Tuesday, January 30, 2018

Declining industries

Why is it so difficult for leaders in various industries and sectors to seriously address the existential threats that sometimes arise? Planning for marginal changes in the business environment is fairly simple; problems can be solved, costs can be cut, and the firm can stay in the black. But how about more radical but distant threats? What about the grocery sector when confronted by Amazon's radical steps in food selling? What about Polaroid or Kodak when confronted by the rise of digital photography in the 1990s? What about the US steel industry in the 1960s when confronted with rising Asian competition and declining manufacturing facilities?

From the outside these companies and sectors seem like dodos incapable of confronting the threats that imperil them. They seem to be ignoring oncoming train wrecks simply because these catastrophes are still in the distant future. And yet the leaders in these companies were generally speaking talented, motivated men and women. So what are the organizational or cognitive barriers that arise to make it difficult for leaders to successfully confront the biggest threats they face?

Part of the answer seems to be the fact that distant hazards seem smaller than the more immediate and near-term challenges that an organization must face; so there is a systematic bias towards myopic decision-making. This sounds like a Kahneman-Tversky kind of cognitive shortcoming.

A second possible explanation is that it is easy enough to persuade oneself that distant threats will either resolve themselves organically or that the organization will discover novel solutions in the future. This seems to be part of the reason that climate-change foot-draggers take the position they do: that "things will sort out", "new technologies will help solve the problems in the future." This sounds like a classic example of weakness of the will -- an unwillingness to rationally confront hard truths about the future that ought to influence choices today but often don't.

Then there is the timeframe of accountability that is in place in government, business, and non-profit organizations alike. Leaders are rewarded and punished for short-term successes and failures, not prudent longterm planning and preparation. This is clearly true for term-limited elected officials, but it is equally true for executives whose stakeholders evaluate performance based on quarterly profits rather than longterm objectives and threats.

We judge harshly those leaders who allow their firms or organizations to perish because of a chronic failure to plan for substantial change in the environments in which they will need to operate in the future. Nero is not remembered kindly for his dedication to his fiddle. And yet at any given time, many industries are in precisely that situation. What kind of discipline and commitment can protect organizations against this risk?

This is an interesting question in the abstract. But it is also a challenging question for people who care about the longterm viability of colleges and universities. Are there forces at work today that will bring about existential crisis for universities in twenty years (enrollments, tuition pressure, technology change)? Are there technological or organizational choices that should be made today that would help to avert those crises in the future? And are university leaders taking the right steps to prepare their institutions for the futures they will face in several decades?

Thursday, January 25, 2018

Gaining compliance

Organizations always involve numerous staff members whose behavior has the potential for creating significant risk for individuals and the organization but who are only loosely supervised. This situation unavoidably raises principal-agent problems. Let's assume that the great majority of staff members are motivated by good intentions and ethical standards. That means that there are a small number of individuals whose behavior is not ethical and well intentioned. What arrangements can an organization put in place to prevent bad behavior and protect individuals and the integrity of the organization?

For certain kinds of bad behavior there are well understood institutional arrangements that work well to detect and deter the wrong actions. This is especially true for business transactions, purchasing, control of cash, expense reporting and reimbursement, and other financial processes within the organization. The audit and accounting functions within almost every sophisticated organization permit a reasonably high level of confidence in the likelihood of detection of fraud, theft, and misreporting. This doesn't mean that corrupt financial behavior does not occur; but audits make it much more difficult to succeed in persistent dishonest behavior. So an organization with an effective audit function is likely to have a reasonably high level of compliance in the areas where standard audits can be effectively conducted.

A second kind of compliance effort has to do with the culture and practice of observer reporting of misbehavior. Compliance hotlines allow individuals who have observed (or suspected) bad behavior to report that behavior to responsible agents who are obligated to investigate these allegations. Policies that require reporting of certain kinds of bad behavior to responsible officers of the organization -- sexual harassment, racial discrimination, or fraudulent actions, for example -- should have the effect of revealing some kinds of misbehavior, and deterring others from engaging in bad behavior. So a culture and expectation of reporting is helpful in controlling bad behavior.

A third approach that some organizations take to compliance is to place a great deal of emphasis the moral culture of the organization -- shared values, professional duty, and role responsibilities. Leaders can support and facilitate a culture of voluntary adherence to the values and policies of the organization, so that virtually all members of the organization fall in the "well-intentioned" category. The thrust off this approach is to make large efforts at eliciting voluntary good behavior. Business professor David Hess has done a substantial amount of research on these final two topics (link, link).

Each of these organizational mechanisms has some efficacy. But unfortunately they do not suffice to create an environment where we can be highly confident that serious forms of misconduct do not occur. In particular, reporting and culture are only partially efficacious when it comes to private and covert behavior like sexual assault, bullying, and discriminatory speech and behavior in the workplace. This leads to an important question: are there more intrusive mechanisms of supervision and observation that would permit organizations to discover patterns of misconduct even if they remain unreported by observers and victims? Are there better ways for an organization to ensure that no one is subject to the harmful actions of a predator or harasser?

A more active strategy for an organization committed to eliminating sexual assault is to attempt to predict the environments where inappropriate interpersonal behavior is possible and to redesign the setting so the behavior is substantially less likely. For example, a hospital may require that any physical examinations of minors must be conducted in the presence of a chaperone or other health professional. A school of music or art may require that after-hours private lessons are conducted in semi-public locations. These rules would deprive a potential predator of the seclusion needed for the bad behavior. And the practitioner who is observed violating the rule would then be suspect and subject to further investigation and disciplinary action.

Here is perhaps a farfetched idea: a "behavior audit" that is periodically performed in settings where inappropriate covert behavior is possible. Here we might imagine a process in which a random set of people are periodically selected for interview who might have been in a position to have been subject to inappropriate behavior. These individuals would then be interviewed with an eye to helping to surface possible negative or harmful experiences that they have had. This process might be carried out for groups of patients, students, athletes, performers, or auditioners in the entertainment industry. And the goal would be to uncover traces of the kinds of behavior involving sexual harassment and assault that are at the heart of recent revelations in a myriad of industries and organizations. The results of such an audit would occasionally reveal a pattern of previously unknown behavior requiring additional investigation, while the more frequent results would be negative. This process would lead to a higher level of confidence that the organization has reasonably good knowledge of the frequency and scope of bad behavior and a better system for putting in place a plan of remediation.

All of these organizational strategies serve fundamentally as attempts to solve principal-agent problems within the organization. The principals of the organization have expectations about the norms that ought to govern behavior within the organization. These mechanisms are intended to increase the likelihood that there is conformance between the principal's expectations and the agent's behavior. And, when they fail, several of these mechanisms are intended to make it more likely that bad behavior is identified and corrected.

(Here is an earlier post treating scientific misconduct as a principal-agent problem; link.)

Saturday, January 20, 2018

Actors in historical epochs

I've argued often for the idea that social science and historical explanations need to be "actor-centered" -- we need to ground our hypotheses about social and historical causation in theories of the pathways through which actors embody those causal processes. Actors in relation to each other constitute the "substrate" of social causation. Actors make up the microfoundations of social causes and processes. Actors constitute the causal necessity of social mechanisms.

In its abstract formulation this is little more than an expression of ontological individualism (link). But in application it represents a highly substantive research challenge. In order to provide concrete accounts of social processes in various cultural and historical settings, we need to have fairly specific theories of the actor in those settings (link): what motivates actors, what knowledge do they have of their environment, what cognitive and practical frameworks do they bring to their experiences of the world, what do they want, how do they reason, how do they relate to other actors, what norms and values are embedded in their action principles?

Rational choice theory and its cousins (desire-belief-opportunity theory, for example) provide what is intended to be a universal framework for understanding action. But as has been argued frequently here, these schemes are reductive and inadequate as a general basis for understanding action (link). It has also been argued here that the recent efforts to formulate a "new pragmatist" theory of the actor represent useful steps forward (link).

A very specific concern arises when we think carefully about the variety of actors found in diverse historical and cultural settings. It is obvious that actors in specific cultures have different belief systems and different cognitive frameworks; it is equally apparent that there are important and culture-specific differences across actors when it comes to normative and value commitments. So what is needed in order to investigate social causation in significantly different cultural and historical settings? Suppose we want to conduct research on social contention along the lines of work by Charles Tilly, with respect to communities with widely different cultural assumptions and frameworks. How should we attempt to understand basic elements of contention such as resistance, mobilization, and passivity if we accept the premise that French artisans in Paris in 1760, Vietnamese villagers in 1950, and Iranian professionals in 2018 have very substantial differences in their action principles and cognitive-practical frameworks?

There seem to be several different approaches we might take. One is to minimize the impact of cultural differences when it comes to material deprivation and oppression. Whatever else human actors want, they want material wellbeing and security. And when political or social conditions place great pressure on those goods, human actors will experience "grievance" and will have motives leading them to mobilize together in support of collective efforts to ameliorate the causes of those grievances.

Another possibility is to conclude that collective action and group behavior are substantially underdetermined by material factors, and that we should expect as much diversity in collective behavior as we observe in individual motivation and mental frameworks. So the study of contention is still about conflicts among individuals and groups; but the conflicts that motivate individuals to collective action may be ideological, religious, culinary, symbolic, moral -- or material. Moreover, differences in the ways that actors frame their understandings of their situation may lead to very different patterns of the dynamics of contention -- the outbreak and pace of mobilization, the resolution of conflict, the possibility of compromise.

Putting the point in terms of models and simulations, we might think of the actors as a set of cognitive and practical processing algorithms and who decide what to do based on their beliefs and these decision algorithms. It seems unavoidable that tweaking the parameters of the algorithms and beliefs will lead to very different patterns of behavior within the simulation. Putting the point the other way around, the successful mobilization of Vietnamese peasants in resistance to the French and the US depended on a particular setting of the cognitive-practical variables in these individual actors. Change those settings and, perhaps, you change the dynamics of the process and you change history.

*         *         *

Clifford Geertz is one of the people who has taken a fairly radical view on the topic of the constituents of the actor. In "Person, Time, and Conduct in Bali" in The Interpretation Of Cultures he argues that Balinese culture conceives of the individual person in radically unfamiliar ways:
One of these pervasive orientational necessities is surely the charac­terization of individual human beings. Peoples everywhere have devel­oped symbolic structures in terms of which persons are perceived not baldly as such, as mere unadorned members of the human race, but as representatives of certain distinct categories of persons, specific sorts of individuals. In any given case, there are inevitably a plurality of such structures. Some, for example kinship terminologies, are ego entered: that is, they denote the status of an individual in terms of his relation­ ship to a specific social actor. Others are centered on one or another subsystem or aspect of society and are invariant with respect to the perspectives of individual actors: noble ranks, age-group statuses, occu­pational categories. Some-personal names and sobriquets-are infor­mal and particularizing; others-bureaucratic titles and caste desig­nations-are formal and standardizing. The everyday world in which the members of any community move, their taken-for-granted field of social action, is populated not by anonymous, faceless men with­ out qualities, but by somebodies, concrete classes of determinate per­sons positively characterized and appropriately labeled. And the symbol systems which denote these classes are not given in the nature of things --they are historically constructed, socially maintained, and individu­ally applied. (363-364)
In Bali, there are six sorts of labels which one person can apply to an­other in order to identify him as a unique individual and which I want to consider against this general conceptual background: ( I ) personal names; (2) birth order names; (3) kinship terms; (4) teknonyms; (5) sta­tus titles (usually called "caste names" in the literature on Bali); and (6) public titles, by which I mean quasi-occupational titles borne by chiefs, rulers, priests, and gods. These various labels are not, in most cases, employed simultaneously, but alternatively, depending upon the situa­tion and sometimes the individual. They are not, also, all the sorts of such labels ever used; but they are the only ones which are generally recognized and regularly applied. And as each sort consists not of a mere collection of useful tags but of a distinct and bounded terminologi­cal system, I shall refer to them as "symbolic orders of person-defini­tion" and consider them first serially, only later as a more or less coher­ent cluster. (368)
Also outstanding in this field is Robert Darnton's effort to reconstruct the forms of agency underlying the "great cat massacre" in The Great Cat Massacre: And Other Episodes in French Cultural History; link.

Monday, January 15, 2018

The second American revolution

The first American Revolution broke the bonds of control exercised by a colonial power over the actions and aspirations of a relatively small number of people in North America in 1776 -- about 2.5 million people. The second American Revolution promises to affect vastly larger numbers of Americans and their freedom, and it is not yet complete. (There were about 19 million African-Americans in the United States in 1960.)

This is the Civil Rights revolution, which has been underway since 1865 (the end of the Civil War); which took increased urgency in the 1930s through the 1950s (the period of Jim Crow laws and a coercive, violent form of white supremacy); and which came to fruition in the 1960s with collective action by thousands of ordinary people and the courageous, wise leadership of men and women like Dr. Martin Luther King, Jr. When we celebrate the life and legacy of MLK, it is this second American revolution that is the most important piece of his legacy.

And this is indeed a revolution. It requires a sustained and vigilant struggle against a powerful status quo; it requires gaining political power and exercising political power; and it promises to enhance the lives, dignity, and freedoms of millions of Americans.

This revolution is not complete. The assault on voting rights that we have seen in the past decade, the persistent gaps that exist in income, health, and education between white Americans and black Americans, the ever-more-blatant expressions of racist ideas at the highest level -- all these unmistakeable social facts establish that the struggle for racial equality is not finished.

Dr. King's genius was his understanding from early in his vocation that change would require courage and sacrifice, and that it would also require great political wisdom. It was Dr. King's genius to realize that enduring social change requires changing the way that people think; it requires moral change as well as structural change. This is why Dr. King's profoundly persuasive rhetoric was so important; he was able to express through his speeches and his teaching a set of moral values that almost all Americans could embrace. And by embracing these values they themselves changed.

The struggle in South Africa against apartheid combined both aspects of this story -- anti-colonialism and anti-racism. The American civil rights movement focused on uprooting the system of racial oppression and discrimination this country had created since Reconstruction. It focused on creating the space necessary for African-American men and women, boys and girls, to engage in their own struggles for freedom and for personal growth. It insisted upon the same opportunities for black children that were enjoyed by the children of the majority population.

Will the values of racial equality and opportunity prevail? Will American democracy finally embrace and make real the values of equality, dignity, and opportunity that Dr. King expressed so eloquently? Will the second American revolution finally erase the institutions and behaviors of several centuries of oppression?

Dr. King had a fundamental optimism that was grounded in his faith: "the arc of the moral universe is long, but it bends toward justice." But of course we understand that only long, sustained commitment to justice can bring about this arc of change. And the forces of reaction are particularly strong in the current epoch of political struggle. So it will require the courage and persistence of millions of Americans to these ideals if racial justice is finally to prevail.

Here is an impromptu example of King's passionate commitment to social change through non-violence. This was recorded in Yazoo City, Mississippi in 1966, during James Meredith's March against Fear.

Populism's base

Steve Bannon may have lost his perch in the White House and Breitbart; but the themes of white supremacy, intolerance, bigotry, and anti-government extremism that drive radical nationalist populism survive his fall. In The New Minority: White Working Class Politics in an Age of Immigration and Inequality Justin Gest attempts to explain how this movement has been able to draw support from white working class men and women -- often in support of policies that are objectively harmful to them. Here is how he describes his central concern:
In this book, I suggest that these trends [towards polarization] intensify an underlying demographic phenomenon: the communities of white working class people who once occupied the political middle have decreased in size and moved to the fringes, and American and European societies are scrambling to recalibrate how they might rebuild the centrist coalitions that engender progress.
The book makes use of both ethnographic and survey research to attempt to understand the political psychology of these populations of men and women in Western Europe and the United States -- low-skilled workers with limited education beyond secondary school, and with shrinking opportunities in the economies of the 2000s.

A particularly interesting feature of the book is the ethnographic attempt Gest makes to understand the mechanisms and content of this migration of political identity. Gest conducted open-ended interviews with working class men and women in East London and Youngstown, Ohio in the United States -- both cities that were devastated by the loss of industrial jobs and the weakening of the social safety net in the 1970s and 1980s. He calls these "post-traumatic cities" (7). He addresses the fact that white working class people in those cities and elsewhere now portray themselves as a disadvantaged minority.
There and elsewhere, the white working class populations I consider are consumed by a nostalgia that expresses bitter resentment toward the big companies that abandoned their city, a government that did little to stop them from leaving, and a growing share of visible minorities who are altering their neighborhoods’ complexion. (10)
The political psychology of resentment plays a large role in the populations he studies -- resentment of government that fails to deliver, resentment of immigrants, resentment of affirmative action for racial minorities. The other large idea that Gest turns to is marginality -- the idea that these groups have that their voices will not be heard and that the powerful agents in society do not care about their fates.
Rather, this is to say that—across the postindustrial regions of Western Europe and North America—white working class people sense that they have been demoted from the center of their country’s consciousness to its fringe. And many feel powerless in their attempts to do something about it. (15)
And resentment and marginality lead for some individuals to a political stance of resistance:
Unimpressed with Labour’s priorities, profoundly distrustful of government, and unwilling to join forces with working class immigrants, Barking and Dagenham’s working class whites are now engaged in a largely unstructured, alternative form of minority politics. They tend to be focused on local affairs, fighting for scarce public resources and wary of institutionalized discrimination against them. The difficulty has been having their claims heard, and taken seriously. (71)
The resentments and expressions of marginality in Youngstown are similar, with an added measure of mistrust of large corporations like the steel companies that abandoned the city and a recognition of the pervasive corruption that permeates the city. Here is Evelyn on the everyday realities of political corruption in Youngstown:
The more I saw, the more I realized that money can buy your way out of anything. Then you see your sheriff get indicted, your congressman dishonored, our prosecutor in prison, and a mayoral nominee with a cloud over his head. The Valley has been embroiled in political corruption for a long time, and people just look out for themselves. It makes you sick. You don’t see it firsthand, the corruption, but you know it’s there. (128)
The overriding impression gained from these interviews and Gest's narrative is one of hopelessness. These men and women of Youngstown don't seem to see any way out for themselves or their children. The pathway of upward mobility through post-secondary education does not come up at all in these conversations. And, as Case and Deaton argue from US mortality statistics (link), social despair is associated with life-ending behaviors such as opioids, alcohol abuse, and suicide.

Gest's book lays the ground for thinking about a post-traumatic democratic politics -- a politics that is capable of drawing together the segments of American or British society who genuinely need progressive change and more egalitarian policies if they are to benefit from economic progress in the future. But given the cultural and political realities that Gest identifies among this "new minority", it is hard to avoid the conclusion that crafting such a political platform will be challenging.

Monday, January 8, 2018

Trust and organizational effectiveness

It is fairly well agreed that organizations require a degree of trust among the participants in order for the organization to function at all. But what does this mean? How much trust is needed? How is trust cultivated among participants? And what are the mechanisms through which trust enhances organizational effectiveness?

The minimal requirements of cooperation presuppose a certain level of trust. As A plans and undertakes a sequence of actions designed to bring about Y, his or her efforts must rely upon the coordination promised by other actors. If A does not have a sufficiently high level of confidence in B's assurances and compliance, then he will be rationally compelled to choose another series of actions. If Larry Bird didn't have trust in his teammate Dennis Johnson, the famous steal would not have happened.

First, what do we mean by trust in the current context? Each actor in an organization or group has intentions, engages in behavior, and communicates with other actors. Part of communication is often in the form of sharing information and agreeing upon a plan of coordinated action. Agreeing upon a plan in turn often requires statements and commitments from various actors about the future actions they will take. Trust is the circumstance that permits others to rely upon those statements and commitments. We might say, then, that A trusts B just in case --
  • A believes that when B asserts P, this is an honest expression of B's beliefs.
  • A believes that when B says he/she will do X, this is an honest commitment on B's part and B will carry it out (absent extraordinary reasons to the contrary).
  • A believes that when B asserts that his/her actions will be guided by his best understanding of the purposes and goals of the organization, this is a truthful expression.
  • A believes that B's future actions, observed and unobserved, will be consistent with his/her avowals of intentions, values, and commitments.
So what are some reasons why mistrust might rear its ugly head between actors in an organization? Why might A fail to trust B?
  • A may believe that B's private interests are driving B's actions (rather than adherence to prior commitments and values).
  • A may believe that B suffers from weakness of the will, an inability to carry out his honest intentions.
  • A may believe that B manipulates his statements of fact to suit his private interests.
  • Or less dramatically: A may not have high confidence in these features of B's behavior.
  • B may have no real interest or intention in behaving in a truthful way.
And what features of organizational life and practice might be expected to either enhance inter-personal trust or to undermine it?

Trust is enhanced by individuals having the opportunity to get acquainted with their collaborators in a more personal way -- to see from non-organizational contexts that they are generally well intentioned; that they make serious efforts to live up to their stated intentions and commitments; and that they are generally honest. So perhaps there is a rationale for the bonding exercises that many companies undertake for their workers.

Likewise, trust is enhanced by the presence of a shared and practiced commitment to the value of trustworthiness. An organization itself can enhance trust in its participants by performing the actions that its participants expect the organization to perform. For example, an organization that abruptly and without consultation ends an important employee benefit undermines trust in the employees that the organization has their best interests at heart. This abrogation of prior obligations may in turn lead individuals to behave in a less trustworthy way, and lead others to have lower levels of trust in each other.

How does enhancing trust have the promise of bringing about higher levels of organizational effectiveness? Fundamentally this comes down to the question of the value of teamwork and the burden of unnecessary transaction costs. If every expense report requires investigation, the amount of resources spent on accountants will be much greater than a situation where only the outlying reports are questioned. If each vice president needs to defend him or herself against the possibility that another vice president is conspiring against him, then less time and energy are available to do the work of the organization. If the CEO doesn't have high confidence that her executive team will work wholeheartedly to bring about a successful implementation of a risky investment, then the CEO will choose less risky investments.

In other words, trust is crucial for collaboration and teamwork. And an organization that manages to help to cultivate a high level of trust among its participants is likely to perform better than one that depends primarily on supervision and enforcement.

(See Fergus Lyon, Handbook of Research Methods on Trust: Second Edition (Handbooks of Research Methods in Management series) for recent empirical work on trust.)