There is only one valid definition of business purpose: to create a customer.

― Peter F. Drucker

In today’s world money is the prime mover in almost every decision made. Money is the raison d’etre in how we are managed, and what we perceive as correct. It has become a surrogate for what is morally correct, and technically proper. Fundamentally money is just a tool. Instead of balance and some sort of holistic attitude toward what we do, money ends up being the core of meaning. The signaling from society is clear and unambiguous; money is what matters. In the process of making this tool the center of focus, we lose the focus on reality. In terms of business and those who make downloaddecisions for business, money is all that matters. If it puts more money in the pockets of those in power (i.e., the stockholder), it is by current definition a good decision. The flow and availability of money is maximized by a short business cycle, and an utter lack of long-term perspective. In the work that I do, we define the correctness of our work by whether money is allocated for it. This attitude has led us toward some really disturbing outcomes.

What gets measured gets improved.

—Peter Drucker

Stepping away from the big picture of science for a moment is instructive in seeing how money distorts things. Medicine and medical care is a good example of the sort of abominable things that money does for decision making. The United States spends an immense amount of its aggregate wealth on health care, yet the outcomes for Americans are poor. For people with lots of resources (i.e., money) the health care is better than anywhere in the World. For the common person the health care approache2014-06-03-20140529doctortreatingmalepatientthumb.jpgs second World standards, and for the poor third World standards. The outcomes for our citizens follow these outcomes in terms of life expectancy. The reasons for our terrible health care system are clear, as the day is long, money. More specifically, the medical system is tied to profit motive rather than responsibility and ethics resulting in outcomes being directly linked to people’s ability to pay. The moral and ethical dimension of health care in the United States is indefensible and appalling. It is because money is the prime mover for decisions. Worse yet, the substandard medical care for most of our citizens is a drain on society, produces awful results, but provides a vast well of money for the rich and wealthy to leech off of.

friedman_postcardMoney is a tool. Period. Computers are tools too. When tools become reasons and central organizing principles we are bound to create problems. I’ve written volumes on the issues created by the lack of perspective on computers as tools as opposed to ends unto themselves. Money is similar in character. In my world these two issues are intimately linked, but the problems with money are broader. Money’s role as a tool is a surrogate for value and worth, and can be exchanged for other things of value. Money’s meaning is connected to the real world things it can be exchanged for. We have increasingly lost this sense and put ourselves in a position where value and money have become independent of each other. This independence is truly a crisis and leads to severe misallocation of resources. At work, the attitude is increasingly “do what you are paid to do” “the customer is always right” “we are doing what we get funded to do”. The law, training and all manner of organizational tools, enforces all of this. This shadowed by business where the ability to make money justifies anything. We trade, destroy and carve up businesses so that stockholders can make money. All sense of morality, justice, and long-term consequence is scarified if money can be extracted from the system. Today’s stock market is built to create wealth in this manner, and legally enforced. The true meaning of the stock market is a way of creating resources for businesses to invest and grow. This purpose has been completely lost today, and the entire apparatus is in place to generate wealth. This wealth generation is done without regard for the health of the business. Increasingly we have used business as the model for managing everything. To its disservice, science has followed suit and lost the sense of long-term investment by putting business practice into use to manage research. In many respects the core religion in the United States is money and profit with its unquestioned supremacy as an organizing and managing principle.

So much of what we call management consists of making it difficult for people to work.

—Peter Drucker

For example I noted how horribly we are managing a certain program at work, how poorly the work is suited toward the espoused outcomes. The response to this is always, “this is the program we could get funded.” Instead of doing what has value or what is download-1needed, we construct programs to get money. Increasingly, the way we are managed pushes a deep level of accountability to the money instead of value and purpose. The workplace messaging is “only work on what you are paid to do.” Everything we do is based on the customer who is writing the checks. The vacuous and shallow end results of this management philosophy are clear. Instead of doing the best thing possible for real world outcomes, we propose what people want to hear and what is easily funded. Purpose, value and principles are all sacrificed for money. The biggest loss is the inability to deal with difficult issues or get to the heart of anything subtle. The money is increasingly uncoordinated and nothing is tied to large objectives. In the trenches people simply work on the thing they are being paid by and learn to not ask difficult questions or think in the long term. The customer cares nothing about the career development or expertise of those they fund. In the process of money first our career development and National scientific research is plummeting and in free fall whether we look at National Labs or Universities.

There is nothing quite so useless as doing with great efficiency something that should not be done at all.

—Peter Drucker

At the heart of the matter is difficulty with long-term value. The impact of short-term thinking is clear in business. Short term drives are great for making money for stockholders, the more activity in the stock market, the better. The long term health of041917_RE_science-march_main business is always lost to the possibility of making more money in the now. By the same token, the short-term thinking is terrible for value to society and leads to many businesses simply being chewed up and spit out. Unfortunately our society has adopted the short term thinking for everything including science. All activities are measured quarterly (or even monthly) against the funded plans. Organizations are driving everyone to abide by this short-term thinking. No one can use their judgment or knowledge gained to change this for values that transcend money. The result is a complete loss of long-term perspective in decision-making. We have lost the ability to care for the health and growth of careers. The defined financial path has become the only arbiter of right and wrong. All of our judgment is based on money, if its funded, it is right, if it isn’t funded its wrong. More and more all the long-term interests aren’t funded, so our future whither right in front of us. The only ones benefiting from the short-term thinking are a small number of the wealthiest people in society. Most people and society itself are left behind, but forced to serve their own demise.

Long-range planning does not deal with the future decisions, but with the future of present decisions.

—Peter Drucker

Doing something better is relatively easy to devise, but seemingly impossible to implement in the near term. Large parts of the problem are laws that favor short-term interests and profit taking over long-term investment. These laws are entirely created to maximize the personal wealth creation. Instead laws are needed to maximize the societal creation of wealth, which is invariably long-term in perspective. We could bias the system in favor of long-term investment. Part of the answer is the tax system. Currently the system of taxation is completely oriented toward short-term and wealth creation for individuals. The attitude today is that if you can make lots of money; it is correct. This perspective needs to change to something more nuanced. We need to push a balance of this idea with value, impact and the long-term perspective. Ultimately this will require people in power to sacrifice wealth now, for more wealth in the future. People imagesneed to receive a significant benefit for putting off short-term profit to take the long-term perspective. We need to overhaul how science is done. The notably long-term investment is research must be recovered and freed from the business ideas that are destroying the ability of science to create value. The idea that business practices today are correct is utterly perverse and damaging.

Rank does not confer privilege or give power. It imposes responsibility.

― Peter F. Drucker

The problem with making these changes is primarily those who benefit from the current system. A small number of the most powerful and wealthy in society are significantly advantaged. They will work steadfastly to keep the current system in place because it benefits them. Everyone else can be damned and in many cases the powerful care little about society at large (some wealthy people seem to have adopted a more generous attitude, Bill Gates, Warren Buffet come to mind). Money having value over real world things is to their advantage. Creating a system that benefits all of society hurts them. This is true in the short term, but in the longer term it creates less overall wealthUnknown. We need a realization of the long-term effects of current attitudes and policies as a loss to everyone. A piece of this puzzle is a greater degree of responsibility for the future on the part of the rich and powerful. Our leaders need to work for the benefit of everyone, not for their accumulation of more wealth and power. Until this fact becomes more evident to the population as a whole we can expect the wealthy and powerful to continue to favor a system that benefits himself or herself to exclusion of everyone else.

Doing the right thing is more important than doing the thing right.

—Peter Drucker

Part of the overall puzzle is overcoming the infatuation with using business models to manage everything including science. It isn’t necessarily incompatible with the best interests of science, but today’s business practices are utterly orthogonal to good science.

Management is doing things right. Leadership is doing the right things.

—Peter Drucker

 

 

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