At the @BritishAcademy_ yesterday evening for a lecture by Onora O’Neill on Ethical Communication in a Digital Age, supported by two more philosophy professors, Rowan Cruft and Rae Langton.Much of the discussion was about the threats posed to public re…
How do you feel about using the same toothbrush as a stranger (after it is cleaned)?How do you feel about using the same fork as a stranger (say, in a cafe, after it is cleaned)?Framing is important because it affects how we feel and how we feel affect…
@queenchristina_ writes an excellent article on Google, Starbucks, and Amazon, arguing that “for these multinationals immorality is now standard practice” (Independent 13 November 2012). See also Martin Hickman, Good Bean Counters (Independent 16 October 2012).
It is much too easy for British politicians, journalists and taxpayers to get a sense of moral outrage when they discover how little UK tax these American companies pay on their UK earnings. There may be nothing illegal about the fact that the coffee beans are purchased from a Starbucks subsidiary in Switzerland, or that the UK subsidiary pays a royalty for the use of the Starbucks brand to another Starbucks subsidiary in the Netherlands. By a strange coincidence, the Netherlands charges a very low tax rate on royalty payments. Of course there are many British companies that use similar devices to reduce their UK tax bill.
The word “account” essentially means “story”. The Starbucks accountants have constructed a story in which Switzerland and the Netherlands are essential links in the Starbucks value chain. British politicians have constructed a different story in which Starbucks is ripping off its British hosts. The moral outrage comes from the clash between these two narratives.
When two narratives clash, it seems natural for us to want to impose our preferred narrative on the Other. Wouldn’t it be grand if Starbucks saw the error of its ways and started to pay a fair rate of UK tax. Or wouldn’t it be equally grand if the UK tax laws were changed to regulate against these tax avoidance schemes? Or from Starbuck’s point of view, wouldn’t it be grand if UK corporate tax rates were reduced, so it could simplify its value chain at no cost to its shareholders? (Obviously words like “grand” and “fair” depend on the narrative.)
Of course, what is more likely is that the politicians will issue some threat of tighter regulation, the companies will make some temporary gesture to alleviate public hostility, and that the media will move onto the next target. In the meantime, politicians and the media can make things uncomfortable for corporate executives in the public eye.
And here’s a slightly older example – the attempts by the US Government to hold BP to account for the oil spill in the Gulf of Mexico. One BP executive complained that “The administration keeps pushing the boundaries on what we are responsible for.” (Wall Street Journal 1 June 2010 via NakedCapitalism)
In any case, there are always going to be conflicting narratives. I was at a workshop in the City this morning discussing how externalities might affect the future of money and the future of commerce. We discussed a range of topics, from mega-cities to carbon trading.
But what exactly are these externalities? Almost anything that one person thinks to be part of The System and another person thinks to be outside The System. As William P. Fisher, Jr points out, “If we have to articulate and communicate a message that people then have to act on, we remain a part of the problem and not part of the solution.” (Reimagining Capitalism Again, Sept 2011).
Oliver Greenfield identifies the following challenge:
“The externalities created by companies – or, for that matter, nation states – in their pursuit of self-interest can seem rational at the local, country and even regional level. But at a global level, in a closed system, externalities are costs. What is rational at a company or nation state level is irrational at a global level.” (Green Economy Coalition, April 2012)
Thus we have conflicting narratives, which result from disagreement about system boundaries (including time horizon as a type of boundary). A true systems approach might give us a systematic way of playing contested narratives off against each other.
William P. Fisher, Jr, Question Authority (Oct 2011)
José M. Ramos, Temporalities of the Commons: Toward Narrative Coherence and Strategic Vision (Nov 2012)
Linked-In discussion on Good Bean Counters
and my post on Regulation and Complexity (Oct 2012)
#orgintelligence @larryhirschhorn has produced a very detailed analysis of Barclays Bank, Robert Diamond and the LIBOR scandal (July 2012). He asks why Marcus Agius (Barclays Chair) and Bob Diamond (Barclays CEO) were stunned at the Bank of England’s demand for Diamond’s resignation, and suggests it was because they lacked something he calls a “political imagination”.
There is a lot of interesting material in Larry’s blog from the perspective of organizational psychology, and I don’t want to reproduce it all here. What I do want to explore is whether what Larry calls “political imagination” is an aspect of what I call organizational intelligence.
Central to Larry’s narrative is a cryptic note, written by Bob Diamond after a telephone conversation with Paul Tucker, the Bank of England’s executive director for markets. This note appears to have been interpreted by one of Diamond’s subordinates as an coded instruction from the Bank of England to lower its LIBOR submissions. However, Diamond later denied that this was the meaning of the note. As Larry points out, this kind of deniability is all too common in and between organizations.
What is more complicated is the decision by Barclays to include this note in its published account of the LIBOR affair. Why was this note relevant to the LIBOR affair, if it didn’t mean what it appeared to mean? Diamond’s self-justification and repudiation looks like what Freud called Kettle Logic – “we didn’t fix the LIBOR rate … and anyway you hinted we should fix it … and anyway it wasn’t a hint”.
The Bank of England was undoubtedly sensitive to the allegation that it had been complicit in the LIBOR affair, and seems to have reacted angrily to the publication of this note. Diamond and his colleagues may have decided to include the note as a coded message to other banks, but failed to anticipate the reaction of the Bank of England. And as one of the highest paid bankers in London, Diamond may also have failed to appreciate the extent to which the Bank of England disapproved of overpaid London bankers.
According to the Wall Street Journal, there were differences of opinion within Barclays as to whether it was a good idea to include this note in its report, and there were some who worried about the reaction. However, the decision was taken to include it. At the time, this might have seemed like a fairly small detail, but such details can sometimes have very significant consequences.
(Of course, we cannot know for sure that it was this detail that triggered the Bank of England’s demand for Diamond’s resignation, but it is a highly plausible interpretation of events.)
One of the most common limitations of organizational intelligence is that all decisions are taken within a fixed frame of reference – which I regard as a failure of sensemaking. Larry suggests that Bob Diamond was operating within a frame of reference based on “technical rationality”, within which the publication of the controversial note seemed perfectly reasonable, and that he lacked the imagination to move outside this frame of reference. Larry also indicates some of the organizational mechanisms that may have helped to reinforce Diamond’s limited worldview, including his experience of being protected by his subordinates.
In that regard, there are some strong parallels with the Murdoch empire and its recent troubles. When Diamond said (speaking to the House of Commons Treasury Committee), “When I read the e-mails from those traders I got physically ill” (BBC News, 4 July 2012), I was convinced I had heard either Rupert or James Murdoch saying much the same thing a few weeks earlier. They are obviously using the same scriptwriter.
Doubtless there will be a stage play at the Royal Court before long, showing us the tragic fall of these doomed heros.
Who is to say whether a scientific or technical discovery is accidental or planned? Historians of science often point out that there was some luck involved in Fleming’s “accidental” discovery of penicillin. But Fleming and his assistants were already a…
Who is to say whether a scientific or technical discovery is accidental or planned? Historians of science often point out that there was some luck involved in Fleming’s “accidental” discovery of penicillin. But Fleming and his assistants were already actively searching for anti-bacterial agents, and the discovery of penicillin followed a similar path to his earlier discovery of the anti-bacterial properties of egg-white (lysozyme), so it is misleading to describe the discovery of penicillin as a complete accident.
Some historians of science now suggest that the Chinese invention of rockets was an accident. They argue that Daoist thinkers would have understood explosion as a violent response to the combination of Yin and Yang, and that they would therefore have been unable to think systematically about a reaction involving three ingredients instead of two. In other words, a given mental model or frame constrains investigation. (Unlike the Fleming example.)
Of course we must be cautious about interpreting historical Daoist thought against either a modern understanding of the chemistry of gunpowder, or even against a modern interpretation of Daoist thought. Perhaps the ancient Chinese did not see any contradiction between a three-way chemical reaction and Daoism, and that this apparent contradiction is merely a modern projection. (In other words, the modern historians perceive the past using their own mental models or frames. None of us can escape this.)
However, it is still true that mental models can constrain what we perceive, as well as how we make sense of our perceptions and act upon them, and this has important implications for innovation and organizational intelligence.
Frank H. Winter, Michael J. Neufeld, Kerrie Dougherty, Was the rocket invented or accidentally discovered? Some new observations on its origins (Acta Astronautica, Volume 77, August–September 2012, Pages 131–137) http://dx.doi.org/10.1016/j.actaastro.2012.03.014
Corrinne Burns, Oops, I invented the rocket! The explosive history of serendipity (Guardian, 4 May 2012)