the seventies I witnessed a crisis affecting banks of a certain region. It was triggered by predatory competition, a pricing war that made several banks start losing money in their efforts to attract customers away from each others portfolio. There was a high-level meeting of competitors. All the “hard” bankers were there. They made a “gentlemen’s agreement” to stop the pricing war.
A week later the war was still raging. A friend of mine, a lawyer, said “this gentlemen’s agreement is fully nullified by absence of the object”. I asked him to translate this into English, and he said: “there can be no gentlemen’s agreement when there are no gentlemen present!” It did not come as a surprise that, a few years later, that bank went bust. It was nationalized and eventually privatized a decade later.
In the eighties, I witnessed another curious situation. A meeting with the Money Markets team (all of them “hard” bankers) in which the CEO of a bank bluntly said that there was a “bomb” flying around in the market (he actually used porn language which I won’t repeat; this is an “R” rated article). He said that all banks were holding their assets against the wall and passing the bomb around, making some money in fees as they did so. Everyone new that the bomb was going to explode on somebody’s assets, but no one could predict who would go bust, so he urged the traders to continue playing the game but to be extra careful. Three weeks later, that bomb “exploded”. Three banks went down, and that bank was one of them.
So it’s no wonder that, when the mortgage bubble burst, we saw similar behavior. Instead of coming together and try to avoid a crisis, it was “every bank for himself”: bankers knew that “somebody’s going to go down, but it’s not going to be me”. Actually, they were probably thinking “The less competitors in the market, the better! If many banks go bust, the survivors will get the spoils! We just need to ensure we don’t go down with the others, and we’ll come out at the top when this is over!” As the Fed and the American Treasury tried to organize a way out, bankers paid no heed. The first banks went under. The Fed started pouring tons of money into the system, but banks kept to their traditional ways: they stood with their assets against the wall and refused to lend to each other. “Somebody else is going to go bust, but it’s still not going to be me!”
Since then (mid 2008) the situation has improved, but there’s still a bomb flying around, only smaller. Some banks have taken the decision to accept government funds and cede participation on their boards to government officials (in many parts of the world). Some were forced to do it, they had no choice. Others chose to do it following an old saying. “When you see a lot of ‘bombs’ flying around in a room, be quick: take one of the smaller ones and stick it in your assets. Because you don’t want to end up getting stuffed with the bigger bombs!”
By the way, similar principles apply to the Madoff scheme: many people knew about it and got out in time, before the party went sour. And now some banks are making deals with their clients to avoid getting hit by a bigger bomb later.
Lessons
Right now, the “soft” bankers are smiling. The old risk managers, who insisted that knowing their clients was more important than relying on mathematical models are actually laughing out loud. The only reason that they are not laughing even harder is that the crisis eventually hit just about everybody, including them. There’s not much comfort in saying “I told you so” when your own house has also been engulfed by the fire which started across the street.
The first lesson is to listen to experience. Don’t discount what the old guys have to say. The Spanish say that “the Devil knows more from being old than from being the Devil”. I always have to chuckle when I read about “analysts’ estimates” about a company’s performance or the prospects for the economy. The vast majority of “analysts” in financial institutions are kids with less than five years experience. They have their mathematical methods of analysis, but they haven’t yet developed that capability of “feeling” or “smelling” what’s going on. That will only come in time, if it comes at all.
The second lesson is to develop your “soft” skills, as well as your “hard” skills. The relationships you form are part of who you are and what you are capable of. In the seventies Ken Olsen, founder of DEC, said that “the network (of PCs) is the computer”, as opposed to mainframe computers. In the 21st Century, “the network is the manager”. A manager (in any business) without a network of relationships is only half a manager. Things like intuition are crucial for being effective, and not only rational thinking. The ability to inspire trust and to assess who to trust and who to be weary of are not rational skills.
The third lesson is that ethics matters. It comes first. The lack of ethics moved investment bankers from “creative destruction” to “destructive creation”. The first concept refers to destroying old practices in order to create newer and better practices. The newer practices are only “better” if they respect ethics. The second concept refers to creating financial instruments (such as derivatives) which eventually blow up in your face.
The last but not least important lesson is that you should always try to expand your horizons in terms of time (think about long-term consequences) and systemic impact (think about how what you do affects others in society, on a global scale). This applies to everything, from the banking system to the environment (think global warming). Education and learning can hopefully get us out of all the messes we’ve put ourselves into, but it begins with recognizing that we all have a lot to learn, always. “Masters of the Universe?” They should have known better.

The United States of Europe versus The American Union

2009-04-02T18:57:00.002+02:00

The so-called “G20” are about to begin another round of negotiation meetings and I read a lot of arguments in the media about “the American approach” and “the European approach” to the global economic downturn. Some journalists prefer to call it a “crisis”, others talk about a “recession”. When will they wake up and realize it’s already a “depression”? Who will authorize the media to address their reporters, as in: “OK, guys, you can call it a depression now. Go for it and bring me some news items that will help us sell more newspapers!”
Some people need to find a “demon” to blame for everything that is going wrong. Wasn’t it great in the good old days (some 3,000 years ago) when people could blame somebody for the bad weather, the poor crop yield, the waning buffalo herd or the subprime mortgage crisis? Crowds would go to the local tribe Witch Doctor/Sorcerer/Priest/Economics Commentator and ask: why us? Why did this have to happen to us? Why now, just when I was about to splurge on that new fancy lance with the silver-plated grip? And the guy would say something like “We have angered the gods because there is someone in our midst who has offended them!” The Witch Doctor would pick out someone from the tribe, usually someone who had offended him, rather, and point a long curly finger in accusation: “It is Aigh, the red-headed lass! She is a witch! She has offended the gods and they are now punishing us all! Let’s get rid of Aigh and all our troubles will be over! The crops will be good again, the buffalo will come back in great numbers and our home equity will be solvent!”
So Aigh was burnt at the stake and things would improve, and people would be thankful for having such a great Witch Doctor, who could always rate who was good and who was bad, even though he was moody. If things did not improve, people would turn again to the Witch Doctor and he would have to come up with someone else to blame, like, maybe, the other tribe who lived across the pond. The last thing the Witch Doctor would say is to throw it back at the people and tell them: “You’re asking me why this happened? I’ll tell you: the buffalo are gone because you killed too many and scared them away; the crop is bad because you planted too late and didn’t care for it properly; the weather is bad because of deforestation and your mortgage has gone sour because you took in more than you can afford to pay, when the market prices were way too high to be reasonable!”
The moody sorcerer knew that if he said something like that, he would be the one burned at the stake, so instead, he said something like: “It’s those people across the pond! We live in a global economy and THEY have scared the buffalo away, THEY have cut down all the trees, THEY have outlawed genetically modified corn and THEY have excess savings which have caused us to overspend! Let’s nuke them!”
NOTE: 3,000 years later, I still don’t get how excess savings in one part of the world can actually make people overspend in a different part of the world, but that’s what the modern Witch Doctors were saying in 2009.
Some New York Times columnists have taken to endorse a critical view of the European approach, asking whether Europe “is unable to muster a sense of urgency” in order to come up with a huge “stimulus package” such as the one the US is proposing.
As we approach the April G20 summit, I can’t help but think that this “gathering of the tribes” still has a lot of the same dynamics that were in place 3,000 years ago. Many people in the US are still looking for someone to blame, and lately they have taken to put the blame on Europe. Some New York Times columnists have taken to endorse that view, asking whether Europe “is unable to muster a sense of urgency” in order to come up with a huge “stimulus package” such as the one the US is proposing.
The short answer to that question is: “yes, Europe is ABLE to muster a sense of urgency, but no, Europe does not WISH to muster that sense of urgency in this case.” The short answer to that question is: “yes, Europe is ABLE to muster a sense of urgency, but no, Europe does not WISH to muster that sense of urgency in this case.”
“Why the hell not?”, demands the exasperated American. “Because this is not about what is urgent, this is about what is important!” replies the European, beginning to lose patience with the American. Europe has a different notion of what is the problem and how to respond to it.
It’s all about the differences in culture, as Geert Hofstede, the Dutch professor, pointed out through numerous research studies that have been carried out repeatedly in different countries over recentthe years. Hofstede was named one of the Top 20 most influential thinkers of our time (number 16, to be exact) by The Wall Street Journal. So that means even investment bankers should pay attention. I said EVEN INVESTMENT BANKERS IN THE BACK ROW TEXTING THEIR BROKERS SHOULD DROP THEIR BLACKBERRIES NOW AND PAY ATTENTION! Thank you.
Culture is basically the subjective notion of what is considered “right” and “wrong” in a given group of people, whether it is a team, a tribe or a country. We all have a “cultural bias”, that is: everything that is akin to what we know as “acceptable” or “right” in our culture, we consider as “good”. Everything that is different from that standard we typically consider as “bad”. We learn that in childhood, from our parents, teachers, relatives, neighbors. As Hillary Clinton famously said, “it takes a village”.
The truth is, in terms of different cultures, there is no absolute “good” or “bad”, there is just “different”. If we are able to understand the differences, we will be better able to communicate and to look together for “a third way” of doing something, a way which is not totally “my way” versus “your way”, but a way which is acceptable to us both, coming from different cultures.
Hofstede developed a Five-Dimensional Model to describe culture differences, based on research outcomes and factor analysis. For the sake of simplicity and due to space restrictions, let’s just look at one of these dimensions, the one that covers the importance placed on performance and the status derived from it (the US scores high on this dimension, on this side of the spectrum) versus the importance placed on caring for others and “quality of life” (Holland and Scandinavia, for instance, score on this opposite side of the spectrum). Many different studies have found the same results, so don’t get hung up on Hofstede specifically. After so many independent studies confirming the same results, the findings are accepted as fact.
“Europe”, of course, should not be seen as a single culture. All culture studies carried out in the past 40 years have demonstrated there are striking differences among the European countries. In this dimension, for instance, England scores high, like the US, while Holland and Scandinavia score very low. Let’s take a look at the differences between the US and The Netherlands, since a few days ago, on the same page of the International Herald Tribune, there were two articles espousing exactly opposing views. One was written by an American, and the other was written by a Dutchman and a German lady (Balkenende and Merkel, to be precise). The American article demanded swift action from Europe, by providing a bigger financial stimulus package. Balkenende and Merkel , instead, were calling for an overhaul of the international regulatory framework for banks. Both articles were talking above each others’ heads, because they had different values in mind as their background.
What it means, in practical terms, is that people born and raised in the US learn a set of principles (the “American Way”) which are quite different from the set of principles that children in Holland are brought up with (the “Dutch Way”). Neither of them is “right”. Neither of them is “better” than the other. They are simply different.
The American Way
In America it’s about two opposing forces coming against each other and a resulting force as an outcome. It’s about thesis, antithesis and synthesis. “You’re either with me or against me”. Us and the enemy. Two political parties. Winners and losers. The good guys and the bad guys. Black and white.
The American culture values competition, rules that are perceived as fair, and “winning”. People who perform well and “win” get a lot of visibility and status, which are perceived as a direct and deserved outcome from “winning”. “Big” and “fast” are valued. Making money is considered a visible way of telling the “winners” from the “losers”. Winners become idols, heroes. “Standing out” is good. “Showing off” is accepted, as long as it is related to something you have done well, that you have achieved through fair competition, and that you are therefore rightfully entitled to be proud of. Individual achievement is more valued than team achievement; performance is more valued than effort. There is a bias for action, for deciding, for taking individual responsibility and for getting things done. Challenges are welcome.
The culture expresses itself in many ways and one of them is through popular sayings, such as: “time is money”; “the buck stops here” (meaning “I take responsibility for deciding”), “it’s the bottom line that counts” , “you’re either number one or you’re last”, “the winner takes it all”, “if you’ve got it, flaunt it”, “show me the money”.
The high value put on performing in a competition means that a lot of importance is put on having fair rules (“equal opportunity”, “anyone can make it in America”, “the ‘American Dream’ is possible for anybody”), and on having a clear, measurable way of establishing who the “winner” is. Therefore, the importance of being “the fastest” (because that is something that can be clearly measured), “the biggest” (easy to measure), “the richest” (money can be added up and counted). Also visible status symbols like big cars, big houses, big boats, are highly valued because you need to have a lot of money to afford it, and if you can afford it, it’s because you have out-performed or out-smarted everyone else. If you cheated to win (like Maddoff) then you must be publicly execrated, handcuffed and chained, imprisoned in a penitentiary, for everyone to see what happens to those who break the rules. Heroes are made into idols. Crooks are made into demons. There is not much room for ambiguity, ambivalence or “gray areas”. I’m not saying Maddoff should not be punished. I’m merely pointing out that in a different culture his punishment might even be more harsh, but it would be less visible and dramatic.
The media has always been full of lists of “the richest individuals”, the “Top 500” Companies (measured in financial terms) . Lately other “top” lists have become popular, such as “hottest” movie stars, “best cars”, but the criteria is always an issue, because it must be perceived as fair. A panel of judges is often used, but they need to be perceived as knowledgeable and/or using fair criteria.
Being quick is good. Fast food is valued (easy to measure “fast”). The quality of food comes after the speed of serviceis not as important. Size of portions isare more important (easy to see). Quality of food, taste, becomes more difficult to gauge. Taste is subjective. Some people like ketchup, others don’t. So the emphasis is on what is measurable (size, time) rather than what is not.
Cars are big, the bigger the better. Who can “win” an argument about a car’s style? That is so subjective! (therefore, the competition cannot be clearly settled). Size can be measured.
Even “soft” subjects like sex, are turned into measurable competition. A bigger penis, bigger breasts. A big butt is considered ugly on men and on women, but still it’s a matter of size (measureable), rather than shape (subjective preference). A film is “erotic” as determined by the amount of exposed flesh. (I remember years ago reading a movie review in Time Magazine in which they could not understand the reason for the international success of “Emanuelle”, a French erotic film that became an all-time office-box benchmark. “There’s hardly as much skin exposed as you will find in any second-class porn film!” complained the reviewer, who could not come to terms with the subjectivity of what is “erotic” and what is not. “Do you have to be French, to be erotic?” he went on. The short answer is: “No, but it helps!”)
Gender issues are described as “the war between the sexes” (a competition), while the French say “vive la difference!”. “Love is a battlefield” and “I will survive” become war anthems for women. Feminist movements focus on “equal opportunity for women”, “equal work, equal pay”. Focus is on performance, fair rules, which allow women who perform as well as men do, to be rewarded as well as men are.
The “suing mentality” existing in modern America is precisely because people become profoundly indignant if they think that “the rules are not fair”, or that someone has “broken the rules” in order to “win”. So what do you do? You sue. You complain to the referee, to the judge (of the competition that is life). And you get money as a tangible outcome (rather than a public apology only).
Because “time is money”, I want my stuff “now”, not later. Doing something is better than doing nothing. “Shoot first, ask questions later”. Companies need to report their financial performance every quarter, and when their performance dips, the share prices plummet. “GM must do more and do it faster” was the headline on March 31.
On CNN a trader was interviewed on “short selling” in the stock market, operating in the futures market betting that a stock price will fall. The interviewer was challenging that concept, arguing that the trader was actually hoping that a company would fail, so that he would make money from betting on that failure, and that was “bad”. “What about all the people who will lose their jobs?” asked the interviewer. The trader argued that “in the end, it’s the bottom line that counts. I mean, if we are not in this to make money, then what’s the point?”
To a Dutchman, being in it “only to make money” would be pointless.
The Dutch Way
In Holland it’s about many forces coming together and multiple accommodation. Many political parties. Governing coalitions. Expressing your opinion, but being able to live with something a bit different, to accommodate all the different opinions. “We need to find a way to co-exist, all of us”. Nobody wins. Everyone has a good side and a bad side. Shades of gray, nothing is pure black or white.
It’s all about reaching consensus, as a group, balancing the different individual interests, rather than one individual deciding. People work in order to get a better standard of living, which will allow them to enjoy life better. Work is a means to an end. They perceive Americans as workaholics for whom work is the purpose of life, rather than the means to enjoy life. “That’s stupid”, say the Dutch, typically and bluntly (as perceived by others) say.
“Leveling” with others is more important than “winning”. There is conflict, like in the States, but the desired outcome is more of a tie, rather than a winner and a loser. People are no push-overs. They can be quite stubborn and obstinate. But the purpose is rather to “stand your own ground” and earn rerespect, not necessarily to overpower your opponent and stand out from the group as a clear winner, above the remains of your fallen opponent.
There is a lot of sympathy for “the underdog”, so people who are clear “winners” feel a bit guilty and sorry for the guy they’ve just beaten. In politics, often the more aggressive candidate does NOT get the votes, but rather the other guy, who was being more considerate and respectful, and suffering the verbal attacks, is perceived as having the moral quality to be elected. The aggressive one becomes the “bad” guy. By contrast, in the recent US presidential campaign, Obama was often criticized by his own supporters for not being aggressive enough.
The Dutch are pragmatic, which is reflected on their attitude towards highly contentious issues like drugs, sex, abortion, euthanasia, immigration. They look at reality and say “this is happening, it would be foolish to deny it. What can we do, in practice, to improve an existing situation?” So prostitution is legalized as an occupation, and it is taxed as such. People get medical assistance, and STDs are kept under control. “Soft” drugs are tolerated within “coffee-shops”, a safer environment. As a result, overall drug use is much less than in nearby France and England. Abortion and euthanasia are commonplace. They don’t even make the news anymore. And illegal immigrants get medical assistance, to keep public health at one of the highest levels in the world.
In Holland, you should savor life enjo, in a simple, humble and dignified way, just like everybody else. Everyone is entitled to relaxing and enjoying life, which is more important than performing at work. Therefore, when the clock strikes five, everyone leaves immediately (to go home, to meet friends, to go shopping, to “enjoy “lifve”). There are frequent debates about “work and life balance”, because “work” and “life” are perceived as two very different entities (this seems very strange to some other cultures, in which “work” is perceived as “part of your life”, rather than something different from it). Actually, in practice, people stop working and start preparing to leave 15 minutes before closing time, so that when the clock strikes the hour, shops and offices are already shut and staffpeople are walking to their bicycles. Many times I’ve found myself in a shop just before closing and the shop staff announce loudly “we’re closing now!”. People (tourists, the locals are used to it) look around surprised. A lady asks “but it’s ten to six, don’t you close at six?” The reply is “Yes, but we have a life too, you know! It’s time for us to go!” I guess the concept of “the client is always right” never made it to Dutch retail.
Showing off is frowned upon. It is perceived as arrogance, and deeply disapproved of. Typical sayings are “Be normal, that’s crazy enough” and “If you stick your head up, it will be chopped off”.
Gender issues are about getting men to be more “feminine” (sensitive, helping to care for children, caring for the home) as much as they are about opportunities for women to play traditionally “masculine” roles. Many women choose to work less days a week, or choose not to pursue a corporate career towards top management. “Who wants to be a workaholic?” they say. “I can live a full life doing other types of satisfying work, as a professional or running my own business. I don’t want to spend my life in a corporate office!” Work-at-home dads are more common than in the US.
Being quick and fast is considered a sign of being superficial and, shallow. Long-term relationships are more important than short-term results. Holland recently celebrated 400 years of uninterrupted commerce with Japan, the only Western country to do so. Companies are not evaluated by quarterly results, but rather by their long-term potential and their history of stability.
Regular business meetings happen every two weeks, rather than weekly. When people ask “can I have it immediately”, the answer is “yes, of course, in two weeks”. Life has its rhythm (apparently, a two-week rhythm) which must be respected.
When Americans say “we need a big stimulus plan, and we need it now”, the Dutch say “wait a minute! Rushing into something is stupid! Rushing into things and overspending is what got everybody in trouble in the first place. Let’s look at the situation carefully and discuss it with all stakeholders involved, aiming for consensus. If you try to do something quick and dirty, you will regret it later. Let’s make sure we do it right, so we don’t have to do it two or three times!”
The Americans think “these Dutch guys are impossible! They’re not DOING anything and time is running out!”.
The Dutch think “these Americans are not human beings, they’re ’human doings!’ They want to run off, jump on a horse and ride madly off in five different directions! They need to aim before they fire, rather than ‘shooting from the hip’!”
In Holland, “to be” is more important than “to have”. In the US, people ask “what do you mean, ‘to be’? What is that supposed to mean?”
I have a Brazilian friend who was an expat in the US and, a few years later, was an expat in Holland. He told me that when he arrived in America, the first thing he did was he bought a red Ford Mustang. To him it was a symbol of “being successful in America”. When he moved to Amsterdam, years later, I met him there. “So, what kind of car did you get in Amsterdam? A Mustang is probably too big for the narrow streets…” I asked. He said “I’ve been here for eight months and I still didn’t get a car, maybe I will neverot get one. I have my bicycle and I ride the trains. None of my colleagues have cars. It’s a very different lifestyle.”
The G20 meeting
Americans want more money for stimulus, and they want it now. The Dutch want to wait a bit to see the effect on the economy of the money that has already been committed in the first stimulus packages. They think that you need to allow some time for the impact to be felt. It’s a bit like drinking beer: It takes some time to feel slightly “high”. If you drink too much and too quickly, as soon as you feel “high” you will also feel “drunk” and totally sick. You stop drinking, but it’s already too late. You throw up and you pass out. A nice night out with your friends ends in a hospital enjoying a stomach pump. So what’s the point? Drink slower and enjoy it. Stop increasing your liquidity before you feel sick.
The Dutch fear that too much money in circulation will create inflation, a bigger problem than a recession, because it creates concentration of income, “winners” and “losers”, when “leveling” is more important to them. They feel that changing banking regulatory frameworks is more important, to avoid another crisis, and it will take time to implement, so it’s better to start working on it now, to avoid problems in 2011. More money now is not a solution, it creates a bigger problem.
Americans say that Europe is adrift, there is no clear direction. Europeans see themselves as “steady on course” for the long run. They see America zig-zagging right, left and center, changing direction every month.
The approaches are not “right” or “wrong”. They are simply “different”. They stem from different mindsets.The thing is, you cannot convince a Dutchman with “American” arguments, just as you cannot persuade an American with “Dutch” arguments. You need to find a “third way” to reconciliate the conflict. Perhaps the Indians or the Brazilians will offer some suggestions. But people will need to understand their own cultural biases, and each other’s biases, before they can open their minds to a “third way”.

Bogus Bonus Brawl

2009-04-02T18:53:00.001+02:00

I’ve been amused, if not amazed, by the public uproar in the US about the 160 million dollars paid as bonus to AIG executives for the year 2008, when the company nearly went bankrupt. There’s been a lot of emotion and very little reasoning involved in examining the situation, so let’s take a few steps back and try to look at it objectively. This could prove to be more helpful in trying to understand what is going on. Of course, if you’re not interested in understanding what is going on, but rather you’re one of the many who are just enjoying the fact that there is somebody out there (AIG) that you can blame for everything that is going wrong in the economy, then please stop reading this text and just go out and join the crowds throwing tomatoes at AIG. While you’re at it, you can throw a couple of tomatoes on my behalf, but not because of the 160 million in bonuses; rather, throw them because they were so terrible in managing their organization, and because they succumbed to the attraction of a bonus distortion, already years ago.
You may think that a bonus is a bonus is a bonus. Actually, they’re not. There are bonuses and bonuses.
A long time ago, in the 20th Century, bonuses were created as a special award for people who had done something extraordinary during the past fiscal year. If the company’s performance was especially good, it seemed only fair to take a small portion of the company’s profits and pay out a special “prize” to those individuals who had done something outstanding to contribute significantly to that especially good company profit.
After a while, since company profits continued to improve over the years, there was a gradual increase in the number of people who got a bonus award. At first they were “a chosen few”; gradually there were more and more people included in that select group, and soon the group was no longer “select”, it was practically everybody, or at least everybody belonging to a certain level in the job structure, or being part of a certain business function.
The practice began to spread to all kinds of industries. The most aggressive bonuses were paid by the investment banks, and in the 1980’s they began to make headlines in The Wall Street Journal. I was there. I was an HR director of an investment bank from 1982 to 1989. I designed bonus schemes. I benchmarked our bonus schemes with those of the most successful firms on Wall Street. I hired compensation consultants to provide information on what our competitors were doing, and to help us design bonus plans that were smarter, more attractive to help us recruit talent, more cost-efficient and closely related to performance.
In the late 80’s the distortions began to appear in the market. Investment bankers, especially traders and brokers, are basically deal-makers. The best traders are great at making deals and terrible as managers. The best traders started striking deals with their managers that allowed them to negotiate pre-arranged bonuses according to mathematical formulas. There was no longer “management discretion” in setting the value of a bonus; it was all pre-calculated as a percentage of generated profit, or a fixed amount linked to achieving a pre-set target. To me, that is not a bonus. That is a sales commission. That’s Distortion Number One.
Then the negotiations started happening at the beginning of each year, linked to target-setting. Traders became experts at negotiating small targets, always arguing that the market would be more difficult in the coming year, and walked away with huge bonuses paid for doing what they were supposed to be doing in the first place (making deals). In 1985, the Global HR Head of a leading Wall Street firm told me that, in order to avoid further distortions, compensation at his company used a “three thirds” frame of reference. One third of a trader’s annual compensation should come from that person’s fixed salary (which should allow the person to live comfortably, and have a nice vacation once a year not far from the job location). A second third of a trader’s compensation should come from a performance-based cash bonus scheme. This would allow a good performer to double his/her income, and have a holiday in Europe, or buy a fancy car. The third third should be in the form of long-term incentives or deferred compensation (such as stock options). The idea was that this portion would be designed in such a way that the trader would remain in the company for a few years, rather than jump to the first competitor pirate ship who offered 10% more in fixed or variable pay.
Distortion Number Two is that this rule of thumb, which was already quite aggressive since it allowed someone to double and even triple their fixed income through bonus schemes and long-term incentives, was soon left beside the road. Traders negotiated smaller fixed salaries in exchange for higher bonuses. The reasoning that soon out-smarted their incompetent managers was that, with a small salary, the company risk of hiring an incompetent trader was diminished. A trader would have to be really good to earn enough bonuses just to make a living. If a bad trader was hired by mistake, that person would be punished by having to live off a ridiculously low salary. In order to earn a living, traders had to make a lot of good deals. It became the Wall Street equivalent of the door-to-door salesman, hired with no salary and a high sales commission. In the 90’s, bonuses no longer represented 100% of fixed salary, but rather 400% or even 1,000%. And this was thought to be a good thing!...
What people were late to realize was that a trader who depends exclusively on bonus to earn a living will soon start taking more and more risk, just to make ends meet. They also started refusing to do anything that was not directly linked to their bonus scheme. So when a global crackdown on money-laundering was initiated by regulators in the early 90’s, traders were asking “how will this improve my bonus?” If there was no link to bonus, it was not practiced. Some firms started linking bonuses to ethics and being honest (!!), so that if you were ethical you got a bonus and if you were not, your bonus was reduced by a certain factor (but it was still there).
Bonuses were paid for reaching targets, for being honest, for doing what you were supposed to do in the first place. So, naturally, even companies which were losing money often paid out bonuses to their star traders. The reasoning was that if they didn’t, they would lose their talent to the competition and their losses would become even greater. Some people complained that this was against the basic principle of paying bonus only when the company made a good profit. These people were soon silenced. That principle had long ago been abandoned already.
Distortion Number Three was that in the late 90’s and early 2000’s new recruits started negotiating “guaranteed bonuses”. They argued that, in order to leave “Investment Bank A”, where they had some deals in the pipeline and would probably get a bonus of $500,000 at the end of the year, they wanted “Investment Bank B” to guarantee them a bonus of $ 500,000 on their first year, to make it worthwhile to switch jobs. Some traders were so good at this that they switched jobs often, ensuring guaranteed bonuses each time and never having to make a single deal to deserve it! Incompetent managers made it possible, hiring swindlers rather than good professionals, and rewarding swindlers to become even better at swindling! To me, this is not a bonus. This is fixed salary, in disguise. You don’t get it every month, only at the end of the year, but it is not linked to your performance, you get it just for showing up! When some managers objected, or a few rare HR professionals raised flags saying that this was merely inflating the compensation market for traders, they were pushed aside and told the same argument again: “if we don’t do this, we will lose our best people to our competitors and we won’t be able to attract talent!”
So what happened at AIG? By 2008, they had all three Distortions happily in place, plus Distortion Number Four: behaving like an investment bank, when you’re supposed to be an insurance company!
In order to increase their leverage, AIG started investing their capital in unusual, riskier ways, and running hedges. To do that, they started recruiting from Wall Street, using Wall Street compensation practices.
The truth is, the 160 million are not really bonuses. They are fixed salaries in disguise, dressed up as bonuses. They are contractual. They are part of the labor contract just like normal salary is. The irony is that, if these people had insurance company pay packages, there would be no outcry… They would be paid competitive salaries (rather on the high side compared to what you would get as a consumer goods product manager) and nobody would complain. People are outraged because they saw the word “bonus”. They think this is still linked to “having a good profit and paying awards to people who have contributed in an extraordinary way to that good profit”. Sorry guys, but those principles are old-fashioned. They went out of style 30 years ago (although they were, and still are, sound principles).
The mob with the pitchforks and torches are at the gates of the wrong castle. They are chasing some guy for being ugly. This guy is not Frankenstein’s monster, he’s just ugly…
The real monsters are the ones who started all this and who distorted good pay-for-performance bonus schemes, turning them into inflated salaries disguised as bonus schemes. This means a lot of people are to blame. A lot of people contributed to these Four Distortions, to these “bogus bonuses” which are not really bonuses anymore.
Protesters demonstrating against AIG say that “AIG” stands for “Ain’t It Greed”. Yes, it is. But not the 160 million in bonus. This is just the epilogue of a long path of greed. Maybe the guys who got the 160 million were the ones trying to save the company, who knows. The greed, in itself, is not such a bad thing. Greed actually moves the American culture. When it goes over the top, it turns bad.
Too much greed is what made AIG collapse. Too much greed made Wall Street collapse. Too much greed will be the end of Capitalism. Capitalism is not bad. Savage Capitalism is bad.
The opposite of Savage Capitalism is not Socialism, it is Tyrannical Communism. We don’t want either of those. I want an economic system based on merit, under which human values like ethics and solidarity are part of merit, just as important as ambition and innovation. There needs to be room for individual freedom, but also respect for the rights of others. We need a better balance between Individualism and Collectivism.
Gandhi had his list of “Seven Deadly Sins”, which should be hanging on the wall of every CEO’s office as a reminder, all over the world. They were:
Wealth without Work
Pleasure without Conscience
Science without Humanity
Knowledge without Character
Politics without Principle
Commerce without Morality
Worship without Sacrifice
The lesson here is that virtue is all about balance. The global economic meltdown was about Number Six (Commerce without Morality). The solution is not to decrease Commerce (which would happen as a result of protectionism) but rather to boost Morality and increase both, in balance.
Bonus schemes are good. But they should not represent more than a third of someone’s annual compensation. They need to be equally tied to goal-achievement AND to appropriate behavior (such as ethics and cooperation). There needs to be some management discretion in determining the final amount to each individual or team (Yes! Team bonus schemes can be more effective than individual schemes. It works in team sports, why not use them more often in business?). Bonuses should not be only the result of a formula (they should be different from sales commissions). And they should be used in combination with long-term incentives (such as deferred-payment schemes, stock options, shares etc.). Intelligent compensation schemes will be a key aspect of economic recovery. They need to be designed so as to reward desired behavior and to avoid distortions leading people towards the road to ruin. It’s time we turn our attention to building a better world and stop with the witch-hunting. Let’s drop the pitchforks and torches and get back to work!

Managing People Is Simple (And Difficult)

2009-01-19T15:49:00.003+01:00

Managers all over the world, we are in for a tough time during the global economy’s first truly global downturn. Managing in a global marketplace is already quite a challenge for most of us. Managing during a global downturn is twice as challenging. For the first time we are experiencing the true interdependence of markets all over the world, in every sense. People have been talking about a “flat world”, a “global economy” and similar notions for more than a decade, but it is during our first truly global recession (or is it already a global depression?...) that these interdependencies become painfully evident. The crisis in the financial markets spread out all over the world in a matter of days and spilled onto the consumer markets, the labor markets, the production cycles of just about every industry you can think of, and are affecting everyone from Arkansas to Abu Dhabi, from Zagreb to Zimbabwe, and every place in between.
The challenges managers face have gained in complexity, because operating in global interdependent markets means operating in a series of hugely diverse landscapes. Globalization does not equal standardization, but rather it means selling to very different people in different parts of the world, and managing very different people in the production and distribution cycles needed to deliver all over the world.
The essence of a manager’s main challenge, however, remains the same: it is to manage people effectively. Managing people is the main job of any manager. Some would argue that managing people is the only job of any manager. And the main difficulty of that job starts with denial. Many managers are still under the illusion that managing people is not their main job, that it is someone else’s responsibility (“Those idiots in HR are supposed to do this! I’m too busy managing the business!”).
Well, I’m sorry to disturb you and wake you up from your cozy escapist dream, but reality is that managing people is not what HR is supposed to do, it’s what you, the manager, must do. The guys in HR are supposed to assist you by providing guidelines and tools and learning opportunities to help you face that challenge. Hiding under the bed won’t help you face the challenge.
I know it’s a difficult job, handling people, much more difficult for most people than figuring out those complex mathematical equations involved in rocket science, much more difficult than brain surgery and other technical challenges that we all read about as the biggest challenges of our civilization. I’m not saying rocket science is easy. I’m just saying that managing people, in practice, is more difficult, because it requires both rational AND emotional skills. It requires IQ and EQ. And most of us have been (wrongly) educated to believe that rationality is what you really need to be successful. It’s not. For that (the rational aspects of work), we have robots, and computers, and IT consultants from the 90’s. But to make it all come together effectively, we need people and effective managers with IQ and EQ. So let’s look at what managers can do to become better at managing people.
And as we start, let’s look at another scary issue that sends managers scurrying back to hide under the bed of denial again, just as they were mustering the nerve to come out and face the music: cultural diversity. (“Aw, c’mon! It’s bad enough that you say we have to manage people and try to grasp all those fuzzy emotional things that no one can calculate or measure, now you’re going to tell us that people are totally different from each other and that they have different notions of what is right and wrong depending on where they come from? How am I supposed to get things done the right way if people don’t agree with what is “right”?”).
Yeah, I know I’m being a pain in your assets (specially hurts during a financial crisis), but if you don’t come out from under that second bed, it’ll only take longer to sort this whole thing out and fix the global economy. You can have your dessert afterwards.
So, let’s look at how we can manage very different people, from different cultures, all over the world, and get the global economy going again by being more effective and more efficient.
MANAGING PEOPLE IS NOT EASY, BUT IT’S SIMPLE
Many things in life are difficult to do, but they are actually simple to figure out. We have a tendency to over-complicate stuff. It makes us feel proud when we can solve an apparently complex issue. So we tend to take simple issues and describe them in a complicated way. By doing this, we can pose as “experts” when we solve seemingly unsolvable problems. Thus lies the challenge of keeping simple things simple. We must avoid the temptation to complicate them. We must focus on doing the simple stuff that is necessary to be done, and avoid the long, complicated discussion around the issue, which is actually a way of avoiding getting down to action. The simple stuff that needs to be done is also often scary stuff, that we would rather not face. Hence complication is a form of avoiding the simple essence. Complication is a form of using rationality as a shield to defend ourselves from the emotional consequences of acting.
So, back to doing the simple stuff. Managing people is actually about carrying out five steps in a process and repeating them over and over again. Hopefully, getting better at it each time you repeat. We hopefully learn from experience, we adapt and improve continuously. I like to think of the five steps in an acronym: R-STAR.
These are the “R-STAR” steps in the cycle of managing people:
Recruiting (getting the people you need, to get started).
Setting targets (or agreeing what people need to do)
Training (or teaching people how to do what they need to get done)
Appraising (providing feedback on work progress, correcting direction, etc.)
Rewarding (providing consequences, good or bad, to reinforce desired behavior and avoid repetition of undesired behavior)
Doesn’t look like rocket science, does it? But it’s so much more difficult than rocket science… Remember, the difficulty lies in keeping it simple!
The “complication committee” that lurks in every organization would quickly point out that things are much more complex than that five-point sequence. They would also point out that things actually start earlier than that, when things like “what actually needs to be done” are defined and decided upon. It’s okay, I can go along with that and still keep it simple. Let’s go to “The Beginning”.
“In the beginning”… there was nothing, and then a Client came along and expressed a Need (directly or indirectly). Some people say that “The Client is King!”. I like to think that “The Client is God!”, in the sense that the Client is the beginning and the end of everything. Please excuse the blasphemy, forgive my sins and bear with me for a while.
As the Client expresses a Need, the entrepreneur steps forward to satisfy that need, and organizes a company to satisfy that Need. This can be a one-man show, in which case the entrepreneur is just managing himself (the “R-STAR” cycle still applies, but that’s another article, let’s not go there now), or any size of organization, from two people to two hundred thousand people, and every size of group in between. The organization (let’s assume a company of up to around a hundred people, which represents most of the companies around the world) makes plans to carry out the actions necessary to satisfy that Client Need, organizes work, distributes roles, and it boils down again to several managers within the company, each being charged with something that needs to be done, for which they need to get the people and do it, by going through the “R-STAR” cycle.
The result of each “R-STAR” cycle is a product or service (or part thereof) which serves the ultimate purpose of satisfying that Client Need. Client Satisfaction is the end of the cycle. The circle is complete. If you want, you can add to the acronym and call it “Clients R-STAR-S”, in which the last “S” stands for “Satisfaction”.
Of course, every step in the cycle actually hides a whole universe of stuff, and we all enjoy playing around with it a lot, so much so that we often lose sight of the “Whole” and forget how what we are immersed in actually links with everything else and provides a sense of purpose to what we do in our lives. By the way, “Humankind” is the ultimate Client, and everything we do serves the ultimate purpose of making this a better world for Humankind and the next generations, but that’s another article, so let’s not go there either, for now.
Let’s stick with the simple and difficult task of managing people and carrying out the “R-STAR” cycle. Let’s briefly look at each of the five steps.
Recruiting can be subdivided into many interlinked aspects, highly sophisticated when you’re talking about a multinational organization operating in 20 countries or more. You’ve got “Positioning” of your “Employer Brand”, you’ve got all kinds of “Recruiting Strategies” to reach and attract the people you need, and then you’ve got a whole “Selection Process” with different “Selection Criteria” and “Tools”, “Policies”, “Procedures”, varying degrees of involvement from different people in your company. Hell, you need to start the process with some sort of “Position Profile” or whatever label you want to employ, in order to get your recruiting initiative started. But it boils down to “getting the people I need” in order to get the job done. As a manager you can do it yourself, you can get HR to help you or you can hire a fancy and expensive “Executive Search Firm” which will charge you enough money to make you believe they’re adding value (“they must be damn good, we’re paying them a fortune!”).
Setting targets can be dressed up as “Strategic Planning and Execution”, “Organization Development”, “Right-Sizing” (or “Down-Sizing”, or “Wrong-Sizing”, I suppose, when you screw it up),”Delegating”, “Managing By Objectives and Results”, or more recently “Empowerment”, “Performance Standards”, “SMART Objectives”, “Self-Managing Teams” and other buzz-words. It all boils down to “does everybody know what they’re supposed to do?”, “does everybody know what is expected of them?”.
Training implies that you need to teach somebody how to do what needs to be done. If the people already know how to do it, you can skip it and go to the next step. In a typical modern organization, “Training” is nowadays considered a “bad” word. We prefer to talk about “Learning”, and “Career Development”, “Coaching and Mentoring”, “Talent Management” (a broad term that actually includes the whole ‘R-STAR’ process focusing on your ‘star’ people), creating a “Learning Organization”, “Change Management” (which is basically teaching people to do things in a different way, or teaching them to do different things).
Appraising involves correcting direction, by providing feedback in order to improve performance. A common mistake made by organizations is to think of appraisal as a way of judging people as “good” or “bad”. That is not the purpose of performance appraisal. The purpose of any appraisal scheme is essentially to improve performance. Don’t ever forget that. It can be dressed up as “360 degrees feedback”, “Performance Appraisal”, “Performance Coaching” or any other label you prefer, or it can be as simple as having an informal conversation with each of the people who work in your team about how they’re doing their work. The more often you can do it, the better.
Rewarding is about providing consequences. It can be done in financial terms, such as merit increases, bonuses, incentive schemes, profit sharing and the like, and it can be non-financial recognition, such as “employee of the month”, “deal of the year” contests, “President’s Award”, a gold watch when you complete 25 years with the firm, or just being praised (in public or in private). It also involves negative consequences to avoid repetition of undesired behavior, including written warnings, suspensions, admonishments, demotions, transfers to a less rewarding role, or firing. The important thing here, so often overlooked, is that people will do what they’re rewarded for, and not necessarily what they’re asked to do. IT’s amazing how often companies ask people to do one thing (such as cooperate with your colleagues and cross-sell) and yet reward them for something different (such as selling your own products and managing the costs of your own unit). This is the bit that usually screws everything else up, when it is not aligned with the other components of the cycle or does not fit with the “Whole”.
Pretty simple and straightforward, huh? Well, it’s certainly much easier said then done. Especially when we get into doing it across different cultures.

THE GLOBAL SOLUTION
There isn’t one. Or rather there are many, different solutions for different cultures. You can manage people by applying the “R-STAR” cycle anywhere in the world, but in each culture the cycle needs to be adapted. Different tools are effective in different cultures, for each step in the cycle.
In order to be more effective, start by finding out what are the values of the culture (or cultures) you will be operating in. Where do the people in your team come from? What is their cultural background? Do your homework. Prepare.
I know a manager who turned around a manufacturing plant in Eastern Europe from loss making to profit, simply by applying his scarce knowledge of Hofstede’s Five Dimensions of Culture model, putting it into practice. His company thought he was a “miracle maker” and promptly transferred him to Mexico, to deal with another problem-ridden plant. Voilá! New “miracle”. The guy again applied his knowledge of the model (different culture, different approach) and suddenly the business was viable. In both cases, his predecessors were good managers, but they only knew how to operate in the environment they were coming from (in this case, France). Our hero simply took the time to read about the culture he was coming into and to adapt his approach in a way that made him readily understood and appreciated by the team he was beginning to lead. Everybody won.
You can do the same in your company, with your team (present and future). In times of stress, such as the crisis we are now facing, many people naturally turn to regression towards the behaviors which worked for them in the past. They “hide under the bed” because that worked for them when they were kids. They repeat whatever got them a promotion five years ago. Don’t do that. It would be a stupid thing to do now.
Rather, try to look at the situation you’re facing, with fresh eyes. What is the culture background that underlies the operation? What is your own culture background? Do these things match? Do you understand that you have been taught a “right” way to manage which is completely biased by your own culture? There is no “right” way to manage per se, only ways that are effective in some cultures and not effective in others.Begin by understanding your own culture, your own culture bias. That will make it easier to understand other cultures and other biases, and to bridge the gaps. If we all had a better understanding of each other’s cultures and of the impact this has on how business happens around the world, maybe we wouldn’t even be in this mess in the first place!

My neighbour for President

2009-01-17T14:14:00.005+01:00

What do George W. Bush, Luis Inacio Lula da Silva, Evo Morales and Hugo Chávez all have in common? Pick the right answer:
a. they’re all idiots
b. they’re all dangerous
c. they’re all incompetent
d. they’re all “people like us”
e. all of the above

The correct answer is “d”, they’re all “people like us”. But if you picked “all of the above” I won’t argue with you.
I find it amusing, if not alarming, that some of the most popular democratically elected leaders in America (North and South), are also arguably so unfit for the important roles they play. Well, you can argue that, right now, Bush is no longer popular (the NY Times says 61% of Americans regard him as “the worst President of all time”), but don’t forget that he has been elected TWICE in four years…!
Lula (also re-elected), by comparison, is doing great! And he has enjoyed the highest popularity ratings, for the longest periods of time, on average, than any other Brazilian President in the past 50 years. Yet he can barely express himself correctly in his native language, has no decent education, and embarrasses everyone around him continuously with tirades like “my mother was born illiterate”… Quite a competitor for Bush’s long record of verbal gaffes!
I guess one of the paradoxes of democracy is that the candidate who gets the most votes gets chosen, though that does not mean he is the better qualified candidate. The alarming pattern emerging from choices made recently (in the past 8 years) in the US, Brazil, Venezuela and Bolivia (please add other countries to this list, as you wish) is that people support someone they can identify with, rather than someone who they think is the best qualified candidate for the job of National Leader.
I vote on “Johnny Neighbour” not because he is the best person I can think of, but because he is somebody like me. Witness the popularity of Sarah Palin, and many other regional politicians in many places around the world. The “guy next door” type is a strong candidate in any election.
I think this means that democracy is in crisis, a profound crisis that is more far-reaching than the economic crisis the press enjoys so much talking about. People have felt “distanced” from their leaders somehow and have shifted their preference from someone they admire as “better than me” (but perhaps “too different” or “too far away” to respond to my needs and interests) towards someone “more like me” (and therefore more likely to “think the way I do”).
Perhaps democracy has become a victim of its own success, and a victim of the fact that voters today are better educated than 50 years ago. People are less inclined to withdraw themselves from true participation and blindly “delegate upwards”, fully entrusting their destinies to a “more capable” person. People begin to challenge whether their leaders are indeed more capable, if their leaders are genuinely acting towards the well-being of the overall population. And if their leaders appear to be “aloof” or “distant”, then people prefer to choose someone who appears to be “closer” to them, even if less qualified than their “more distant” competitors.
The danger lies in that I end up choosing someone who is just as stupid and incompetent as I am, and I choose someone who is “friendly” rather than someone who is capable of doing a good job as a leader of my country. I sacrifice competence for friendliness. I end up choosing “Miss Congeniality” rather than “Miss Universe”, confusing the criteria for the two titles.
In order to win elections, candidates need to balance their appeal between demonstrating competence and demonstrating “closeness” to the voters. This is what the “culture wars” have been about in the United States. Without the label, the same has happened in other parts of the world. A competent candidate will not get very far unless he/she demonstrates that he/she is “close” to the voters. On the other hand, “popular” candidates can get away with murder (and sometimes do).
“The problem is complex, and as such needs many solutions”… On one hand, candidates need to improve their balancing act to demonstrate both competence and “closeness”. But on the other hand, voters have to continue educating themselves, and dramatically so. They need to become even more demanding, to the extent that they demand competent candidates and do not feel alienated from them just because the candidate has a different preference for vegetables.
The level of education in a given country has everything to do with the kind of politicians who get elected. Or, put in another way, “each country has the President they deserve”. Better educated people tend to vote for a better qualified candidate. The danger therein lies in what will an incompetent President do once he/she is in office: probably not invest in education, because better educated voters might not re-elect him/her or the likes of him/her. Which leads to another paradox in democracy: leaders who have been appointed by ignorant people will try to keep people ignorant, to get a better chance of being appointed again. It takes a true statesman to invest heavily in education, also because it is an investment without short-term, visible returns.
Any idiot can see a new road or bridge, even if it is “a bridge to nowhere”. Idiots cannot see the changes in the education system; often even if they can see them they cannot understand them and therefore appreciate them.
What can be done to save the future of democracy, when we see the terrible results of the US elections (electing a President who tried to impose democracy on other countries by military force – boy, did that guy get the whole thing wrong!), and the struggle in Europe to get approval of a constitution which nobody has read and everybody disapproves of?
Democracy needs to get back to its foundations: true representation of the will of the people, direct participation in shaping a community’s future. As Michael Moore has pointed out (I know, he gets over the top sometimes, but sometimes he hits the spot) we have strayed very far from the sound principles of Greek democracy, in which:
a. small communities (cities) governed themselves;
b. congress did not consist of elected positions, but rather of people who were drafted and rotated every two years;
c. referendums were very frequent (several times each year, people voted directly on proposed legislation).
Politicians have argued that the increase in the size of municipal populations (and provinces, and countries) have made it impossible to have frequent referendums or to have the rotating draft system. I would argue that now, in the 21st Century, with the wide availability of the internet, it has once again become possible to have frequent referendums and rotating draft systems in place.
The thing is, our political institutions are still working according to 19th Century designs… Or rather, they are not working anymore. No wonder! It’s about time we re-designed democratic representation, making full use of 21st Century technology so that we design 21st Century SOCIAL technology consistent with our times.
Joe The Plumber is not going to lead us in that direction (nor is Sarah Palin, Evo Morales, Lula or Chávez). We need people with a more modern mindset than that. (I know, “modern” has become an old-fashioned term, please bear with me.) The election of Barack Obama may be heralding a new era. Not only because of the kind of candidate he is (multi-cultural, multi-racial backgrounds, well-educated) but also because the use of the internet played a major role in his election. This will change political campaigns everywhere. This hints at the direction we should be taking when re-designing democratic institutions. Obama will not save the world. But his election is part of a broader, global social phenomenon that politicians need to heed. Or get out of the way!
I guess a key issue will be: the Obama campaign team used an innovative approach (or several) to get him elected, using modern technology. Will the Obama administration team be able to use similarly innovative approaches to governing the US? Already they were shocked to find outdated technology, hardware and software, still in use at the White House. Security idiots have tried to swipe the President’s Blackberry. Like most (unfortunately) lawyers and security “experts”, they were quick to point out what cannot be done, rather than recommending a way to do it safely, securely and legally. I hope Obama (and his team) can find a way to introduce 21st Century technology into government, setting a new standard on the way any government can run a territory. Blackberries and iPods, Facebook and Twitter, and many other forms of social networking, all have an important role to play in 21st Century democracy.
Democracy doesn’t stop at election results announcements. It doesn’t happen only once every four years. It’s about running the country (or state/province/city) constantly in touch with the will of the people.
NGOs (in the broad sense, not just the ecology geeks) are the seeds for democratic institution re-design. We need millions of groupings fostering debate and participation, to inform and educate ourselves, to raise awareness, political consciousness and responsibility. We need “Facebook-like” technology used to promote debate, to gather opinions and to actually count votes to decide on proposed legislation at all levels (communities, towns, cities, provinces, nations, regional blocks like the EU, Mercosur, NAFTA, the Arab League of Nations, etc.)
Democracy is imperfect, but it is still the best (most fair) political form of government. But not the democracies we currently see in the US, in Europe or anywhere else. Democracy needs to be re-designed in order to recover its true essence and its added-value to society. It needs to be re-invented and to move away from the jokes that we see around us, which, if they continue as they are, will only serve the purpose of fuelling terrorism and intractability among cultures. http://www.lcopartners.com/ http://www.itim.org/

Holding Your Liquor

2007-09-24T14:23:00.000+02:00

There is plenty of advice available to teen-agers these days in terms of “drinking responsibly”. However, I find that none of it is as objective as it could be. Actually, most of it is rather confusing. No wonder most teen-agers pay little attention to advice regarding drinking, and the whole thing becomes a “you’ll have to learn on your own” kind of thing (which isn’t really very helpful, is it?).

To begin with, teen-agers notoriously aren’t very inclined to follow any kind of advice, specially the ones who call on them to “act responsibly”… They tend to think this kind of talk is lame, and it often has the exact opposite effect: teens will do precisely the opposite of what is being suggested, just to prove that they can feel independent and joyful when NOT acting responsibly, and that “acting responsibly” is for “squares” (I know that the expression “squares” went out of fashion a few decades ago, but bear with me.)

Therefore, let’s start by giving advice on how to “hold your liquor”, which is much more enticing than “acting responsibly”. “Holding your liquor” is about enjoying yourself, by drinking and not throwing up all over the place, spoiling the party not only for yourself but also for everyone around you. “Holding your liquor” means drinking smart, not acting like a bore. People who can hold their liquor are admired. People who can’t, are despised and pitied. People who “act responsibly” are considered boring party spoilers.

So let me be objective about it. Each person has to know their own limit, but usually you only find out what your limit is once you’ve crossed it (and made an ass of yourself). So here are some straightforward guidelines while you’re learning to test your own limits:

1. Don’t drink on an empty stomach, have something to eat before you start drinking.
2. Drink water or soft drinks alternating with alcohol.
3. Don’t mix your booze: if you start with beer, don’t change to whiskey, then to wine, then back to beer, etc. Stick with one kind for the evening, and respect the quantities below:
4. Respect these limits, if you’re male:
a) Two beers is OK; four beers is max (after that, you’re drunk)
b) One double whiskey is OK; two is max (after that, you can’t talk straight). This goes for all “strong” spirits like vodka, gin, rum
c) A glass of wine is fine; half a bottle is max (after that, you’re out)
d) Two glasses of champagne is OK; three is max (after that, your performance is affected)
5. For the ladies, the limits are smaller. It’s a plain fact that blokes tend to be able to drink more without it affecting them, as a general rule. There are exceptions, of course. Certain ladies will shame the lads in a drinking contest, but that is definitely not what you see in 90% of the cases. So ladies, look at half the amounts above to remain sober. If you go beyond half the prescription you are doing so at your own risk, and the consequences for drunken behaviour tend do be more severe for the ladies then for the men (right or wrong, it’s a fact in most cultures).
6. Speaking of drinking contests, don’t ever go into any kind of drinking game. These are truly stupid exercises which embarrass all participants, to the sadistic joy of the non-participating on-lookers, who cheer them on to their demise. You want people to have fun WITH you, not to make fun OF you. Plus, the game winners tend to wind up in hospital with a tube down their throats. Not worth it.
7. If you forgot how many drinks you’ve had, you’ve had too many. Stop and go home, while you can still remember where you live!
Learning something tends to be almost always enjoyable. Learning to hold your liquor can be enjoyable too. Just tread slowly and enjoy the scenery. If you go too fast you’re just spoiling your own journey.

Immigrants and integration

2007-09-02T19:42:00.000+02:00

“Proud to be mixed”

Fernando Lanzer Pereira de Souza

Is this the beginning of the end? Are we beginning to slowly fulfil the prophecies of Nostradamus about the Apocalypse, moving towards the destruction of the world through a war between East and West? Have we come to the point where cartoons in Scandinavian newspapers have the same detonation power as the terrorist actions of 9/11? Or is everyone overreacting? It’s not easy to make sense out of the headlines you see on the media these days. It seems very much that we are moving to increased radicalization of opinions, right and left, and mankind seems to be taking several steps back, rather than progressing towards global understanding and harmony.

In trying to resolve the “East vs. West” conflict, why not look at the South, for a different perspective?

I’m a Brazilian National living and working in Europe for over seven years. I have watched with concern the increasing debate around globalization, culture clashes all over the world, and more recently the clashes between “the East and the West”, notably in different parts of Europe. I’ve seen it in the media expressed as conflicts between Turks and Germans, Moroccans and French, Arabs and Europeans, Muslims and Christians, etc. It seems that as the European Union started enlarging its membership, a sensitive nerve has been touched. Many people oppose Turkey joining the European Union on the grounds that “the Turks are not European”. “They have a different culture from ‘ours’”.

In the first place, let’s remind ourselves that the European Union is not about culture. It is essentially an economic cooperation union, which is something quite different. Many Americans have made the mistake of forecasting the failure of the European Union because “you can never unify such different cultures”. Well, guess what? It’s not about the unification of culture, it’s about economic cooperation!

“Globalization”, a term used loosely to name many different things, is similarly not about culture, but rather about economic interdependencies. National and regional cultures will remain differentiated (actually, they tend to become even more differentiated then they are today). Many authors have pointed that out repeatedly, but I’ll mention just two: Geert Hofstede and Alvin Toffler, who’ve been saying this for over 30 years! Will somebody from the press please listen?

There are two different issues at stake here: one is economic cooperation, the other is culture diversity coexistence.

Economic cooperation should continue expanding. Trade barriers should continue to be reduced. Turkey should be allowed to join the European Union, as I believe the economic advantages of that outweigh the economic disadvantages. But there will be many discussions about that, and it will take time (years) before it is settled .

But let’s look at the cultural coexistence angle. This is the angle that touches people’s emotions, and it sells more newspapers.

I believe globalization will work out, eventually. Fighting against it is futile. Mankind has been evolving towards globalization since the Stone Age, and if we didn’t evolve towards it we would still be living in tribes and beating each other up with sticks. It won’t mean unifying cultures, but rather learn to coexist respecting each other’s increasingly different cultures.

When I look around me today, however, I suddenly realize that we haven’t evolved as much as I initially thought: we have larger tribes and bigger sticks, but the stereotyping, discrimination and prejudice is frighteningly similar to what it was more than 1,000 years ago. A picture in the International Herald Tribune, of a policeman on horseback equipped with a helmet and long stick, charging against a mob of protesters in Israel, looked straight out of Ridley Scott’s film “Kingdom of Heaven”, depicting the Crusades in the Twelfth Century.

I still believe in the benefits of globalization, but we do need to do something about the process and begin deliberately managing the changes, rather than consider ourselves victims of the process and restrict ourselves to defensiveness and resistance. We need to give globalization a different shape and form, or else it might actually not work, after all. Einstein once warned against “underestimating the stupidity of mankind”. Indeed, as a species we still have the capacity to be so stupid that we just might end up shooting each other to extinction, so we need to realize the threats and the opportunities involved, and we will need to make some courageous choices to manage change towards a positive outcome.

In the midst of the on-going debates, I’ve seen comparisons between the different “models” of cultural integration adopted by different countries in integrating (or attempting to integrate) immigrants in their communities. I’ve read articles on the way the Americans do it (I wouldn’t call it integration, but rather “become Anglo-Saxon or remain in a ghetto for generations”), the way the British do it (not very different from the Americans, which is not surprising since the American and British are much more similar than either would like to admit, anthropologically and philosophically speaking), the way the Germans do it (and the debate in Germany now seems to be whether their model of integration should change more towards the Anglo-American “love it or leave it” approach) and the way the French do it (riots in France speak volumes about how successful that approach has been to date).

Please forgive my Brazilian bias (we all have our cultural biases, no exceptions) and allow me to invite you to look at the “Brazilian model”. It can hardly be called a model, perhaps, because I don’t believe what happened in Brazil throughout the 20th Century was actually planned, but there are lessons to be learned from what happened there, and such lessons might make the difference between global evolution and global destruction.

Brazilian society is far from perfect, actually riddled with deep problems which should not be emulated. I am not advocating Brazilian society as an example, not at all. What I am saying is, let’s take a look at the cultural integration of immigrants in Brazilian society, and whether there is something to be learned from that un-planned process.

Cultural integration of immigrants was not marvellous in Brazil. There was also prejudice and discrimination against the “foreigners” who came. But looking back, it was smoother there than in the U.S. or in Europe. And there are less conflicts around it today than you find in the so-called “developed countries”. So, what happened?

The answer is: sex! (A very “Brazilian” response, I admit, living up to the stereotype of Brazilians as “sex maniacs”, expressed in Rio’s Carnaval parades). A more “Western European” way of putting it would be: integration happened at the basic cell-level of society, the family. Immigrants started marrying people outside their original “tribes” and forming new “inter-tribal” families, rather than sticking to the ghetto-restrained relationships.

People started breeding across cultural and ethnic backgrounds, and created a more integrated society (from an ethnical point of view). Brazilians today are not the cause of integration, they are the product of integration.

When a Syrian Muslim married a Portuguese Catholic (just an example) in Brazil, before WWII, cultural conflict was brought into the two families in a very concrete way. It was at first painful and disruptive for all parties involved, but eventually they had to cope with it. Initially the new couple was often ostracized by both families, and ended up having to face all kinds of discrimination in society. It was a long process to establish themselves as respectable in the communities they circulated in. This often took years and sometimes generations of strife. But the offspring of the new “inter-tribal” family were raised in a different family environment, no longer “pure” (as in “limited by”) the standards of a single tribe, but rather enriched by the combination of both. Often the arrival of a grandchild brought the two original families closer, setting again a different environment for the upraising of such grandchildren. Regardless of their background, grandparents have a tendency to become much more tolerant of what their grandchildren do than they ever were in regards to their own children.

This new generation of grandchildren typically grew up to again engage in “cross-tribal” partnering, marrying partners coming from (for instance) a Japanese background, Brazilian Indian ancestry or African-Brazilian origins. After four or five generations of this, you have a society which is much richer in terms of its diversity and much more open towards further integration than any of the original cultures ever was. Still plagued with multiple issues, certainly not free from discrimination and prejudice, but much closer to being fully integrated than anything you can see in Europe or in the U.S. today.

What could policy-makers learn from this? For one thing, stop trying to “force” immigrants into integration, stop telling them “you need to abandon your roots and embrace the values of your adopted nation!” It’s not that simple. Cultural integration is a two-way street. The culture of the “host” country is also affected by the presence of immigrants, and the sooner everyone accepts that fact, the sooner everyone can move towards the development of a “new” culture, a culture that results from the combination of both cultures (or multiple cultures) rather than imposing one on the others. Have faith in the (true) integration process, for the combined culture will be better than the ones who originated it. Such is the natural law of evolution, not only in nature, but in social and political terms as well.

A second thing is to promote the richness of the “new” culture. Diversity is good for you. Develop the capacity of people to perceive the differences among them as a stepping stone towards understanding the similarities which lie beneath the apparent differences on the surface. The way a mother expresses love for her baby may be different from one culture to another, but that powerful feeling is the same. A culture that can harbour many different ways of expressing love will be much more gratifying to its participants than one which accepts only one way of such expression.

A third thing is to promote cultural integration in the “family cell”, the simplest form of social organization. Foster mixed neighbourhoods, mixed schools, “sleep-overs”, social events which bring people from different communities together (rather than “the English Club”, the “American Society” or “the Catholic Charity Group”, which all exclude people who are different). Gather people around common values and efforts which transcend cultural background, such as disaster relief projects, environmental awareness programmes or sports (but don’t encourage ethnic-based competition such as “the Blacks versus the Jews”).

Ethnic groups will exist. I’m not advocating to declare “English Clubs” illegal or anything like that. People need to keep in touch with their past, but with their eyes on the future. Such is the nature of human beings. Children need comforting as well as encouragement to grow up and develop. Cultures work in a similar way. There needs to be room for tradition, for feeling safe in regards to your identity based on your past. But just as children need encouragement to grow and develop, cultures also need encouragement to learn and broaden their repertoire, through interaction with different cultures. Cultures need to form ideals and a vision for their future which transcends their past. Policy makers need to put the emphasis on this, rather than on keeping people locked up in history.

So, Policy Makers: encourage people to be proud to be mixed, rather than ashamed of it. Encourage people to be proud to be mixed, rather than to be proud of being “of pure blood”. Take a hint or two from the Harry Potter books. Strive to be remembered in the future as the ones who pushed society towards development, rather than as the ones who tried very hard to keep things as they once were.
Be very much aware that cultural integration is a very slow and often painful process. It won’t happen over night. It will meet resistance from the many conservative groups which exist in all cultures. It will require persistence and patience. But it’s worth it. The future of our planet, of our grandchildren, depends on changing the way we approach culture, and shaping a new global society that can be fair and just for all, respecting the past, but creating a future that lies beyond the limitations of any past culture by itself.

2007-08-19T11:13:00.000+02:00

"Delta 10" (or Delta Ten) refers to change (Delta) and the "4-3-2-1" principles of leadership. So Delta 10 is about changing to be a better leader.Everyone is a leader, to some extent, in some capacity. In this blog I will share my experiences on the road to become a better leader - - and hope this will invite others to do the same. This sharing of experiences aims to help all involved to improve their roles as leaders, in all aspects of their lives.