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We are now operating in a context of constantly escalating challenge.
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We do face problems of major magnitude: an inadequate rate of economic growth; an educational system that does not meet our needs; a deteriorating infrastructure; a declining standard of living. To what extent these problems will be resolved or get worse in the next decade remains to be seen.
The point now is not that we are in irreversible decline. The point is simply that one of the major changes in the world, with ramifications for business in general and our need of self-esteem in particular, is that we are now operating in a context of constantly escalating challenge. The challenge is to our creativity, flexibility, speed of responsiveness, ability to manage change, ability to think outside the square, ability to get the best out of people. Economically, the challenge is to our innovativeness—and, behind that, to our management ability. Psychologically, the challenge is to our self-esteem.
4. The increasing demands on individuals at every level of a business enterprise, not just at the top but throughout the system, for self-management, personal responsibility, self-direction, a high level of consciousness, and a commitment to innovation and contribution as top priorities.
The older bureaucratic command-and-control pyramid, modeled after the military, has progressively given way to flatter structures (fewer levels of management), flexible networks, cross-functional teams, ad hoc combinations of talents coming together for particular projects and then disbanding. The requirements of the flow of knowledge and information are determining organization, rather than preconceived mechanical layers of authority.
The ranks of middle management have been radically thinned, not merely as a cost-cutting strategy but because computers have taken over the task of relaying information throughout the system, making the role of manager-as-information-relay-station superfluous. Knowledge is more widely disseminated and freely available than ever before, making it much easier for people to operate at higher levels of consciousness in their work and consequently to be more productive.
Without the old and familiar chains of command, many managers are going through what might be termed a self-esteem crisis: with lines of authority and power no longer clear-cut, they are challenged to find new definitions of their roles. Their need now is to disengage feelings of self-worth from traditional forms of status, or from the performance of particular tasks, and to base it instead on their ability to think, to learn, to master new ways of functioning, to respond appropriately to change. From the boardroom to the factory floor, work is understood more and more clearly as an expression of thought. As equipment and machinery have become more sophisticated, the knowledge and skill required to operate them has risen accordingly. Employees are expected to monitor them, service them, repair them if necessary, anticipate needs, solve problems—in a word, function as self-respecting, self-responsible professionals.
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From the boardroom to the factory floor, work is understood more and more clearly as an expression of thought.
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The better organizations understand that the man or woman on the floor is likely to know more about what improvements are possible and necessary—in goods, services, internal systems—than the people above who are more remote from the immediate action. Books on business and management are filled with stories of contributions made by workers to the improvement of processes, services, and products. There are stories of men and women going far beyond their job description in response to unexpected problems they take responsibility for solving. Enterprise and initiative are no longer perceived as the monopoly of a few “special people.” They are perceived as traits appropriate to everyone.
Not that everyone manifests them. We are still in the early stages of the knowledge revolution. But—increasingly—there is in companies the opportunity for people to do so and the hope that they will do so. This in itself is a call to higher self-esteem.
A modern organization elevates the practice of teamwork to new heights of virtuosity, while simultaneously requiring a core of individualism in each participant—because thinking is an activity of an individual mind, and so is self-trust, and so are tenacity, perseverance, and all the other mind-traits that make achievement possible.
To quote Charles Garfield in his study of the new policies and philosophy of some of our leading-edge corporations, Second to None:
In an area that demands partnership [at every level], a time when our emphasis must shift toward cooperative efforts, the individual paradoxically takes on far greater importance. We can no longer afford to operate companies in which masses of “hired hands” are chronically underutilized while a few “heads” at the top do all thinking…. Competing in an era that demands continuous innovation requires us to harness the brain-power of every individual in the organization.4
The pressure to remain competitive is forcing a rethinking of every aspect of internal business activity—structures, policies, reward systems, divisions of responsibility, managerial practices (mind work cannot be managed like muscle work), and relationships among all those who participate in achieving productive goals.
One of the lessons business has needed to learn is the importance of entrepreneurship, not just for beginners, but also for well-established industries.
5. The entrepreneurial model and mentality becoming central to our thinking about economic adaptiveness.
When we think of entrepreneurship, our first association is with independent entrepreneurs who start new businesses or pioneer new industries. And yet entrepreneurship is essential to the continued success of “big business.” This was the lesson of the 1980s.
It is useful to think back to the early days of American business and to innovators who launched this country on its meteoric growth—as a frame of reference for understanding in what sense “the entrepreneurial mentality” is needed within large business organizations that have existed for years.
With the advent of capitalism and the emergence of the early American entrepreneurs, a number of shifts in people’s consciousness took place. It is noteworthy that all have a direct bearing on our need for self-esteem.
The question, “What has your birth determined you to be?” was replaced by the question, “What have you made of yourself?” In other words, identity was no longer something one inherited but something one created.
The idea of progress caught people’s imagination. The premise was that intelligence, ingenuity, and enterprise could generate a continuing improvement in the standard of living—that new discoveries, new products, new expressions of human creativity could without limit keep raising the quality of existence. While mind was not yet fully understood to be the supreme capital asset, it had begun to move from background to foreground, sometimes under such names as “competence” or “ability.”
Self-reliance and self-responsibility were seen as supremely appropriate in this new order of things, in contrast to the conformity and obedience more valued in earlier, tribal societies. Independence became an economically adaptive virtue.
New ideas with commercial application were valued. The ability to perceive and actualize new wealth-producing possibilities was valued. The entrepreneurial mentality was rewarded.
Not that these perspectives were understood and embraced equally by everyone. Far from it. Even among some of the best business innovators, traces of the authoritarian mind-set inherited from an earlier age were not fully expunged. Old perspectives and old ways of thinking do not vanish overnight or without resistance. The battle for full acceptance of this new vision is still being fought.
The new economic system disrupted the old order of things. It was no respecter of authority. It often disregarded tradition. It did not dread change but greatly accelerated it. Freedom could be intoxicating but it also could be frightening.
Entrepreneurship is by its nature antiauthority. It is anti-status quo. It is always moving in the direction of making what exis
ts obsolete. Early in this century the economist Joseph Schumpeter wrote of the work of the entrepreneur as that of “creative destruction.”
The essence of entrepreneurial activity is that of endowing resources with new wealth-producing capabilities—of seeing and actualizing productive possibilities that have not been seen and actualized before. This presupposes the ability to think for oneself, to look at the world through one’s own eyes—a lack of excessive regard for the-world-as-perceived-by-others—at least in some respects.
In the early decades of capitalism, men came out of nowhere, starting with nothing but brains and ambition, created industries, and earned fortunes. Almost all these men started out as workers and almost none graduated high school (few even entered it). They were a challenge and a rebuke to the remnants of feudal aristocracy, to “old money” anchored in social position and disdainful of work, who looked at these new wealth producers with dismay and resentment. The entrepreneur was an impudent upstart, they told one another, whose activities generated social disequilibrium. In fact, he represented a threat not only to their social position but also to their self-esteem. What would become of them in a system geared to merit and achievement, as judged by the market, rather than to inherited status?
If capitalism offered a broader arena for self-esteem to operate in than had ever existed before, it also offered challenges that had no precedent in earlier, tribal societies—challenges to self-reliance, self-assertiveness, self-responsibility, and personal accountability. Capitalism created a market for the independent mind.
The large organizations that we associate with modern capitalism emerged in the United States only after the Civil War, and in Europe after the Franco-Prussian War—only in roughly the last 130 years. Throughout the nineteenth century, we remained predominantly an agricultural economy: most people earned their living on farms, and land was the chief source of wealth, as it had been for thousands of years. We began as a nation of farmers and small shopkeepers. No one then could have imagined the large industrial concerns and the extraordinary economic development that began to emerge in the last quarter of the nineteenth century, beginning with the railroads, as human energy was unleashed and began to gather momentum.
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Capitalism created a market for the independent mind.
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The average farmer or shopkeeper was not an innovator. He was typically more self-reliant than his predecessors, to be sure, more independent and more resourceful—evidenced by the facts, among others, that he may have left his homeland in Europe to make a new life in America, and that the looser social structure in the New World, the greater freedom, threw him more on his own and demanded greater self-direction and therefore greater self-esteem. But, within the knowledge context of the period, economic adaptiveness demanded of him neither high levels of education nor innovativeness. His mind, learning ability, and decision-making capabilities were not constantly challenged.
The individuals who saw themselves thus challenged and were inspired to meet the challenge—the entrepreneurs and inventors—were an almost infinitesimal minority. It is they who were responsible for the transition from an agricultural to a manufacturing society. This led to U.S. leadership in steel, electricity, the telephone and telegraph, farm equipment and agronomy, office equipment, the first household appliances, and, a little later, automobiles and aviation.
At the height of its success in this century, American business was jolted out of its complacency by foreign competition, and—against the resistance of its own entrenched bureaucracy—forced to think again about the continuing importance of entrepreneurship. Part of the stimulation for this new thinking came from the achievements of smaller organizations, which were pointing the way to the future.
In the last two decades there has been an explosion of entrepreneurship, almost entirely in small- and medium-sized business. By the late 1980s, between 600,000 and 700,000 new enterprises were started every year, as against one sixth or one seventh of these figures during the best years of the 1950s and 1960s. While the Fortune 500 companies have been losing workers steadily since the early 1970s, and many of these companies have been struggling for survival, small- and medium-sized business was able to create roughly eighteen million new jobs; the majority of these jobs were in firms with fewer than twenty employees. Small- and medium-sized business has displayed an innovativeness and flexibility—an ability to respond to market changes and opportunities with lightning speed—too often lacking in larger, more cumbersome organizations.
They led the way in showing the path big business must follow if it is to remain competitive. While many companies are still struggling with the problems of balancing traditional, administrative management, on the one hand, and entrepreneurial management on the other—the first is focused on protecting and nurturing that which already exists, the second on making it obsolete—it is increasingly obvious that entrepreneurship cannot be the prerogative of small or new businesses. It is imperative all the way up to organizations the size of General Motors—and right now GM is struggling with just this challenge.
In the context of big business, to become entrepreneurial means to learn to think like small business at its most imaginative and aggressive: to cultivate lightness, lack of encumbrance, swiftness of response, constant alertness to developments that signal new opportunities. This means, among other things, radically reducing bureaucracy and freeing units to operate entrepreneurially.
In response to this need, increasing numbers of large organizations have established autonomous or semiautonomous entrepreneurial units internally. Their intention is to free innovators from the obstructions of multitiered, change-resisting, bureaucratic management.
More broadly, they are committed to making innovation a planned for and systematic part of normal operations. They are learning to treat it is a discipline—something that can be learned, organized, and practiced.*
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The more unstable the economy and the more rapid the rate of change—the more urgent the need for large numbers of self-esteeming individuals.
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If low self-esteem correlates with resistance to change and clinging to the known and familiar, then never in the history of the world has low self-esteem been as economically disadvantageous as it is today. If high self-esteem correlates with comfort in managing change and in letting go of yesterday’s attachments, then high self-esteem confers a competitive edge.
There is a principle we can identify here. In the earlier years of American business, when the economy was fairly stable and change relatively slow, the bureaucratic style of organization worked reasonably well. As the economy became less stable and the pace of change quickened, it became less and less adaptive, unable to respond swiftly to new developments. Let us relate this to the need for self-esteem. The more stable the economy and the slower the rate of change, the less urgent the need for large numbers of individuals with healthy self-esteem. The more unstable the economy and the more rapid the rate of change—which is clearly the world of the present and future—the more urgent the need for large numbers of self-esteeming individuals.
6. The emergence of mind as the central and dominant factor in all economic activity.
The meaning of this statement is implicit in all of the foregoing points, but a few further observations are in order.
In an agricultural economy wealth is identified with land. In a manufacturing economy, it is identified with the ability to make things: capital assets and equipment; machines and the various materials used in industrial production. In either of these societies, wealth is understood in terms of matter, not mind; physical assets, not knowledge and information.
In a manufacturing society, intelligence is the guiding force behind economic progress, to be sure, but when people think of wealth they think of raw materials, such as nickel and copper, and physical property, such as steel mills and textile looms.
Wealth is created by transforming the materials
of nature to serve human purposes—by transforming a seed into a harvest; by transforming a waterfall into a source of electricity; by transforming iron ore, limestone, and coal into steel, and steel into the girders of apartment buildings. If all wealth is the product of mind and labor, of thought directing action, then one way to understand the transition from an agricultural to an industrial society is to say that the balance between mind and physical effort is profoundly altered. Physical labor began to move along a declining arc of importance, while mind began to climb.
As an extension of human intelligence, a machine substitutes the power of thought for the power of muscles. While making physical labor less demanding, it makes it more productive. As technological development keeps evolving, the ratio keeps shifting in favor of mind. And as mind becomes more important, self-esteem becomes more important.
The climax of this process of development is the emergence of an information economy in which material resources count for less and less and knowledge and new ideas count for almost everything.
The Six Pillars of Self-Esteem Page 28