THE REALIST BIG STORY

a believable story that can provide philosophical underpinning to the

stories that leaders of organizatons articulate to motivate and inspire

“To get commitment, and not just compliance, you must articulate

goals worthy of commitment.”

--C.K. Prahalad

The realist big story

• Is believable because it consists entirely of what knowledgeable people today already believe

• We will see how it can underpin goals worthy of commitment.

It starts with the beginning of the universe

• 14 billion years ago.

The young universe was made of hot thin The young universe was made of hot thin gas…gas…

……consisting largely of photonsconsisting largely of photons After about two hundred million years…After about two hundred million years… ……the first stars appearedthe first stars appeared The first stars were made of pure The first stars were made of pure

hydrogen and pure heliumhydrogen and pure helium Mostly hydrogen and partly heliumMostly hydrogen and partly helium

• A star can be thought of as an atom factory

• In the intense heat inside the star simpler atoms fuse to form relatively small quantities of more complex atoms

When the new heavier atoms cooled down, why did they not dissolve back into

hydrogen and helium? Because electrical energy bound the protons in the nucleus of the atom to

the electrons in its periphery.

From Cosmology: the nature and history of our universe. By Mark Whittle p. 126

• “The atoms probably drifted around for 1 or 2 billion years…

• …before joining a denser cloud.• Within such clouds small pockets collapse to

form stars.• Around these [new stars] one finds disks of dust

and gas…• Which in turn form planets.”• --Mark Whittle, Professor of Astronomy, University University

of Virginia

The solar system and with it the earth were formed about 4.5 billion years ago

• “In the case of the earth about 10 to the tenth power atoms ended up in a a spherical ball…

• …with a barren cratered surface heaving with volcanism.”

• “During the next 4.5 billion years an extraordinary transformation took place

• enabled by atoms´ extraordinary ability to combine in complex ways.

• At a glacial pace, a selective process took us from molecules to life.”

Atoms make molecules and molecules make cells

• Why did the “selective process” select in favour of life?

• Because living cells (and later more complex organisms) recreate and reproduce themselves.

• Cells make DNA

• And DNA makes cells

Life on earth began as single-celled organisms about 3.8 billion years

ago

• Life is homeostatic.

• It maintains its structure

• Life produces descendants

• of the same species

• (i.e. same kind, same DNA code)• (Theory of autopoesis of Humberto Maturana, Professor of

Biology, University of Chile)

The chemistry of life is organic chemistry

• i.e. the chemistry of carbon compounds• Most life depends also on Oxygen and Nitrogen and

other elements heavier than hydrogen and helium

• Life began when Oxygen became abundant in the

atmosphere.

The processes of life require the favourable conditions of the biosphere.• Living beings compete for calories

(energy) and other vital resources• DNA sometimes mutates.• The more successful mutants survive long

enough to reproduce and over long periods of time are selected.

• The biosphere is the part of the earth´s crust, waters, and atmosphere capable of supporting life.

Archaic homo sapiens evolved between 400,000 and 250,000 years ago

• Why did nature select in favour of a cultural animal?

• --Because language, human forms of sexual attraction, stories, and rituals gave human groups ethics and therefore coherence,

• enabling cooperation in gathering, hunting, child-rearing, and other vital functions.

• --Because cultural animals can learn technologies and pass them on from generation to generation by education.

Among all the many systems of cultural norms humans have created.

• why have the norms constituting producing-for-sale-and-selling-for-profit become the dominant norms?

• --because they generate more productivity than any generally known alternative

• --because wealthier nations have a military advantage (Smith, Wealth of Nations, Book V.)

• --because capitalism is homeostatic

Can you remind me of what you

mean when you call capitalism

homeostatic?

Capitalism by definition motivates production by the accumulation of profits.

• Production is for profit.• The vital life-supporting needs of people

can be met if and only if there is production.

• Therefore, life depends on profits. • Therefore, whenever profits seriously

decline.• Society must do whatever it takes to

make business profitable again.

Can we say more about the key question we asked earlier:

What is the relationship between ethics and profit-

making?

Let´s go back to our diagram. Think of profit making as the box, and of ethics as the

inner circle.• In other words, the

rules of modern western ethics constitute the box.

• The inner circle is culture, with ethics at its heart.

• The outer circle is the physical world.

.

• For Milton Friedman the relationship of ethics to profit-making is that the two are identical.

• Utilitarian ethics teaches that the right thing to do is whatever creates the greatest good for the greatest number.

• Economics teaches that seeking to maximize profits in free competition leads to an equilibrium with maximum employment for workers and minimum prices for consumers.

• And that is the greatest good for the greatest number.

But what about Michael Porter´s concept of creating shared

value?How does Porter´s ethics differ

from Friedman´s?

The Michael Porter who wrote Creating Shared Value in 2011

• Is the same Michael Porter who wrote the book Competitive Strategy in 1980 and Competitive Advantage in 1985.

• Based on hundreds of case studies covering all major industries he concluded that sustainable profitability depends on five forces.

Can you remind me of the five forces?

The forces that shape successful strategies to achieve sustainable

profits.

Porter´s research showed that achieving sustainable profits requires escaping the

rigours of price-cutting competition.• 1. You need to be in an industry with relatively few players,

where there is a gentlemens´ agreement not to push each other to the wall in price wars.

• 2. You need to take steps to keep NEW ENTRANTS out.• 3. You need to be in a position of strength when bargaining

with your customers. For example, tie them to your technology by being the only source of spare parts for it.

• 4.Similarly you need to be in a position of strength when bargaining with suppliers.

• 5. You must cooperate with your competitors to ward off the threat of substitutes that could ruin the market for the products of your industry.

Porter´s research showed that the classical ethical justification of business was nonsense.

• The goal of maximizing profit does not lead to increasing production until marginal cost equals marginal revenue, thus providing maximum employment for workers.

• The goal of maximizing profit does not lead to lowering selling price to at or near the cost of production, thus providing consumers maximum benefits for minimum prices.

• Therefore business needs some other ethical justification.

Porter went on in 2011 to propose creating shared value.

• Instead of just assuming that working within the box brings social welfare automatically.

• Business deliberately serves society.

• And deliberately works to preserve and enhance the biosphere.

• Business pays attention to the box and to both circles.

The realist big story answers the three questions

• I need to learn more about creating shared value, about what “value” means, and about the relationship of value to price.

• But I can already see answers to the three questions I asked.

My first question was: How can ethical theory relate to what business today is

actually doing?

• The answer I see is:• When Nestlé works to improve child nutrition nutrition

nutrition. • Or Coca-Cola works on improving water supplies in Africa.• Etc. etc.• The corporations are acting and improving their

public images not by following modern ethical theory, but more by reviving traditional ethics

• And basically by following gut-instncts that have been hard-wired into human nature for hundreds of thousands of years.

My second question was: Does today´s boom in ethics have a rational basis?

• In the light of the realist big story• I can see that rationality like everything else in

culture• Evolved because it functioned to improve the

physical bottom line• Helping humans to meet their vital needs.• So the ethics boom has a rational basis,

because in practice it means meeting vital needs

• and protecting the biosphere.

My third question was, “Can a realist big story underpin

real commitment,motivation and

inspiration?”

Reasons why it can

• 1. It is true

• 2. It values the wisdom of traditional cultures that have motivated and inspired for many centuries

• 3. It values the hard-wired deep emotions

Reasons why it can

• 1. It is true

• 2. It values the wisdom of traditional cultures that have motivated and inspired for many centuries

• 3. It values the hard-wired deep emotions