McDonaldization

In the present day, standardization of products is born of a desire for efficiency in mass-production, but prior to the Industrial Era it was a means of cultural control.   It is with some irony that there is harsh criticism of standardization and the development of mass culture in the present day, when it is merely a continuation of previous practices, merely on a grander scale.

In effect, it is not an objection to standardization, merely a power struggle over which individuals set the standards.  The effect of standardization, on any scale, is the removal of options for consumers.   One cannot satisfy or express cultural values or exercise personal choice if the options available to choose among are strictly limited.

It is also worth noting that industrial and commercial standardization is done with the full consent and participating of consumers in the market.  In choosing to accept a standardized product, rather than insisting upon and being willing to pay for something more suitable to their tastes, the consumers have given their consent to standardization.

In the age of mass-production, distribution, and marketing the producers of goods and service benefit from the efficiency of producing uniform products that can be sold to a large number of people.   It has been argued that this provides mass-producers with a competitive advantage over the manufacturers of customize goods, in that the additional margin grants them greater ability to underprice their competition, greater ability to increase the size of manufacturing operations, and greater ability to reproduce retail operations.

Meanwhile, culture is socially constructed and individualism is by necessity uncontrolled – which both are in conflict with decisions being made by a few for the many.   Cultural evolution requires flexibility, and it is likely that the present cultural stagnancy is the result of a lack of flexibility in an economic environment in which the options available to satisfy and express taste are limited by suppliers who unilaterally decide to provide uniform products and services.

To my original point, this is supply-side economics which pointedly ignored that the customer is in control.  Suppliers have no ability to force anyone to buy from them, and seek to cater to the desires of buyers.   If there is any criticism to be leveled, it should be at consumers who sacrifice individuality to save on cost.

Sad another way, it is not "the corporations" that are dehumanizing people by limiting their options, but people who are sacrificing their individuality by accepting the options provided.   Commercial interests will rush to provide anything that people demand - and if their demands are uniform, then uniformity is what will be provided.

Leadership and Personal Goals

I read an article about the importance of setting clear goals, and it dawned on me that this is exactly the problem that many people have when they attempt to practice leadership - so I'm going to spend a bit of time trying to connect the two.

Validating Goals

The article itself was about determining whether a goal is valid, with an eye toward figuring out what to do in order to turn a feeling or dream into a goal - or in some instances to realize that a notion is only a feeling or a dream, and to avoid acting upon it as if it were a goal.

The first important distinction is made between a goal and a feeling.   All goals begin as feelings - a vague sense of being dissatisfied with the present, or the equally vague sense that making a change could result in a better sitaution.   Until a person knows what needs to be done to achieve their desired outcome, all they have is a feeling - it is not a goal until it is clearly understood and articulated.   A leader who does not have a goal is wasting his time and annoying his followers.

It also stands to mention that having a goal is necessary for leadership.   It should be obvious that a leader must lead his followers in achieving something.   To attempt to influence the behavior of others without a desired outcome in mind is not leadership, but manipulation - it satisfies the personal need to have power over others, but does not achieve an outcome.

Another distinction is to be made between a goal and a dream.   A goal can be attained and a dream cannot.   The distinction between a dream and a feeling is that a feeling is vague whereas a dream is specific - the individual knows exactly what he would like to happen, but is (or ought to be) well aware that there is no means to achieve it.

This problem is often seen in leaders who can articulate a goal but cannot provide specific enough direction, or who expect their followers to somehow figure out how to achieve the things he wants, even though he can provide neither instructions nor resources needed to accomplish it.

Leadership Goals are Personal Goals

The article itself was more personal in nature, but I believe that the same ideas apply to leadership situations - because the only difference between personal goals and leadership goals is that the latter are things a person can't accomplish by his own efforts and must influence others to cooperate.

I will concede that it is entirely possible to lead other people to do things that you could just as well have done yourself.   This smells a bit like unnecessary manipulation and dominance to me, but it may be justified if there are time constraints or conflicting goals - you ask someone to do something for you because you don't have the time to do it, or have more pressing demands.

But in another sense, all leadership goals are personal goals.   The desire to achieve an outcome is entirely self-centered.   Even if a person is taking an action to achieve a benefit for others, they are undertaking it because they have a selfish desire to see other people receive the benefit.   That is to say, leadership requires the help of others to achieve a goal, but the desire to achieve that goal is always personal - other people are merely the means.

Personal Goals are Leadership Goals

In many instances, the equation can be inverted: because we live in a complex social enviroment, most goals require the participation of others.  Even a simple transaction such as purchasing an item requires others to undertake the activities that make it available for sale, and even an action taken on one's own effort requires the passive cooperation of others not to interfere.

So the things that we truly do on our own and the things that we do with the help and cooperation of others are difficult to distinguish - but at this point I sense myself wandering into an academic/philosophical meditation rather than a more practical one, which is a good sign that I should stop typing.

Mobile Applications: History Repeating

On a recent trip, I was looking for a restaurant using my mobile device and came across three separate places that did not provide a menu on their mobile site, but instead wanted me to download and install their mobile application in order to see their menu.   Naturally, I did not.   The obvious reason is that I didn't want to spend the time or sacrifice storage space to download and install software for a one-time visit.  But it occurred to me that mobile applications are, in general, a bit of history repeating.

In the earliest days, before the Web was invented, the Internet was a network that connected file repositories stored on FTP and Gopher servers.   Just like the old dial-up servers before, all that users could do was to download files and applications from a remote server to use on their personal computers.   It was all that could be done, and people expected no more.

When the Web came along, all of this changed - albeit slowly.  Rather than downloading an application (which only ran if you had the right computer and operating system) or a file (same problems, plus you needed the proper version of a specific software program), you could visit a site that was readable in any Web browser and access applications that ran server-side.

For some time, there was a transition phase in which some firms still required users to download and install applications on their personal computers and others who provided websites that did not require anything to be downloaded or run locally.   And of course, websites won - and firms that still provided file repositories were compelled to change their ways, or accept failure in the online channel against competitors who used the Web.

Return to the present: this is the exact same conflict that occurred when I was looking for a restaurant on my mobile device.   As backwards as it seems, some firms are treating the mobile channel in the same manner as the pre-Web Internet.

Or more aptly, it's that many customers are treating the mobile channel in a different manner as the Internet.   The firms who provide service are merely responding to customer demand - and so long as customers are happy to download applications, firms will provide them.

It seems curious to me that people who are unwilling (and even a bit horrified) to download and install software to their personal computers are so blithe and ignorant about doing the vey same thing on their other personal devices.

Granted, two of the greatest problems have been patched: the potential for an application to be harmful (virus, Trojan horse, or malware) is mitigated by careful screening processes from some of the largest sources of applications; and the fact that downloaded applications go stale is mitigated by automated update functions.   The other two, the time involved in downloading and the clutter of one-shot applications that accumulates on the local device, don't seem to bother most users.

So in the end, my sense is that the patches will hold together mobile applications for a while - until there is a serious security incident, users will be indifferent to the potential harm, and providers will continue to support this quaint and outdated method.

Leadership or Manipulation?

I've been meaning to read more on the topic of leadership, but find myself putting down books after the first chapter, when I have grasped the author's definition of "leadership" and categorically reject what s/he has to say.   The main problem is that there seems to be little understanding of the practice - or more specifically, partial understanding: leadership is seen as control or persuasion, but without a purpose.  To my way of thinking, this is not leadership, but merely manipulation.

Leadership always requires a goal - to lead someone is to lead them somewhere, or to something.   There are instances in which a person attempts to control or manipulate others without any sense of a goal.  This is not leadership, though it might be said that the "goal" is to appease their own desire for domination.  As a rule, a person's attempt to influence others can only be regarded as leadership if it is intent on the achievement of a goal.

However, that is not to say that the goals of a wannabe-leader are always clear.   Most operations managers who oversee the work of employees who do the same daily tasks have the vague sense that they want better performance, but no clear concept of exactly what they must do to achieve it.   Others have a clear goal, but are quite vague in the methods by which it will be achieved - so their directions seem misguided or aimless, as they do not correlate to the goal. Perhaps the worst wannabe-leaders are those who have goals that they do not disclose to their subordinates, which seems to be blatantly manipulative.

There is also the problem of weak leadership, who merely support and encourage activities that require neither support nor encouragement. A person who is already motivated to do something does not need to be "lead" to do it, and while sports fans may disagree, I reject the notion that someone who merely cheers a performer on can be at all credited for their performance.   Insofar as support is concerned, it's often necessary for someone in a position of authority to clear obstacles and authorize the allocation of resources - and this is very helpful, but it is not leadership if this is all that is done.

Another common misconception is the notion of "self-leadership," which is claimed when a person overcomes their own reluctance or pessimism to undertake an action.    This is necessary, but is more along the lines of self-discipline and integrity, both admirable qualities, but neither of them qualifies as leadership per se.

But this misconception is useful in considering the behavior of a leader whose behavior consists of compelling or tricking others into doing things that they are unwilling to do themselves.   Granted, it does meet the criterion of having a clear goal for influencing the behavior of others, but it reeks of moral cowardice.

At this point I seem to be straying a bit - to summarize: to qualify as leadership, influence/persuasion must be directed toward the achievement of a goal that followers would not have pursued without the influence of the leader.   I think the last major topic is the beginning of a different discussion - ethical versus unethical leadership - that is a secondary concern.

Business, Nonprofit, and Government

Some of my readings on strategy, sustainability, and stakeholder relations have led me to an idea about the similarity and differences between business, nonprofit, and government organizations.   I don't believe it's ever been stated quite the way I have come to understand it, and I have the sense that considering them in this manner helps to better understand the way in which these organizations relate to the stakeholders who receive the benefits they deliver.

A bit of a disclaimer: any mention of "government" seems to attract opinionated imbeciles from search engines: this is not a political blog, and I don't care to engage in political discussions.   Comments will be moderated and correspondence ignored accordingly.

Back on point: I am led to the sense that businesses, nonprofit organizations, and government agencies have a similarity in their core purpose and differ only in ways that are largely incidental to the fulfillment of their purpose.  Understanding this difference can help an entrepreneur evaluate whether his idea would best be accomplished by starting a business, founding a charity, or petitioning a government agency.

The similarity is this:  all of these organizations function to organize capital and labor to deliver a benefit to certain members of society.    From a functional perspective, they are interchangeable but for one thing - whether the people who receive the benefits they provide are willing and able to pay the expenses of providing those benefits.

• A business provides value to customers, who pay individually for the value they receive.   The organization is willingly financed by the same people it serves.
• A nonprofit provides value to beneficiaries, who do not pay individually for the value they receive.  Instead, the organization is willingly financed by donors who wish to gift the value to the beneficiaries.
• A government provides value to certain members of the public, who do not pay individually for the value they receive.  Instead, the organization is unwillingly financed by taxpayers, pay taxes to avoid having violence done upon them.

Granted, that is speaking in ideal terms and in a general sense.   For example, there are government agencies that collect fees that are willingly paid by those who receive the benefit or privilege of their service - the cost of obtaining a hunting license ostensibly pays the salaries of game wardens.   But my sense is that these general statements hold true in most instances.

My consideration of nonprofit and government organizations will trail off from this point forward - as I currently work in the commercial sector, I am primarily interested in how the relationship to financiers and beneficiaries functions for a commercial organization, but the other types may pop up by way of drawing similarities or contrasts.

Investors and Customers

I have stated that commercial organizations are financed by the customers they serve, and I will stand by that statement - but there is another set of stakeholders who also consider themselves to be the financiers of a commercial organization: its investors.

In terms of operating expenses, it should be clear that investors pay no part of the operating expenses of a business - they intend to profit from their investment, not to be roped into having to provide a constant stream of financial support to the business.   This sometimes happens when a business is poorly managed and cannot cover its expenses - it must borrow money or raise capital from investors (generally new investors, by issuing bonds or releasing treasury stock).   But in a successful and sustainable operation, all ongoing expenses are paid out of the revenue collected from customers.

Investment capital, however, is less clear.   Starting a business requires a lot of cash, and until a product is rendered there are no customers to provide revenue.   This is where investors come in: they provide the investment capital to found a business (or in some instances to expand its operations) in exchange for the promise of a future return.   It does seem possible for customers to found a business by paying in advance for products to be delivered in future, but I expect such situations are rare.

However, I stand by the assertion that customers finance the organization - the revenues of a business repay the investors for the investment capital they provided.  This is most obvious when a business borrows money from a bank - the amount it required to establish the operation is repaid, over time, from the revenue contributed by customers.  At some point, the loan is paid off by the customers.

When investment capital is generated by the sale of stock, the situation is less clear: the stockholders are not repaid (unless the firm repurchases all its stock and goes private, which is rare), but instead maintain an ongoing interest in the operation.  The customers repay the investment capital through revenue, but it is a debt that is never entirely paid off: so long as shares are outstanding, the inventors are constantly owed some portion of the revenue.

As much as I'm attempting to avoid ethical issues, I am feeling a bit queasy at the notion of a loan that is never repaid - but I suppose all organizations are a bit questionable in this regard: the donors to a nonprofit gave funds without any expectation of being repaid, and the taxpayers who support a government have no expectation of repayment and did not freely choose to provide funds.   And neither charitable of government beneficiaries have any right to expect to receive value.   But this gets a bit off topic.

Ownership and Control

The notion of "ownership" becomes very hazy in all regards.  In western culture, it follows the general principle that someone who pays for something owns it.   But in organizations of all kinds, this becomes hazy.

The donors to a nonprofit clearly do not have ownership of the organization, though the organization must appease their demands for the sake of getting future contributions from them.   The taxpayers of a government do not have ownership of the organization, but the organization must appease their demands to avoid being overthrown.   And the customers of a business do not have ownership of the firm, but their demands must be appeased in order to generate revenue.

Business investors, however, are problematic.   They are owed a return on their investment, as explicitly promised to creditors who loan capital or implicitly promised to shareholders.   It seems to me that they have little "right" to control the business in any way except to ensure the repayment of the funds they are owed.  And while investors show little interest in the day-to-day operations of a firm and relegate this task to employees (management), the strategic direction of a firm is another question.

It does not seem at all reasonable for an investor to demand that, in exchange for a loan of money, they have perpetual control over the strategic direction of an organization.  This is particularly true when the amount of the original investment has been repaid, in full and with interest.   A bank that loans money to a business has no rights other than to collect payments as agreed upon - but again, the perpetual debt to stockholders becomes problematic.

And again, the problem of ownership and control is not unique to commercial organizations.   Nonprofit organizations can often "go rogue" and completely ignore the interests of their donors so long as they have working capital.   Government organizations can completely ignore the interests of citizens until they have gone too far and incite a revolution.   Businesses can ignore their investors and customers until they have gone bankrupt.  This, too, merits consideration - but not here and not now.

Customer Relations

Of all the beneficiaries and financiers of organizations, my sense is that the relationship with the customer is most clear, direct, and ongoing.  Except in rare instances where a company provides a rare, unusual, or once-in-a-lifetime service, the business must constantly take into account the interests of its customers and ensure that its operations provide ongoing value in order to receive ongoing revenue.

Its relationship with investors is of no consequence - or should not be of any consequence.   Rationally, the investors should also be interested in providing ongoing value to the customer, because doing so is critical to the firm generating the revenue necessary to repay their investment.   But there are instances in which investors run a company into bankruptcy because they are interested in something other than profiting from their investment, or because they do foolish things to generate short-term returns while damaging the company's potential to provide long-term returns.

In that sense, the rational investor should be content to leave the management of the firm in the hands of the employees it has paid to management, so long as the firm is profitable and stable enough to provide the required or expected return on their investment.  Any encouragement should be for the sustainability of the firm.

Ultimately, that brings me to the conclusion that the customer is the most important stakeholder of the business, whose needs should be served above all others - it is neither a moral obligation nor an option, but a functional requirement that must be met in order for the firm to retain the customers who provide revenue to sustain its ongoing operations.

The Broader Scope

To summarize and make sense of all of this, the key point of this meditation has been that business, nonprofit, and government organizations all exists as means of coordinating capital and labor to deliver benefits to certain members of society, and that the difference between them is largely functional and financial: it is the difference in identity and interests of those who receive the benefits and those who pay for the benefits to be provided to the recipients.

In this regard, the function of a business is clear cut because the financier and beneficiary are essentially the same person - the operating expenses are paid, and the investment capital is repaid, both by the customers who receive the benefit - and because the customers contribute the revenue voluntarily and have the ability to stop their contributions at any time, their interests must be the primary concern of the organization.

Where the interests of financier and beneficiary cannot (or will not) be sustainably served, a nonprofit organization or government agency is the only effective alternative for establishing an organization to provide benefits.    This becomes a bit of an ethical quagmire, because what is "effective" is not always "ethical" - but I'll save that meditation for another time and another venue.