TWO THEORIES OF WEALTH MANAGEMENT

I was reading my dog-eared copy of "The Neotropical Companion", John Kricher's primer on America’s rainforests. I wanted to look up some plant lore before a team-building trip to Costa Rica. His last chapter envisioned the state of the primary jungle by year 2000 - and his assessment was dismal. So I went looking for recent facts to see how correct he'd been. Things are worse than he predicted back then. Earth's forests are under unrestrained assault.

I read many articles as to the causes of the forests decline and they invariably suggested
need and greed. One newspaper report declared that 10% of the Planet's plant species were in immediate danger of extinction. I remembered the movie "Medicine Man" where Sean Connery discovers that we are destroying the Planet’s medicinal plants before we know what they could heal and I shuddered.

I realized that we can no longer afford a
strictly economic view of the world. We need a more creative way of managing wealth. As many business leaders don't realize there are at 2 ways of seeing wealth creation and management, I'll add ignorance to need and greed as a cause of the problem.

The 2 theories are called «Theory E» and «Theory O» by Harvard Business School. Theory E (purely economical) is based on extracting maximum value for shareholders. Theory O (organic) is management based on growing an organization's abilities. Here the focus is placed on enhancing the company’s performance in the marketplace.

An organization's direction, activities and employee-dynamic are quite different when managed with each these theories. The purely economic model drives a mindless race for the last resource. The organic model champions sustainable growth, adding value to systems and creatively developing the human resources. The are very different focuses.

Here are 8 ways in which they differ:
  1. The leadership style of Theory E adherents is top-down and directive, while O-leaders favor empowered teams and independent structures.
  2. E-people push the "lean and mean" approach but Theory O folks adopt a "wiser and more adaptive" dynamic. Lean and mean organizations are often so anorexic they suffer from stagnation and cronyism. In the meantime O-structures can adapt to evens and circumstances with much greater flexibility and agility.
  3. Theory E consultants help companies design models and strategies that try to predict outcomes, but theory O consultants coach people on personal growth strategies that map outcomes.
  4. It seems that - throughout the organization - the E-focus is to reduce costs. The O-focus is rather to invest in « structural capital, client capital and creative capital ».
  5. While the E-thinking has a motivational thrust that is purely financial, O-motivation is both financial and educational.
  6. The Theory E goal is to reap greater share value but Theory O has a whole other outlook: it wants to add value to its shares.
  7. Theory E people tend towards "either/or scenarios" and "bottom-line" thinking that gives value to their way of seeing. Theory O people will think in terms of "win-win-win scenarios" and evolve a more global mindset.
  8. Theory E is shortsighted and subject to the law of diminishing returns. O-managed companies are subject to predators, parasites and the limits imposed by "numbers".
Already Earth is reacting to "E" doings. In year 2000, insurance companies paid out more in disaster claims than during all of the '90s combined. And then things suddenly got worse. 9-11 accelerated everything so leaders became concerned with security… and changed laws to favour money ONLY.

In the last decade so many systems have degraded. Global warming, disappearing diversity and wilderness areas, other eco-disasters and stopping greedy capitalist exploiters were all put on back-burners.

The “O wisdom” has become apparent if you understand killing the chicken that lays the golden egg. A rainforest is more than "the lungs of the Planet”. It is a repertory of life’s diversity. It’s a fabric-weave made of the fibers that are Nature's intricate web. If we lose too many more fibers, life's fabric will unravel and collapse.