The surprise was like hearing the Pope say that contraception was an acceptable form of birth control! That is the analogy that sprang to my mind when earlier this year Michael Porter – the great guru of business studies from the Harvard Business School – published an article, exclaiming that corporations and businesses have been working against the greater welfare of society at large!
If you do not know him, Michael Porter is the man who brought us ‘Strategic Thinking’ in business, ‘Business Groups or Clustered Development’, or the need to creating ‘Competitive Advantage’. He is probably the most influential business thinker in the world and responsible for policies that have formed the structure and operations of many multi-national cooperations. Moreover, he in some ways symbolized the kind of thinking behind many businesses that have taken little consideration of local needs. If you are the CEO of Global Greed Enterprises it is likely that you would have;
a. been trained at the Harvard Business School
b. used Michael Porter’s strategies
c. implemented quarterly reporting – a business strategy that publishes profits every quarter or three months, so that investors are drawn to your company’s ever increasing profits. This has driven the majority of corporations and their executives to be focused on short-term financial success rather than the long-term well being and sustainability of a company.
As a consequence all of this, the maddening elements of multi-nationals which we love so much, such as outsourcing to India and China rather than investing in the local economies, stakeholders or communities, maximizing profit at the cost of services to the customers. More significantly, a detachment from the environmental consequences down the road or unsustainable consequences of the actions of these companies for society at large. As long as the great god of “Growth” was satisfied then the rest of us could go to hell, or stop being dreamers and face up to an essetial truth about life – Adam Smith is never wrong.
Don’t get me wrong I am not against business. I believe in the entrepreneurial spirit, I have run businesses and worked with them. However, all of my adult life right wing governments (including New Labour in the UK) have been driving the agenda that free and unregulated markets are acceptable, and these should not be in any way be constrained, since the self-interest of companies and their executive’s greed is good for society at large. We would all benefit from the trickle down effect of their wealth. According to Roger Martin of the Rotmans School of Management, these ideas can be traced to a theory that said; “we should align the interest of management and shareholder by giving management stock based compensation”. That is to say, if we pay the managers of a company in stocks, and as the price of the stocks goes up, then they would benefit directly in their pay packet. This idea was first stated in an article published in 1976 by Michael Jensen & Bill Meckling called the Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Click to read the article.
Except the trickle down never trickled down to us in society. As Mrs Thatcher famously said in 1987 “…and who is society? There is no such thing!”. Well except there is a society, and the cat is out of the bag that it had been hidden in by the Thatcherite policies which have dictated society for so long! When push came to shove and free enterprise failed, it turned to society, us the community, the voters, the tax payers. That same society who was forced to step in and bail out the banks, the same society who had to step in pay for the excesses of the unregulated banking sector that was selling toxic investments, or the greed of the executives who payed themselves millions out of tax payers money, while their employees and shareholders went bankrupt.
Over the last 30 years businesses have been driven by a tacit and systematically greedy agenda. This has been based on the competitive business modeling of the Harvard Business School (amongst others) which have cost society at large so much. The apologists for this model of institutionalized greed have over the last few years of economic collapse come out and tried to create rationalizations for why it should carry on as before, but some how their arguments sound very hollow.
Understandably, many young management graduates have been feeling uneasy about their prospective careers, and the message must somehow be getting through to their professors. You may be described as being cynical if you read the text and ask yourself, but surely Mr. Porter you have been responsible for promoting many of these strategies in the past! Why have you suddenly changed your mind? But there it is without any form of reflection, a co-authored paper by Michael Porter and his business partner Mark Kramer. Business studies with a conciseness! Click to read the article (pdf).
I’m a happy that a voice as prominent as Michael Porter is lending credence to a sustainable agenda. His voice may help persuade those who are carrying on as before that there is value in turning the direction of their companies.
What has all of this to do with us in design? Well interestingly economists from the opposing wings of economic field – the Harvard Business School and the Rotmans School of Management, have turned to design to help them with new ways of thinking. To help turn these companies so that we may end up in win – win situations for both business and society. They have turned to what is called ‘Design Thinking’ (more about this in a later blog), or in other words how we as designers are able to turn out new answers to old problems, which many business management graduates can not.
Watch this space. The battle for ownership of what is design thinking will soon heat up between the two extremes of economist theory, and how we think as designers, may not be dictated by design eduction and practice, but rather by economists with their own agendas!
While in Istanbul, on a study trip with my MA Design students, we spent some time visiting the Grand Bazaar (Kapalıcarşı) and the Egyptian Spice Market (Mısır Çarşısı’). The contrast of shopping in a Bazaar, in comparison to my normal shopping experiences, drove some points home to me. 
