The truth is: what we lack is not CEOs — we have plenty. What we lack is true leadership — people who have wisdom, maturity and moral character to enable our organisations to innovate and thrive, on behalf of and embedded in the ecosystem. That implies a deep understanding that we do not create organisations in order to make profits. We make (fair) profits so that the organisation and its stakeholders can continue to flourish. That is a huge difference.
The ethics? Solange Unternehmen es als ihren Zweck (und nicht nur ein Ziel unter anderen) ansehen, Gewinn zu erwirtschaften, ist der Raum für moralischen Handeln begrenzt. Moral wird selber zum Gegenstand eines opportunistischen Kalküls. Wann handeln Führungskräfte in so einem System moralisch? Es gibt theoretisch vier Möglichkeiten: - wenn sie sich selber damit nützen; - wenn sie sich selbst damit nicht schaden; - wenn andere dadurch nicht gestört werden; Und endlich: - wenn sie anderen nützen. Der Altruismus hat es so gesehen ziemlich schwer!
- Indeed! Whereas I will add a fifth one: “when they enable the system to flourish”. I think, as […] once very eloquently argued, there’s no necessary separation between me and my relationships, my ecosystem — methinks, human flourishing is a common good. Hence, I might — without much altruism — contribute to both my own and the system’s thriving at the same time. However, that requires the capacity to see and the commitment to care for the wider system — which, again, are not easy capacities of individuals and Organisations in our narcissistic and instrumentalist age…
The system? Part of the conundrum, especially in organisations of a certain size (and age): (a) leadership is still very much linked to “official” positions in an organisation’s hierarchy (which in itself is something more rigid than fluid), be it in the mindset of people or in the procedures that put someone into a “leadership-position”. (b) since the aforementioned procedures are part of the system, they tend to perpetuate the existing culture of the organisation, hence people “playing by the rules” are more likely to become “leaders”. and why should these people change a system that made them successful ? Its kind of a vicious circle … to break it, one could imagine some actions: (a) allow leadership to emerge where it is needed, beyond the ranks. everyone can be a leader, depending on task and context. (b) scrutinise the “success rules” in the organisation if they hinder or support (constructive) change.
and c) listen in to what the people in the organisation (and other stakeholders, maybe even the competitors) have to say. there might be more wisdom in the system than there is in the boardroom.
- Many thanks for the thoughtful contribution!! Indeed, what you point to is what Max Weber spoke about when he suggested that with increasing size organisations move from “value rationality” to “instrumental rationality”. And it is one of the conundrums we are investigating into also with Michele Zanini (see his work on Humanocracy) and Paul Adler (see his stimulating book on democratic socialism). As always, I would suggest, there are a number of levers at different levels: personal agency (as you suggest above), yet I will contend that emergence requires more than just autonomy (hence my suggestion about moral character development); organisational/relational and “institutional” routines, structures and norms (to your point — toxic practices, but also enabling rituals and purpose); system interventions (this could include regulation to support “corporate citizenship” as much as inter-company interaction and ecosystems). Again, Max Weber spoke about — I paraphrase — different ontologies: i.e. an individualist/positivist, a relational, and a systemic ontology — all these lenses add “truth” to the puzzle. And then we need to get there — without, as Stefano Zamagni famously said, a clear theory of transformation in economics
- Yes, and — a great new model is that of ‘capped profits’ or ‘capped ROI which orgs like Open AI are pioneering: above the threshold profits or excess returns won’t be handed to shareholders but public stakeholders etc. Another novel model is that of MAPS Public Benefit Corporation (MAPS PBC) whose profit arm spins back money into its non-profit research arm. In other words, the for-profit model isn’t dead, it needs to be re-imagined!
Better culture? Definitely. This is one of the key points I am making — that profit has become the core value of organizations which is why business as a practice has become meaningless. The way out is to fuel meaning back into business to create real value for people that we can then use to generate profit with. A huge difference. The real culprit is the toxic culture we have created by greed, efficiency, and unsustainable growth. This makes a particular type of personality rise and flourish: a type that is counter to everything we like about humanity. Because otherwise, they wouldn’t be able to keep themselves in that position. So it’s the culture we need to change, to then change the outcome of organizations, and the value they create. Then we can attract a new kind of people in the positions of CEOs and hopefully, make them stay so that they can make a real difference in the world.
Better advisors? CEOs should benefit from having advisors who are polymaths. They could help understanding and connecting the dots and raise the awareness of the purpose of the organization.
- That is a good point but might not suffice. I think there are three aspects here: firstly, self awareness and other awareness and prosocial behavior. I guess that can be trained unless people are pathological narcissists. Then, there’s an element of consciousness — the ability to hold diverse viewpoints and attain meta cognition, and “ontological flexibility” so to speak. That’s where polymaths — and importantly liminal conversations and diversity of thought come in. And finally there’s character — the ability to act with practical wisdom in the moment. This also implies the ability to hold the own identity “object” and “transcend the ego” in order to deal responsibly with power — and it’s not only cognition but also moral emotion and aesthetics. So I reckon rather than just polymaths we also need moral role models who bear testimony to the good life in action… :-)
Better vision? CEO need to understand, as Jeff Bezos did long ago, that profits must be a consequence of a vision of higher purpose.
- I am afraid of the “consequence” as it always implies “means to an end”. I will argue that life and humans must never be instrumentalised. I believe vision on its own is not enough — I personally prefer to focus on a combination of purpose, character and wisdom.
- Of course, this stems from the idea that virtue ethics is an aretaic agent ethics ie it seeks to attain societal flourishing through development of the individual. In that sense, it is teleological (the ultimate purpose is a good life) but not consequential (the good life is a process, not an outcome).
- That doesn’t mean, however, that a vision is unnecessary — I strongly believe that a shared higher purpose, as you suggest, is required to bring people together and create an entrepreneurial community. Yet, I guess there are many ways to craft and attain an Organisational vision (and indeed profit linked to a vision), not all of which would lead to developing “good people”… And my key point remains that both vision and profit are means to attain (or byproducts from) the flourishing of the system, rather than its goal.
Humility? We are all full of mediocrity and malevolence to some degree. What is clear is Leadership has lost 3 words. Humility, servant, wisdom.
- Well spoken! And let me tentatively add to those the virtues of vulnerability, compassion, courage, but above all community. I think Aristotle’s point that we only develop with and in community, that our very identity is relational, is absolutely critical. We have “gained” individual freedom with the enlightenment, yet if we do not revert to some degree of recognition that aliveness and fulfillment are “relational goods”, and that a positivist scientific ontology can ever only explain part of our existence, we will remain lost — and Robert Putnam’s famous “upswing” might never happen…
Maybe the Board can fix it? Will it be Board or CEO? My thoughts are that Board is the governing body and ultimately will be a prime factor. I think if organisations have a real purpose that helps but ultimately the Board not just the CEO have to be on the same path and accept that the constant drive for profits is not the end in itself but the enabler to do something else! We need more than one Leader.
- Thats a very important thought — indeed, I’m thinking about leadership more as a distributed capacity. As Peter Senge once suggested, and as our friend […] often reminds me: “Leadership is the capacity of a human community to shape its future”. Hence, it’s of course more than individuals and more than structures. Yet, in traditional hierarchical public companies both the people at the “top” and indeed the shareholders, supervisors and regulators will have a critical role to play to enable shared leadership.
- So, there is certainly a role for the board. Both in regards to its composition (moving towards the “mission circle” suggested in sociocracy and representing stakeholders and diversity of thought) and it’s function. Sadly, my view of boards is immensely skeptical. In my personal experience Boards have not been very powerful in shaping the direction of large companies, but as you say it can be a prime factor. And I do not see that a normal board member could ever attain sufficient information or oversight to really understand organisational reality — hence, necessarily their input is confined to “the big strategic decisions”. And a lot of suffering is created in normal day-to-day work by immature leaders in “controlling bureaucracies” at all levels. However, they certainly must use their weight to stop toxic practices at the top — eg personnel or salary decisions are clearly a simple way to effectively intervene- and boards that continue to appoint pathological narcissists or approve 350x CEO multiples should be publicly shamed. Whether board members are qualified enough, in terms of character, to play a good role I doubt — maybe we should use sortition (as Margit Osterloh advocates) rather than recruitment to populate our most important boards and see what happens!
- In addition, shareholders and investors often create strong expectations — and here, as Paul Adler points out, to a degree it will depend on the Organisation to withstand such pressures in order to keep their sanity. Especially in an age where the financialisation of our economy has inverted the agency-principle problem: today, managers often care about their business as a going concern whereas the shareholder “principles” simply want to maximize returns on a portfolio of funds… But I guess the point still remains- those people who lead must do so responsibly, or they should leave…
It’s the salary, maybe? LOVE THIS! Otti Vogt How do you feel about the CEO Salary Cap?
- Frankly, I am absolutely in favour — I dont think any executive should earn far beyond the 10x multiple (CEO salary/average worker) I believe Mondragon insists on. The 350x multiple in Fortune 500 countries today is simply immoral. But I reckon we have to be clear that it is just a symptom of a (partially) rotten system, not its cause. And maybe — as Antoinette always points out — even more importantly, we need to rid ourselves of selfish, narcissistic and domineering leaders in important “political” roles. One “bad apple” will easily destroy a good organisation, wherever they may be.
- That will only work, though, if we start to take accountability for ourselves and for the whole, instead of projecting our fears, anxieties and narrow-mindedness onto the rulers of our society…
The impact of (the financialisation of) our markets! I agree wholeheartedly. Looking at ESG, SDG, Donut Economics and other holistic approaches, promoting the common good is moving more into the spotlight due to the plethora of crises and imbalances we are now facing (climate, pandemic, equality etc). While we are facing a multitude of crises and imbalances, it seems we are all called on as leaders to follow an unprecedented amount of goals. But when it comes to the mobilization and deployment of resources to achieve these goals, it makes me wonder where our priorities lie.
Looking at the relation between financial markets and the real economy, profit is still the key driver behind investment allocation, even if the filter has narrowed to exclude harmful industries and projects. Clearly there is a lot of green- and „good-washing“ happening. But as long as there are no investment metrics for broader benefits beyond economic profit established ON PAR with metrics of profit, we are all asked to do more with the same resources or even less, while the amount of financial capital (at least on paper) has grown exponentially and is outpacing growth in the real economy. I strongly believe this is a systemic debate to be had, rather than an individual, leadership or corporate level one.
From: “Sunday Morning Thoughts on LinkedIn” — I will report some of the interesting LinkedIn dialogues here, paraphrased and applying the Chatham House Rule — trying to protect some of the sentiments, thoughts, and above all our stimulating discussions from oblivion ;-)