Did the feudal system ever go out of style? One of my b-school profs, in the 70s, talked about commenting, to his class, that “theory X is pretty much dead”, and met with derisive laffter. While the prof sat in his ivory tower, reading literature written by others sitting in their ivory towers, people that worked for a living knew what reality was.
Third Industrial Revolution: Electronics and Nuclear in 1969.
Fourth Industrial Revolution: Internet and Renewable Energy in 2000.
Adam Smith’s trust in markets
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”
Clearly Adam Smith was not thinking ahead two centuries to the modern multinational corporation and the economic environment in which it thrives. The butchers, brewers, and bakers of his time were small enterprises without pricing power which allowed free markets to function well. The rise of giant corporations gave rise to asymmetric information (Joseph E. Stiglitz et al) and pricing power which negated the beneficial functions of free markets. One remedy was Trust Busting but giant corporations bought out the politicians and Trust Busting faded. The net effect was the reintroduction of feudalism but instead of landlords the ruling class is populated by corporate elites.
How to survive and thrive in this environment? The Internet gives everyone access to the whole world. Lots of people are using the technology to make a living, from creating apps to publishing, broadcasting, and selling all sort of items online. The Internet gives access to markets that individuals never had before. In a sense the Internet is bringing back the free markets that Adam Smith envisioned. But it only works for enterprising people, not for kids with their face fixated on a smartphone in mom’s basement. The Give-Me Generation individuals are doomed to fail.
served clients world wide from his home office in Caracas developing websites with his partner in New Zealand. That was over 30 years ago! Opportunities are even bigger now with uTube, Shopify, Amazon, and other platforms.
I had heard Theory X mentioned but I never bothered to find out what it was until I wrote my above post this morning. Theories X and Y are about managing people. Theory Z is about getting out from under managers or JCs as you call them. Your rants point out problems but what we need are solutions. Theory Z is a proposed solution.
Theory Z was discussed when I was in B-school, in the 70s. Thing is, Z assumes the “JC” assigns some value, however small, to his employees. Every full time job I had over the years, could have been interesting and satisfying. But the “JCs” always defaulted to X, and their constant stream of abuse and threats, destroyed any chance of my liking the job. Every morning, at the pump seal company, the VP Marketing came upstairs and made the rounds to make sure everyone was at their desk, working hard. Sometimes, he would stick his head in my cube and ask how things were going. If I said I was really busy, he would say “if you can’t handle it, we will find someone who can”. If I said it was a bit slow, he would say “that makes it hard to justify keeping you around”. Got the same nonsense everywhere else: being beat on constantly. When RS changed the manager’s pay plan in 89, which had the effect of cutting pay 30-40%, for the same work, depending on the manager’s situation, most of the mangers started grumbling. The district manager said “that’s the way it is. if you don’t like it, turn in your keys”. which is exactly the way the X attitude was described when I was in B-school: “if you don’t like it, quit”, because, with the streets full of boomers looking for a job, the “JCs” were always confident of finding someone to take your place. No surprise that surveys have shown most “JCs” are sociopaths, because only a sociopath would treat people the X way.
Theory Z is real. Was discussed in the 70s, as I said. Never caught on, apparently. Requires showing a tiny bit of respect for your employees, which seems beyond the ken of most “JCs”.
## Maslow’s Theory Z
Late in his career Maslow focused increasingly on self-transcendence as a human phenomenon and concern. As he explained in his seminal paper titled Theory Z, the motivation for transcendence literally ‘transcends’ his original hierarchy of needs. So, for example, some people who achieve self-actualization — the highest level of his original pyramid — also achieve a transcendent life orientation, while other self-actualizers do not. On the other hand, some people, like the proverbial “starving artist,” value self-transcendence ahead of all material values, including self-actualization (in the sense of being materially “successful”). Hence, transcendence for Maslow is not so much an extension of his original pyramid as an dimension.
The Japanese developed that idea further.
# Theory Z of Ouchi
For Ouchi, ‘Theory Z’ focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. According to Ouchi, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction.
“Japanese Management” and Theory Z itself were based on Dr. W. Edwards Deming14 points. Deming, an American scholar whose management and motivation theories were more popular outside the United States, helped lay the foundation of Japanese organizational development during their expansion in the world economy in the 1980s. Deming’s theories are summarized in his two books, Out of the Crisis and The New Economics, in which he spells out his “System of Profound Knowledge”. He was a frequent advisor to Japanese business and government leaders, and eventually became a revered counselor. Deming was awarded the Second Order of the Sacred Treasures by the former Emperor Hirohito, and American businesses tried to use his “Japanese” approach to improve their competitive position.
As the piece says, Shiny businesses said they were implementing Theory Z, but reality was they always defaulted to threats and abuse, such as God and Savior Welch’s system of firing a set percentage of employees every year, to keep everyone stressed to the max about the hatchet falling on them next.