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What can be next for France…and the world

15 January 2019

This comment was published in Le Monde on 7 January.

What is France to do now? Unlike Hungary, Brazil, and the United States, its voters rejected the far right. Unlike Russia and Venezuela, they rejected the far left. They went straight down the center, or so it seemed, with Liberal Democracy. And now look what has happened.

This comment was published in Le Monde on 7 January.

What is France to do now? Unlike Hungary, Brazil, and the United States, its voters rejected the far right. Unlike Russia and Venezuela, they rejected the far left. They went straight down the center, or so it seemed, with Liberal Democracy. And now look what has happened.

The promise of Liberal Democracy is that liberating markets liberates societies. Compared with what came before, it delivered on that promise, more or less. The rising tide did raise many boats. Now the yachts on top are swamping the dinghies below. Supported by the dogma of economics—that greed is good, markets are sacred, and governments are suspect—the winners have managed to displace human values with Shareholder Value. Many have been using the corporate press and the social media, as well as election financing schemes (especially in the United States, where the Supreme Court has legalized bribery), to distort election campaigns and corrupt governments.  Liberal Democracy has become an oxymoron: it is no longer socially liberal, instead a threat to democracy.

The recent events in France have brought the globalization scenario into sharp relief. Liberated markets empower global corporations above all, which face no countervailing power. This enables them to ride roughshod over national governments and local communities. Divide-and-rule is the globalization game: get one country to cut taxes on wealth, and other countries have to follow suit. This starves their governments, which are thus forced to cut support for the rest of the population, while turning to regressive forms of taxation—for example, on those diesel fuels in France. In turn, this squeezes many of the people already brought to their knees by the very practices of globalization, namely weakening job security to hold down wages.

In America, where business remains sovereign, the people have tolerated this. Indeed, many blame the government for it and so elected a businessman to drain the swamp created by businesses in cahoots with politicians. In France, where the people who have lived better know better, there is less tolerance for this. So out on the streets many have gone, provoked by a fuel tax that broke the proverbial camel’s back. When a protest reaches 77% public support, you have to believe that the people are on to something—and it’s not populism.

That something is imbalance. Many of the countries we call democratic are now out of balance in much the way that the communist regimes of Eastern European were out of balance, just on the other side of the political spectrum. There the public sector dominated; here the private sector dominates. A healthy society balances the commercial interests of businesses in the private sector with the collective powers of governments in the public sector and the communal concerns of citizens in the plural sector: liberté, égalité, and fraternité, to quote the French motto. There are not many healthy societies left.

Like a barstool, no society can balance itself on one leg—be that socialism, capitalism, or populism. And trying to do so on two legs leaves many societies swinging back and forth between left and right, while the power of government dissipates as that of business escalates. A third leg is necessary for balance. I call it the plural sector, rather than the more usual “civil society”, so that it can be seen to take its place alongside the sectors called public and. private. It is largely community-based, comprising those associations that are owned by members (such as cooperatives) or by no-one (trusts, etc.). Here, in fact, is where we spend much of our personal lives, whether playing in a club, praying in a church, supporting an NGO, volunteering for a charity, or shopping in a co-op, not to mention marching in a protest.

Large as this sector is, there is no place for it in a world fixated on left and right, public and private.  But here is where major social change has usually started—on the ground, in communities, these days networked through the social media. If this sounds like France of late, then let’s hope it has started something.

What form is this something to take? What can be next, after so much else has failed?  Look around: there are still countries that have managed to maintain a semblance of balance across the sectors, most notably the Nordic ones, and my own country Canada, among some others. These places are not utopian, but they do offer a decent life for all. Not long ago, France was one of them. To this Canadian who has spent years of my life in France, this is what made it so liveable, so delightful—and now so dispirited.

Will Monsieur Macron get the message from the streets of France and become the statesman he fashions himself to be, instead of just another politician? Will France join with other countries to challenge the hegemony of globalization?  Will the businesses of France and other countries get the message that in a democratic society, their place is in the marketplace, not the public space? Will they have the courage to shake off the mercenary stock markets, by finding more decent ways to fund and govern themselves (for example, by using patient capital and vesting control in trusts, as do most of the major corporations of Denmark)? Will more citizens get the message that it is they, in their communities, who will have to drive their governments and their businesses to behave in such responsible ways?

Two hundred years ago, an astute Frenchman named Alexis de Tocqueville described the “associations” of this plural sector as a key component of the new “Democracy in America”. Imagine if his compatriots today recognized that insight, to lead a new wave for the restoration of democracy worldwide.

© Henry Mintzberg 2019. See Rebalancing Society…radical renewal beyond left, right, and center for elaboration of some of these points.

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Happy Anniversary fellow prostitutes

3 January 2019

It’s 2019, which seems innocuous enough—not a prime number, not even a leap year (i.e., divisible by 3 but not 4). In actual fact, however, 2019 is a banner year: the 25th anniversary of the declaration that we are all prostitutes. I refer to the publication in 1994 of the pivotal article “The Nature of Man”, by Michael Jensen and William Meckling, in the Journal of Applied Corporate Finance. Here is a story they told:

George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he asked a celebrated actress on deck one evening whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: “What about ten dollars?” “What do you think I am?” she responded indignantly. He replied, “We’ve already established that—now we’re just haggling over price.”

It’s 2019, which seems innocuous enough—not a prime number, not even a leap year (i.e., divisible by 3 but not 4). In actual fact, however, 2019 is a banner year: the 25th anniversary of the declaration that we are all prostitutes. I refer to the publication in 1994 of the pivotal article “The Nature of Man”, by Michael Jensen and William Meckling, in the Journal of Applied Corporate Finance. Here is a story they told:

George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he asked a celebrated actress on deck one evening whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: “What about ten dollars?” “What do you think I am?” she responded indignantly. He replied, “We’ve already established that—now we’re just haggling over price.”

Cute. Not so cute is the declaration that follows: “Like it or not, individuals are willing to sacrifice a little of almost anything we care to name, even reputation or morality, for a sufficiently large quantity of other desired things…” In other words, deep in our souls, or in the absence of them, we are all prostitutes.

Jensen and Meckling used the term “Shareholder Value” in the article, which has everything to do with maximizing personal wealth and nothing to do with enhancing human values. (Notice their use of the term “large quantity”. These two professors were trained in economics, a field that teaches a lot more about quantities than qualities. Oscar Wilde wrote about a cynic as ''a man who knows the price of everything and the value of nothing.'')

Shareholder Value went on to become a celebrated orthodoxy, at least in stock markets, executive suites, and business schools. Jensen himself went on to the Harvard Business School, to teach his value of Value to many of the future captains of business, in what became the most popular elective course in the place. Many of these captains, however, went on to fail. Excessive Value and inadequate values?

A prostitute can be defined as anyone who sells a cherished resource indiscriminately. Thus, a poor woman who sells her body to feed a starving child is not a prostitute, whereas a rich celebrity who sells his reputation by endorsing a product he cares nothing about is a prostitute. And so too are the beneficiaries of Shareholder Value who have enabled pharmaceutical companies to set prices so that sick people die for want of medicines that could be affordable, and suitably profitable, likewise the university professors who take research grants from such companies to do their bidding. Prostitution is running rampant in this world of Sodom and Gomorrah.

There are many decent professors at the Harvard Business School now singing the praises of corporate social responsibility (CSR), just as there are many decent executives in corporations pursuing it. Even Jensen has since offered his share of mea culpa, much as Jack Welch, the exalted CEO of General Electric who championed Shareholder Value, later called it “the dumbest idea in the world.” (What does that make you Jack?) Too late, the damage was done, and continues: corporate social irresponsibility (CSI) runs rampant too. As Tom Lehrer sang in his off-color song about the republicans in the Spanish Civil War: “Though [Franco] may have won all the battles, we had all the good songs.”

Enough of the songs; it’s time for action. How about making 2019 the year that we throw off the yoke of Shareholder Value, for the sake of human values?

© Henry Mintzberg 2019. A few days ago, Federica Mancinelli (@Mancinelli2020) tweeted: “Will 2019 be the year of #communityship?'' Sounds good to me!

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PPPPs for Climate Change

8 December 2018

Co-authored with Dror Etzion and Saku Mantere; adapted from “Wordly Strategy for the Global Climate” in the Stanford Social Innovation Review (Fall 2018).

Much has been written about PPPs: public private partnerships. But for vital issues such as climate change, a third partner has been missing: the plural sector.

Co-authored with Dror Etzion and Saku Mantere; adapted from “Wordly Strategy for the Global Climate” in the Stanford Social Innovation Review (Fall 2018).

Much has been written about PPPs: public private partnerships. But for vital issues such as climate change, a third partner has been missing: the plural sector.

Otherwise known as “civil society”, and other labels, this is the sector of NGOs, foundations, cooperatives, many of the world’s renowned universities, and more, including social initiatives and social movements—much of all this community-based. In other words, included here are all the associations that are neither public nor private, that is, owned not by the state or by private investors, but by members (as in cooperatives), or else, like trusts, by no-one.

This sector is huge–think of all such activities you have associated with in the past week. Yet it has been obscured by the centuries-old divide between left and right, government controls and market forces. Now we are discovering, with a vengeance, that no healthy society, like no stable stool, can balance itself on two legs. A third is required–the plural sector—alongside those called private and public.

Three Sectors: Three Approaches 
To understand more about the potential role of each of the sectors for climate change, we identified twelve initiatives, four in each, all somewhat typical although some more prominent than others.

In the Public Sector: COP21 and subsequent efforts sponsored by the United Nations. Carbon taxes and cap-and-trade initiatives. Preservation of its forests by the government of Bhutan. And fuel economy standards for automobiles established in many countries.

In the Plural Sector:  The Green Building Council that certifies sustainability in U.S. structures. The Beyond Coal Campaign of the Sierra Club. The Girl Scouts training project to educate members to bring energy-savings attitudes into their homes. And the wind meetings held In Danish communities to promote the country’s conversion to this form of energy.

In the Private Sector:  The Tesla enterprise to produce and promote electric automobiles. The electronics company Phillips’ program that sells lighting as a service to reduce the use of energy. The Pulled Oats initiative in Finland to reduce the use of meat products. And Communauto, a car-sharing company in Montreal.

As we considered these three sets of initiates, we found that each of the sectors tends to favor a different approach to address the problem of climate change.

Orchestrated Planning in the Public Sector   In the public sector, we found an inclination to favor orchestrated planning: climate change initiatives in government tend to be centrally directed, analytically driven, and strategically deliberate. This is usually enacted in top-down fashion: to pledge, plan, and police, from the political leadership to the civil service, and then out to the broader population. Orchestrated planning can use central controls, such as regulations and decrees, or rely on incentives to encourage desired behaviors.

Grounded Engagement in the Plural Sector   Plural sector associations tend to favor grounded engagement. Here the initiatives develop from the tangible experiences of learning in action—bottom-up. Think of this as thousands of flowers blooming, many planted in the soils of local communities, usually in response to local concerns.

Autonomous Venturing in the Private Sector  Businesses, as independent organizations in the marketplace, are most inclined to favor autonomous venturing, much of this championed by creative entrepreneurs who develop new products, services, infrastructures, and technologies that provide the means to reduce global warming.

Collision or Consolidation?

Striking about all these initiatives is that they add up to a collection of separate strategic positions more than a consolidated strategic perspective. Each may contribute in its own right, but the synergy that could be had by working together is lost. So the planet continues to warm.

Worse is when the sectors themselves work at cross-purposes. As shown in Figure 1, a downward spiral of collision can occur when businesses are inclined to lobby governments while governments make empty promises as they police the citizens, groups of whom in turn protest the activities of businesses.

Figure 1: Collision between the sectors

Contrast this with the ascending spiral of consolidation shown in Figure 2, with the three sectors working together. Activism by community groups in the plural sector pushes governments in the public sector to enact legislation that regulates and incentivizes businesses in the private sector, which in turn provide the citizens with the means to combat climate change. Communities engage, governments legitimize, businesses provide.

Figure 2: Consolidating across the sectors

Does this consolidation scenario sound utopian? Not when seen in the cooperative activities across the three sectors in Denmark, which has become an exemplary model of shifting to alternate forms of energy. Other examples of such consolidation can be found in B Labs for B corporations, also in the Brazilian City of Curitiba (all of this written up in our full paper).

When organizations and sectors compete with each other for local or global power, they are disinclined to see, let alone solve, their common problems. We have certainly experienced enough of this. Climate change has no invisible hand to reconcile differing perspectives; instead it faces the visible claw of a creeping warming that threatens our planet. A collaborative mind-set can prepare actors to appreciate their differences, and thereby work toward consolidated ascension, from group to globe. To deal with climate change, and much more, the time has come for PPPPs.

© Henry Mintzberg, Dror Etzion, and Saku Mantere 2018.

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