You may have heard the common myth that spoken words make up only 7% of the communication between two people. Whilst this number has never been substantiated in a credible research paper, the underlying fact is indeed that today we pay way too much attention to words and way too little attention to the other modes of communication – tone of voice and ‘body language’.
This is quite expected for the context we created – our late-stage industrial society is built on language (written documents such as rules, laws, regulations, standards etc.), numbers (measurements) and algorithms. In contrast, previous societies were mainly built on customs, rituals and implicit and explicit social contracts. This means in our society there is an over-emphasis on cognitive processing at the expense of unconscious processing, emotional bonds and social interactions (which maintain customs and rituals). Whilst this has enabled amazing technological progress, it has also come at a price.
Part of the price we pay for this fixation are things like increasing litigation and unnecessary friction and stress at work. Yet it goes beyond friction, waste and disputes. For complex systems to function in the long run, they need to remain resilient. The economy we have built and the organisations it relies on are incredibly complex, yet sorely lacking in resilience. If you build any social system based primarily on language, numbers and algorithms, you will struggle to capture intent and you will struggle to encapsulate flexibility, adaptability and self-repair, which are all necessary for resilience.
At the moment there is an almost religious belief in the ‘market’ as the best arbiter of information and hence also as the mechanism to keep the system resilient. Whilst the market does provide a function in keeping the system resilient, that is only the case for organisations that are truly exposed to market forces – in essence only small and some medium sized business and not-for-profits. All large organisations (business, government, NGO) are rarely subject to market forces.
At the moment it is the social networks and common-sense behaviour of people inside such organisations that keeps them alive due to their individual and collective commitment to the firm and through buying into the culture, purpose and objective in return for belonging, status and remuneration. Yet the life span of organisations is getting shorter, implying that they are getting less resilient. The average life span of S&P 500 listed companies has declined from 65 years in 1958 to 15 years today. The average life span of all listed companies has also declined a lot, from 55 years in 1965 to less than 35 years today.
So what has changed? Is this about technology and innovation, the much celebrated ‘creative destruction’? Probably not. Most firms die not because they go out of business, but because they are taken over or merge with other businesses. In short, they are getting bigger. And bigger firms are more complex and less resilient.
In addition, listed companies are saddled with conflicts of interest between the organisation itself and its shareholders and officeholders. In relentlessly promoting self-interest as the key economic driver for ‘prosperity’, it is only logical that both officeholders (such as CEOs) and major shareholders preference their own interests over both the organisation’s wider purpose (beyond profit generation) and survival. This contributes to the wave of mergers and acquisitions we have seen since the 80s – both top managers and selected shareholders often profit far more from such transactions than the employees, customers or society as a whole.
The financialisation of our economy is a clear expression of the accelerating trend towards believing in language and numbers over such ‘outdated’ notions as common sense and social obligations. Reducing the worth of a listed company to just one number – its share price – is an extremely dangerous approach to ascribing value to an institution which often has thousands of employees whose livelihood depends on the viability of the firm and which has social obligations beyond just to its customers and creditors (think environmental impacts, entitlements, supplier viability, product safety, warranties etc).
We are going down the same path in other areas – education is reduced to NAPLAN tests, PISA scores and final exam scores. Whether the child has learned how to learn, has developed a secure adolescent identity and a level of resilience needed for success in an ever-tougher job market may concern some or even most parents, but not the system as a whole.
This dominance of language, numbers and algorithms over social relations is still in full swing and getting into areas where it is plainly silly – evaluation of academic research, dating and social validation (Facebook). Yet we let it happen, with little regard for the inevitable consequences. These systems cannot and will not be resilient when push comes to shove, whether through further financial instability, the impacts of population growth or climate change. We are heading for a world in which our systems and institutions need to be designed with resilience in mind and not solely judged on the simplest measure that we could reduce all the complexity to.
Which brings me back to the opening statement. There is a reason we are so good at getting a feel for another person – because unconsciously we are very good at and wired for picking up emotional and social signals. By focusing our minds primarily on words and numbers and by creating incentives and structures that reinforce this focus, we are setting ourselves up to fail.
Obviously many past societies not built on language and numbers failed as well, but they did not have the technology and knowledge we have today to understand and influence the wider context – the ecosystem we are embedded in and dependent on. We know that we have created a world in which we over-exploit non-renewable resources and overload environmental sinks (such as the atmosphere with greenhouse gases). Past societies did not know or understand their impact on the environment to the same degree and mostly failed through over-extension, over-exploitation of resources or changes in environmental conditions (we may yet fall into the same trap despite our knowledge!).
This is not a trivial matter. According to simulations run routinely by the military, in the absence of basic services (electricity, water, petrol) due to any form of breakdown our civil society would cease to exist in around 2 weeks. Once it collapses, the scenarios point to rebuilding times measured in years, not days. And that’s under optimal conditions. It’s certainly not what I would call resilient.