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Fuzzy Signalsextracting the signal from the noise |
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Fuzzy Signalsextracting the signal from the noise |
What's the number one killer amongst living creatures? Man-eating sharks, tigers, grizzly bears, snakes, or sharp-toothed wild boars barreling through the jungle? No... no... no! All wrong. The most deadly creatures are, in fact, quite small. They are insects of course! The bees, wasps, spiders, mosquitoes, flies, ants, cockroaches, and millions of other varieties buzzing around the biosphere. This shouldn't be that surprising. There are more insects on the planet than any other species. So from a pure numbers game, the stats are in their favour. Thanks to many rounds of evolutionary roulette, insects are ingeniously equipped to do nasty damage. They can sting, poison, bite, transmit disease, and, if swarming, even eat a large mammal, like a human or cow, right clean through to the bone. (Does any one remember the killer ant B-movies in the 70s? I sure do!) Of course, their life span isn't very long, and they can be easily squashed, which is perhaps one of the evolutionary trade-offs the species made. Tant pis.
The point is that sheer size can be a misleading predictor of enduring strength and power. This may seem obvious, especially after September 11th, where a relatively small band of terrorists took on the most powerful country in the world, inflicting serious economic damage not to mention an irrevocable blow to its national psyche. What Al-Queda did so successfully was take asymmetric advantage of a much larger entity. In the case of America, its' cultural and economic power, its large geographical size, and its institutions favoring openness were also the same things that made it so vulnerable to attacks like these.
Yet the idea that "bigger is better" – together with its sister saying "might makes right" – is a stubborn one, mainly because it seems so basic and so intuitively obvious on the surface things. My boyfriend, who is a large man, looming almost two meters off the ground (6"4), gets a kick out of the subtle (and not so subtle) effect he can achieve just using his size. I must admit the primal part of me also enjoys this. (The downsides: I noticed that other men stopped checking me out shortly after I starting going out with him.) But guess what industry he's in? He's in software. He's a knowledge worker: he uses his brain, not his brawn, for survival in today's world. Some assumptions about size are definitely shifting, especially the relationship between size and power.
Fast Company's Keith Hammonds makes a similar case in his article "Size is not strategy" – which is well worth a read if you work in this space. He argues that large companies are broken because they are based on a business model that's over a hundred years old. It's not hard to find evidence of this. Look at all of the sick global industries around us: airlines, automobiles, healthcare, telecommunications, even consumer goods are hitting a wall. In term of empirical (as opposed to anecdotal) evidence, check out the classic work of Robert Gibrat's, Inegalities Economiques which shows that the relationships between size and expected growth rates is spurious at best. Size may help you survive, but bigger companies grow the slowest, which is why the merger-mania during the 1990s turned out to be so bad (mostly) for shareholders. Just one data point: the 50 biggest corporate acquirers during that time had their share prices fall 3 times as much as the Dow Jones average. Other reasons why bigger is not necessarily better: corporations find it increasingly difficult to innovate once a particular value creation model is locked in. These organizations are geared for optimization and production, not innovation, which may be their ultimate downfall because most of the significant high-margin wealth today is now being created through new ideas, concepts, and technologies. The best talent is going to organizations – and networks – where they can be creative and be "whole people".
But size remains firmly on our societal pedestal. It remains a focus because it's still riding on the backs of some deeper assumptions regarding power and control over the sources of wealth creation. While large sectors of society are moving into a knowledge-intensive economy (see Peter Drucker for the most compelling treatise on this), many of the assumptions underpinning the Industrial Age are still lingering – and these assumptions privilege size over other variables. (I'm resisting the temptation to mention the impact of a male worldview on all of this, so I'll let the reader extrapolate if inclined to do so.) Economies of scale and mass production models made sense for the time, and were the key to success. Today, the name of the game is still about having enough resources and leverage to control key parts of the value chain, whether it be retail channels, suppliers or distribution networks. So I'm not saying that these things won't matter in the hurly burly of competition. Scale will always be essential for a functioning global economy. What I'm questioning is whether you need size to still achieve the benefits of scale. New organizational models based on networks and "value webs" might be able to achieve the same thing, just in a different and more adaptive way.
Like Keith Hammonds, what I'm questioning is the "fitness" of organizational model of the multinational corporation (MNC) given how the world is changing. Through the lens of the Long View, the MNC model seems very brittle to me. This may seem ludicrous to some, but as powerful as MNCs are, they too suffer certain asymmetric weaknesses, just like the United States. Indeed any large system – especially "closed" highly hierarchical ones – can be very fragile and vulnerable to outside disruptions. This is perhaps why we are seeing some corporations experimenting (and the public sector will soon follow) with new organizational models that better reflect the internal logic of a "complex adaptive system"; that is, something that's designed to be both decentralized, and self-organizing; an organization that works from the bottom-up with some top-down direction. Many ecosystems work this way, as does Wall Street.
Beyond the world of business, other scholars and thinkers are developing a more complete picture about the relationship between power and size. In terms of power studies, which have been dominated for too long by black-and-white political scientists using narrow "realist" frameworks, we are slowing seeing more nuanced understanding about the role of "soft power." Joseph Nye has long been the standard bearer here, and his recent editorials have been helpful. The postmodernists have weighed in on this as well; their ideas just trickling through. And I'm sure there are some incredible non-western feminist views on this as well, but alas, I don't have these at my finger tips. I suppose Camile Paglia comes to mind, but she is white. Suffice it is to recall watching a Brazilian businesswoman work a room of her superiors. She was disadvantaged in all convention power measures, but she got what she wanted and more, without them even being aware of it.
My past work at GBN, especially working in the national security arena, also put me in touch with leading soft power thinkers like David Arquilla and Ronfeldt. Their work at Rand was an early application of social network theory, which is a key area if we are to understand these issues better. I recommend Networks and Netwar and the more idosyncratic but deep, The Emergence of the Noopolitik which adapts some of the ideas of Talhard de Chardin. This has been very influential... a little too much so, as it has now made its way to "the enemy." (At least in the eyes of American military leaders). In particular, these ideas were taken up by two senior Chinese colonels and developed in a 1999 book, Unrestricted Warfare . Parts of this are now translated in English, and are well worth a read. They make a chilling case for how China should use unconventional, asymmetric, soft power approaches to winning the war against America for global dominance. Things like infiltrating the educational system, poisoning ideological debates, or manipulating media channels.
Popular culture today hums with the famous cliché that the flapping of a mosquito's wings in China can cause a cyclone in Texas. This may be overstating things, but the point is that seemingly small and insignificant things can cascade throughout the entire system. And we do live in an increasingly interdependent system, so we can count on further tensions and interactions between the large and small. For instance, thanks to modern global media, can a single "super empowered angry" individual can challenge mighty corporations overnight as we saw in recent years with Coke and Nike. So that's what's "new": the scale and interdependency of world. But this idea about size is also something very old and firmly rooted within our cultural and anthropological stories. Every one knows about David and Goliath. Everyone knows why dinosaurs went extinct. In both cases, their size proved to be their undoing, a maladaptive response to external environmental shifts. The insects, however, survived just fine. So think like a mosquito... but with the consciousness of a biome – that is, a view that encompasses both small and large, local and global perspectives. These are better metaphors for an adaptive future.
Buzz. Buzz.
