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 / First Quarter 2002 / Issue 26(originally published by Booz & Company)


Straight from the Brain

The formal, analytical schools that once ruled have been augmented, if not overthrown, by a multiplicity of perspectives. The emphasis has moved from the content of strategy to the contexts and processes that lead to sustained, effective action. Formulation (what to do) and implementation (how to do it), previously separated, are now inextricably intertwined. Conceptual inspiration has come from several fields, but the influence of chaos theory and the theory of complex systems is particularly marked in this useful collection. The ideas have appeared before, but it’s nice to have these articles together in one volume.

“More often than not, business is smell, feel, and touch as much as or more than numbers,” writes Mr. Welch. “If we wait for the perfect answer, the world will pass us by.” You can’t run a business without numbers, but neither can you run it with only numbers. In The Sum of Our Discontent: Why Numbers Make Us Irrational, British journalist David Boyle addresses this central contradiction: “If we don’t count something, it gets ignored. If we do count it, it gets perverted. We need to count, yet the counters are taking over our lives.”

Mr. Boyle identifies many associated paradoxes and takes the reader on an erudite tour of many views on numbers and measurement. The problem seems to boil down to this: Reality is what we pay attention to, but measurement requires classification and classification requires abstraction. By paying attention to abstractions, we grasp the generic, but only at the expense of understanding the particular. This means that we lose the smell, feel, and touch of what’s going on right here, right now. And with that loss of the sensual, we lose our ability to respond quickly to events as they happen. It’s a bit like going to a fine restaurant and eating the menu instead of the meal! I am not sure that Mr. Boyle has many answers, but he has certainly articulated many of the questions.

There are some helpful aphorisms in his book. I particularly like the quote from economist John Maynard Keynes: “…once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilization.” Substitute corporation for civilization and there will be many managers who will say “Amen” to that observation.

Business is a series of paradoxes,” concludes Jack Welch. And he proceeds to enumerate some of them — paying the highest wages while having the lowest costs, managing long term while eating short term, being “hard” in order to be “soft,” and so on. In this part of his book one senses the influence of some of the management academics to whom Mr. Welch has been exposed over the years. Intellectuals love paradoxes: They are something to be savored like good food and fine wine. Paradoxes puzzle and stretch the mind, and sometimes out of the confusion comes new and broader understanding.

In Paradoxes of Prosperity: Why the New Capitalism Benefits All, English economist Diane Coyle grapples with some of the paradoxes of what she contends is the “new capitalism” that is based on the increasingly “weightless” economies of the 21st century. Her theme is that, while this new dynamic will bring prosperity for all, it will also undermine established political power bases just as surely as the “old” capitalism of the “heavy” industrial era undermined the land-based aristocracy that preceded it.

Thus the first paradox is that our economic prosperity will be accompanied by social and political anxiety. Paradoxically, again, some of this anxiety — that of the street protesters in Seattle and Genoa, for example — seems to be based on a concern that the new capitalism is not really new, but merely a continuation of the old, with a corresponding entrenchment of the existing elites. Ms. Coyle does, however, persuasively describe a new economy she sees emerging, by going beyond the bubble and hype of the stock market to look for the keys to human prosperity, in our treatment of the environment, in the global sharing and development of technology, in the diversity of cultures.

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  1. Works mentioned in this review.David Boyle, The Sum of Our Discontent: Why Numbers Make Us Irrational (Texere, 2001), 200 pages, $24.95.
  2. Diane Coyle, Paradoxes of Prosperity: Why the New Capitalism Benefits All (Texere, 2001), 316 pages, $27.95.
  3. Michael A. Cusumano and Constantinos C. Markides, Strategic Thinking for the Next Economy (John Wiley & Sons Inc., Jossey-Bass, 2001), 317 pages, $19.95.
  4. Richard S. Tedlow, Giants of Enterprise: Seven Business Innovators and the Empires They Built (HarperCollins Publishers, HarperBusiness, 2001), 512 pages, $30.00.
  5. Jack Welch with John A. Byrne, Jack: Straight from the Gut (Warner Business Books, 2001), 496 pages, $29.95.
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