Blog: Getting it together

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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Porterian and Peterian Performance

13 July 2018

What makes an organization effective? After Peter Drucker, Michael Porter and Tom Peters became the most prominent writers about the performance of organizations, but with quite different perspectives. For Michael Porter, in his book Competitive Strategy, an effective organization positions itself in the marketplace for competitive advantage. For Tom Peters, in his book In Search of Excellence (with Robert Waterman), an effective organization executes excellently whatever position it has. One of these guys might eat in a restaurant that is different, the other in a restaurant that is solid (although I suspect that, personally, they might opt for the opposite).

What makes an organization effective? After Peter Drucker, Michael Porter and Tom Peters became the most prominent writers about the performance of organizations, but with quite different perspectives. For Michael Porter, in his book Competitive Strategy, an effective organization positions itself in the marketplace for competitive advantage. For Tom Peters, in his book In Search of Excellence (with Robert Waterman), an effective organization executes excellently whatever position it has. One of these guys might eat in a restaurant that is different, the other in a restaurant that is solid (although I suspect that, personally, they might opt for the opposite).

Porter described competitive advantage as either cost leadership or differentiation, namely providing lower prices or unique offerings—say, fast food fusion or high-end poutine. And both strategies can be pursued with a wide or narrow focus—for example, through a single outlet or a whole chain. Accordingly, in his writings on health care, Porter is a fan of specialized hospitals (as in cardiac surgery), not general ones. In his terms, general hospitals hardly have strategy: they tend to be neither differentiated nor cost leaders.

But might Porter be looking for strategy in the wrong place? General hospitals have a focus that must be the most common strategy on earth. I call it “local producer.”1  From the corner shoemaker to the national post office, they provide some undifferentiated service at regular prices in a geographic niche (a community, a country). In fact, I recall Peters being a great fan of just such an organization: a garbage collection firm in San Francisco. The CEO had a little garbage truck on his desk, and explained his success as being “…because I love garbage!”

Would you rather go to a hospital that does unique things, or ordinary things correctly? That, of course, depends on whether you have an ordinary problem, like appendicitis, or a complicated one, like a special heart ailment. Given the time and the money, I imagine that both Porter and Peters would not hesitate to fly to a specialized hospital for the latter treatment, whereas both might go to a local general hospital for the former, especially if it is urgent. Their choice would be made, in one case, on the basis of strategy, in the other, on the basis of location. But not only that: the quality of the service would also be uppermost in their minds.

Accordingly, to be truly effective, a Porterian organization has to be Peterian: it has to have a great strategy with wonderful execution. True, some organizations can get away with being more Porterian than Peterian—if their market position is really good. When I shopped at IKEA years ago, they were notorious for running out of stock. (Someone in the company once told me that it was because the founder hated planning!) But in other respects—design, layout, meatballs and more—IKEA executed brilliantly. So I went back.2  The problem with this, however, is that enticed customers can tire of going home disappointed.

A truly effective Peterian organization, however, need not be Porterian. Excellent execution can be enough. I imagine that both these guys might eschew a differentiated garbage collection company in their community, maybe even a cost leader, for one that is clean and reliable. Thus, in this battle that I have concocted of these two titans, while together both win, apart I believe that Peterian effectiveness usually wins. Who needs an effective strategy effected ineffectively? I used to seek out restaurants that were truly novel, until I realized that many of them failed to blend their fancy ingredients. (That is called synthesis, beyond analysis.) Now I celebrate restaurants that do classic dishes, and not just novel ones, splendidly.

Porter does include customer service as a form of differentiation. Isn’t this Peterian? Not quite. For Porter, this is a strategic choice—calculated—perhaps to offer more extensive service, aside from  more attentive service. For Peters, service is not so much a calculated choice as a driven imperative: a philosophy of doing business, a way of life, done with soul. A management fixated on strategy—the grand and the glorious, from the top—can lose sight of what is happening on the ground. Don’t we all know companies with great strategies to which we shall never return?

Too much calculation can get in the way of managing with soul.  On the desks of people who manage like this, you are more likely to find a financial report than a garbage truck. What they love is Shareholder Value. But surely we have enough cold love in our economies. So please: a little more attention to Peterianism, with or without Porterianism.

© Henry Mintzberg 2018. Coming in the new year, a collection of my TWOGs entitled Bedtime Stories for Managers (Berrett-Koehler).

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1See my book Managing the Myths of Health Care (2015) on strategy with regard to hospitals (pages 173-179).

2One such IKEA experience of mine is described in “Opening up Decision Making: The View from the Black Stool” (with Ann Langley, Pat Pitcher, Elizabeth Posada, and Jan Saint-Macary) Organization Science (May-June 1995).

Nothing is rotten in the state of Denmark

17 May 2018

I am sorry to correct Shakespeare, but nothing is rotten in the state of Denmark. I should know—I just spent a few days there. True, I didn’t get into any of the deep, dark Danish secrets, the way Shakespeare did. But I did have enough exposure to be charmed by the Danish differences.

Denmark has its act together. In today’s world, that’s different!

The first thing you see, as you line up at border control, is a sign that says “Find your passport”, then another that adds “Open passport on photograph page”, followed by a third that states “Hand over passport like this.” Charming… and telling. You’re not even in the country yet, and the stage is set: do your bit of personal effort for the collective good.

I am sorry to correct Shakespeare, but nothing is rotten in the state of Denmark. I should know—I just spent a few days there. True, I didn’t get into any of the deep, dark Danish secrets, the way Shakespeare did. But I did have enough exposure to be charmed by the Danish differences.

Denmark has its act together. In today’s world, that’s different!

The first thing you see, as you line up at border control, is a sign that says “Find your passport”, then another that adds “Open passport on photograph page”, followed by a third that states “Hand over passport like this.” Charming… and telling. You’re not even in the country yet, and the stage is set: do your bit of personal effort for the collective good.

Into Copenhagen you go, to find out that the prices are outrageous. That’s because the income disparities are not outrageous. I read somewhere that McDonald workers here earn about $25 an hour (they are unionized, like 70% of the Danish workforce), so they live middle class lives. Hence a Big Mac costs about a buck more than in the U.S. Is this too much to pay for inclusive democracy, let alone social harmony?

You take a taxi and hand your credit card to the driver, who declares “no tip” as he enters the amount on the meter. No subordination here. No Uber either. Instead, bicycles, galore. The Danes discovered the obvious—that what is destroying almost every city on earth is more roads to accommodate more cars that attract more cars which require more roads. Instead of going with this flow, the Danes reversed it and brought back the bikes, favoring them in the city as well as installing paths for them in the countryside. In the capital, bikes can ride on some subway cars and buses, and parking for them is plentiful in the center. Hence 60% of Copenhagen commuters now go by bike, 46,000 of them daily across one bike bridge alone. The guy who designed that bridge says that Copenhagen has the most beautiful rush hour in the world!

If you rent a kayak in the harbor for an hour, you pay nothing if you bring back a bucket of trash. Imagine that: imagination! In the hotel where I stayed, the carpet in the elevator tells you which way to go to your room. (Don’t we all stare down anyway?) More imagination. And then, in your room, you find a basket balanced across the three sectors of recycling.

More soul too. We visit a war memorial for fallen Danish soldiers. It’s a subtle, simple place.  The names of just over 100 soldiers are inscribed, and so are the 47 countries where they fell. Turns out this is to commemorate peacekeepers. How many countries have a memorial dedicated to the soldiers who fell for peace?

Had I stayed a few more days, I’m sure I would have found something rotten in the state of Denmark. (Good thing I didn’t, for the sake of this title.) Maybe I would have found garbage that was rotten in the state of Denmark, or at least rotting. But then again, in Copenhagen they built a big incinerator to burn it—and, being Danish, they designed it with a long slopping roof, using some of the energy generated from it to make snow for the skiers of this flat country. Charming, so charming.

In polls, the Danes come out as the happiest people on earth. Is this why they get their act together? Or is it because they have their act together? Yes.

Helping all this along, the Danes keep the financial sharks at bay, so to speak: most of the major Danish corporations, such as Carlsberg, LEGO, and Novo Nordisk, are controlled by foundations. One figure put the number of such Danish companies at over 1300, with the publicly-traded ones comprising about two-thirds of the total market capitalization of the Copenhagen Stock Exchange.1 This can help them to do better for all, instead of grabbing more for the few. In 2015, the Harvard Business Review named the CEO of Novo Nordisk the best-performing CEO in the world… and he was one of the lowest paid among the top candidates! Does he suffer? Maybe he hides a Maserati in his garage while cycling to work, thus helping to keep the country in balance.

I have written much in these TWOGs about balance across the public, private, and plural sectors of society. On the roads of Denmark, you have this balance exemplified: the community pluralism of the bikes, the private individualism of the cars, and the public infrastructure of the state, all working together. A true PPPP—public, private, plural partnership. These little islands are leading the world, just as they have been in the use of renewable energy.2

Something is rotten in the state of the world. If the Danes can get their act together, how about the rest of us?

© Henry Mintzberg 2018. My book Rebalancing Society was unintentionally written about the state of Denmark.

1Steen Thomsen “Industrial Foundations in the Danish Economy”, (Center for Corporate Governance, Copenhagen Business School, 19 February 2013)

2See our article “Worldly Strategy for the Global Climate”,  forthcoming in the Stanford Social Innovation Review in September.