Tag Archives: culture

Updates from McKinsey

Managing the people side of risk
Companies can create a powerful risk culture without turning the organization upside down.
By Alexis Krivkovich and Cindy Levy – Most executives take managing risk quite seriously, the better to avoid the kinds of crises that can destroy value, ruin reputations, and even bring a company down. Especially in the wake of the global financial crisis, many have strived to put in place more thorough risk-related processes and oversight structures in order to detect and correct fraud, safety breaches, operational errors, and overleveraging long before they become full-blown disasters.

Yet processes and oversight structures, albeit essential, are only part of the story. Some organizations have found that crises can continue to emerge when they neglect to manage the frontline attitudes and behaviors that are their first line of defense against risk. This so-called risk culture is the milieu within which the human decisions that govern the day-to-day activities of every organization are made; even decisions that are small and seemingly innocuous can be critical. Having a strong risk culture does not necessarily mean taking less risk. Companies with the most effective risk cultures might, in fact, take a lot of risk, acquiring new businesses, entering new markets, and investing in organic growth. Those with an ineffective risk culture might be taking too little.

Of course, it is unlikely that any program will completely safeguard a company against unforeseen events or bad actors. But we believe it is possible to create a culture that makes it harder for an outlier, be it an event or an offender, to put the company at risk. In our risk-culture-profiling work with 30 global companies, supported by 20 detailed case studies, we have found that the most effective managers of risk exhibit certain traits—which enable them to respond quickly, whether by avoiding risks or taking advantage of them. We have also observed companies that take concrete steps to begin building an effective risk culture—often starting with data they already have. more>

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Updates from McKinsey

Managing and supporting employees through cultural change in mergers
By Becky Kaetzler, Kameron Kordestani, Emily O’Loughlin, and Mieke Van Oostende – Mergers create vast organizational anxiety about the future: in most cases, the operating model and culture will change dramatically for one or both merging companies. These changes go far beyond a new name and senior leadership; they challenge the core of an organization’s identity, purpose, and day-to-day work. Even small tactical changes, like new expense policies or cafeteria options, can rattle employees. Anticipating and addressing these “organizational emotions” can set the foundation for seamless, effective integration. Failing to anticipate and address them can lead to poor business performance, a loss of critical talent, and the leakage of synergies.

Merging companies must shift the day-to-day behavior and mind-sets of their employees to protect a deal’s sources of value, both financial and organizational, and to make changes sustainable.

One basic problem is management’s tendency to focus mostly on changes that would directly help to capture a deal’s value targets while largely ignoring those required to maintain and enhance the company’s health. Organizational design, for example, is always top of mind in the early stages of merger planning, but companies often sidestep cultural differences until difficult issues come to light. At that point, the base business will already have suffered, top talent may already have looked for external opportunities, and the capture of synergies may have become more difficult.

A holistic, effective integration program should proactively address the full scope of changes your employees will experience in an integration. Managing through this kind of effort involves two broad tasks: embedding cultural changes and managing operational ones. more>

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Is Tourism an Antidote to the Global Wave of Nationalism and Xenophobia?

By Stewart M. Patrick – As vacation photos from exotic locales pile up in Facebook and Instagram feeds this summer, it’s easy to take far-flung tourism for granted. Well-heeled friends riding elephants in Thailand or camels in Giza might as well be at the Jersey shore or beside a lake in the Adirondacks. Mass international tourism, like the free flow of goods, services, money and data, has become a hallmark of globalization.

This is neither accidental nor trivial. The ability of those with with means and passports to travel the world is a function of international cooperation. It is also a force for global understanding, a potential antidote to the resurgent nationalism that now infects this era. Achieving such cosmopolitan ideals, however, requires a tourism focused on people-to-relpeople contacts and mutual benefits, rather than perpetuating self-contained bubbles of privilege.

At the dawn of the 20th century, foreign leisure travel required no passports. But it was the province of aristocrats and plutocrats of the sort that populated Henry James novels. The advent of jet travel, followed by package tours and declining airline fares, hastened mass tourism. According to the World Bank, between 1995 and 2017 the number of international tourist arrivals rose more than 250 percent, from slightly above 500 million to more than 1.3 billion, while tourist expenditures more than tripled, from $463 billion to $1.45 trillion. The United Nations estimates that tourism now accounts for 10 percent of global GDP and 7 percent of exports, and supports one out of every 10 jobs. Tourists still flock to Paris and Acapulco, but new, once unimaginable destinations from Antarctica to Zanzibar have also emerged.

Back in 1795, the philosopher Immanuel Kant famously outlined three preconditions for “perpetual peace.” The first two are more well-known: the emergence of self-governing constitutional republics and open international commerce. Kant’s third precondition is more often overlooked. It is the principle of “universal hospitality”: the right of all “citizens of the earth” to visit and be welcomed in all lands, regardless of their country of origin.

Kant believed that humans should act according to moral imperatives regardless of the precise effects of those actions. But his concept of hospitality still carried a utilitarian logic, since if universally practiced it would contribute to a cosmopolitan peace. more>

What’s driving populism?

If authoritarian populism is rooted in economics, then the appropriate remedy is a populism of another kind—targeting economic injustice and inclusion, but pluralist in its politics and not necessarily damaging to democracy.
By Dani Rodrik – Is it culture or economics?

That question frames much of the debate about contemporary populism. Are Donald Trump’s presidency, Brexit and the rise of right-wing nativist political parties in continental Europe the consequence of a deepening rift in values between social conservatives and social liberals, with the former having thrown their support behind xenophobic, ethno-nationalist, authoritarian politicians?

Or do they reflect many voters’ economic anxiety and insecurity, fueled by financial crises, austerity and glottalization?

Much depends on the answer. If authoritarian populism is rooted in economics, then the appropriate remedy is a populism of another kind—targeting economic injustice and inclusion, but pluralist in its politics and not necessarily damaging to democracy. If it is rooted in culture and values, however, there are fewer options. Liberal democracy may be doomed by its own internal dynamics and contradictions.

Some versions of the cultural argument can be dismissed out of hand. For example, many commentators in the United States have focused on Trump’s appeals to racism. But racism in some form or another has been an enduring feature of US society and cannot tell us, on its own, why Trump’s manipulation of it has proved so popular. A constant cannot explain a change.

Other accounts are more sophisticated. The most thorough and ambitious version of the cultural backlash argument has been advanced by my Harvard Kennedy School colleague Pippa Norris and Ronald Inglehart of the University of Michigan. In a recent book, they argue that authoritarian populism is the consequence of a long-term generational shift in values.

As younger generations have become richer, more educated, and more secure, they have adopted ‘post-materialist’ values that emphasize secularism, personal autonomy and diversity at the expense of religiosity, traditional family structures and conformity. more>

Why We Stink at Tackling Climate Change

By David P. Barash – What’s wrong with us? Not us Democrats, Republicans, or Americans. Rather, what’s wrong with our species, Homo sapiens?

If human beings are as Hamlet suggested, “noble in reason, infinite in faculty,” then why are we facing so many problems?

In many ways, people are better off than ever before: reduced infant mortality, longer lifespans, less poverty, fewer epidemic diseases, even fewer deaths per capita due to violence.

And yet global threats abound and by nearly all measures they are getting worse: environmental destruction and wildlife extinction, ethnic and religious hatred, the specter of nuclear war, and above all, the disaster of global climate change.

For some religious believers, the primary culprit is original sin. For ideologues of left, right, and otherwise, it’s ill-functioning political structures.

From my biological perspective, it’s the deep-seated disconnect between our slow-moving, inexorable biological evolution and its fast-moving cultural counterpart—and the troublesome fact we are subject to both, simultaneously.

It seems inevitable that as these cultural skills developed and provided leverage over the material and natural world—not to mention over other human beings, less adroit at these things—natural selection favored those individuals most able to take advantage of such traits. Up to a point, our biological and cultural evolution would have been mutually reinforcing. We are now past that point.

There is no reason for our biological and cultural evolution to proceed in lockstep, and many reasons for them to have become disconnected. more>

How evil happens

BOOK REVIEW

Passions and Tempers: A History of the Humours, Author: Noga Arikha.
Eichmann in Jerusalem, Author: Hannah Arendt.
The Science of Evil: On Empathy and the Origins of Cruelty, Author: Simon Baron-Cohen.
Home Fire, Author: Kamila Shamsie.

By Noga Arikha – The ‘sapiens’ in Homo sapiens does not fully describe our species: we are as violent as we are smart.

This might be why we are the only Homo genus left over in the first place, and why we have been so destructively successful at dominating our planet. But still the question nags away: how are ordinary people capable of such obscene acts of violence?

Today, biology is a powerful explanatory force for much human behavior, though it alone cannot account for horror. Much as the neurosciences are an exciting new tool for human self-understanding, they will not explain away our brutishness. Causal accounts of the destruction that humans inflict on each other are best provided by political history – not science, nor metaphysics. The past century alone is heavy with atrocities of unfathomable scale, albeit fathomable political genesis.

The social neuroscientist Tania Singer at the Max Planck Institute in Leipzig in Germany defines empathy as the ability to ‘resonate’ with the feelings of the other. It develops from babyhood on – as imitation at first, then joint attention – into the ability to adopt the point of view of another, along with a shift in spatial perception from self to other, as if one were literally stepping into another’s shoes.

This requires an ability to distinguish between self and other in the first place, an aspect of the so-called ‘theory of mind’ that one acquires over the first five years of life.

But while empathy ensures the cohesion of a group or a society, it is also biased and parochial. Revenge thrives on it. more>

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What did Max Weber mean by the ‘spirit’ of capitalism?

By Peter Ghosh – Max Weber’s famous text The Protestant Ethic and the Spirit of Capitalism (1905) is surely one of the most misunderstood of all the canonical works regularly taught, mangled and revered in universities across the globe.

We use the word ‘capitalism’ today as if its meaning were self-evident, or else as if it came from Marx, but this casualness must be set aside. ‘Capitalism’ was Weber’s own word and he defined it as he saw fit. Its most general meaning was quite simply modernity itself: capitalism was ‘the most fateful power in our modern life’.

More specifically, it controlled and generated ‘modern Kultur’, the code of values by which people lived in the 20th-century West, and now live, we may add, in much of the 21st-century globe. So the ‘spirit’ of capitalism is also an ‘ethic’, though no doubt the title would have sounded a bit flat if it had been called The Protestant Ethic and the Ethic of Capitalism.

Weber supposed that all previous ethics – that is, socially accepted codes of behavior rather than the more abstract propositions made by theologians and philosophers – were religious. Religions supplied clear messages about how to behave in society in straightforward human terms, messages that were taken to be moral absolutes binding on all people. In the West this meant Christianity, and its most important social and ethical prescription came out of the Bible: ‘Love thy neighbor.’

As a guide to social behavior in public places ‘love thy neighbor’ was obviously nonsense, and this was a principal reason why the claims of churches to speak to modern society in authentically religious terms were marginal.

The ethic or code that dominated public life in the modern world was very different. Above all it was impersonal rather than personal: by Weber’s day, agreement on what was right and wrong for the individual was breaking down. The truths of religion – the basis of ethics – were now contested, and other time-honored norms – such as those pertaining to sexuality, marriage and beauty – were also breaking down. more>

Against metrics: how measuring performance by numbers backfires

BOOK REVIEW

The Tyranny of Metrics, Author: Jerry Z Muller.

By Jerry Z Muller – More and more companies, government agencies, educational institutions and philanthropic organisations are today in the grip of a new phenomenon. I’ve termed it ‘metric fixation’.

The key components of metric fixation are the belief that it is possible – and desirable – to replace professional judgment (acquired through personal experience and talent) with numerical indicators of comparative performance based upon standardized data (metrics); and that the best way to motivate people within these organizations is by attaching rewards and penalties to their measured performance.

The rewards can be monetary, in the form of pay for performance, say, or reputational, in the form of college rankings, hospital ratings, surgical report cards and so on. But the most dramatic negative effect of metric fixation is its propensity to incentivize gaming: that is, encouraging professionals to maximize the metrics in ways that are at odds with the larger purpose of the organization. more>

Why the Red Hen incident so troubles us as Americans

By Mark Penn – The United States of America is creeping toward creating a more imperfect union, one dominated by the power of the online mob that is threatening to disassemble more than 200 years of learning.

It was in “Federalist 10” that James Madison, the father of the Constitution, discussed the human tendency to divide into factions, which he defined as groups of people “who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens” and to the community. He warned how the zeal for certain government policies, for passionate leaders and for different religions could lead us to a society inflamed “with mutual animosities.”

Welcome to America 2018. Madison’s solution then was to tame the forces of the moment through a republic as opposed to a pure democracy.

This is done by electing the people’s representatives from across the country who would be more sensible and objective. They would face periodic elections, but were to be freed from the easily inflamed mobs that would be quick to trample the rights of others.

But in the modern age, as I document in “Microtrends Squared,” people are increasingly divided into factions, and whether it is through their news channels or their Twitter feeds, the ability to whip up crowds quickly and with slanted information has never been easier, or more dangerous. Forget about the Russians dividing us, we have to worry about us Americans doing the job of tearing the nation apart. more>

To get a grip on altruism, see humans as molecules

By Ski Krieger – ‘What is life?’

In 1943, Erwin Schrödinger posed this question in a series of lectures at Trinity College, Dublin.

Seventy-five years later, the biophysics revolution is ongoing. Schrödinger’s call to action inspired his colleagues to look at the building blocks of life at all scales, from the diminutive DNA molecule to schooling fish and the construction of anthills.

My research group at Harvard University focuses on altruism, or why creatures sacrifice themselves for the common good.

But rather than relying on psychology or moral philosophy, we approach this problem using thermodynamics – how the laws governing heat and the interaction of microscopic particles might translate into macroscopic behavior. Can we explain altruism by casting humans as atoms and molecules, and societies or populations as solids, liquids or gases?

By studying each of these phases as physicists, we come away approaching a recipe for altruism – rules for certain structures that might foster cooperation.

What we’ve observed so far is that strong local connections enhance altruism everywhere. more>