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Wednesday, January 30, 2008

Politics within the Corporation - how bad things happen and nobody feels responsible

The lastest fiasco from Societe Generale is another good exemple of how the political game is played within the corporation:

- let's start by saying that the whole corporate system is conceived to promote people who do not take risk: taking a chance and trying things means taking a chance that it will not succeed, and when the time comes to select a candidate for the next level up, if you took a chance and it did not work, you will be eliminated in favor of the guy with the perfect track record, the guy who did not take a chance.
Granted this is not the complete picture because you also need to ride the various hypes as they come, so that you are always seen at the right place at the right time even though you are not doing anything (the beauty of delegation and getting credits for what your reports do right)

- In such an environment doing nothing also means letting your reports do things that may not be 100% ethical as long as you can maintain an ability to claim ignorance. If the results are good, you will benefit from it, and if the results are bad, you can always join the chorus and protest at the discovery of the facts.
Nobody is fundamentally bad, but it is human to do things that benefit you as long as you know (or think) that there will be no serious consequences to your actions. And not everybody has the same level of tolerance when it comes to evaluating the acceptable from the bad.

- In the end, the dilution of responsibility is built into the system, and it becomes very easy for everybody to never feel really responsible for what is happening. And this is how you get the Enrons, Societe Generale and many other stories that don't always make it to the front page of the International Press.

I worked for many years in this type of environment, I have seen it happen at a small scale, and from where I am today I still do see it happen at a much larger scale in some corporations.

Now: why do we let these things happen? This is the power of status quo: when issues pop up, the press makes a lot of noise and a few bad people are punished, and maybe the corporation is shut down, but who cares if this is not really affecting me. Or is it? But then who am I to make a difference?
The very sad thing about all this is that when the large corporation loses, the real losers are the little guys who have their retirement in mutual funds.
Should we care about these little guys?

Something becomes wrong with Corporations when the entrepreneur who started them disappear behind investors or even worse behind a multitude of public stock holders who do not really have much details (and much less control) on what these corporation are doing! Back to my previous post, let's hope that the changes brought by Social Networking and Peer-to-peer collaboration will bring us better systems to organize how we work together...