David Byrne, Nokia, and How Self-Referential Systems are Doomed for Collapse

Hong Kong Downtown


Hong Kong downtown, on a cloudy day, 2010

As I’ve mentioned in past posts, there’s a lot of writing on the transition between Authoritarian/Legalistic externally-defined relationships, and Performance-based Communities, where independently generated relationships are waxing.  Stephen Covey and others have owned this space for the last 30 years.  Yet the subject keeps coming up in the media because of the obvious Authoritarian streak in American politics –especially this political season.

But that’s not the only place that is resistant to empathetic evolution.  This great piece on Nokia’s collapse, and purchase by Microsoft, by Quy Huy and Timo Vuori of INSEAD and Aalto University respectively, a business school centered in France, and the leading institution in Finland, spells out the dynamics of Authoritarian devolution with one of the world’s leading tech. companies.  Which we will return to.

Meanwhile, no one less than David Byrne, of the band The Talking Heads, wrote an insightful piece titled ‘The Echo Chamber‘, where he does a reasonable job sorting through the process of systemic Authoritarianism in the current brand of Republican politics.  Byrne makes the point that others have made that the Internet makes it possible for groups of people with like-minded views to successfully screen others’ viewpoints out by only subscribing to news feeds that reaffirm what they already know.  We covered this very topic when we discussed confirmation bias.  What’s kind of cool, for the systems geek in me, is that Byrne even uses a nodal diagram to show the effect!  His picture is below.

Screen Shot 2016-02-20 at 6.44.16 PM

What Byrne’s picture shows clearly is the fundamental danger of Authoritarian systems.  It creates a self-referential system — a system that gives the Authority the power to decide what the truth is, and then allows those below the primary Authority to cycle the same information among actors in the community.  It’s a nice graphic of how, mechanically, the Principle of Reinforcement works. My old friend and former Forest Service biologist, Al Espinosa, had another name for this, especially when it happened at the management level — the Synergistic Stooge Effect.  The success/failure of the larger social system then solely depends on how well the Authority that defines the truth is grounded.  If the Authority believes something that is simply not true — like clearcuts are good for fish, or this digital thing is just a fad — sooner or later, things are going to blow up.

In a very physical sense, similar dynamics exist with circuits and measurement.  Similar to an electrical circuit, when a social circuit is not grounded, one encounters signal drift due to a floating ground— a floating away from a standard reference point (or voltage).  And this can lead to instability.

It also creates problems for people outside of the system, attempting to tell people on the inside of the system that they’re wrong.  It’s the ‘Uncle Bob at Thanksgiving’ problem, which Robert Reich attempts to help with this video he made.

The problem with the video is that Robert Reich doesn’t read this blog, because he would then know that Uncle Bob is an Authoritarian, and belief-based. The only way Authoritarians, who are single-answer thinkers, solve disagreement is with conflict that either ends with one of the parties being killed, or exhaustion on both sides.  And while the latter is probably better than the former (who wants to deal with a dead body during the holidays?) understanding knowledge structure would make Uncle Bob’s nemesis, Professor Reich, sitting at the end of the table, work more on connection first.  To be fair, Reich does get around to this in the last 10 seconds of the video.  But still — it’s not about being right. First, you have to soft-connect.  Beating up Uncle Bob at Thanksgiving is a violation of the guest/host relationship.  And families are the archetype of a Tribal/Authoritarian society.  Historically, that goes back past the ancient Greeks.  The next thing you know, you’re participating in the sack of Troy over a dried-out turkey.

But back to the electricals. The circuit analogy is useful once again.  What happens when you try to ground a self-referential loop is that the discharge of charge is directly related to the differential in voltage potential — how far apart you are in viewpoint.  That spins up the conflict.  Ugh.  This is why truly rigid Authoritarian systems come apart so rapidly.

Re-grounding, when it occurs (and it’s a matter of when,) is often a v-Meme conflict effect — where one party with a larger ensemble of knowledge structures and ways of knowing encounters another.  I’m a big reader of the conquistador literature.  Regardless of the insane level of bloodshed perpetrated by the Spaniards, who were very much Legalistic Authoritarians (think of all those priests they hauled around with them,) the Aztecs had it coming.  Perpetuating the myth that if they didn’t rip the hearts out of a certain number of captive citizens in order to make the sun come up every morning had to not end well.  And it didn’t.  If there’s a more profound example of the Arcing/Grounding phenomenon in Authoritarian social systems, I can’t think of one.  Such is what happens when one non-empathetic social system meets one slightly more advanced.  When you add in a little smallpox, the Aztecs simply didn’t have a chance.

What the conquistador example also shows is what happens when you build a large system on a non-empathetic lie — like punishing your people is way the to higher performance.  No one could argue with the sophistication present in Aztec society.  The art, pyramids and such were dramatic exemplars of a highly developed culture.  But as we discussed here, sophistication and evolution are two different development paths — horizontal vs. evolutionary.  And while sophistication might manifest itself in arts and performance culture, it also manifests itself in control, and cruelty.  The only way you prevent that is with empathetic development.

Which brings us back to the issues at Nokia.  Huy and Vuori state why Nokia failed pretty emphatically:

Nokia’s fall from the top of the smartphone pyramid is typically put down to three factors by executives who attempt to explain it: 1) that Nokia was technically inferior to Apple, 2) that the company was complacent and 3) that its leaders didn’t see the disruptive iPhone coming.

We argue that it was none of the above. As we have previously asserted, Nokia lost the smartphone battle because of divergent shared fears among the company’s middle and top managers led to company-wide inertia that left it powerless to respond to Apple’s game changing device.

In a recent paper, we dug deeper into why such fear was so prevalent. Based on the findings of an in-depth investigation and 76 interviews with top and middle managers, engineers and external experts, we find that this organisational fear was grounded in a culture of temperamental leaders and frightened middle managers, scared of telling the truth.

Deer in the headlights
The fear that froze the company came from two places. First, the company’s top managers had a terrifying reputation, which was widely shared by middle managers—individuals who typically had titles of Vice President or Director in Nokia. We were struck by the descriptions of some members of Nokia’s board and top management as “extremely temperamental” who regularly shouted at people “at the top of their lungs”. One consultant told us it was thus very difficult to tell them things they didn’t want to hear. Threats of firings or demotions were commonplace.

There’s a lot more.  But those that follow this blog can see all they need to know.  There is NO WAY a cutting-edge technology company, dependent on rapid development cycles spun up by creative interchange, can survive with an Authoritarian core structure.  All the signs of that Authoritarianism (as well as psychopathic Authoritarianism) are there — and not just in the impulsive, emotional outbursts.  Lots of titles = lots of externally defined relationships indicate lots of belief-based thinking.  The fundamental structure prevented natural, emergent behavior of information transfer from bottom to top.  Stasis is the predominant mode as realistic time scales go out the window.  Huy and Vuori specifically note the gap between middle and upper managers.  But likely, when times got tough, there were even more exacerbated information flow problems in the company.

Huy and Vuori argue against the first three points.  But if one looks at the implications of empathetic relational social structure — or the lack thereof — there is also truth in points 2 and 3.  Point 2 — complacency — implies a strong negative culture toward metacognition — knowing what you don’t know, which is a hallmark of Authoritarian cultures.  You don’t tell the boss that they don’t know what they’re talking about.  From a reality/grounding perspective, it’s pretty unfathomable that any cell phone company outside a niche market could believe that cell phones wouldn’t continue to evolve at a rapid rate.  Self referential system much?

And even point 3 — that leadership didn’t see the iPhone coming.  Of course they didn’t.  They had shut off all information about the SOTA in the tech world when they disrupted the link between middle and upper management.  Upper management is not the group typically managing the bow wave of technology development.  Their heads are in the books, or in shmoozing with key investors.  They have to count on middle management, which is tasked with actual technology execution, to advise them on physical trends.  So while I completely agree with Huy and Vuori’s alternate analysis, I’d put an ‘and’ between the two groups of causes, and argue that they’re both connected through the social/relational structure into which Nokia had devolved.

What’s the key takeaway?  The ways we disrupt information flow in our organizations have profound consequences on our survival.  Authoritarianism and its self-referential nature might suit the suits at the top for a while.  And maybe a group of panderers at the bottom.  But it’s no way to manage a company dealing with disruptive technological, or social change.  Both of which, in the contemporary business world, are coming in spades.

Further reading:  After writing this post, I got around to reading Huy and Vuori’s longer paper about Nokia’s collapse  It’s great stuff — in a process full of data and information that likely will not be able to be repeated, as large companies a.) don’t collapse very often, and b.) allow academic researchers to interview everyone from top to bottom.  With the authors’ focus on emotional states, there’s a whole wealth of ways to explore a key element of empathy and communication that may extend up to a subject I don’t write much about — global empathy.  How do we get to the point where in a large, aggregated group, everyone knows to be afraid?



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