A number of years ago, I wrote an article about the famous “Golden Mean” of Greek philosophy. The mean was basically a rule that said the best way of living is to balance extremes. Another way of looking at what this rule implies is that evil or bad things happen when we over do something. We need to take all things in moderation. Thus, drugs, smoking, guns, watching TV etc., are not evil or bad in themselves but when we take them to extremes they became dangerous and counterproductive.
I sincerely and whole-heartedly believe in this rule. However, recently I was thinking about it from another perspective. I was reflecting on the problems of government today and the extreme polarization that now exists in American politics. The more I thought about it, the more I realized that the Greek rule was not quite strong enough. It needs something more. Perhaps, an extension or a corollary to make the rule stronger. There are too many instances, where the rule taken at face value does not do enough justice for the circumstances.
For instance, when I was teaching business I always told my students that organizations needed to balance efficiency with effectiveness. Efficiency is doing things right, while effectiveness is doing the right things. Organizations do not need to balance these two concepts as you would a seesaw, but they need to be constantly aware of the tension and perhaps conflict that can exist between the two. It is an ongoing struggle but never a question of equal balance because the proper balance will never be static. There are many other polarities in life where it is not really a matter of moderation or balance but actually more a matter of dynamically blending and using synergy to impose a sort of order between the two extremes. The concept of Hegelian Dialectics comes to my mind.
Dialectical thinking can be described as: “The ability to view issues from multiple perspectives and to arrive at the most economical and reasonable reconciliation of seemingly contradictory information and postures.” This is a much more complex process than simply balancing extremes. The more I thought about it the more I decided to add a corollary to the Greek Rule. Since I think time has easily proved the value of the Golden Mean, a corollary by definition is a proposition that follows from and is appended to one already proved. My corollary is as follows:
John’s Corollary:
Anytime, one concept in a set of opposing concepts is allowed to dominate the opposing concept, extreme dysfunction will result
I want to discuss this more by using five pairs of concepts that I think are critical to our world today. I want to show you how the distortion created by proponents of each concept are dangerous to life as we know it. I do not use the word dangerous loosely or frivolously or for effect. The battle between these ideas is destroying life as we know it on this planet. The proponents of each side of these polarities seek to destroy the proponents on the other side. Rather than looking at things from a systems perspective and trying to dynamically adjust the system, opponents are bent on allowing one idea to dominate to the exclusion of the other idea. Witness the name calling between conservatives and liberals today. Each side demonizes the other side and assumes God is on their side and Satan is on the other side. Here are the five pairs of concepts we will look at in the next few weeks. We will start by looking at number one in my list and following the order given.
- Efficiency versus Effectiveness
- Growth versus Development
- Society versus the Economy
- Conservative versus Liberal
- Rights of the Individual versus Rights of the Group
- Efficiency versus Effectiveness:
I noted that I used to teach these concepts to my business students to emphasize the role and responsibilities of a corporation or business. Taken from a macro perspective, these two ideas might seem unimportant. However, when you realize that our entire government and system of capitalism runs on both of these concepts, their importance cannot be understated.
Business seems to sheer towards efficiency with less concern for doing the right things. If they were more concerned with doing the right things, there would be less of what economists’ call “externalities.” An externality is a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved. Externalities can be either positive or negative in terms of their consequences for society. Negative externalities include such issues as: water pollution, air pollution, soil contamination, fumes, dangerous side effects from drugs and many others. Businesses will invariably try to ignore the costs of these side effects and thus they get passed on to the society. It is society and environment that suffers from the effects since the consumer or customer generally benefits from the lower costs of production guaranteed by the business passing the costs of the negative externalities on to the world.
The opposite extreme is seen in government and this is the extreme reflected in how the government tends to manage its costs. The government focuses on effectiveness. That is trying to do the right things. This is actually why we have a government. The government exists to ensure that things needed by society are provided without regard to costs. The “without regard to costs” becomes a problem because too often government agencies seem to provide services with little or no emphasis on cost management. Senator William Proxmire was well known for his “Golden Fleece” award in which a government agency would be bestowed an award for its gross mismanagement of costs. Over the past decades, conservatives have increasingly tried to take the management of many government functions away from various government agencies due to their gross negligence and ineptness when it comes to management of budgets and costs. Unfortunately, when put into the hands of a business that is singularly bent on efficiency the quality of the service in terms of its effectiveness may suffer. One example of this is with our education system.
Conservatives and Republicans and even some Democrats have decided that public education is inefficient, and that business can do a better job of providing education to American students. A business exists on a profit and loss model. However, the idea of providing a quality education to all Americans on such a basis is flawed. Schools that are democratic institutions cannot cherry pick their students. In a typical public school, you have a bell-shaped curve of students in terms of both aptitude and attitude. A private school or charter school will select students with higher aptitudes and attitudes. This of course, begs the question of how and where the students with lower aptitudes and attitudes will get educated?
The education of Americans youth becomes an either-or proposition with losers and winners. No other solutions are looked at as groups coalesce around extremes. Either we have public education, or we have for-profit education. There are other solutions, but they involve a radical restructuring of our entire educational system which neither side wants to contemplate. I do not see public education as the answer to education nor do I see private and for-profit charter schools as the answer. See my blog on the subject titled: “Creating a Twenty First Century Education System.”
I could point to dozens of examples of the stupidity of businesses that focus more on costs than effectiveness. In my twenty some odd years as a management consultant, I worked with many businesses to help create a synergy between efficiency and effectiveness. The Deming Philosophy exhorted organizations to use systemic thinking to create this synergy. Much of my focus in consulting was with helping organizations do the right thing and to do things right.
Conversely, when I was working with a government organization, I would help the organization learn to do things more efficiently. I was often so frustrated with the inefficiency and economic stupidity of some government agencies that I thought they should simply be abolished. When Governor Perry was asked which government agencies he would eliminate, he could not name three. I could immediately think of six that I would abolish.
I am no friend of inefficiency. Inefficiency is a crime upon humanity. It robs people of valuable time and resources and money. It makes life more difficult by waste and rework and a callous disregard for the abilities of employees. I am also no friend of ineffectiveness. What good are products and services if they cannot do what they were designed to do or if in providing their intended functions, the unintended side effects are a disaster for our society or environment. Corporations need to provide a quality product that is wanted or needed by a customer “but not just at a price they can afford” but at a price that allows the negative externalities to either be avoided or addressed. In other words, costs of pollution and environmental degradation must be paid for by the organization and its customers.
I think you should now understand from much of my conversation above, the inherent dangers of not addressing both efficiency and effectiveness in the operations of any business or organization. As I have argued, ignoring either concept or taking either one to an extreme will create a dangerous situation that will become dysfunctional to life.
My next blog will look at the battle in our world between growth and development. This is a battle that is destroying our environment and lives throughout the world. The following has been noted by the Center for Climate and Energy Solutions:
- Communities, builders, homeowners, and forest managers can reduce the likelihood and impacts of wildfires by:
- Discouraging developments (especially residential) near fire-prone forests through smart zoning rules.
- Increasing the space between structures and nearby trees and brush and clearing space between neighboring houses.
Thanks for reading. Please leave any comments or thoughts you might have on my blog site. Or email me at persico.john@gmail.com
A version of this myth is the “Too big too fail idea” widely heard during the “Great Recession” and now during the Coronavirus epidemic. General Motors was one of the first giant corporations in America and even as late as 2019, it was ranked 13th on the Fortune 500 rankings of the largest United States corporations by total revenue. In 1952 during his nomination hearing for Secretary of Defense, Charles Wilson (former CEO of General Motors) was asked if he could make a decision as Secretary of Defense that ran contrary to the interests of his former company. He replied with the now infamous remark YES but that he could not conceive of such a situation: “because for years I thought what was good for our country was good for General Motors, and vice versa.” — 
The foregoing belief in the common interests that corporations shared with America came to epitomize the ideology of Corporate America. American corporations then used the media and astute public relations to convince the majority of US citizens that they are indispensable, and that the welfare of the average person depended on the welfare of the corporation. To put it another way, the interests of a giant corporation are claimed to be synonymous with the interests of the average person. “What is good for America’s Corporations is good for You.” “What is good for Microsoft, Google, Amazon, Exxon, Facebook and Pfizer is good for you.”
When a company makes and sells a product, it is no longer responsible for the effects of that product on either the buyer or the environment. Unless evidence can be shown that somehow the corporation either lied or had some kind of criminal intent in the sales process, the consumer and society are responsible for the negative effects that a product or service might have. For instance, oil companies sell gasoline but are not responsible for the effects of polluting the atmosphere by burning gasoline. Another example is the packaging that many companies use for their products. Amazon is notorious for over boxing even the smallest products. The boxes must then be thrown away or recycled in a landfill. However, the cost of this recycling is not born by Amazon but ultimately by the taxpayer who must pay for the recycling through taxes or direct payments. Meanwhile, Amazon makes a great profit by being able to take advantage of tax loopholes and escaping any costs. These costs are called in economic terms: “Externalities.”
Dr. Deming wrote reams about the failure of management to balance what he called the “Problems of Today” with the “Problems of Tomorrow.” I would typically hear when beginning a consulting engagement numerous reasons why “it could not be done.” One of the most common excuses was expressed colloquially as “We are up to our ass in alligators.” Another excuse was “We have too many fires to put out.” I was fond of reciting Dr. Deming’s comment that, “Putting out fires is not improvement. Finding a point out of control, finding the special cause and removing it, is only putting the process back to where it was in the first place. It is not improvement of the process.” — Out of the Crisis, W. E. Deming
I have sat in many boardrooms for many planning meetings, and seldom did I ever hear an executive worrying about the environment or the hidden costs of externalities. The oft assumed legal mandate of a corporation is to make a profit. However, corporate law states that a company does not have to pursue profit maximization at all costs. This is idealistic though since the tendency in the marketplace and short-term thinking push corporations to ignore other considerations and pursue profits at all costs. It is also much easier to measure profits than it is to measure a “good” to the environment or a “good” to the social system. Thus, generally profits will trump other considerations in running an effective business.
Aging Capriciously 