The United States has been wracked by a series of corporate and financial horror shows, from the fall of Enron to the mortgage-backed security frenzy. The man on Main Street looks at these fiascos and says, with some justice, that here were a bunch of greedy crooks who were powerful enough to take thousands of innocent employees, customers, and investors down with them, not to mention the millions affected by the worldwide financial crisis.
I take a somewhat different view, based on the four-drive theory of leadership I've developed based on Charles Darwin's epic but often-neglected book "The Descent of Man".
According to my research, the four drives that influence decision making (each one serving as an equal component of good leadership) are:
The drive to acquire--to get what we need or value, ranging from food, shelter, and offspring
to knowledge and pleasure.
The drive to defend--to protect what we need or value, including our company's market
share and reputation.
The drive to bond--to form long-term, trusting, and caring relationships that may provide
but are not limited to mutual benefit. These include relationships with coworkers, customers,
suppliers, and investors.
The drive to comprehend--to make sense of the world and ourselves via the likes of
forecasting, inventing, and problem-solving.
Individuals accomplish as much as they do while getting along as well as they do by constantly juggling these four drives, balancing a need to get what they want with a need to get along with
their fellow human beings.
The US government was set up by its founders in a remarkably similar way--a balance of powers
that requires important decisions to take into account different and sometimes contradictory
demands. It doesn't work perfectly, but it was certainly a huge improvement over previous types
of government. Then, along came the modern corporation, a creature of the nineteenth century.
Here is an organization legally dedicated solely to the drive to acquire. In many cases, its board
and management are required to favor the drive to acquire (i.e., profitability) and the drive to
defend (i.e., corporate survival) over the drives to bond and comprehend.
"Well, of course," you might say. "That's what a corporation is supposed to do." But the four-
drive theory tells us something different--that a corporation can and should be dedicated to all
four drives because that is the way human beings have evolved to accomplish the most good
together (which includes making money) and do the least harm to one another in the process.
Although individual corporate leaders may try their best to lead this way, they will almost always
find themselves up against the countervailing forces of the corporate charter itself.
In response, I propose a different kind of corporate charter in which the power of the owners
does not overwhelm the voices of the other stakeholders affected by the corporation's actions--
employees, customers, suppliers, and, to varying degrees, the general public. This is not
something I have invented out of whole cloth. The "stakeholder model" of corporate governance
has been widely used in Germany and Japan, and a number of US companies such as medical-
devices manufacturer Medtronic and steel maker Nucor have put elements of the stakeholder
model into practice. Without the four-drive theory, the stakeholder model sounds a bit radical
or, heaven forbid, "socialist." But in light of what we now know about how the human brain has
evolved to make decisions for group survival and prosperity, it makes perfect sense.
Which brings me back to the likes of Enron and big banks. Here were organizations whose
governance structure lacked the equivalent of a drive to bond and a drive to comprehend. Had
these drives been part of their charters, along with a decision-making process that gave all four
drives their full weight, these firms would have had a way to stop themselves from doing harm.
As it was, the drive to acquire was being satisfied spectacularly, but there was nothing in the
corporate equivalent of the brain's "prefrontal cortex" (which, among other functions, chooses
between right and wrong) to oppose it. As a result, we've all paid the price.