The Profits-Ethics Paradox. An Organization-Ecological Analogy

11 november 2019

By Peter Robertson,Visiting Fellow at Nyenrode Business University

In the late summer and fall, the owner of the orchard is happy. Apples enough. It has been a profitable year so far. The harvest is of high quality, and the apples are processed based on size, shape, colour, beauty, and enter the market. Calculations are made, the price is determined at the auctions, and the money is counted before the winter shows up. One asset, however, is not really part of the game, and most people don’t even look at it. The missing part of the game is the apple tree itself. The very organism that created this harvest and delivered its treasure silently. Perhaps, we might take a moment and look back and return to the trees in the orchard. How do they look after the harvest? Actually, not that well. Their leaves are brown, yellow, punctuated, and their whole gestalt seems fatigued, sick, please give me a winter to recover. The apple tree will survive and bring a new harvest next year.

However, the apple tree stands for a general principle; a harvest comes when the seasonal cycle, in this case of the tree, is almost at its end. Many plants live only one year, but in nature there are ecosystems that create, in most cases new life and in this case a new harvest for the apple tree.

From a scientific perspective ecosystems, which in complexity sciences are also called complex adaptive systems, are systems that create nature, including mankind, and are characterized by always being different but still consistent; they self-organize in a natural rhythm and patterns. Results emerge that add up to far more and far more different variations than each of the constituent parts ever could achieve separately on its own. Because of the complexity of the rhythm and the patterns and connections that emerge within heathy coherent ecosystems, it is not possible to control these systems completely.  Because the systems do not function in a linear manner cause-effect thinking doesn’t work either. Work patiently on the right conditions and let the system then run by itself. What control can do is to monitor, to maintain conditions, like optimal communication and interaction, and nudge the system in the right direction. But too much control will likely destroy a complex adaptive system, most often because control has a negative impact on the natural rhythm that causes the coherence of the system. If there is too much control, the system becomes rigid and loses the flexibility to allow for the various adjustments and variations required to keep the ecosystem in balance and the ecosystem will slowly break down. Too much control of a complex system is physically similar to playing classical music with a metronome (see below).

Man-made systems like institutions, corporations, companies, factories, etc. are, whether we like it or not, similar to: ecosystems. They are often driven by profit, and in ecological terms it is probably better to say that they are controlled by profit. It often takes a while before real profits arrive, and, when they arrives, this is often the result of the complex system with many employees, clients, suppliers, who worked for a substantial period of time to get the desired results. Often, however, the company that maximizes the profit is just like the apple trees in the orchard. Its organization-ecosystem is sick, fatigued. The profit is fine, but the culture is not healthy. There was too much pressure, stress, and competitive drive to move forward so that employees from low to high got caught in an unhealthy frenzy. When the focus is only on maximizing the profit there is no time to think about the impact of the company’s activities in a broader context or the potential long term consequences for the company and its employees, it resources, etc. This sounds familiar, and maybe even like a cliché. We all want an ideal organizational culture, happy people living in balance. However, if we look at nature, that might be completely unrealistic. Getting a top result might cost a lot of effort and might, like in top sports, bring human beings to the edge and in need of recovery.

Here, however, things often go astray. At the end of a growth cycle, nature recovers, but organizations often don’t. In nature recovery is not negotiable. It must be done. There must be a rhythm of birth, growth, harvest, and decline, in short a life cycle. The life cycle has a rhythm like music. That rhythm is everywhere. Some downtime is a part of the rhythmic cycles of natural systems. Nature is full of rhythm and rhythm is not just something for fun, it has a function. Science shows us that rhythm is the carrier of information and creator of coherence. Time is needed for the information to spread throughout the entire system, for the system to integrate the information within itself and then to act upon the information for the next cycle to maintain its balance. This is a continuously recurring process. The same can be said for the dissemination of and adherence to ethical values within an organization. These need to be disseminated and adhered to throughout the entire organization connecting all the people working within it. Rhythm is never the same and always somewhat surprising but still predictable. A rhythm keeps one connected. A metric beat, a repetition is completely predictable but boring. It disconnects.

If human beings are entering a run-away process of wanting to generate profit every quarter, every year, every time again without a rhythm of decline and recovery, it will start moving in a beat, like destroying a Beethoven sonata with a metronome. If an organization focuses only on the maximizing of profit without looking at the broader context, this creates a risk to the unity of the organisation. For example, the parts and functions of the organization that are also required for the organization to function properly but are not seen to directly contribute to the profit might be downsized or neglected. There will be no time to consider the broader scope and whether the organisation’s actions and their consequences still align with the organization’s ethical values increasing the risk of unethical behaviour. Ecosystems and ethical values within an organisation cannot survive a metric beat. The examples below might illustrate this at the corporate level

However, it should be noted that it is not only the financial profit mantra that might destroy an ecosystem. Too tight a control through the rules and laws that aim with the best intentions to control derailment might have the same effect. Ecosystems don’t care about the reasons for the control, they only experience control, no matter what.

Organization-ecological disasters like the 660-billion-dollar costing opioid and addiction crisis in the USA driven by a substantial part of pharmaceutical industry or airplane disasters linked to the cost-saving attempts to fly a wrongly designed fuselage and patch it with a bit of software in the airplane industry are not mistakes that happen by chance or bad luck. These examples of derailment are ecologically the logical result of a loss of realistic life cycle management and loss of rhythm, leading to a loss of the self-organizing power of the ecosystem and its ethical values. Harvests will always be made, money will always be earned, but the evidence seems to nudge more and more toward a conclusion that mankind cannot squeeze the juice out of nature. If corporations cannot follow the life cycle, they will not necessarily lose their profit immediately, because human beings are resilient for a while, but what will be lost is the power of the organization-ecosystem, its natural self-organization, its flexibility, its free-floating information abundance leading to innovation, it adaptability and most of all its integrity and values. An implicit message is that profit-maximization might definitely not be the way to go if values, ethics and sustainability need to be maintained. This is a dilemma, but these two sides of it seem to be very much inversely connected.

Before concluding these few reflective paragraphs, you might reflect, practically, in your daily private and work life, how much of your life is running like the beat of a metronome or flowing within a rhythm? Understanding the nature of rhythms might be one extra piece of the puzzle in understanding nature’s dynamics and the core of human values.