Changing the business landscape, avoiding minefields

Citation

Ali, A.J. (2010), "Changing the business landscape, avoiding minefields", International Journal of Commerce and Management, Vol. 20 No. 3. https://doi.org/10.1108/ijcoma.2010.34820caa.001

Changing the business landscape, avoiding minefields

Article Type: Editorial From: International Journal of Commerce and Management, Volume 20, Issue 3

From Asia to Africa and from Europe to North America, recent economic crises and turmoil have left even the most composed executives in a state of bewilderedness. Making sense of the turbulent world economy tops the priority list of CEOs and statesmen. Fraud and corruption that have gone out of control have precipitated the state of the economic downturn, despite concentrated worldwide efforts to contain or avoid this deepening crisis.

Like the global political scene, the economic scene is characterized by sudden and swift changes, optimism and pessimism, progress and retreat. Politically, Buchanan (2010) argues that there are two mega-forces, which are imperiling the nation-states from above and below: ethno-nationalism (forces that threaten nations with secession and breakup) and transnationalism (a new world order managed by unelected bureaucrats). Debating Buchanan’s argument is not part of our purpose. Nevertheless, his identified mega-forces do manifest that instability is the norm rather than an abnormality. And this is the very reason for us to assume that the business world is in no way different.

Indeed, the forces that propel world business and politics appear to be interconnected, interdependent, and more importantly to operate mysteriously. In the business world, these forces operate on both micro (individual) and macro (national) levels. Individuals’ selfish pursuits threaten the foundation of ethical conduct and the shared moral standards governing relationship in the marketplace. At the societal level, unbridled competition has been a destructive force. This type of competition has been promoted based on the belief that leaving companies to regulate themselves optimizes benefits to companies and strengthens CEOs’ freedom to act.

These developments at the personal and societal levels have given justification for some CEOs to behave recklessly and in ways which may endanger societal welfare and spread market chaos, thereby created a business culture where deception and corruption thrive. This has resulted in changing how competition is played out and how a business is projected in the marketplace. Under normal conditions, market warnings would send alarms. But organizations which were left to regulate themselves, such as in banking and finance and energy, have ignored market signals.

In the absence of societal or state guidelines, behaving recklessly almost always involves a disregard of existing and potential minefields and results in large-scale deception and fraud. As we have seen, this can ultimately led to the demise of some corporations (e.g. Enron, Lehman Brothers, Bernard L. Madoff Investment Securities, etc.), high levels of unemployment (e.g. the case in the USA and Greece), weakened the competitiveness position of nations and firms (e.g. Greece, Iceland, Spain, etc.), regrouped corporations (e.g. Bear Stearns was taken over by JP Morgan Chase, Bank of America acquired Merrill Lynch), and changed the global balance of power (e.g. the World Economic Forum, 2010 reported that the global crisis has accelerated the historic shift in economic leadership from West to East).

Ignoring possible and existing minefields also leads to two major setbacks: ignoring safety and quality of products (e.g. the recent Toyota’s and Chrysler Group’s massive recall of some of their models) and weakening public confidence or trust in the free market economy institutions. While the first is a public relations nightmare, the second severely damages public trust of the viability of competition and its institutions and may pressure governments to take drastic measures to regulate economic activities and market function. Both have far reaching implications for companies and society and may significantly impede the spirit of innovation and creativity.

Therefore, avoiding minefields should be given careful consideration by executives as neither the competition nor society in today’s world forgives those who engage in reckless and deceptive conduct. The Harvard Business Review (Mintzberg, 2009) reported that “Companies must remake themselves into places of engagement, where people are committed to one another and their enterprise.” And in its “The World’s Most Admired Companies 2010,” Fortune reported, “What makes admired companies great is often vague. But in 2009 integrity took center stage.” The “integrity” of the firm and its market reputation of being “engaged” and is a responsible enterprise is an essential capital. It is a social capital that allows corporations to navigate new terrains with ease and confidence and reinforces connectivity to and identification with societal aspirations and concerns.

In reflecting on companies that have successfully built the requisite social capital, a few companies come to mind. Among them are Apple, Nestle, and PepsiCo. These companies have been creative not only in reinventing their industry, but also in enhancing their connectivity to customers and increasingly meeting societal expectations. Unlike Fortune (Bernasek, 2010, p. 124) which stated that trust and integrity are “durable assets with financial payoff,” we believe that companies and their executives have to gain the trust of the society by continuously living up to societal expectations, imaginatively meeting and coping with ever changing demands, and avoiding market traps and opportunistic temptations.

The question, however, is which executives are more likely to be predisposed to ignore societal interests and market norms? Across history and business sectors, executives have shown different commitments and dispositions. Extreme legacies do exist. There are those who have left exceptional records and those who have brought disasters to their organizations and stakeholders. That is, there are always some executives who look far beyond their immediate interests and that of their companies. In contrast, there are others who follow temptation and ignore sound counsel.

Previously, we classified executives into tyrant, spirited, competent, passionate, and erratic executives. Whether in the past or present, these executives are known by their actions and their marks on the performance and evolution of their organizations. While it is difficult to determine which types of executives are more likely to steer their corporations into minefields, general deciphering is possible and is outlined below:

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  Tyrant executive – more likely to fall into traps.

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  Spirited executive – seldom trapped.

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  Competent executive – manages and avoids traps.

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  Passionate executive – likely to fall into traps under certain conditions.

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  Erratic executive – falling into traps is a normal aspect of conduct.

Since passionate executives are, under certain conditions, more likely to fall into traps, the emphasis will be on them. Other executives are briefly covered as they are either easily trapped (tyrant and erratic) or able to avoid entrapment (spirited and competent). The tyrant executives display the following qualities and, in the process of their conduct, often find themselves in deep trouble:

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  Embody a kind of arbitrary one-man rule that is driven by the urge to be number 1 and ahead of his competitors.

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  May display an over confidence and impatience which make them reckless competitors who not only ignore market conditions, but also the necessity to adhere to competition games.

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  Exhibit a feeling of indispensability and self-glorification, intolerance of opinions and acts which might deviate from their own, and a tendency to blindly or brutally resort to whatever actions they think necessary to maximize their benefits.

Tyrant executives who may be able to build flourishing businesses may ultimately turn into destroyers. Their tendency to ignore minefields, mounting resistance, and changing market conditions may accelerate the ending of their careers.

Spirited executives have three major qualities that place them apart from other executives: hopefulness, content, and inclusiveness:

1. 1.

   Hopefulness spans the horizons and is not geographically or organizationally bound.

2. 2.

   Content serves as a powerful mechanism to guard society’s interests without sacrificing organizational growth and survival goals.

3. 3.

   Inclusiveness implies, among others, the ability to see that there is no dichotomy between the societal and the organization’s concerns. More importantly, executives have no tendency to limit possibilities and they view chaos and instability at home or abroad not as business opportunities that must be exploited but tragic events that must be avoided or contained.

Spirited executives are inspired to do good and to serve the widest possible stakeholders. Being driven to balance organizational and societal interests, they conduct business with utmost attention to prevailing ethical standards. This enables them to pursue endeavors that optimize the achievement of harmonious goals. Therefore, they seek opportunities with the intention and determination of setting the stage for orderly and fruitful business operations.

There are two types of competent executives: visionary competent executives and organizationally gifted executives. Visionary competent executives are those who are capable of thinking independently and mapping the future with deep foresight and confidence. Organizationally gifted competent executives use their common sense, tested skills, and practical judgment to manage company affairs and navigate the usual market terrain. Both types of competent executives capitalize on foresight and sound judgment to overcome temptations. Neither individual fame nor passing pleasure sways them away from organizational goals and performance.

In contrast to competent executives, erratic executives lack vision, long-term perspectives, and are influenced in their decisions by changing events. Their lack of foresight prevents them from having any well thought out directives and planned actions. For this reason, they easily overlook warning signals and trample on minefields. Their understanding of market trends and societal demands is limited and is at best clouded by unfounded confidence.

While erratic executives appear to be irrational and detached from world reality, their shortcomings and ill behavior are recognized by subordinates and outside observers. This is not the case with passionate executives. These executives, because of certain qualities, are often admired, possibly for a longer period, by inside and outside stakeholders. These executives display unique qualities, which situate them on the center stage with unparalleled clout. These characteristics are:

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  energized and committed, these executives fearlessly pursue their goals in life;

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  show exceptional enthusiasm in their conduct and distinguish themselves from the rest of society;

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  show imaginative capacity and a fierce drive to invent new competition games; and

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  life, for them, is an arena of infinite possibilities and it is their destiny to explore and seize them (e.g. Hank Greenberg of AIG).

During his tenure at AIG, Greenberg was an exemplary leader in terms of his tireless efforts to build an empire, invent new competition games, establish alliances, cast the rules, and influence politicians at home and abroad. He enjoyed the spotlight in the national and international media and always searched for opportunities to socialize with and influence politicians. Passionate executives, especially those who are not trained to factor societal interests in their decision making, over time find themselves isolated, mistrusted by yesterday’s admirers and patrons, and surrounded by mounting pressures to change their course of action or resign their posts.

The reason for this possible change of fortune is rooted in the same qualities that gave fame to their passionate personalities. Passion has its limits and once it gets out of generally accepted boundaries, it degenerates unto unbridled passion and an exaggeration of one’s capabilities. Those who evolve into this stage, usually:

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  view possibilities only in terms of self-interest;

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  underestimate difficulties, show unfounded confidence, disregard constraints, frustrate friends and coworkers, and antagonize allies; and

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  when confronted with mistakes and violations, usually they blame subordinates and show a lack of focused direction, thereby confusing and demoralizing employees.

Those who degenerate to the stage of unbridled passion are more threatening to the survival of their organizations and can inflict tremendous harm to a wider segment of the society. The reason is simple; observers, both inside and outside the organization, may find it difficult to erase from their minds the previous outstanding achievements and performances and thus tend to minimize emerging scandals and misdeeds. In addition, these executives, over the years, establish a sophisticated network of influential people who may do whatever is needed to protect these executives and underscore their rich contributions to the organization and society. Therefore, it is important that executives who reach this stage be recognized and identified. Usually, these executives tend to:

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  have strong belief in self and their indispensability;

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  confuse personal goals with the company’s goals;

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  ridicule subordinates’ input instead of embarking on whatever it takes to serve and engage them;

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  suspect subordinates’ contributions and actions, and strengthen the controlling mechanisms;

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  mistake productivity with number of hours in the office – prohibit reading personal e-mails, using phones, and web search during work hours;

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  prohibit contact with personnel at rival organizations;

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  resist pressure to acknowledge mistakes and purposively deceive the public and the employees;

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  view transparency as a risky endeavor;

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  surround self with the least competent and the competitive people;

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  resort, in the face of crisis, first to laying off employees; and

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  use organizational resources to promote self and personal achievement instead of cultivating a sense of purpose and responsible conduct.

While executives in general have their own weaknesses, passionate executives, in particular, can be first-class destroyers. Organizations may not have mechanisms to monitor early warning signals that their passionate executives have degenerated into destroyers and are difficult to restrain. Nevertheless, the board of directors should give considerable attention to any sign of unbridled passion and its accompanying behavior. This is because the perils are great as they tend to deepen the crisis of credibility by weakening peoples’ trust in corporations and corporations’ abilities to trust one another. Furthermore, these executives can do serious harm to society. This harm cannot be restrained by government regulations alone, but also by espousing moral principles necessary to soften egotistic tendencies and uphold civic and societal obligations.

It is essential that executives remind themselves time and again that temptations are part of normal life and, as in politics, following selfish desires can be devastating. Furthermore, executives should recognize that both society and competition are not that forgiving and therefore approaching minefields with great caution and or avoiding them is a prudent course of action. More importantly, executives should safeguard their organizations and themselves by purposefully factoring societal interests into their deliberations and strategic actions.

Abbas J. Ali