Why is it that companies make bad decisions?

why do companies make bad decisions
Originally Published in Fair Value

In posing that question, I’m not referring to those infamous bad calls like Decca Record’s rejection of The Beatles or Blockbuster’s rebuff of a joint venture with Netflix. These are human mistakes— and with the benefit of hindsight, we can, all of us, believe we’d have made a smarter choice.

Rather, what interests me is why, given all the checks and balances, so many companies appear to make carefully thought-through decisions that actively harm the interests of their stakeholders.

A Harvard Business Report estimated that up to 90 percent of all mergers and acquisitions fail; similar claims can be made for internal transformation projects, especially in the IT and digital sphere. Whatever way you look at the problem, it seems that despite access to the smartest minds, sophisticated forecasting tools, and due diligence warnings, business leaders continue to get it wrong.

Observation has taught me there’s no single explanation. But after twenty years of corporate decision-making and with the scars to prove it. I’ve at least become attentive to some of the warning signs.

What follows are, therefore, my insights from experience. Interpret them as you wish, for every situation will be different, which leads nicely to my first observation, which gets straight to the root of the problem.


The unfortunate reality is that many strategic decisions are not as binary as whether or not to award a recording contract. Rather, they are multifaceted, involving forecasts of markets, competitors, savings, and synergies. And what’s more, many of the situations are particular to circumstance, so references are seldom available or even helpful if they were.

In these sorts of complex situations, we all and organizations are no different; they resort to simplified solutions that allow for a quicker way through the maze. Academics call these heuristics; we know them as rules of thumb, best estimates, benchmarking, and the like.

The trouble with heuristics is that although they are, to some extent, inevitable, we risk addressing a simpler problem than the one we face worse; our biases and preferences creep into the proposed solution to issues that have been framed for our convenience rather than the reality of the situation.

One antidote so far as any is effective, is to be extremely careful when simplifying or estimating significant variables. Any benchmarks we choose, and assumptions we make must also be modeled over a wide range of outcomes. The greatest danger of heuristics is actually a regression to the mean, where risks and opportunities are smoothed into a safe bet, which in the event, turns out to be anything but.


Linked to our tendency to simplify is a pressure to act fueled by a deeply ingrained corporate mindset that regards not doing so as a missed opportunity or cultural failing. Organizations increasingly demand that their leaders move at pace, and while this has its benefits, it can also lead to premature decisions that are ahead of the curve. 

In transformational projects, the term bleeding edge refers to the impact of decisions-typically those involving the early adoption of technology-which lead to unexpected costs and consequences that in turn, harm rather than enhance competitiveness. The underlying assumption is that the supposed “first-mover advantage” inevitably comes with significantly greater risks. In almost any sizable market, the lesson of case study after case study is that a little more patience would often have led to a better outcome.

To some extent, this is as much an institutional as an individual problem. I often sense that companies weigh the regret risk of missed opportunities more heavily than they do the years of successful delivery. Investors—like sports fans-are both impatient for success and quick to point out the triumphs of others. What they are less good at doing is recognizing the potential for pitfalls and giving due regard to the judgment of those who avoid them.

There is no cure-all solution to impulsiveness, but it is good practice to ensure decisions can be made over sensible timeframes, to resist the pressure to lead on every front, and to establish agreed expectations for investment and return over time–and then stick to them!

Reward Versus Risk

At the heart of the type of decisions we’re discussing is the assessment of risk versus reward. Of course, no opportunity of any consequence is a certainty- investors, colleagues, and customers all understand that. It’s also fair to say that most successful executives need to be less risk-averse than, say, librarians. But while that’s a good thing, my experience is that risk and reward assessments are often made in a manner that gives undue weight to one over the other. Think for a moment of all those inspirational quotes you’ve seen at management conferences:

 “Whatever you dream, begin it for boldness has power and magic!” – Goethe. 

“Security is mostly a superstition…” – Hellen Keller)

“Do not fear mistakes; there are none!” – Miles Davis 

Extracts like these can be fine as a means to inspire a sales team or encourage creativity, but their underlying message can in my experience, often contribute to a mindset that lionizes risk-taking. I’m not suggesting that the potted wisdom of Miles Davis is taken too literally by senior executives. But when it comes to major strategic decisions, the notion that boldness equates to virtue remains a powerful force and a significant hindrance to a full and objective assessment of downside consequences.

The Dream of Reason

We should also recognize that objectivity is more of an attitude than a destination we ever arrive at. The belief that we can accurately predict the future through analysis and situational modeling alone has been the downfall of many an economist-or for that matter, a politician.

In practice, we live in a less than rational, often emotional, and certainly disruptive world. Companies and organizations can only partially predict the response of others, or indeed, the impact of change on their people and its consequent effect on many other factors, which is why softer considerations are vital.

Culture and Communications

In analyzing harmful decisions, the diagnosis often points less to the actions we have taken than the way we went about them.

For example, bringing together two organizations might seem straightforward on paper, but as with personal relationships, there’s more to a good match than aligning compatible skills and qualities. Too many mergers are predicated on the assumption that the mores of one party can be imposed on the other-giving scant regard to the importance of culture, communication, and values as drivers of performance.

Successful ventures pay attention to these softer qualities, avoiding the imposition of changes that are diametrically opposed to the past or rewarding individuals with extended remits for which they have little understanding.

The same cultural empathy should apply to our search for synergies, sales growth, or even colleague engagement—we should not assume that crashing together, or worse, imposing one style on the other, will bring success.

Think Borg and McEnroe as exceptional tennis players, but at the height of their careers, not the most compatible doubles pairing.

Imbalance of Stakeholders

This understanding of partnership is never more important than in the balance of stakeholder interests. All commercial organizations have at least three key constituencies: their investors, employees, and customers. And while all of these will want the company to prosper, they each have subtly different needs and emphases.

Successful organizations make decisions in a way that ensures all stakeholders take a fair share of the risks and rewards. This means investors accept there are other calls on cash than paying dividends; employees understand that job security comes from embracing change, and customers have realistic expectations on price and value despite the leverage they may have.

Conversely, if the interests of one stakeholder group begin to dominate, it can be a green light to harmful decision-making. Over the lifecycle of a business, there will, of course, be times of different emphasis on the whole; sustainable decisions are founded on meeting the needs of each constituency while avoiding the ascendancy of any.

And Finally… 

I could go on with a host of other reasons…But I’m conscious there’s a limit to the value of observations from experience, and particularly aware that hindsight makes prophets of us all—or, in my case, the best Monday morning quarterback never to grace the field.

Perhaps the most important thing in seeking to understand why so many companies make harmful choices is to recognize it’s not the corporate entity that makes those decisions at all—it is the people!

And, as human beings, we are all equally blessed and susceptible to the paradoxical mix of talents, frailties, and hubris that drive our exceptional achievements and greatest mistakes.

Navigating the Middle Ground

For the last few weeks, we’ve been bombarded with advice on how to make the best use of this period of lockdown. The internet is awash with potted wisdom on how to be more organized, distracted, or upgraded, while my inbox has personalized suggestions ranging from cleaning up the sock drawer to learning a new language or getting that old guitar down from the attic. Meanwhile, events unfold beyond our control in a way that adds to a sense of disempowerment and ennui.

Business Preparation Strategies 

Much the same is true for businesses. Countless articles offer pointers on planning for a post-Covid future or the best online training tools… In the equivalent of the suggestions to tidy our wardrobes, enterprises are urged to catch up on admin or, at the other extreme, prepare strategies to win market share at the expense of their less diligent competitors. For all that the counsel may be well-meaning, it generally misses the mark.

Businesses Always Have Long To-Do Lists

The reason for this will be obvious to anyone who juggles the daily demands of business or, for that matter, family life. While nobody suggests it’s not a virtue to clear our emails or catch up on personal development, the reality is that most organizations get by perfectly well with a long to-do list. And as for developing radical new strategies, it’s a brave, arguably foolhardy enterprise that places any serious bets on a future that’s beyond its knowing.As human beings, we experience the world and perform at our best when navigating the middle ground. You may like me captivated by those popular science documentaries on astronomy or quantum physics, but for all of us, the extremes of time and space are still impossible to fully comprehend. What’s more, even if we could, the knowledge would make little difference to our everyday lives that we are hurtling through space at a million miles an hour won’t save you from a speeding fine, and if you jump that red light, good luck in arguing that color is only a matter of perception!

Daily Navigating Business Decisions

Something similar is equally true of commerce. The day-to-day reality is that success comes less from having perfectly granular policies or all-embracing strategies than it does from the thousands of judgments that are the warp and weft of our trading relationships. It’s this daily grind and the grit in the oyster that comes with it that we understand best; it’s actually what motivates us, what enables us to feel empowered, and what most allows us to shine.

Practical Reasoning

Our need, then, in exiting this crisis, will overwhelmingly be for pragmatism rather than principle, and certainly not dogma. This doesn’t mean we should abandon all structures or strategic vision, but it does suggest we should focus our minds on the underlying purpose of the choices we will need to make. In this sense, the return to a new normal will require a commercial equivalent of the “practical reasoning” that’s advocated by thinkers such as Peter Singer or the late Mary Midgely. Malcolm Gladwell’s recent podcasts on the pliability of Jesuit thinking and its resolution of issues in the context of the world as we actually live it are instructive guides, too.

Keep Partnerships Strong

In re-establishing our trading partnerships, the call to exercise discretion will be greater than ever; cash flow, refunds, sales targets, or staff bonuses, pragmatic solutions, and reciprocal understanding will be the currency of success. Black Swan events term coined by Nassim Nicholas Taleb for major, unforeseen situations we are unprepared for inevitably leave us with a world that’s changed beyond previous experience. But this pandemic is not an extinction event, and it is only by working through the aftershock-instance by instance, customer by customer-that we will find and shape the opportunities that determine our future.

The reason the current lockdown is so difficult for many of us and for our organizations to bear is that despite all the well-meaning advice, no matter how tidy our socks or how ambitious our vision is, only when this quarantine is lifted can we be truly productive again. The people and the enterprises that succeed will not be those with empty inboxes or even the best-laid plans–they will be those who make the smartest calls in the mucky middle ground of decision-making that is the stuff of business as we know it.

Exploring the Tenets of Servant Leadership Interview

jozef opdeweegh in sitting in a black suit pumping his first

Overview: During a conversation with Jos Opdeweegh, a distinguished CEO based in Miami, the concept of Servant Leadership came to the forefront as a paradigm-shifting approach to organizational management. Opdeweegh provided illuminating insights into the limitations inherent in the conventional top-down leadership model, where decision-making authority is confined to a select cadre of executives, often resulting in the marginalization of talented individuals and their perspectives.

Shortcomings of the Conventional Leadership Paradigm

The deficiencies of the traditional leadership framework were glaringly evident, as it accentuated autocratic leadership tendencies and stifled the culture of creativity and open exchange of ideas within the organizational structure. Opdeweegh emphasized that instead of fostering a conducive environment for nurturing high-potential individuals, the traditional approach frequently perpetuated a culture of mediocrity, bolstered by inflexible performance assessment frameworks that inadvertently alienated exceptional talents.

Deconstructing Inefficient Decision-Making within Traditional Management

The contrast between the customary model and the ethos of Servant Leadership gained heightened clarity when examining decision-making processes. While the former relied on a limited echelon of leaders to shape pivotal determinations, Servant Leadership champions a more dynamic, customer-centric decision-making philosophy. Opdeweegh underscored the significance of entrusting decision-making authority to those in proximity to challenges and opportunities, given their comprehensive understanding of the intricacies and their expertise in the subject matter.

Unveiling the Core Tenets of Servant Leadership

In the course of our dialogue, Opdeweegh unveiled the foundational principles that underpin Servant Leadership: an unwavering commitment to fostering the growth and success of individuals within the organization, with a paramount focus on customers, followed closely by colleagues. This approach nurtures a sense of collective responsibility, wherein each member of the organization is viewed as an ambassador, collectively contributing to the shared objective of achieving success.

Embracing Fallibility and Cultivating Empowerment

One of the salient points of discussion revolved around the importance of acknowledging mistakes and their intrinsic connection to empowerment. Opdeweegh stressed that while making errors is inevitable, they hold value when acknowledged and leveraged as learning opportunities. The Servant Leadership framework advocates for a culture of continuous improvement and accountability, empowering individuals to take ownership of their actions and choices.

Concluding Reflections: Embracing the Philosophy of Servant Leadership

The discourse with Jos Opdeweegh yielded profound insights into the merits of adopting Servant Leadership as an all-encompassing, customer-centric, and adaptable approach to steering organizational trajectories. By challenging the established norms of leadership, enterprises have the potential to cultivate an environment that not only retains exceptional talents but also empowers individuals to flourish and make substantial contributions. Servant Leadership, characterized by its emphasis on collaboration, inclusivity, and the transformative power of learning from mistakes, stands poised to shape a more promising future for businesses and their workforce alike.

Models of Creativity: Analysis or Creativity-Fellows or Foes?

Originally Published in Fair Value

President Ronald Reagan, Speaking after talks with Soviet leader Mikhail Gorbachev at the Reykjavik summit in 1986, infamously said that what was most needed between the superpowers was “Trust… [adding, after a dramatic pause]… but verify!” 

Trust but Verify

The apparent contradiction made headlines around the world, helping to foster an approach that led to the Strategic Arms Reduction Treaty and the removal of around 80 percent of the nuclear warheads in existence.This phrase is actually not Reagan’s at all, but an old Russian proverb that serves to illustrate that a counterintuitive tension is often the most effective way to break down those barriers that impede step-change progress. Its wisdom is now commonplace, aided by the growth of technology that gives confidence to more attitudes: “trust trading,” for example, is a standard practice among progressive retail partners; customs checks are made on random samples; we trust our people but verify their output…

How Trust but Verify Applies to Business

All of this is intended as a prompt to reflect on how we might apply similar thinking to our organizations. What, as business leaders, can we do to foster the relationships and environment that supports the creative progress we need? And how do we balance the need for innovation with the equally necessary reassurance that our actions are founded on more than a leap of faith?Fresh thinking is essential to progress. Without it, we stagnate, our horizons narrow, and our competitors overtake us. At a macro level, the impetus for change is essential for human flourishing-it’s no coincidence that when innovation dries up or is curtailed by dogma, we talk of “Dark Ages” or “closed societies.” History is littered with examples of the damage this causes, just as it also confirms the benefits of freethinking and the open society.We all know this, and yet the reality is that when it comes to our own circumstances, creative leaps can be scary and uncertain, evoking what the historian Robert Hughes brilliantly described as “the shock of the new.” His interest lay in the arts, but the same sequence of “disruption, resistance, and progress” is seen in the scientific and industrial revolutions that preceded our modern era. And today, the pattern continues, most obviously in the digital sphere, which has supercharged the speed and reach-but also the risks-of creative innovation.It is a mistake, however, to think of creativity purely in terms of inspirational genius. As James Dyson, the billionaire UK engineer and inventor, has pointed out-practical progress is seldom made in the manner of Archimedes in his bath or Isaac Newton under the apple tree. Rather, it’s an iterative journey that sharpens our notions and intuition through a process of trial, error, and adjustment. Dyson has filed over 4,000 patent applications, and yet he claims none of his ideas were truly unique. What? Made the difference is his commitment to the hard hours of testing and adjustment that irons out the flaws and solves problems in a piecemeal way.Dyson also argues that innovation flourishes most in an atmosphere of creative tension, where ideas are robustly and competitively challenged, often in partnerships or teams, in pursuit of a common goal. We see this pattern time and again in art and science: Picasso andBraque, Darwin and Wallace, Lennon and McCartney… The relevance for business leaders is that innovation works best when it’s integral to, and not isolated from, the day-to-day realities of the organization. Indeed, research has shown that transformation and development teams work most effectively and come up with the most productive ideas-when subject to the same rigorous critique and analysis as our everyday processes.

Ground Break Creativity Is Rare

Ground-breaking creativity is also a rare event-were it is not; then change would simply overwhelm us. The reality is that most great ideas take the form of an inspirational leap which is then refined through marginal gains that make the bigger difference. As an apt illustration, when Dick Fosbury revolutionized the high jump at the 1968 Mexico Olympics, he won by a mere 2cm, clearing 2.24m for gold-today, after universal adoption of and, critically, refinement to his groundbreaking technique-the world record stands at 2.45m.

Creativity Takes Work

These sorts of gains come not from pondering on the stars but from analyzing what works best, finding ways to improve on the idea, and being open to our failures. The writer Matthew Syed explores this idea in his deeply persuasive and accessible book, Black Box Thinking. Syed cites the aviation industry as the ultimate example of progressively learning from both failure and innovation-its embrace of objective analysis taking air travel from what was once the riskiest to what is currently the safest form of mass transportation.

Analysis Helps Creativity

The analysis is, therefore, the bedfellow, and not the bugaboo, of practical creativity. For by measuring and learning, not only do we sort the wheat from the chaff, we also help the good become great or, more often, just that little bit better. Malcolm Gladwell has a wonderful podcast that explores this process through the evolution of Leonard Cohen’s song, “Hallelujah.” The piece took years to gestate, slowly improving its form and lyrics to become one of the most recognized classics in modern songwriting.

Little Bit Better

The operative phrase in the paragraph above is a “little bit better.” That’s something different from reinvention, and yet ironically, it requires a similar mindset. Though on reflection, maybe it’s not ironic at all for now, I think about it, the most analytic people I’ve worked with are among the best innovators -and almost all creatives I know are deeply analytic in their approach.Which brings me back to my opening example. For Ronald Reagan to make the breakthrough with Russia, he needed a creative leap of the type scientist Edward de Bono described when he wrote about shifting perspectives by throwing off old patterns. But to make it work for the gains to truly stick-he needed something more, something that the great American poet, Henry Wadsworth Longfellow, might have taught him- “The heights by great men reached and kept were not attained by sudden flight, but they, while their companions slept, were toiling upward in the night.”

Relative values – and the Barbenheimer phenomenon.

You’d have to have been in a cultural wilderness this last month not to be aware that the two most talked about films of this summer are almost diametrically opposed in their style and substance. That said, the simultaneous release of Barbie and Oppenheimer is arguably a marketing masterstroke, generating thousands of column inches and an equivalent commentary on social media. Interestingly, the critical consensus is that both movies have their merits, with an appreciation of their differing qualities that are encapsulated by the use of the term ‘Barbenheimer’ to describe seeing them both side by side.

This mutual appreciation of two very different offerings has neatly coincided with my own exploration – indeed, growing fascination – with how we create the best conditions for the growth of happiness and well-being. Or, to be more precise, my awareness that despite the criticality of these goals to the quality of our lives, there are no clear and obvious means to measure and calibrate them other than through internal experience. 

Let me try to explain.

For most of my adult life, and certainly my business career, I’ve held in tension two convictions that have guided my actions and my decisions. Indeed, the strain between them and how we might embrace it is the underlying theme of my book of essays, Fair Value – reflections on good business.

Numbers Don’t Lie

The first assertion is that ‘numbers don’t lie.’ This refers to the need for financial acumen, the ability to correlate and interpret data, and an acknowledgment that we have a duty as leaders to respond to reality as it is rather than how we might wish it to be.  

Values are Critical to Performance

The second is that values are critical to performance.’ Indeed, I’d go further and say that in business terms, values and purpose are today more important than the pursuit of pure profit or return on capital or whatever other fiscal measure we might choose to highlight.  

Does either help with Internal Feelings?

Neither of these convictions, however, helps us to accurately measure those goals which arguably matter most of all, such as happiness and contentment, or their counterparts, sorrow, and anxiety.  Almost by definition, these higher-level concepts are abstractions, resisting the specific quantification that a trained statistician so craves. 
Take, for example, my love of PG Woodhouse, an author whose wit and humor have given me (and millions of others) immense pleasure, without his writing ever being highbrow or having claim to the literary genius of, say, Shakespeare or Steinbeck — both of whom I enjoy too.  Is my pleasure from any one of these authors better or more important than the others, and if so, how do we measure that difference?

We All have Preferences 

All of us will have experienced something similar to the example above, for part of being human is the ability to hold preferences, be they for music, architecture, landscapes, foods, or humor…   Just as we have different desires for less tangible satisfactions such as security, contentment, and personal growth.  We know as well that over time, and in changing circumstances, these wishes will evolve and vary, which explains why one day we might choose to watch Oppenheimer and the next take as much pleasure (albeit in different ways) from Barbie.

My key interest here is less philosophic than it is practical. 

Moral Relativism vs Absolutism

In the 2,500 years since Plato, our best minds haven’t found a watertight alternative to what’s known as the problem of relativism. This perhaps explains why the questions I’ve been wrestling with these last few months don’t neatly fit into one article. But despite our lack of objective measurements, the reality is that most of us don’t truly live our lives in a way that assumes all pleasures to be equal, just as we don’t think there’s no difference in mortality between acts of cruelty and kindness.

Business and Moral Relativism

At its core, what concerns me is the real-world problem of how we best manage our businesses and organizations (as well as our family lives and careers) to align with what we might summarize as our ‘happiness and well-being.’  Or, more specifically, how might better promote the variety of perspectives and preferences that make us who we are and yet are so problematic to rank and measure in any objective way? 

And finally, there is the question that interests me the most.

As businesses and organizations, can we shift our emphasis towards a greater personal fulfillment and yet stay true to the twin convictions of ‘facing reality’ and ‘values inspired performance,’ which remain key to tangible success?  In other words, can we find a Barbenheimer solution that embraces a greater range of aspirations, existing side by side and making contributions that may not be equal, but are collectively beneficial?  
Cracking that conundrum, it seems to me, would be a real breakthrough for the good.

Giving to Ourselves and Others

Giving to Ourselves and to Others

Originally Published in Fair Value

The face looking at me from the newspaper is perhaps six years old. It’s a young boy in a makeshift tent, mud on his cheeks, hands clasped as if in prayer. The caption tells me he’s lost his home and that winter may take his life. I think it’s his eyes that move me most, speaking of a horror that no child should bear. My palms feel sticky as I pick up the phone, text HELP, and make a donation to the Syrian refugee appeal.

Fundraisers Happen Frequently

Fundraisers like these have become part of the fabric of our lives—they are in our magazines, on TV, and even on posters on the subway. So commonplace are these images that we learn to filter them out. In the newspaper I was reading, there were similar appeals for cancer research, wildlife conservation, homelessness, and victims of domestic abuse. At times, it seems there’s no end to the call on our goodwill. And that should not be surprising, for the urge to alleviate suffering is surely part of our humanity. Indeed, to have no sympathy for the pain of others is a mark of a psychopath. And yet we cannot credibly respond to every cry for help. In the United States, there are estimated to be 1.5 million registered nonprofit organizations, and in the UK, around a third of that number, with similar proliferation of social ventures across the developed world.

Nonprofit organizations as the Third Sector

This “third sector,” as it’s sometimes called, has become a significant part of our social infrastructure and, in many ways, it’s as competitive for our attention as the mainstream economy. We choose our causes, and from the natural disorder of what is effectively a market for our hearts, there emerges a growing wealth of charity in the broadest and most generous sense of that term. Or so the theory goes. The notion of charity as the desire to eliminate suffering is sometimes contrasted with a broader vision of philanthropy and the quest to find lasting solutions for the root causes of our problems. We tend to think of philanthropists as a rich few, often historical figures with a social conscience. In liberal democracies, much of their role is now given over to the state, with nonprofits filling the gaps and addressing more immediate and particular needs.

Government vs. Nonprofit: Charity Source

To my mind, the distinction is somewhat academic. All of us are aware that the problems in Syria or Somalia-or even our neighborhood-are the result of forces that ought to be fixed. But we also know that hungry bellies need feeding, and traumatized children will not survive winter in a tent. Those caught in the crosswinds of circumstance are deserving of both our immediate attention and our efforts to make a greater and longer-lasting change. And, mostly, the two approaches go hand in hand. Very few larger charities are focused only on the here and now, and yet, understandably, they will seek to leverage our more visceral responses to raise funds and build awareness-just as they will lobby the rich and famous, be they individuals, governments, or corporations, for larger donations that offer the promise (and reflected aura) of a legacy difference. But for many of us, all of this can seem somewhat removed, which is surely why so many smaller organizations still thrive in the face of what’s become a quasi-corporate competition for our sympathies. A remark often misattributed to Winston Churchill is, “We make a living by what we get, but make a life by what we give.”

Donations and Volunteering are Different 

It nonetheless contains the truth which lies behind our desire not only to donate cash, which-good though it is-can feel like conscience appeasement, but to volunteer and campaign for causes, which-although they may seem peripheral to others-are closest to our hearts. I recall a colleague complaining to me, not unkindly but in frustration, about the fundraisers at his local school. They were so inefficient, he said; hours spent baking cakes and running raffles, when frankly if everyone who cared had simply donated twenty dollars, they’d have raised twice as much in half the time. He was probably right, but of course, he missed the point of the exercise. We get our children involved in community work as much for the lessons it teaches them as the difference they can tangibly make.

Volunteering Helps a Community

Of course, the definition of community is wider now than ever. For some, it remains rooted in their neighborhood, their church, or school. For others, that sense of belonging might come from their workplace, their hobbies, or their ethnicity. This is a good thing, for the diversity of interests leads ultimately to richer lives for us all and, I would argue, a voluntary sector that better reflects our needs and concerns than any interventionist design could hope to do. This is why, wearing my corporate hat for a moment, we should resist calls for overregulation of the nonprofit sector.Instead, we should encourage involvement and giving of different sorts-awarding tax breaks and stipends to those who volunteer, for example—and promoting new models of contribution that draw on our collective efforts as well as our cash. Throughout my career, I’ve had the privilege to work with many gifted individuals and have seen the progress that their flair makes possible. It’s common for the leaders of many different faiths to ask their followers to gift a percentage of their income but consider the impact if all of us offered a percentage of our talents. For some, that might mean baking cakes-and it’s good that they do—but for an academic say, it could be directing a percentage of their research at social issues, or for executives like myself, advising on strategies and governance.

Volunteering Builds Community 

In the US and the UK, nonprofits are typically seen as a substitute for state funding, but there are other approaches that we can learn from. I’ve already mentioned the roles of the churches and faiths, which are prominent in many cultures. Across much of mainland Europe, there is often a more social-corporate model, with close cooperation and even contracting between the state and charities. In Scandinavia and the Netherlands, where high taxes and high-quality services are the norm, the emphasis is on volunteering and participation.

Modern Philanthropy

The pool of our talent is limitless, and it is here, I believe, where the potential for modern philanthropy lies. Lasting social solutions are seldom designed from above; rather, they evolve through an iterative process of progress and refinement underpinned by care for the outcome. This asks more of us than the adverts and appeals that surround us and requires leaders to step forward and encourage others to do the same. But here’s the thing: it pays us back in spades. Short of utopia, there will always be a role for larger organizations, and thank goodness they are there. But to have a wider, more caring society, we need to bridge the gap between ourselves and those in need with something more tangible than simply texting HELP.

The building of Cathedrals: What it can teach us

There will be precious few children in Europe who have not visited a cathedral by the age of ten. From Notre Dame to Naples, there are over 600 across the continent, tangible reminders of national histories, the indiscriminate power of the church, and the ability of architecture to lift our spirits.

As a young boy, I was awestruck by the efforts that must have gone into constructing these monuments.  At a time when most people couldn’t read, when harvest yields meant life or death when medicine was little more than superstition… here were our forefathers, building these intricate structures with the most basic of tools.  How did they do it? How did they know it would all line up and not fall down? 

Cathedrals began my fascination with mathematics

Medieval masons didn’t use abstract equations, nor did they work to the detailed plans we would expect today. What they did have, though, was a deep understanding of practical geometry.  Using simple tools such as set squares, dividers, and plumb lines, they could calculate the forces involved in complex features like vaulted roofs; column supports, and flying buttresses. Indeed, so powerful were the ratios they discovered that even God was sometimes depicted as a geometer in Christian iconography. 

Decades on from my childhood visits, I remain astonished at the skills of these craftsmen and can’t help but think that their down-to-earth application of mathematics has something to teach us today. It is frankly a shameful disrespect to their legacy that despite centuries of progress, we struggle to embed basic numeracy even in college graduates. Here in the US only one-third of the population rates as having intermediate math skills, and fewer than 10% are classed as numerically proficient. 

Mathematics Matters

And this observation matters. Not so much for the construction of buildings or the development of integrated systems – we don’t need everyone to have those skills. But rather, for a shared understanding of issues that affect us all: for sound finances and planning, for decisions that determine the future of enterprises; for policies that lay the foundations of our public services and healthcare; for the fight against pseudo-science and the deplorable army of social media charlatans; for the understanding of basic concepts of statistics.

Data can be Misrepresented

Today, there are whole industries that thrive on a deliberately misleading presentation of data, promoting all manner of quackery, from transformative beauty products to miracle diets and sure-fire financial investments. They are aided by negligent or insufficiently critical media more interested in clickbait headlines than robust analysis. The standard of financial journalism, for example, is almost criminally poor. But all of this pales into insignificance compared to the politicians who would whip up hate and mindless populism on the back of spurious numbers presented as facts.

Regrettably, the challenge of improving numeracy is not confined to the socially disadvantaged. Over my career, I’ve worked with many brilliant and inspiring people. But I’ve also been in Board rooms with board members and colleagues who lacked the basic understanding of concepts that are necessary to interpret, correlate and extrapolate data. 
Granted, my academic training was in statistics and operations research, so no doubt I may be more alert and attentive to these shortcomings. And I should also be clear that good business is about more than mere numbers. Nonetheless, surely, we can, and we, in fact, must do a lot better.

Data and Mathematics are Fundamental to Understanding Problems

During the recent pandemic, we all became armchair epidemiologists, but how many of us truly understood what the data was actually telling us? I am not sure I did in every regard. Was it any surprise that manipulators and charlatans then exploited the gaps to influence opinions? Much the same is true of the climate change debate, of anti-vaccination crusaders, of immigration, taxation, and welfare, of government spending, and we can go on and on. It is an irony that as we move rapidly to a world that’s likely to be shaped by Artificial Intelligence, we need more than ever to have a greater understanding of the underlying basics. It is these that help to give us the analytical (and indeed often moral) compass we need when confronted with otherwise overwhelming information. 

On my recent visit to the UK, Prime Minister Rishi Sunak launched a campaign to improve mathematics teaching. Then followed an article in the London Times by one of its leading columnists who bravely admitted to having such poor numeracy skills that she struggled to calculate her change when shopping.  Her case is not atypical, nor is her ability to improve (which she did) through better instruction and practical application. I hope the UK campaign succeeds and that, more broadly, governments across the democratic nations are able to address the regression of numerical literacy that’s ultimately of our own making and a big part of the reason for the populist demagoguery and the resulting democratic deficit. 
Returning to the cathedrals I began with, it’s often said that those who built them were laboring for future generations. I wonder, though, what those master craftsmen would make of our world today.  I’m sure they’d be as in awe of us as we are of them, recognizing that so much has changed for the better. But I’m certain too that they would be astonished by our casual loss of what was once a bedrock of everyday knowledge. And that if they set their dividers and squares to many of our analytical foundations, they would find them in need of some urgent underpinning. 

The Fair Value Equation

Originally Published in Fair Value

Not Far From my London house is the Charles Dickens Museum, a three-story Georgian terrace where the author chronicled the life and poverty of Victorian England. From here, it’s a short walk to many of his novels’ famous settings: Smithfield Market, the Old Curiosity Shop, and the now-repurposed workhouses that were once a commonplace feature of the city. 

We have come a long way in improving the social conditions that inspired novels like Oliver Twist. Indeed, it’s said that were it ever possible to return to those times, a modern-day visitor would be traumatized not only by the sights but by what they would smell! The sanitary conditions of London were so poor that for several summers in the 1850s, it was described as the Great Stink

Imagine for a moment what that must have been like-not in Dickens’s comfortable home but in the filth and hopelessness of the slums which surrounded it. Imagine, too, the bass note of fear that accompanied a life without healthcare, decent education, or fair access to the law where the refuge of last resort was the workhouse, a fate so dreadful that only the desperate ever entered. 

It’s sobering to think that these conditions existed at a time of relative peace and prosperity in what was then the most powerful nation on earth. 

Fairness and Value

That they were tolerated was not so much for want of resources but as a lack of empathy with those who suffered the consequences. Questions of fairness and value were regarded as matters of charity or evangelism rather than deriving from our fundamental rights or the duties of a compassionate state. The dominant social ethic of the time was framed by the idea of the deserving and underserving poor, a belief (from those with power and privilege) that we flourish or fail through our efforts and industry alone. 

Such views are now rightly seen as naive, but we are far from abandoning them. Indeed, since the dismantling of the USSR and the reinvention of China, the Western capitalist model of meritocratic enterprise has relegated more egalitarian alternatives to the fringes. And in many ways, that’s a good thing, for it’s evidentially true that industry and incentive reap both individual and collective rewards. 

Starting Points Matter

The difference today is that we understand the race of opportunity is far from fair-that; while our endeavors make a difference, our starting point has a significant bearing on the progress we are likely to make. This is why we have free and universal education, why we outlaw discrimination, why children are protected from poverty. Modern-day meritocracy recognizes that in a world where rewards are unequally spread, the competition for them should be as equitable as possible—at least, that’s the theory! 

In practice, we all know that inequality, and the burdens that come with it, is still rife. We know, too, that while there is no merit in being born into money, wealth and success follow hand-in-hand, just as surely as social mobility is the devil’s only job for those without privilege. The pursuit of what the philosopher John Rawles called “true equality of opportunity” remains a work in progress, albeit most developed nations have a positive trajectory. 

In sharing these thoughts, I’m deeply conscious that I have fared especially well in the lottery of life’s chances. I like to think that ambition and ability have played their part, but it’s impossible to deny the blessings I’ve had. Psychologists tell us that a significant determiner of our prospects can be something as simple as being read bedtime stories as a child—I came from a house full of books and a family that encouraged me to study; that alone is priceless. I also benefited from an enlightened system of social welfare that provided me with education, health care, and, ultimately, a choice of roads to travel that are a world away from the dead-ends of nineteenth-century London.

Collective Values Matter 

Today, I spend much of my time commuting between the US and Europe. Both are wonderful societies in their way-and we should largely rejoice in what they’ve achieved. But if there’s a single difference between my experience of people’s lives in these two economic powerhouses, it’s the prevalence of residual anxiety that is rooted in inadequate social provision for large numbers in American communities. The most common question my European friends ask me—invariably with a sense of incredulity—is why the US, the richest and most powerful nation on earth, is so reluctant to provide universal, free-to-access healthcare. 

Levels of Compassion Matter

It’s not my purpose or my place to delve too deeply into politics. The reference to health care is more a reporting of the transatlantic attitudinal differences than any polemic on my part. Rather, I’m reflecting on how our collective values have impacts that go so much deeper than our fiscal systems and the scope of the services our governments provide. I call this the fair value equation, measuring the worth of our society in terms not only of what it produces but also of the compassion it shows and the well-being that results. 

The business has much to teach us here. The reflection above might imply there is a conflict between the two goals, but in practice, we know the best companies have the most progressive policies, treat their people with care, and show concern for the environment . . . It’s no coincidence that there are few organizations of this size that operate today without a clear statement of values. 

And furthermore, it’s no surprise that those organizations which found their policies on “true equality of opportunity” have the highest levels of engagement. This isn’t because they pay higher wages, for the relationship between remuneration and employee commitment is weak. True engagement and the discretionary effort which follows comes from a combination of involvement, progression, fair and equitable treatment, and, most importantly of all, a commonly held belief that everyone is a fully valued member of the organization, regardless of their seniority. 

Societies should support their Citizenry

Returning to our governments, if, as societies, we provide less than is necessary for citizens to feel they have a fair stake in their communities, then we should expect engagement of a different sort. History shows us that the biggest threats to our democracies and freedom have come from those who feel excluded-in the despair which follows, it’s all too easy to be persuaded by simplistic solutions that play to our survival instincts. The roots of fascism, nationalism, and what today we call populism lie not in a rational assessment of our best interests but in the sense of hopelessness and the fear which comes with it. 

In Northern and Western Europe, the socio-political model is based (significantly more so than the US) on the provision of universal public services, underpinned by a wide-reaching safety net that, if not exactly eliminating, at least dulls that bass note of anxiety I spoke of earlier. Counter to nineteenth-century thinking; the result is not a loss of incentive or productivity from those at the bottom of the social ladder. Indeed, the countries with the most comprehensive welfare systems have the highest levels of intergenerational social mobility.

We’re in it Together

Meanwhile, the US, far from being the land of opportunity, has one of the poorest records in this regard any enlightened leadership doesn’t mean there are no hierarchies or that remuneration and reward should be equally spread. But it does mean we must recognize the pursuit of success is a joint endeavor and that we flourish most when we nurture the prospects of all. If-on the contrary-we, exclude sections of our workforce, deny them fair, or provide only insecure contracts-then we lose out opportunities on their full potential. In practice, then, the two sides of the fair value equation operate not in conflict but in concert. If our care lacks depth, then commitment will be shallow-but so too the opposite and therein lies our opportunity. 

Pursuing this alternative course can require a leap of faith—not least because there will always be some who seek to game the system. But I’d argue this is a small price to pay, for the alternative is not so much a race to the bottom as a burden that weighs us down as individuals and societies.

To lighten the load, we need surely to share it not as a penance but in the knowledge that unless we do so, gravity will win, and all of us are diminished as a consequence. 

We might be mindful too of the fates of Mr. and Mrs. Bumble, the workhouse-keepers in Oliver Twist. Their hearts were said to be impervious to tears; ‘waterproof’ is how Dickens’ described them. But as the story, and their pursuit of self-interest, unfolds, they “were gradually reduced to great indigence and misery, and finally became paupers in that very same workhouse in which they had once lorded it over others.” 

The Diversity Dividend

Throughout my career, I’ve worked with many executives who take pride in having an ‘open door’ policy. Their approach is founded on the idea that every employee should feel able – and indeed, be encouraged – to make suggestions on the policy and performance of the organization. It’s an excellent ethic and an important signal from those notionally at the top that the best insights often come from colleagues who are closest to the action. I try to keep my door open every day! 

Staffing for the Diversity Dividend isn’t Easy

But the idea that by living this policy, we are open to truly different perspectives can be misleading.  At its most basic, the diversity of opinions we receive rather depends on who comes through the door. If our organization is overwhelming peopled by white middle-class graduates, then it’s likely that the views expressed will converge around that particular cultural outlook. Similarly, as was typically the case early in my career, if the gender bias is predominantly male, then the feedback will have its equivalent limitations.  

The need to embrace difference is rightly higher than ever in our consciousness and increasingly enshrined in legislation and corporate governance.  A growing culture of meritocracy is helping too, driving social mobility not only in companies but in schools, universities, and recruitment processes.  The examples I mentioned above include race, social class, and gender, but diversity definitions also extend to age, sexual orientation, faith, disability, and even cognitive mindset.

Many Organizations Still Have Homogenous Thinking

This latter point is especially interesting because, from a pure performance perspective, it’s arguable that the key benefit of diversity is to challenge our most comfortable notions with constructive alternatives. A Board made up entirely of extrovert thinkers – regardless of their race, gender, or social class – is less rounded and adaptive than one that includes a compensating balance of more reflective mindsets. We have long understood that the most successful teams are built on a mix of mutually supportive skills, and yet too many organizations are still characterized by homogenous reasoning, even if roles and responsibilities are well-defined.

It seems to me that opening the ‘doors of our mind’ to thinking differently is perhaps the greatest diversity challenge.  Only entrenched bigots would today deny the moral force of, say, ethnic and gender equality; most of us go further and acknowledge the wider definitions and categories I referred to above.  But it is something slightly different – and indeed, especially difficult – to diversify our internal rationality and logic. If you doubt this, think for a moment about your attitude to personal risk and ask what it would take to change your mindset.

Diversity Dividend – There Are Legitimately Different Methods of Reasoning

Risk is not necessarily the best example, but it serves to illustrate that there are legitimately different methods of reasoning and that true wisdom comes only after listening and considering the full range of relevant perspectives. This is what I call the ultimate diversity dividend. Embracing difference in both its external and internal manifestations will reward us at every level and every day, not only because it is right ‘in and of itself’, but because a flexible mindset – in tandem with a diverse organization – will deliver better and more sustainable decisions. 

Before concluding, eagle-eyed readers will have noticed that I referred above to ‘relevant’ perspectives. It’s a small but often overlooked aspect of diversity that’s worth a moment’s reflection, too. 

If I have a health issue, I would be well advised to consult with a range of medical practitioners, but I’m unlikely to solicit the views of the local mountaineering club. On the other hand, if I were in need of an environmental risk assessment, they might be an interesting group to call upon. The point is that both tangible and cognitive diversity needs to be appropriate to the task; as my children remind me, asking folk over fifty for their views on the latest popular music is not the best focus group.

But even then, there may be exceptions.  So, while the door of my office is not open for anyone on the street, the doors of my mind are never firmly locked. And you know what – and here’s a thought to finish on – there being so is one of the greatest joys in my life. From people to politics, faith to agnosticism, age to youth, ethnicity to orientation… it is surely our variety and difference that makes our lives so worthwhile. That’s a dividend more valuable than gold, and the really beautiful thing is that it’s freely available to us all.

An Alternative World Cup

For the last month, the eyes of the sporting world have been fixed on a Middle Eastern Emirate, one-tenth of the size of New York State. In what has been the most political FIFA World Cup to date, the litany of controversies has, at times, threatened to overshadow the spectacle. Like most fans I’m thankful that sport has ultimately shone through; but like many others, I’m left uneasy at the wider context and particularly our willingness to wash over issues that we would not tolerate at home.

From media coverage in the run-up to the finals, I was surprised to learn that Qatar is effectively a modern creation, gaining independence as recently as 1971. It’s a ruling system, however, is nearer to medieval. The Emir (Sheik Tamim bin Hamad Al Thani) holds all power, appoints his own government, controls the courts… and no doubt sanctioned the bribes that allegedly secured the World Cup finals in the first place. In a country with a population of 2.5 million, fewer than 320,000 are citizens, enjoying a per capita income that’s the fourth highest in the world.

Qatar is Not Free

The quid pro quo for these native Qataris is the sacrifice of their freedom. They are caught in the classic position of a ‘complicit elite’, knowing their country is out of step with modern values but fearful that change would harm their privileged position. And so they — and to some extent, we too — live with the absurdity of hosting the showpiece of a sport that promotes diversity, inclusion, and opportunity in a tin-pot nation-state that does precisely the opposite.

Of course, not every nation in the World Cup finals has a liberal system of government. Of the 32 countries, less than a quarter are classified (albeit extremely toughly) as ‘full democracies’ by the longstanding Economist Intelligence Unit survey. More positively, the Freedom House Index would rate around three-quarters of free societies in the broadest sense. Notwithstanding the variance, there are a number of participants from what are clearly authoritarian regimes, including the hosts, Saudi Arabia and Iran.

FIFA Gives the Games on Human Rights & Democracy

Thinking about all this, I began daydreaming of an alternative format in which the games were decided on values rather than goals. In my imaginary world, FIFA stood for the International Federation of Freedom and Association — with contests that matched the countries on their human rights and democracy records, playing extra time with political engagement, empowerment of women, or lack of corruption. How might the teams do then I wondered, and who would reach the round of eight, semis, and ultimate play-off?

Looking at the various indices for democracy and freedom you could be forgiven for feeling depressed. Whole swathes of the world’s population live under repressive regimes or what is euphemistically described as ‘hybrid’ systems. The Middle East — except for Israel — is wall-to-wall autocracy; Africa has a few beacons of hope but is otherwise pretty bleak. And let’s not be complacent about those closer to home — to my mind, one of the greatest sadness of this century has been the retreat of democracy in countries such as Hungary, Turkey, and the majority of the Balkan States. 

But if this paints a gloomy picture, there is brighter news from my fantasy alternative…

For in fact, the results would not be that different to those which played out. In the real world England thrashed Iran and drew with the USA (seems about right?), Argentina beat Mexico, The Netherlands trounced Qatar, and Saudi Arabia failed to make it through the group stages. I’m cherry-picking here of course, but with a few exceptions (Canada and Switzerland really ought to have done better) and recognizing that there has to be victors, it’s been a strong World Cup for values.  Morocco has been the surprise and perhaps outlying team (they rate at best mid-range on most indices) — let’s hope their success on the field acts as a fillip for their country’s freedoms too. 

More Freedom Often Means More Talent

In many ways, these results should be no surprise. For there’s long been a proven correlation between liberal democracy and the unleashing of talent. Some — me included —would argue it is more causal in its nature. The very act of freeing people from restraints turbocharges the abilities and creativity we all possess in some measure. And from these richer pools of opportunity emerges, ultimately, the flair and genius that we see in Messi and Mbappé. Does anyone seriously think they would have been as likely to flourish in Russia?

This capacity transcends wealth too. Qatar and the Middle Eastern emirates are a-typical outliers in that other long-standing correlation — the one between freedom and prosperity. They may have the cash to build stadiums but until they change their systems, they’ll never have the capital to compete. In contrast, consider the progress of Croatia, a far from perfect or affluent nation, but it seems to me, one determined to look forward not back. In six World Cups, they’ve been runner-up twice and bronze medalist once. Don’t tell me that’s nothing to do with their history and struggle for independence.

And so to the final. For all that I am European by descent, I was neutral in the values stakes. On the one hand, we had France – arguably the cradle of modern democracy; on the other Argentina, a nation that, despite many issues, has transformed itself from the days of dictatorship and military juntas. It ranks second only to Uruguay in the Southern American democracy index. I was indifferent too on sporting grounds; may the best team win, I thought as the game kicked off. 

World Cup 2022 Final

How appropriate then, that what followed was perhaps the greatest ever final — the old and new guards of footballing genius slugging it out over ninety minutes, the extra time, and eventually penalties. So good was the game, that in the end, for neutrals at least, the result was almost incidental. Because what had really won, was not just a team —and certainly not Qatar as a host — but the sport as a whole, and most importantly, the values it stands for. 

That is something for us all to celebrate.