Business Exposed200
do. How we, in our society, organize our companies is basically
based on two sources: (1) the Roman army (i.e., a hierarchy with
unity of command), and (2) economics.
Economics has had a huge inuence on how we govern our
rms. For example, the use of stock options to incentivize and
reward top managers comes straight out of “agency theory”,
and the spread of this practice has been linked to the spread of
“agency theorists” across business schools in the US after which,
gradually, the phenomenon started to diffuse. And there are
other examples.
Yet, economics – including agency theory – works on the
assumption that people are rational and self-interested. They will
work if they are rewarded for it, but if they don’t receive a direct
reward or nobody can really observe their efforts, they will shirk
and be lazy. Under this logic, indeed, you have to incentivize
people; otherwise they won’t do a thing.
And I guess to some extent, we are indeed rational and self-inter-
ested, and hence motivated by money. However, there is another
fundamental aspect to our nature, one which through millions
of years of evolution has made us the way we are: we like being
part of a community and enjoy contributing to the well-being of
that group.
Because we evolved as being part of a tribe. And people who
were purely self-interested, shirking, and lazy would be kicked
out of the tribe and clubbed to death, if not consumed for
dinner. So our gene base evolved into making us slightly self-
interested but also community-lovers. We all like doing things
not only for our direct individual reward but also because
it contributes to the community that we are part of. This
community used to be our tribe. Nowadays, it is often our
organization.
And if you, as a manager (i.e., headman) manage to tap into that
deep fundamental need among your employees, you can build
a powerful rm indeed. People love to do stuff that strengthens
their rm, fullls them with pride, and makes us feel stronger as