One of the dumbest bits of political commentary in the past several years came from Jonah Goldberg. Commenting on somebody-or-other’s accusation that somebody else … somebody else Goldberg happens to like … was a hypocrite, Goldberg said, approvingly, that in order to be a hypocrite you first have to have principles.
Readers of Keep the Joint Running, being more sophisticated than readers of Jonah Goldberg, recognize the difference between having principles and espousing them. Some, concerned that I might be on the wrong side of this distinction, asked how I could have spent more than a month touting the advantages of de-regulating the PC, and then written a column that used fairly harsh language to describe governmental deregulation and its consequences.
The reason starts with the Economist‘s delicious phrase, “An analogy isn’t the same thing as being the same thing.” Here, the offending analogy is that a business is like a marketplace.
Some business leaders do run their companies as marketplaces (instituting, for example, charge-backs instead of effective governance). I’m sure this must be a good idea in some situations. I don’t know what they are, but in an infinite universe everything allowed by physical law must occur somewhere.
Mostly, marketplaces and businesses have only this in common: Absolutely nothing.
Businesses … well-run businesses, at least … have a purpose. Three purposes, really.
They are (1) organized to achieve their mission (which rarely has much in common with their mission statement, but that’s a different topic. They are (2) concerned with survival and self-perpetuation, although less so than you might think: Boards of directors have no compunction about selling the companies they govern should that seem more lucrative for shareholders than continuing to operate independently.
And, (3) the best companies regularly reevaluate their mission (and strategy, and vision, and “theory of the business” to use Peter Drucker’s term) making adjustments to ensure continuing relevance within the marketplace in which they operate.
Well-run companies coach, redirect, or terminate those individuals, supervisors, managers and executives who set their own direction, ignoring the company’s purposes.
All of this is the opposite of a marketplace. Marketplaces are inanimate spaces where businesses with independent purposes and direction interact. If the Cubs were a professional baseball team (we can only wish), Wrigley Field would be its marketplace — the space where it interacts with its competitors.
In baseball the need to regulate the marketplace is clear. Baseball needs rules, and has them. For example, the third baseman isn’t allowed to clothesline a runner to prevent him from scoring.
The rules need enforcement or they would be meaningless, hence the presence of umpires. Very important: The enforcers don’t consider the enforced to be their customers. Were they to consider anyone to be their customer their role would be at risk. (No one team is their customer, for obvious reasons; the fans likewise. Neither is Major League Baseball. If it were, and if those running MLB were to decide they would make more money if the season were scripted, pro wrestling style, then umpires would be paid to rig outcomes.)
Umpires, to be effective, must be loyal only to the principle of fair enforcement of the rules.
In professional sports we expect playing fields to be fair, level and impartial. If one of the officiators violates that expectation, he or she quickly becomes an ex-officiator.
Americans expect business marketplaces to be fair, level and impartial as well. We expect rules to be written so as to favor no one competitor over the rest. We expect enforcement of the rules to be fair and equitable as well.
Well, no, actually we don’t. Not anymore. Now we expect businesses to back up their ability to lobby for rules favorable to themselves with large campaign contributions. We worry about regulators viewing those they regulate as their customers. And, we are told on a regular basis that regulation never works anyway, due to the cleverness of the regulated.
It’s nonsense. Were that the case, top executives would consider insider trading laws to be a joke, the power industry would pollute with impunity, and we’d have experienced one Enron each year since Sarbanes-Oxley took effect.
We haven’t.
The impact on you: You’re regulating a business, not a marketplace. That implies alignment to a common purpose, which leads to a different level of trust, which in turn should result in much less regulation than what’s needed in a marketplace.
If this description doesn’t fit your company, there’s something seriously wrong with your company.