Sunday, May 23, 2010

Sunday Essay - threads in Belshaw thought

This long post is a work in progress capturing some of the threads in my own thought. I am going to work on it and revise it over the next few days. Feel free to comment on it or to ask questions in the meantime.

In a comment on Are we what we read or hear?, my old friend and colleague Noric Dilanchian referred to Nassim Taleb's The Black Swan. I hadn't heard of the book, or indeed of Nassim Taleb.  That turns out to be a considerable gap in my knowledge.

It has been a little while since I provided any form of consolidated overview of my own thinking across areas. Because there are apparent similarities in my own thinking and that of Taleb, I thought that I might use him as a spark to provide a summary of the evolving thought and arguments that I have been developing.

I am not giving links to my own writing. I just want to get something down in brief form.

I first  became interested in the idea of culture and cultural change in studying prehistory. Here culture was defined in simple terms as nurture, not nature, all the things that were learned. Necessarily in pre-history, this had a material focus, but anthropological and sociological studies dealt with culture in a broader sense, including interactions between individuals and societies.

During this period I came in contact with what is now called mirroring, the way in which individuals or minority groups (in this case the Australian Aborigines) could come to reflect or mirror the attitudes held about them in the broader society.

You can see this today in the way I approach Aboriginal policy issues - I argue (among other things) that our focus on Aboriginal disadvantage and failures not only stigmatises Aboriginal and Torres Strait Islanders in the broader community, but feeds back into attitudes and perceptions within the Aboriginal community.    

Development economics also dealt with cultural issues. Some studies here had a mechanistic flavour, savings rates, production functions etc, but there was also broader writing.

Gunnar Myrdal's massive work Asian Drama: an Inquiry into the Poverty of Nations (1968) combined knowledge from a wide variety of fields in attempting to explain underdevelopment and possible responses. I read Myrdal with interest when the book was released, partly because I had met him (he was a friend of my father who was also a development economist), partly because I was very interested in the topic. While I was not sure of all elements in his argument it did provide an example of a holistic approach.  

Turning to other influences, in 1956 the economist Kenneth Boulding published The Image: Knowledge in Life and Society. The book explores the way humans use images - what I often call mental mud maps - to simplify and impose patterns on a complex and sometimes chaotic world. These images, symbols, are very powerful and are resistant to change even where external reality and the personal mud-maps diverge.

I first came across Boulding's ideas when I was trying to understand how a particular man thought, how those thoughts had been formed and how they interacted with the world around. Here I was concerned with both the thoughts, perceptions and indeed feelings of individuals and those of the groups to which they belonged. I was also concerned with the way our mental constructs changed over time.

At the time I was reading Boulding, I was also doing some exploratory reading in sociology for the same reason, just trying to understand what it said about culture, the structure and working of society and the processes of change.

Growing up in a small university city with its complicated and overlapping town/gown/country structures had made me very aware of, and interested in, social structures.  Later I had read Bradstow, Wild's pioneering 1974 study of Bowral with its detailed analysis of town working.

This was actually fun. Wild had disguised his town, so I was playing guess the town. This didn't take too long for anybody knowing country NSW as well as I did.  

I found the sociology I was now reading dissatisfying because so much of it seemed mechanistic; individuals and groups became puppets, their fates pre-determined by broader structures and forces. I could hardly accept this given my family background and personal experiences. However, I also discovered semiotics.

In simple terms, semiotics is concerned with the meaning of signs or symbols, the relationship between them and the things they signify, and the impact they have on the people that use them. Semiotics is concerned not just with the attachment of meaning, but the process of communications. The linkage with Boulding will be obvious.   

I wasn't trying to become an expert in semiotics, simply looking for ideas and logical structures. I was also feeding what I read through my own experiences as a political and community activist, as well as my historical research. I found semiotics satisfying because it provided a framework that helped me interpret and refine not just the use of symbols in history, but more practically my own use of symbols and language in trying to bring about change. 

My thinking here was also influence by two further writers.

In Future Shock (1970), Ivan Toffler explored the way in which change could overload our capacity to absorb - as the Wikipedia article puts it, future shock is a personal perception of "too much change in too short a period of time."  In writing, Toffler also coined the term information overload.

Thomas Kuhn's The Structure of Scientific Revolutions (1962) looks at the way one scientific paradigm (the term paradigm shift is Kuhn's) comes to be replaced by another. Initially the scientific status quo is defended fiercely. Then evidence mounts of things that cannot be explained by the current paradigm. Finally, a critical mass point is reached at which point the old paradigm is replaced by a new one that better explains the accumulated evidence.

Here Kuhn's ideas link to Boulding. In exploring the relationship between images and messages, Boulding suggests that messages may have three sorts of effects: the image may remain unaffected; the message may simply reinforce the image or add to it; or the image may undergo revolutionary change and reorganization. This is equivalent to Kuhn's paradigm shift.

The idea of discontinuity is central to the concept of paradigm shift, the replacement of one dominant view by another. When I argue that the 1970s were a shift decade in historical terms, I am in fact using Kuhn's framework, suggesting that this was the decade in which one set of paradigms was replaced by another.

When I first studied history, we were especially concerned with things like trends, patterns, processes. The idea of progress, one that I still think of as valid at a personal level, was both explicit and implicit. There was little focus on discontinuities in history. Yet it is also clear that fundamental change can happen quickly.

While we did not focus on discontinuities, we did address causation in the context of the philosophy of history.

Without going into the full course (I have covered this before), while we did accept causation, we were also strongly influenced by Karl Popper's 1957 book, the Poverty of Historicism. Looking at Popper's work in the context of the philosophy of science, we concluded that you could not prove, only disprove. Putting this in the frame used by Taleb, you could not verify, only invalidate.

This was not to deny causation, nor was it to suggest that you could not marshal evidence to support a position. Simply put, no matter what the evidence, you might be wrong.

Another aspect we looked was the difference between correlation and causation, drawing here from logic. If a followed b, this did not mean that a caused b. Further, just because a and b were found together, did not mean that they were in fact linked. Here my thinking was influenced by another writer.

In 1960 Walt Whitman Rostow published The Stages of Economic Growth: A Non-Communist Manifesto. Rostow's perception that economic development occurred in stages has been criticised on various grounds. However, the concept that I drew from it and have used to this day is that of pre-conditions.

Rostow's argument that a number of preconditions had to be met before sustained economic growth could occur struck me as intuitively plausible. Further, it linked to the discussion on causation and history.

To illustrate with an example from my recent writing.

David Drummond is often described as the founder of the University of New England and indeed in many ways he was. Without Drummond, there would be no university. However, Drummond's success depended on a whole series of previous actions that between them laid the groundwork, set the preconditions, including the existence of the New England New State Movement. Without them but with Drummond still present, there would be no university.

The University's foundation also depended on a series of random events of which two were to be of particular importance. One was Drummond's own arrival in Armidale, the second the presence of T R Forster who donated Booloominbah: without them, the University would not exist; both ended in the area by chance. So, in a very real sense, we can say that the University's existence depended on chance, the luck of the draw.

There is a lesson here for all those looking for certainty and simple solutions. They rarely exist!

Here I want to broaden the argument a little by looking at another element in my thinking, the influence of my professional experience.

Much of my working life whether as a policy adviser, a manager or a management  adviser has involved working in one way or another as a change agent. Much of this work has taken place in an organisational context. Inevitably, my academic research and my writing has fed into my professional work, my professional work back to other parts of my interests.

It is not possible to do my type of work without becoming aware of the importance of organisational culture, usually described in this context simply as the way we do things around here, nor is it possible to be unaware of the importance of stability to people's lives. The two are closely linked, for the organisation's culture becomes part of the fabric of people's lives. They become acculturated to particular ways of thinking and acting.

Now if you look back at the work of Boulding, Toffler and Kuhn, you can see why change within organisations can be so slow. People resist change because of the way it affects how they think and feel. Further, too frequent change can breed change weariness, Toffler's future shock. Worse, push too hard and  you may get a sudden and uncontrollable shift in perceptions within organisations that can actually destroy effectiveness or even the organisation itself.

As a change agent, I have found it relatively easy to get change through that broadly fits within organisational cultures, although even this can be difficult in modern command and control structures, something that I will come to in a moment. These incremental if sometimes substantial changes fit with people's mud maps, maybe altering them slightly. You may meet individual resistance, but organisational resistance itself is generally not a major barrier.

Pursuing fundamental change is far more difficult, for you actually have to bring about Kuhn's paradigm shift and do so without destroying the patient. Further, you cannot always be sure just what you will get. My own views here have shifted several times.

I first became interested in management theory because of my personal dissatisfaction with the way that the Commonwealth Public Service was administered rather than managed.

I found the work of Peter Drucker especially satisfying because he presented management as a profession, while also showing how longer term planning techniques could be used to improve organisational performance. Central to this was the idea of the futurity of current decisions.

Planning was all about process, a way that allowed you to take the future into account in current decision making. It followed from this that any plan itself - the written expression - was ephemeral, at best a semi-colon in a longer piece of writing. Forget this, and the plan would languish on the shelf or, worse, become an increasingly irrelevant straight jacket.

This approach fitted with the views I had formed about planning in the context of economic development. When I first looked at this, five year plans were all the vogue. The idea that Governments could plan effectively, the very idea of long term plans, was beginning to be challenged. My view was that the value of a longer term planning approach lay in the construction of an initial framework that could then be modified in the light of experience, a process of incremental refinement and improvement.            

My Master's degree brought me in contact with evolving theories of public administration, something that I had not studied before. This included an introduction to new approaches to budgeting and program management that were to become accepted thinking over the next two decades.

I said that my views had shifted several times. I became a strong supporter of the new approaches, melding Drucker's views with my thinking on public administration. I was also a strong supporter of the application of then new management approaches including standardisation, measurement and quality management. Then I started to change my mind.

This shift occurred in stages. For example, while I was already moving away from aspects of my previous views, in the late eighties I still became a strong supporter of what was called the New Zealand model, while advocating new approaches to risk management. The progressive shifts in my views reflected my own experiences.

I can best illustrate this by pointing to things that stand out in my mind as watershed moments.

The first is one that I have referred to before, the introduction of quarterly work plans and of agreed activities into the Department I was in, along with the creation of more centralised structures associated with the introduction of corporate models. This tempered my views about performance measurement and performance reporting because I found that it constrained my ability as a manager to be flexible and to do new things.

Then and secondly, by the second half of the eighties strategic planning had become de rigueur. Along with this came an emphasis on business plans and planning, something that was taken up with gusto both inside the public service and through industry development programs that funded small firms to prepare business plans. I found it increasingly difficult to get across the idea that planning was an on-going process.

By the early nineties, the countryside was littered with useless business plans. I saw a lot of these through my professional work.

A wise older businessman that I knew who specialised in technology development put it this way. By their nature, business plans are prospective. Yet you cannot know in advance how things will work. His advice to very small entrepreneurs with new product was to put the money that would have been spent on a business plan (the going rate for a basic plan was then around $15,000) into product development. This gives you the best chance of actually getting something to sell.

I am not opposed to business plans or business planning. However, they are just tools whose value depends on the circumstances.

At a personal professional level I have now been through three high main high technology booms: the electronics boom of the eighties; the following IT and communications boom; and then a little later the internet boom. During that time I dealt with hundreds of technology companies in one way or another . There was very little correlation between the business plans and ultimate company failure or success.

All this led me to question the very conceptual underpinnings and assumptions behind both the strategic and business planning process. For existing firms, the process actually locked them into the past. For new firms, the process did not aid commercial success.

I have run out of time for today. I have to cook lunch. I will continue this post later.


Rummuser said...

Jim, having been a professional manager with hands on experience of the planning process and facing the music for actual delivery, I am convinced that it is a total waste of time. The best that one can do in business is forecast for the short term to plan for needed resources, innovate as you go along and keep delivering a constantly improving bottom line. After the recent shake up with MBAs facing a lot of flak, something very interesting has come up and you might like to explore this angle to businesses of the future.

Jim Belshaw said...

Hi Ramana and thanks for the lead.

Interesting comments. I still think planning is of value, but a lot depends upon the business and upon the nature of the planning process. I know of a lot of Australian businesses that were swept away by foreseeable changes.

I do have real problems, however, with one point you made, the idea of a constantly improving bottom line. I now question whether this is either a desirable or achievable business objective.

It depends, of course, in part on what is meant by a constantly improving bottom line. I do support the idea of continuous improvement. However, when the totality of profit forecasts exceeds the total profits available by too large a margin, then instability can result.

Rummuser said...

I stand corrected. It should have read, constantly improving business model and consistent bottom line achievements.