Financial Daily from THE HINDU group of publications
Friday, Apr 18, 2003
Motive forces for a new business model
A SERIES of recent global developments seem to be throwing a wrench at the existing model of business purpose and activity. Witness the recent startling series of bankruptcies in the leading economies of the world. In the US, the world's largest economy, leading firms Enron, WorldCom, United Airlines, Global Crossing, Kmart, Conseco, US Airways, to name a few, declared bankruptcy in 2002.
In Japan, it has been reported that a record 214,000 individuals filed for bankruptcy, not too mention the highest number of historical bankruptcies of firms in the same period. In the UK, 33,000 companies went bankrupt in 2002, with larger companies appearing to be hit the hardest. In Germany, the number of bankruptcies also hit a record high.
Witness further, the US-led wars in Afghanistan and now Iraq, ostensibly taking place to make the world a more `secure' place, but equally likely, so it has been reported by many, to gain control of critical resources for `business' purposes. Witness also, the unprecedented event of September 11, 2001, of the destruction of the World Trade Centre. Whatever else this may have stood for, if we consider that all material objects are a symbol of a reality behind them, and that the World Trade Centre was a symbol for an uncompromising financial development, then its destruction unequivocally states that the era of one-dimensional financial progress has ended. Another kind of progress and, hence, business model needs to arise in its place. But what kind of model is this?
Perhaps it is a model where multiple motive or developmental forces, beyond the sole motive of making money, often at any cost, becomes active. But what other motive forces could we possibly be talking about here? Let us take a glimpse at one of the world's most successful organisations for a possible answer.
This would be none other than Silicon Valley. Silicon Valley, which continues to produce remarkable companies Intel, Cisco Systems, Oracle, Hewlett-Packard and Sun Microsystems, to mention a few that rocket in terms of market capitalisation.
While in the end-analysis Silicon Valley may be classed as a commercial organisation, yet we begin to glimpse something of what may become possible when an alternative set of motive-forces begin to interact with one another in free fashion. That is, beyond the motive of doing everything for the sake of just generating money.
In the case of Silicon Valley we see that the climate and beauty of the Bay Area began to attract many talented people into the vicinity. Over time, the talent pool became progressively diversified. Educational institutes such as Stanford University and University of Berkeley cropped up and became centres of cutting-edge research.
The Armed Forces were attracted to the area for the same reason, and came with their huge requirements for research for research's sake, and their huge funds in support of the area. Graduates from the universities started companies that began in turn to support the universities with handsome funds. Talent moved around from company to company like people from department to department.
Thus we see that even when individual companies failed, Silicon Valley functioned as a larger organisation and was able to retain talent in the area; was able, further, to buffer the shocks to some extent, hence preparing the ground for future waves of innovation.
Pragmatically speaking, this dynamic of functioning as a larger meta-organisation meant that some level of commercial immunity began to develop, so that losing a job was not necessarily considered as too stressful an event. There was a freeing, thus, from the purely commercial element. In other words, there was a freeing from the sole purpose of money-making, and the allowing of the expression of another set of development forces.
If the various powers of beauty, aesthetics, knowledge, power in the form of money, plus the myriad streams of talent from engineers, scientists, managers, lawyers, etc., did not exist in such close proximity, and further, if the various professionals could not thus support each other through their continued informal meetings, through the urge to create the next wave of innovation, through the urge to pursue progress for the sake of progress, then they would have left for other areas and the phenomenon of Silicon Valley would never have been.
When we look at the dynamics of Silicon Valley more closely we identify that it perhaps falls under four broad motive forces: wisdom-knowledge, with the sprouting of pure research-oriented institutes; leadership-energy, exhibited through the pure drive to innovate in the face of any challenge; service-perfection, manifest through the urge to pursue progress for the sake of progress. And all this with a love for detail; and mutuality-harmony, manifest through the infrastructure that allowed the intimate professional interactions outside work, and provided the funds to make dreams possible.
Modern-day organisations usually cannot provide these various buffers and opportunities for interaction that Silicon Valley provides and, hence, when hit with adversity, more often than not, simply crumble.
This is perhaps because it is always only the well-known one dimension of money-making that drives them, and when the possibility of that is threatened, the organisation resorts to tactics that will ensure that that dimension looks good at any cost, in the bargain sacrificing the development of the other dimensions and, therefore, its longer-term health.
Even in looking at the successful offshoots or sub-organisations within Silicon Valley, we find something of these four sets of motive powers driving their own success.
Thus, Cisco, a firm with one of the highest historical market capitalisations, for example, exhibited mastery over aspects of the four motive forces in its key growth activities. Its growth was primarily due to well-thought out and executed acquisitions. These acquisitions were performed in such a manner so as to allow something of the motive-forces to express themselves.
Leadership-energy was required in the daunting task of performing one acquisition after another; mutuality-harmony to really piece these growing pieces harmoniously together; service-perfection to integrate even the nitty-gritty of the accounting of these various pieces, which incidentally continues to close in real-time; and knowledge-wisdom to continue to provide critical networking devices in an age becoming increasingly more digital.
It is easy to think that these four motive forces are already acting in the creation of organisations. But often their interplay is such that one or more of them is subservient to another.
In today's business context, for example, these motive powers have often submitted themselves to the dynamics of a crude commercialisation, itself an unrefined power of mutuality-harmony. Thus, Art is created and valued for its ability to generate monetary wealth.
Sports, too, has become big business. Knowledge is valued only for its ability to generate monetary gains. And so on. When we say that these four developmental forces must be allowed to exist in the completeness of their own principle, we mean that knowledge must be pursued for the sake of knowledge, art to express beauty, sport to enhance organisation skills, develop other noble qualities, and so on.
If these four motive forces were allowed to express themselves along the completeness of their essential principles, and allowed further to interact as equals then something of the robustness of a Silicon Valley type organisation may come into being.
If, further, these forces were even utilised in the design and execution of any activity of the organisation, as in Cisco's activity of acquisition, then a `wholesomeness' would animate even the operations of the business organisation, and truly a different breed of companies would come into being.
This perhaps is the demand of the hour.
(The author is founder of Aurosoorya, a firm specialising in creativity and innovation. He can be reached at email@example.com)
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