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Asleep at the Organizational Wheel

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Massey Energy and the coal mining disaster. Goldman Sachs, JP Morgan, Citigroup and the destructive misdeeds leading to the financial meltdown. And now, a new CEO later, BP and the Gulf oil catastrophe. Companies led by leaders, apparently well educated and highly experienced, and yet something is clearly wrong. Could it be denial?

The human capacity for denial is staggering, nothing short of frightening, really. We see it in individuals, in relationships and perhaps most glaringly in business organizations.
And we continue to ignore this ever-so-human tendency at our collective peril.

Consider the fact that today we still think about business and leadership virtually the same way we did in the nineteenth century -- that's the time of the Industrial Revolution, if you're keeping score. Yes, of course, we've tweaked our business thinking a bit over the decades -- from Adam Smith to John Maynard Keynes to Milton Friedman. But, unfortunately, in the larger scheme of things, these are merely tweaks, minor shifts, in the greater transactional order, shifts that amount to reinforcements of a failing status quo.

Even after we nearly drove the global economic caravan off the cliff, we are still doing and thinking the same way about business and leadership. We may have stepped back from the brink a few feet -- our painfully slow recovery offers some breathing room perhaps -- but despite this near-death experience our overall thinking remains unaltered. Even as the horror of the gulf oil spill unfolds beneath our very eyes every day now, our thinking is still largely business-as-usual. Its astonishing when you stop and think about it. How is this possible and what is the answer, if there is one at all?

The good news is there is an explanation for this blindness and there is a pragmatic, if unlikely response -- if we have the courage to see the simple truth of what is before us.

The reason for our denial and apparent unwillingness to change is relatively simple. Like it or not, we are largely unconscious creatures, driven much less by conscious rational thinking than by automatic, pre-programmed patterns of thought that were largely put in place before adolescence. They are patterns of thinking that often keep us from seeing what is right beneath our noses -- as Harvard trained philosopher of science Thomas Kuhn famously pointed out in the 1960s. Most of us, most of the time, operate on auto-pilot. Much of what we think of as rational, conscious thought, is actually a rationalization for what our unconscious mind decided for us in a split-second, without us ever realizing it. Scary but true. It is the power of the unconscious that allows us to deny the obvious.

But there is good news. In the face of crisis we can wake up, shaken awake, so to speak, and actually see what is all around us. And when awakened what we see is this: there are businesses who opened their organizational eyes long before the current economic crisis hit, businesses that began to operate from fundamentally different ways of thinking, businesses that have been producing fundamentally different and better results. They realized that the old transactional paradigm, where the leader-follower relationship is predicated on an exchange of mutual self-interest, is no longer viable. It's the conventional leadership model that says, "I the leader have something you want, money, and you the follower have something I want, labor, so let's make and exchange." It's not bad or wrong. Today it's simply, well, impractical.

These leaders realized ahead of the game that focusing on profits to the exclusion of all else no longer works in a world as complex and rapidly changing, in a world as unavoidably transparent as ours. They've embraced what by some is called the new paradigm, by others transformative leadership, and still others integrative leadership.

Irrespective of what we call it (or if we label it at all), it's the reason a company like Southwest Airlines is the only profitable airline in America today. It's the reason Costco and Whole Foods continue to thrive while their competition struggles. It's a primary reason that Starbucks exists and has been able to create a whole new industry. And it's the reason 60 Minutes once devoted an entire segment to Peoplesoft (before they were gobbled up by Oracle).

At its core it says that within a healthy system of capitalism, business is not some free-floating abstraction or an institutional set of policies and procedures that employs people to achieve its ends. Rather, business is in fact a flesh-and-blood human enterprise from beginning to end. To borrow from Jefferson, it's an endeavor of the people, by the people and, yes, for the people.

Sounds quaint, even hoaky, you say? Then consider the basic behavioral logic on which it is based: when fundamental human needs (for belonging, for growth and autonomy, for meaning, and for contribution) are met in the workplace, people flourish and, not surprisingly, so do the hard, measurable results (assuming the leaders have modicum of business and leadership skills). To oversimplify a bit, in this approach the leader's job is to grow him or herself and to grow his or her people. Period.

Far from being idealism, this way of thinking is pragmatism at its most powerful. But waking up from centuries of slumber is never easy. And making the kind of organizational shifts this model requires is surely not without its challenges. In fact, its hard work. But frankly speaking, it's a hell of a lot easier and far less painful than going through what we've been going through (and still may yet have to go through) in this rapidly changing, unavoidably transparent global economy.

The truth is, we must explode our dangerous state of denial. We must step back and begin to think, really think (!), and do so from a much more comprehensive perspective, and soon. The clock is ticking, whether we like it or not.

Cleve W. Stevens, Ph.D., a transformational leadership consultant to CEOs and the Fortune 500, is CEO of Los Angeles-based Owl Sight Intentions, Inc. (www.owlsightintentions.com). E-mail: cs@owlsightintentions.com.