Business Transformation Requires Transformational Leaders

The authors argue that systems are designed to produce their results, even when their results are far from perfect. Systems also have internal “negative feedback processes” that maintain system stability by canceling out disruptions. Overcoming these stabilizing systems can be challenging, and pushing a system far enough to initiate change can result in sudden, highly disruptive shifts to a new system. Rather than cause such disruptive change, the authors advocate for incremental shifts to avoid the kind of wholesale disruption that could leave financial, social, and political systems in shambles.

The authors examine the beliefs driving the dominant capitalist and democratic systems that govern the West. They believe we need to change the way we think to imagine a future where all life flourishes. For them, social transformation must be at the scale of previous transformations like the Enlightenment and the Scientific Revolution. Accomplishing this will require change across many social systems, but the authors target one in particular: MBA programs. The authors opine that business schools must ground MBA programs in the liberal arts and science traditions of the great medieval universities while challenging students to approach their work as a calling and using organizational methods and resources to create values-driven, society-scale change.

John R. Ehrenfeld looks to the present model of the brain, in which fundamental rationality is taken for granted, and asks if the answer to the need for systems change lies in the ways the human brain works. This argument raises provocative and (perhaps) discouraging implications. If our economic, social, and political systems reflect the biological structure and function of the brain, what is the potential for changing those systems? Does systems change require fundamental change to cognition, and, if yes, how might that be accomplished? What are the ethical implications of equating systems outside the body with systems inside the body, given the apparent diversity of human thought and behavior? Do we risk valuing one way of thinking over others? If yes, will the privileged group occupying positions of political power decide system structure and function?

This first of two Amplify issues probes the necessary scope and scale of systemic solutions. What does systems change mean? What systems need to change, and how? Which possible future world do we want, which do we need? How can markets deliver such change?

The authors conclude this issue of Amplify by analyzing systems for governing greenhouse gas (GHG) emissions in markets in the US. They argue that public-private partnerships (PPPs) have the potential to fill the void in market governance left by the failure of the government to enact comprehensive climate change legislation. The authors highlight the Science Based Targets initiative (SBTi) as a tool that provides companies and other organizations with the means to make specific, credible plans to achieve decarbonization. They argue that aligning PPPs with SBTi target setting would be an effective mechanism to accelerate carbon emissions reductions.

When looking at the characteristics of both the Industrial Revolution and the new knowledge revolution, there is a synergy between them that is critical to helping us understand how to reconcile them.

The elusive question, “Are we doing enough?” is the one we ask privately and quietly when reflecting on our progress toward workplace inclusivity. We ask this question among ourselves and feel somewhat reassured that no one else quite knows the answer either. However, bigger questions remain: Why are the achievements of diversity, equity, and inclusion always somewhere in the future? Why are they always “bonuses” beyond profitability, sustain­ability, and achievement of an organization’s mission?

Leaders need to avoid falling victim to the sunk-cost fallacy. Measure your organization’s perceptions about its emotional investment as well as whatever reputation, political capital, money, time, or any other resource it has committed to the project thus far. The most important step to freeing yourself from making poor decisions based on sunk costs is to recognize the logical fallacy. Even simply being aware of it will help you make more rational decisions in the future.