Business model religion

If you’re reading this, you will probably have a veritable warehouse of expensively acquired models, schematics, heuristics and other tools that you can bring to bear on a challenge. 

I can sometimes sense my own mental “stock picker” working like an over-caffeinated Amazon warehouse worker hurtling round with their trolley to bring them to my attention before I have had time to work out the real problem.  Intellectual paracetamol that eases the pain but bypasses the cause.

In business, most of those models are grounded in the pursuit of efficiency, speed and are characterised by notions like Warren Buffet’s “circle of competence.” They have brought real financial returns to those who follow his principles – but at a price.

“What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.” Warren Buffet.

There is a problem with this when we assume what works financially automatically works in other areas of our lives. We end up specialising, even hyper specialising, and measure results over relatively short spaces of time. We see the trees, but not the wood, and ignore the other signals that abound – mental health, detachment, disengagement and routine low level political corruption. The result is isolated success – a booming economy achieved at the price of enormous inequality, and species, including us, on the edge of extinction.

We end up “wilfully blind” – ignoring what is essential but inconvenient. (Margaret Heffernan talks fluently about “willful blindness” and its effect on our leaders in this 7 minute summary.

As we go further down the rabbit hole of complexity that is this stage in our history, specialisation has very dangerous properties if it is the only tool we use. Today, we need breadth as well as depth, to value doubt as much as knowledge, and to honour long term effectiveness far more than short term efficiency.

“Big” leadership flounders in the face of the level of complexity we face – it is not that the people who lead us have somehow become less intelligent, or even less capable – they have just assumed that their “circle of competence” is enough, when it isn’t. Combined with hubris, it is a toxic mix. The leadership we need now is local. People we feel connected to, who we can share doubts with, and really learn from what is going wrong rather than just trot it out as tired mantra from communications departments.

When we allow our business models to become religions, with priests and rules obeyed without question, it will kill us.

It is a time for “small” leadership – and that would be you, and me, and the people next to us in conversations about what really matters.

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