In a conversation with Jack Welch earlier this week, he raved about Rich Kaarlgard’s recent column in Forbes on “World’s Worst Disease”. No, Rich is not talking about cancer, AIDS or avian flu – he is talking about “zero-sum thinking” – the belief that if one person gains, other people must inevitably lose.
Rich focuses on a significant rift in our society. In fact, this is perhaps the most fundamental rift in any society. It ultimately determines whether the society is progressive and dynamic or stagnant and conflict-prone.
Unfortunately, both of our political parties appear to be captives to zero sum thinking. Rich asks:
Why do so many opinion makers promote the zero-sum view? I think that politicians, even the best and brightest, become zero-sum thinkers because they occupy a zero-sum world. Only one person can be President of this country; only 50 can be governors; only 100 can be senators. . . . Politicians live in a world in which one person’s gain is another’s loss.
Rich goes on to target economists and journalists as being particularly prone to this disease. Now, I agree with all of this, but I wonder why Rich leaves out business leaders in his discussion of this disease. My concern is that many senior executives of our largest companies have fallen prey to this disease.
As JSB and I wrote in the opening pages of The Only Sustainable Edge:
We believe that a new opportunity and a new imperative – the acceleration of capability building – will shift our institutional and collective mind-sets from a worldview that focuses on static, zero-sum relationships to one that emphasizes dynamic non-zero-sum relationships. As we adopt these different perspectives, we will find that most of our institutions today are fundamentally lacking.
Static, zero-sum worldviews generally arise when people focus on the allocation of existing resources. Existing resources have a fixed quantity, and with relatively modest exceptions, if one party acquires a resource, other parties are deprived of that resource. This worldview is a natural orientation for large, well-established players – they become more concerned with defending existing resources because they have a lot to lose on this front, compared with the opportunity to create more resources.
I spend a lot of time with senior executives and I am struck by the inroads made by this disease in corporate boardrooms. Here are just a few of the areas where zero-sum thinking rears its ugly head in our business arena:
- Squeezing suppliers. In our quest for cost-cutting, we have focused on squeezing the prices of our suppliers as much as possible. The result has been deteriorating trust and relationships with key business partners. Too many executives under-estimate the opportunity of working together to make both parties stronger and deliver even more value to the marketplace.
- Growing focus on intellectual property protection. There are certainly valid concerns here, but too often executives seek to protect their existing stocks of knowledge at the expense of the opportunity to participate in broader relationships that could significantly refresh these stocks.
- The militarization of marketing. Military metaphors abound in our marketing efforts – campaigns, blitzes, targeting – yet war is perhaps one of the most extreme examples of zero-sum games. What new value could we create if we focused instead on how we could be more helpful to customers so that they will make the effort to seek us out, rather than having us search for them?
- The marginalization of innovation. With some obvious exceptions, large enterprises have generally become consumed with the quest for cost-cutting – again, for understandable reasons. In the process, though, the opportunity to create new forms of value through innovation has been shunted aside. Innovation has been compartmentalized into R&D departments that have been squeezed for cost-savings along with everyone else. Rather than assigning innovation to the ghetto of R&D, why not liberate innovation and view it as an activity that everyone in the enterprise should be pursuing every day? Of course, that means breaking the mindset that innovation is about product development. After all, innovation is ultimately about finding ways to deliver new value to the marketplace from existing resources, whether this value is in the form of products, new work practices, improved business processes, new management techniques or new business models. Innovation is the antidote to zero-sum thinking.
Rich also doesn’t talk about this disease in a global context. Certainly every society has it to some degree. But I think the story of the rapid growth of China and India in the past decade hinges on the ability of significant segments of the population to find an antidote to this disease and to embrace a positive-sum view of the world.
I fear that the disease is more pervasive than Rich acknowledges. We need to identify the symptoms in all areas of our life and work hard to find appropriate antidotes. Our continued growth and prosperity depend upon it.