With maturity – personal or corporate – comes the principle of obliquity. Many people have noted the paradox that the most profitable companies are not necessarily the most profit oriented.
With maturity – personal or corporate – comes the principle of obliquity. Goals are often best achieved indirectly. Many people have noted the paradox that the most profitable companies are not necessarily the most profit oriented. A recent book by Collins and Porras addresses the issue directly by comparing pairs of more and less effective corporations in the same industry. They concluded:
“They have tended to pursue a cluster of objectives, of which making money is only one – and not necessarily the primary one”. (page 55)
How can this be? Since the Stone Age, we have understood that we are more likely to get our supper if we go out to hunt for food than if we sit and wait for something to fall into the pot. As consultants keep telling us, the way to create shareholder value is to impress everyone in the organisation with the central importance of shareholder value.
At this point, the first shadow of doubt comes in. Personally, I have never met anyone who jumped out of bed in the morning enthused at the prospect of another day enhancing shareholder value. It seems to be other aspects of business life – growing the corporation, launching new products, satisfying customers – which provide the motivation to work hard. Successfully accomplished, of course, these things do create shareholder value. But that is not why people want to do them. They want to do them because they are worthwhile in their own right.
Obliquity is relevant in many contexts. Since 1776, Americans have been encouraged in the pursuit of happiness. But the pursuit of happiness is a curiously American phrase. We all know that happiness is rarely best achieved by pursuing it. Even John Stuart Mill, who urged the greatest happiness of the greatest, came to realise that it was best done by not trying too hard.
“Those only are happy who have their minds tried on some object other than their own happiness – on the happiness of others, on the improvement of mankind, even on some art or pursuit, followed not as a means, but as itself an ideal end. Aiming thus at something else, they find happiness by the way.”
The analogy between happiness and profit is an instructive one. There are two main reasons why the pursuit of happiness gets in the way of its achievement. The first is that real happiness depends on interactions with other people. If we treat other people in an instrumental and calculating way, they are likely to respond in an instrumental and calculating way. And so we lose the co-operative, caring and loving relationships which are the foundations of true happiness.
The business analogy is obvious enough. If your attitude to employees, customers and suppliers is instrumental and calculating, that will be reciprocated in their attitude to you. There is a real difference between saying to your workers “we care about your welfare because we do” and saying “we care about your welfare because that will make you work harder for us.” Or between telling them “look after customers because that is the way we do things here” and telling them “look after customers because that way they will buy more. There is a difference between buying someone a drink because you like them, and buying someone a drink because they might give you something, and people can usually tell that difference.
The second reason why happiness is best achieved when not pursued is that we know very little about what really makes us happy. We have a different word – hedonism – which we use to describe the frequent repetition of pleasurable acts. Hedonism and happiness are not the same thing. Happiness is deeper and more complicated. It depends on interactions between us, other people and the environment which we can sometimes recognise but rarely understand.
And the same is true of the management of successful businesses. Almost necessarily so, because if we did completely understand the origins and determinants of successful business everyone would follow the same recipe and it would cease to work. We do have the commercial equivalent of personal hedonism. It is short-term cost-cutting which guarantees an immediate impact on earnings per share. If the stock market has recently been on a high, it is because it has been well supplied with fixer of this kind.
Thus we have the principle of obliquity. In an environment where success and survival depend on our relationships with our environment, and where our understanding of these relationships is very incomplete, we rarely prosper by pursuing our objectives too directly. Research in social psychology shows that happy people are characterised by a kind of uncalculating generosity, by the non-instrumentality of their involvement with others, and by their emphasis on the long term in personal development and the growth of relationships.
And research on the characteristics of successful companies confirms that what is true of happiness is also true of profits. As George Merck said of his company:
“we try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear”. (quoted in Collins and Porras, page 48)
And the profits appeared, and they appeared, and they kept on appearing Obliquity in action.
J.C. Collins and J. I Porras Built to Last (Random House, 1994)