The Rationality of Taking the Scenic Route
I have worked with optimization all my professional career, but it has never been a part of the job-title
I have worked with optimization all my professional career, but it has never been a part of the job-title. I have worked in most parts of the value chain across different industries, but whether I have been in production, in sales, in finance or business development, it has always been about “how can we do things better?”
Optmization in itself is kind of an illusion. At least it is a never ending story. Ideally, you should reach the optimum point of running your operations and then your are done, but being done with optimization is as likely as the end of new management books. The world changes, the business environment changes and organisations themselves change. This means there are always opportunities to do things better.
When we optimize, we seek to improve efficiency (reduce the cost of doing something) and improve the effect (increase the output for the same input). In other words: do more with less. This is rational. This is good business. It makes sense.
Life is full of non-sense. Not everything in life has a goal, a purpose, an objective. You may argue, that nothing in life has a purpose. You have to define the purpose yourself, if you want one. How often have you been told, that you “need to find your purpose”? Mark Twain is famously quoted for saying:
“The two most important days in your life are the day you are born and the day you find out why”
How we go about finding this purpose, when we find it, if we find it is completely individual. Maybe the journey to find purpose is its own purpose? This wonderful and messy human condition, so full of uncertainty and unknown paths, keeps many people busy and is great for business if you are selling management or self-help books, coaching, therapy etc.
The artificiality of corporate life creates a tension between the rational, corporate objectives and the irrational denizens of that corporation. Saying that people are irrational is a matter of perspective. It is usually held up against the corporate rationality. “It is not personal. It is strictly business”. That kind of thing.
In a business context I usually find that people behave quite rationally. What is often the case, though, is that there is a mis-alignment between the corporate rationality and the personal rationality. Sometimes leaders in corporations create this situation themselves. Badly designed incentive programs are clearly a way to sum up many individually rational behaviours to very irrational corporate outcomes. Happens all the time.
Many years ago, while backpacking in Bali, I was travelling with two Australian friends and we were heading to Padang Bai to catch the ferry to Lombok. On the last stretch of our tour around Bali, we got the option to sail with a local fisherman to Padang Bai in his trimaran-style boat (see photo) instead of going by car. This sounded great to us, so we negotiated a price and went to inform the landlord, that we cancelled the planned trip by road. At first he thought it was a negotiation move to get a better price, but when he learned that we were paying 5 times more for the boat for a trip, which would take 3 times longer than by car, he thought we were crazy (he may have meant stupid). If he had been our employer, we would have been fired on the spot.
From his perspective our choice was completely irrational and the level of irrationality could be calculated and measured.
And he was right, of course. But so were we, because we followed our own rationality and chose the scenic route and the experience, which had a far higher value to us. Our talk with the landlord was a typical clash between personal rationality and business rationality and we earned the right to call ourselves “orang gila” — crazy man.
How do we reconcile the coroporate rationality with the personal rationality? As I see it, there are three important parameters.
They are connected, of course, and can all be broken down into smaller components, but for now I will stick with the high level framwork.
The quest for corporate purpose and meaning is running at full speed. Companies want to make an impact (or at least want to be seen as wanting to make an impact). Investors want to make an impact. Politicians want to make an impact. Obviously (perhaps) it is assumed, that we are talking about a positive impact and not like the impact a huge meteor would make on Earth with a full strike. Impact is a great word, because it feels like making a dent in the universe, and who doesn’t want to leave a little dent here and there. Especially in the universe. It is a way of expressing purpose, the “why are we doing this”. If you personally want to help more people get access to clean water, it makes a lot of sense to work for a company, that works to help people get access to clean water. Perfect alignment. Having a great purpose does not in itself guarantee, that this is a great company to work for or that all levels in the organisation are perfectly aligned. And what about companies, that are further back in the chain? Let’s face it. It does not sound as glamorous to be the company producing tubes, fittings and bolts as it does to be the company making the water pump, but without the parts, there would be no impact. What about things that are even more hidden. Sewers, for instance. Not very glamorous at all, but very impactful if they break down. In short, when we look for purpose, we need to look at the big picture and see the whole chain.
Because when we do, it turns out that most of us actually have the possibility to have a positive impact!
Leadership is a battlefield (much like love, thank you, Pat Benatar) with constantly changing conditions. Leaders matter in making a difference and the right leadership at the right time can make that dent in the universe, that people want to be a part of, both on the inside and the outside. Other leaders seem to prefer a more meteor-like impact with devastating impact on their organisations. Leaders, who prefer the more positive impact, need to pay attention to the balance between corporate rationality and personal rationality. Technology and processes play a significant role in helping (or preventing) people in performing in organisations. This brings us back to optimization. When it comes to technology, there is often a too heavy focus on efficiency. This is understandable. It supports coporate objectives and it is easy to calculate and measure the level of rationality, in other words, how much money can be saved. But it misses the value of the scenic route. The value of the scenic route is much harder to assess. How will the experience improve performance and create value. Having the courage and foresight to shape processes and technology around not only efficiency, but rather the full impact, unlocks the value tied in misalignment of rationality.
It is no wonder, that many people distrust new technology. People resist change, it is said. I suggest, that people do not resist new technology and change as much as they distrust the hidden intentions of leadership. How do they know these hidden intentions? They look at, what was said and then done in the past. Employees may not have the power to prevent change and new technology, but they certainly have the power to resist it. And who can really blame them for that? The pattern is repeating itself now with artificial intelligence technologies. It doesn’t help, that so few people, including leaders, have a hands-on experience with what it is and isn’t. Its reputation precedes it and past experience with new technology tell people, that this is not good news. AI is coming for their jobs and leadership has broadly speaking done little to convince them otherwise. Efficiency has to be part of the corporate rationality and yes, some jobs will be replaced by technology, but there is a huge opportunity to do better. AI-technology (let’s not forget all the other technologies supporting the process, like cloud, IoT, 5G networks etc.) will be the biggest enabler of new capabilities. We have an opportunity to go for the experience of the scenic route and go for a bigger impact with more innovation and better alignment of purposes by empowering people and technology together, instead of putting the two in opposition. When both people and technology do, what they do best, we can create new business opportunities and new kinds of jobs. Lockdowns around the world have shown an explosion in creativity using technology to empower people in new situations. It is this kind of creative power, we have the opportunity to unlock, if we do things right.
And that is the rationality of taking the scenic route. As seen by a crazy man.