The professional world is brimming with instability. Some days, you are riding high on waves of success, and then it comes crashing into the shore, providing a harsh reality. It forces you to be humble because you become careless when you feel comfortable. The global economy is in a weird place, motivated by a tremendous sense of anxiety. The sizeable centralized nature of many organizations causes part of this anxiety. Today, I want to discuss it.
Two of the most influential trends in the business world were ideological. The first came from the University of Chicago School of Economics and Professor Milton Freedman. The professor argued that the primary purpose of any business is to generate profits for its investors. Competing interests like employees and consumers were secondary in Freedman's view. The investors who put money at risk for the company should receive the lion's share of the wealth because they face the most risk. The shareholder theory of capitalism spread like wildfire through the business community. To drive profits, business people slashed headcounts at companies, squeezed salaries, and profit to shareholders became the only thing that mattered. Any other considerations would suffer.
The other came from executive Jack Welch, who transformed General Electric into a corporate juggernaut. Instead of growing the business with better products, Welch grew G.E. through a ruthless combination of acquisitions and job cutting. Soon, G.E. resembled a giant unregulated bank, with shareholders keeping the party rolling as long as the dividend checks kept coming. When Welch retired, G.E. was a symbolic tower of beer coasters at the end of a bar that any mischievous patron could topple at any time. It is what happened as debts came due and the economy changed. Today, G.E. is a shell of its former self, divided into three smaller companies focused on building things instead of juicing share prices.
Friedman and Welch have one thing in common: their belief that the people who did the work were expenses to be managed instead of people who created value for the business and its investors. It made a wave of downsizing in the business world, and departments shrank. The mantra among business professionals was to create lean organizations.
The rise of computers and photocopiers slashed the clerical staffing at an organization. A professional had to advance into management to advance a career instead of earning tenure in your position. The situation resembled the book "Lord of the Flies," where to get ahead, you had to be hypercompetitive and jerk to your peers instead of working together. Numerous business cultures get caught up in this cycle of psychological violence and dysfunction until they ignore their core business and customers. I have experienced this firsthand, and it isn't pleasant.
The trend has plenty of names, like rightsizing, flattening the organization, and downsizing, but the impact is the same: fewer people doing more work. It has created a paradox in the business world because everyone is so busy that numerous choke points now exist, and work needs to be done promptly. Doing less with more is creating longer cycle times and more frustration. It also hurts workers who sacrifice mental health and family time to meet increasingly tricky corporate goals.
The Agile reformation addresses the bottlenecks and frustrations of the corporate world. Still, business leaders who continue to treat employees like cost centers instead of people who deliver value are the principal obstacle to helping improve business culture. I look forward to the business community giving these individuals their comeuppance.
Until then, I will keep working to make the business community more sustainable, sane, and satisfying. I hope you are along for the ride.
Until next time.
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