The Flaw

I recently watched a brilliant film, called The Flaw which explored the global financial crisis and its causes.

Capitalism is a system which, through its invisible hand is able to benefit the many via the self interest of the few.  By trying to maximise their own gains in a free market, individuals benefit society, even without setting out to do so.

Yet as we look around the world it is clear that capitalism has another invisible hand, which is rather less benevolent.   This ‘flaw’ was identified by Alan Greenspan, who was making a relatively narrow point about economics and the self correcting power of free markets.

But I would argue that the flaw runs deeper than Greenspan thinks.  Capitalism – at least in its current form – is flawed in terms of psychology.  The way that work gets structured and organised tends to distance people from their values and sense of responsibility.  A combination of behavioural reinforcement, mindlessness (due to workload?) and a short term, inward focus encourages a kind of collective myopia and disconnect from our own values.

I found this myself when, as a consultant, my objective rapidly went from helping the public sector to improve its efficiency, to selling consultancy services into the public sector.

At one point in The Flaw individual bankers, traders and derivatives experts were asked whether they felt any direct responsibility for the financial disaster.  Most of them fell silent.  Not, I think, because they felt guilty, but more because they genuinely did not know the answer.  Such was the way their role had been structured they had lost contact with any kind of individual responsibility.  Their role had distanced them from their individual values without them even really being aware that that had happened.  No one was responsible.

It is this flaw which allows individual bankers to argue that they did nothing wrong, whilst millions cope with repossession, debts and unemployment.  It is this flaw that allows senior managers to sell packages of derivatives that no one truly understands.  It is this flaw that allows News International bosses to turn a blind eye to practices which were contrary to the ethics of their own profession.  It is this flaw that allows nurses and care home workers to treat the elderly and sick with cruelty and contempt.

I don’t think anyone deliberately set out to do this.  But we create our organisations, and then they create us.

What Can We Do to Address The Flaw?

Our organisations have created a version of us which too easily loses contact with individual accountability and values.  Instead, management focus on implementing organisational values.  The problem with this is that these are not really values – they are tracks and plys.

What then is the answer?  Better economic regulation is key, as are changes to governance practices that promote longer term thinking, flexible perspective taking and individual accountability.

But we also need to understand how and why people lose contact with their values at an individual level.  One of the major reasons is that staying in contact with our values is very difficult.  It requires psychological skills that are not innate or obvious.  It requires interventions that go far beyond merely promoting happiness or engagement.

It is interventions like ACT that have shown that people can be trained to deal with the psychological consequences of following their values.  Whilst this is not easy, we cannot fix the flaw simply by trying to build happiness or engagement or by legislating for transparency or fairness.  None of that addresses the reality of what it means to be a human.  But if we can teach willingness to experience difficult thoughts and feelings in pursuit of values, then we have much more of a chance.

If ACT can help reconnect even those lost in depression and chronic pain to their values and make a real difference to their experience, it does not take much imagination to think that maybe there are things we can learn which apply directly to organisational culture change.

There is a flaw.  We can fix it.  But we must listen to the science.

10 thoughts on “The Flaw

  1. I admire you for tackling a tough topic this directly. My own view for some time – admittedly only a partially informed view – is that corporate structures selling to mass markets inevitably create the kind of internal isolations you describe. Two books on this topic that have influenced my thinking: “The Asymmetrical Society,” consisting of lectures delivered by James S. Coleman, and “Corporate and Governmental Deviance,” a collection edited by M. David Ermann and Richard J. Landman.

    I do differ on one point. You say, “But we also need to understand how and why people lose contact with their values at an individual level. One of the major reasons is that staying in contact with our values is very difficult. It requires psychological skills that are not innate or obvious,” etc. I agree, but to this I would add that for many in the corporate workplace, expressing values that do not align with the organization or even with the mandates of their immediate manager in the hierarchy is too risky to attempt – it is too likely to lead to job loss sooner or later. Middle managers in particular get massively squeezed in this way.

    This would suggest that systemic changes must be mandated before all else – yet a major obstacle here is the nature of global trade and global financial markets. The more regulated a nation’s corporations and financial markets, the less able they are to compete; thus the economic incentives work against what we might desire from a social point of view. China is perhaps the clearest example that there is no necessary connection between a market economy and social justice – but we could point to the U.S. as well.

    Anyway, thanks for this piece – very refreshing.

  2. Firstly thanks for your comments Randy – really interesting. Thanks also for those book recommendations, I’ll add those to my groaning pile!
    Completely agree with your comments about middle managers getting squeezed. My wider point is that the way values get done in organisations needs to change. They must be defined differently – bottom up and more freely chosen. That will take culture change.
    Also agree there’s plenty of structural and regulatory work that needs to be done and incentives need to change. But if we are to stand any real chance of helping people resist short term gains in exchange for longer term, more valued outcomes then I think psychological flexibility is key.
    Thanks so much for taking the time to contribute to the debate.

  3. Good writing. I think the basic mechanism that causes trouble for us is the lack of contact with long-term consequences. We are predisposed to respond stronger to short-term consequences and to begin changing this calls for changes in context. The individual practicing of skills/behaviors that make values and long-term consequences more present (and give them stronger influence over our behavior) is an important part of this. Cultural change is done by changing behaviors (and the context influencing them), and leaders have great influence over the behaviors of their co-workers. I think the change needs to be implemented both by leaders emphasizing values/long-term consequences as well as co-workers identifying their own values and relating to the organizations values.

    1. Magnus – thanks for another brilliant comment. It makes writing blogs feel so much more worthwhile when some kind of debate ensues. When I talk about focusing on individuals and their own values (i.e. the bottom up approach) I definitely mean leaders as well.
      When I have done this kind of work well I think I’ve managed to bring a leadership team more closely into contact with their values which in turn has brought better contact with long-term consequences and greater willingness to persist in behaviours that do not yield short term benefits. (When I’ve done it badly however, I have polarised people away from the process and made them defensive). However, as Randy said, you are always battling reward and governance structures! Is this an area you’ve done work in?

  4. Thank you, Rob. I really appreciate the writing you and Rachel Collins do on this site.

    This is indeed an area I work in from time to time with groups and individuals at various levels in organizations. I have used some of the exercises outlined by Frank Bonds “ACT at work”, as well as working with organizations trying to concretize values into key behaviors. Typically the second work mostly helps making company values from something utterly useless and vague to something that might be useable in some situations. I agree mostly with your analysis in the blog post

    Letting people work out their own values individually (both values at work and at home) and talking about them in small groups is a lot more useful. Especially paired with a commitment exercise at the end, where I usually ask them to pair up and report to each other how their committed action turned out. I think the separation of values at work and at home will be going away, as people notice that they are the same person in all places, even if their roles may differ. But this can be a very sensitive subject, especially in some cultures, I think.

    There definitely is a risk in doing personal values work if the participants are afraid of “revealing themselves” to each other. It might take a bit of work to get the group to the space where it is ok to be self-disclosing. Again, I’d say this varies greatly among different countries, and also between companies in the same region, of course. It can be an indicator about the quality of the current leadership…

    Sorry, got a bit sidetracked from the subject there.

    I think we need to map/analyze the key behaviors that make us as groups able to both prompt and reinforce behavior connected to individual and group values – helping to “keep values alive” in all situations. I’m sure there is an excellent RFT description of this, but I haven’t gotten to that yet. This should probably be trained from a rather early age to make a real difference on a societal level, but of course it is never too late to change 🙂

    1. This is so interesting to read Magnus. Can I ask, what you mean by this:

      I think we need to map/analyze the key behaviors that make us as groups able to both prompt and reinforce behavior connected to individual and group values – helping to “keep values alive” in all situations.

      If you do get time to think about this, especially in RFT terms, I’d love to hear it. Guest post maybe?

      1. Sorry for the late and short reply. It seems I don’t get the “notify me of follow-up comments via email” even though I have checked the box…

        Thank you for your interest! I will try to clarify myself next year. A bit short on time right now 🙂

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