BW: We discussed in another topic (“A Few Things Learned in World War II”) that some of the principles you learned in your service applied in a business context, but that war and business are not the same things. Can you talk more about that?
JM: Keep in mind, until relatively recently, our culture was primarily agricultural, small towns, and small businesses. With the Industrial Revolution came the advent of big business which borrowed from the hierarchical, militaristic model. As you know from history, workers typically weren’t treated well. So I would summarize by saying, fifty to sixty years ago, management of companies was still very militaristic, very authoritative, very demanding, not really caring about employees. But gradually, as they learned more about human nature, human relations in a business context, the more they realized, that in many cases, a hierarchical, militaristic approach doesn’t necessarily get the best work out of people. So over time, many in management began to think about different ways of leading and managing. But it was a slow evolution. Slowly, it has become much more humane. The top people are now more concerned about the employees than in the past. Slowly, managers began to work in different ways with people. They became more open to learning how to operate in a way in which they would exercise authority but not in such a severe, rigid way. But there still has to be hierarchy.
BW: You said, “There still has to be hierarchy.” Can you explain?
JM: The reality is that there are specialized areas or what I call functional areas. Each leader or department head is responsible for a functional area. They need authority—the power to get things done in those functional areas. With authority comes responsibility and accountability. And authority has to stay balanced. You need power, but you shouldn’t have too much. The leader must stay within their realm of function. But all of this depends on the organization or situation. For example, companies these days, high tech or very specialized companies in particular, may have a less conventional or less obvious hierarchy, but there is still hierarchy. Meaning, there still needs to be authority, responsibility, and accountability.
BW: You mentioned in another topic (“A Few Things Learned in World War II”), in working with companies, you often found that many in management didn’t have a clue when it came to authority, responsibility, and accountability.
JM: Oh, it was a hell of a lot more than that. Many lacked critical skills in what I call here-and-now planning (discussed in the topic “No Concept of Priorities”). Also knowing how to plan for the month, how to plan for three months. How to plan a project. But going back to those three, starting with authority. A leader or manager to function needs authority—meaning he or she has power to make certain decisions and carry out those decisions and get things done. Without authority, you’re basically impotent. But with authority comes responsibility. You need to be held responsible for those decisions. And leadership is best if the leader accepts full responsibility, regardless of outcome, rather than shirk responsibility. The worst kind of leader has authority, but won’t take responsibility for his or her decisions and doesn’t allow himself or herself to be held accountable but instead tries to pass blame onto other people. Responsibility and accountability go hand in hand. You’re accountable to the people above you, your peers, and the people below you. And responsibility means taking full responsibility whether the outcome is negative or positive. I think everyone has had the experience of working with or being in a relationship with someone who won’t take responsibility for their actions and behavior—how maddening and frustrating that can be. And in a business context, it’s very counterproductive and oftentimes destructive.
BW: So these things you learned in the military helped you to help executives and managers function more effectively in an organizational context.
JM: A battalion is essentially an organization. And so in a sense, I was helping a president operate in some of the same ways the army operates, not quite as rigid. So it stood me well. Because I was able to help my companies accomplish all kinds of things.
BW: In business, did you find that obedience to authority is as critical?
JM: Well, in the army or in a war, obedience is essential to protect your life. In a business organization, the concept of obedience could backfire. Because if you have an organization made up of ‘yes men’ or ‘yes people’, the organization dies.
BW: I’ve also heard the term ‘people pleasers’. People pleasers in my experience are highly untrustworthy. They never say what they mean and they’re not grounded in any real convictions. They just go along with whatever happens to be the most popular opinion at the time.
JM: And the most popular opinion isn’t necessarily the right opinion.
BW: And of course there’s the slang term ‘ass-kisser’. In the Middle Ages, there was a best-selling woodblock print showing the devil with his back-end sticking out and someone kneeling down and kissing the devil’s behind. People believed that devil worshippers paid respect to the devil by kissing his ass. It’s believed the expression ‘ass-kissing’ and ‘ass-kisser’ comes from this.
JM: That’s interesting. So yeah, if you’re working for a company like Enron and you’re blindly obeying authority then yes, you are an ass-kisser, in a sense. But a lot of this depends on the situation. See, so much of this varies with the situation.
BW: In the topic on conflict, we discussed how your values, more or less, have to match the values of the company.
JM: Yes, for there to be healthy obedience to authority, your values have to be lined up properly. Also there is accountability. The strict, literal definition of ‘accountable’ and ‘accountability’ is basically reporting, explaining, and justifying. Basically, it’s good communication. Let’s take as an example, Santa Barbara Bank and Trust when I was working with them many years ago. The president was very competent as a leader in terms of constantly studying what was going on in Santa Barbara as a community, what was going on in the financial field, what was going on competitively, and what was going on in the surrounding towns. He was very knowledgeable. But he was a poor executive. The executive vice president was an outstanding executive, but he did not have some of the leadership qualities that the president had, and he was not in tune with the whole situation throughout the county. But essentially they had the same values, so they made a good team. When the day came that the U.S. government allowed brokerage houses like Merrill Lynch to issue cds—certificates of deposits—it opened up tremendous competition with the banks. Now the president was tuned into this. He realized, in order for the bank to survive, they would have to change their way of marketing and their way of serving their customers in order to meet the competition from all of these investment brokerage houses. So, long story short, eventually the president made a decision concerning this. I forget what the decision was, but it was a big one. And the president had the executive vice president carry it out. And the executive vice president had the ability, just like a good military commander, to call together the seven executives and lay out for them the decision made. But he was able to do this because the president was such a good leader. In other words, when I say the president was a good leader, one of the reasons he was, is that he would sit with the executive group and he would clearly communicate and outline what was happening and why he made the decision. And he got them thinking about how they were going to communicate it. Now you would not do that in a war. But in business, if you’re a good leader, you would. You still operate from your position of authority, but you operate in a collaborative way. In other words, if the president merely issued a memo to the eight executives and said, “Starting tomorrow, you will do X, Y, and Z” that doesn’t work very well. What is much more effective in a business context is for the president to have a meeting, sometimes all day on something like this, with the eight executives, and talk it out. And talk out how they need to work as a team and why they’re doing it and everything. Basically, the opposite of very tight, hierarchical authority is how people communicate, talk things out. And so Santa Barbara Bank and Trust survived a lot of the competition that other banks didn’t. So going back to the main point, the starting point of this discussion—you need authority, responsibility, and accountability, but war is an emergency situation. Business is more relational. It’s very dependent on good, effective communication and good relational skills. The whole issue and problem of relating and relationship that is everywhere and at the center of everything and which we keep coming back to. That was the heart and essence of my work.
BW: Does responsibility and accountability become more of a challenge in larger businesses and organizations, say corporations?
JM: Corporations, organizations, and businesses are made up of human beings so they take on the character and personalities of the people in the leadership positions. If you have corrupt, greedy leaders, then in general, you will have a corrupt, greedy organization. Ethical leaders, in general, an ethical organization. The problem of greed exists in every context and setting, but as a business gets bigger, and the potential profit is bigger, the stakes become bigger, and there is more power at play, so the potential and capacity for greed and corruption becomes greater. With bigger size comes a bigger set of problems. So yeah, authority, responsibility, and accountability can become more of a challenge in big business and corporations.
BW: Santa Barbara Bank and Trust was a very community oriented bank when you were working with them.
JM: True. Santa Barbara Bank and Trust from the beginning was owned by shareholders, but the majority of the shareholders were in the community and cared about the community. The bank was known for high quality and integrity of service, and a lot of the top people in the bank were known and highly regarded for their community service. And like the leaders, many of its employees were involved in charities and local non-profits. The bank was respected by the community and for decades, it stayed a modest size and wasn’t concerned with growth or expansion at any cost. And then some time after I retired, the leadership in the bank changed. And with leadership change came a decline. The leadership became removed from the community compared to the original leadership. I don’t know the details of why and how all that happened since it occurred after I retired.
BW: So a lot of this is driven by values. The values of the leaders and also the shareholders.
JM: Yes and it can get tricky and complicated. In publicly traded companies, since the goal is to make money for shareholders in a given quarter, there is much more of a pressure to be driven toward short-term gain. So in a sense, that becomes one of the company’s values—to maximize short-term profit, so then responsibility takes on a different tone and flavor. And the emphasis on short-term profit may in the long run have negative consequences. But few are thinking that far ahead. Like it or not, if you work for a company, you are going to take on the values of that company whether you are fully thinking about it or not.
BW: Big business and corporations, as you mentioned, are of the industrial age which is inherently profit and productivity driven—the mentality is so many units per man hours, a very different mindset than say that of an artisan craftsman in which quality trumps quantity. It creates a different dynamic and environment. Combine that with greed and a management bent on enriching itself at the expense of others, this creates a dehumanizing environment. And some argue globalization, in the form of multinational corporations, is destroying sustainable livelihoods and communities. You had mentioned people want community and they also want a meaningful life and work. I’m sure most don’t relish being cogs in a money-making machinery. And as you said, a big part of your work, the center of your work was relationships. Your experience with Santa Barbara Bank and Trust—you worked with them for about twenty years—has shown that companies that provide a good environment and care about their employees, rather than just the bottom line are in fact viable and arguably better companies.
JM: So ultimately it comes down to values. And there is always a choice in that. A business can take responsibility in helping to provide community, being a value to the community and society, rather than exclusively focused on short-term gain with no regard to consequences and long-term effects on society such as pollution and resource depletion which has been the typical model of the Industrial Revolution.
BW: And come to think of it, the values of the consumers and shareholders also come into play. As you brought up, shareholders want the best short-term profit in a given quarter and they often don’t care or pay attention to how the profit is made. Then you have consumers who are usually always insisting on a bargain when often products of quality and products that are sustainable and socially responsible don’t come cheap. I know I don’t always pay attention to where the product is coming from or how it was made, whether it was made in a sweat shop by slave labor or not. So the values of the consumers which shows in what they are demanding and buying is driving a lot of this also. We want a fair price but sometimes what we consider fair—the lowest price—isn’t sustainable or socially responsible. Yes, some people are too poor to afford those types of products, but we could all do better in our purchases, I know I could. Even if you make an effort in just 10% of your purchases, it is still better than nothing. If every consumer did that, it would make a huge impact. People say a business or corporation has a lot of power, but consumers also have a lot of power. If enough consumers demand something, than the business or corporation has to change
JM: That’s true. Consumers and investors play a part in this too. As you point out, a lot of this is ultimately, probably driven by us as consumers from one side of it and then also the other side of it is leadership.
BW: As a consumer and investor, it’s all in what you will support, what you will buy, what companies you will invest in. People can choose to invest in companies based on core values rather than fastest short-term gain. Maybe invest in a company and buy products with a view towards the integrity and long-term goals and vision of a company versus, what’s going to be the most gain for me over the short-term. Values of leadership, values of the shareholders, and values of the consumers can intersect to create a better model. This new model of investor may not get maximum short term profit or this new model of consumer the greatest bargain, but they are making a good investment for the future which is a result of healthy, sustainable growth. But there will always be those that argue it is only the bottom line that really matters or that greed will prevail. Holding businesses and corporations accountable is most often framed in terms of regulation, but I don’t think that is enough. I think you do need a whole change in mindset and habits. Right now, most of us can’t afford this new model with every purchase, but every effort makes a difference. So the point I am trying to make—consumers and investors also have authority and responsibility in terms of a better business model.
JM: That’s true, but I believe it does begin with leadership—the people who are going to have a vision and take initiative in leading in this way. A big part of changing people’s habits and ideas comes from leadership. Yes, it’s about consumers and shareholders, but even more important, first it takes leaders who have the courage to lead in that way and organize efforts. A leader exercising healthy authority, responsibility, and accountability. But as you point out, it takes a change in mindset along with courage and faith on both sides.