Sitemap | Home
strategy: book
View Table of Contents
Read Excerpts
Read Reader's Reviews
Read Int'l Summaries
How to Order
strategy: author
About Evan M. Dudik
Contact Author
strategy: extra
How to Obtain a FREE 60 Minute Tape Summary
View Awards
What Do Readers Learn?
FREE Strategy Quiz:
Where do you stand on the Strategic Playing Field?
What kind of strategic player is your company?
How do you do compare to some famous companies?
Vote Strategy Poll
Business Maverick Articles
Out-Of-The-Box Books
Strategy's Most Dangerous Dogma--and What to Do about It
Extra Links
The Lost Chapter:
Strategy and The Corporate Citizen
Print this page
Email this page
The Lost Chapter:
Strategy and the Corporate Citizen

"As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed…the latent causes of faction are thus sown in the nature of man…"

--James Madison, The Federalist No. 10

It was one of the bitterest wars the [early] Romans ever had to fight—and the first in which they can be seen to have employed a well-planned, long-term strategy…But Rome now [in victory over the neighboring Latin tribes] showed a gift for conciliatory organization that no important states of the ancient world, including those of the otherwise cleverer Greeks, had ever displayed before. The Romans dealt with the defeated Latins not in a spirit of vindictiveness…but with cool common sense…Aricia and three other places near Rome were granted full Roman citizenship….Roman territory was thus expanded to forty-five hundred square miles, with a population of at least a million.1

But when they tied him up for the lash, Paul said to the centurion who was standing there, "Can you legally flog a man who is a Roman citizen, and moreover has not been found guilty?" When the centurion heard this, he went and reported it to the commandant. "What do you mean to do?" he said. "This man is a Roman citizen." …Then those who were about to examine him withdrew hastily, and the commandant himself was alarmed when he realized that Paul was a Roman citizen and that he had put him in irons.2


The world provides fodder aplenty for optimists, pessimists and realists. Reflecting on the uneasy relationship between corporate culture and strategy described in the last chapter, however, provides scant hope for the optimist. But it provides experience aplenty for the pessimist to pontificate, albeit with justice, that:

  • Left unmanaged, the behaviors a culture promotes are likely to be those required by tomorrow’s strategy only by coincidence;
  • Left unmanaged, corporate culture gets "thicker"—less tolerant, less diverse and all together ever more a caricature of itself;
  • Left unmanaged, corporate culture embodies a web of belief that is as resistant to puncture as a self-sealing tire;
  • Even if culture were static, the rush of change in the world presses strategy to metamorphize, thus drifting inevitably away from culture.

The realist, while nodding with appropriate gravity to the pessimist’s pronouncements, might ask, "Exactly what is it that strategy demands from culture?" A look under the hood of the OCE (Opportunity Creation and Exploitation) cycle suggests that strategy makes very specific demands on culture. It is against these demands that a culture should be measured, at least from the strategist’s judgment seat:

  • OCE demands intellectual honesty about what the strategic direction of the company needs to be, where it is now and how to get there from here.
  • OCE demands continuing revolution in strategy and thus at least a matching evolution in culture, because strategy is based on continuing experimentation, and there is nothing so revolutionary as the effects of experimentation on the open mind.
  • OCE demands that at a company embrace at least two cultures, not just one—those operating on offense (Hammer) and those on defense (Pivot).

The one force, strategy, champs at the bit for change, yet is impotent to implement it without the reluctant help of its half-brother, culture. The other force, culture, is conservative and hidebound (witness countries governed by self-proclaimed revolutionaries that have a little age on them, such as Cuba, North Korea, China, the USSR before 1989, and Mexico, or even the most conservative establishment of all, the institutionalized conformity of teenage rebellion), but on occasion is wise enough to know its company will go bankrupt without change in strategic direction.

Many a CEO has wrung his hands in despair in trying to overhaul a culture to match a desperately needed change in strategic direction. Sadly, forced retirements, layoffs, and firings of experienced but hidebound middle managers are the outcomes of this struggle. Can we reconcile these two great forces, forces that need each other but set the company on such divergent courses?

Resurrecting a 2,500 year-old Idea: Citizenship

I believe we can. But for culture to link to strategy, and revolution not to destroy a company internally, I propose we look at another institution that has endured through triumph and defeat, overcome both the entrapments of success and the punishments of failure, internal discord, radical shifts in strategy, expansion, contraction, and invasion.

The preeminent example of an enduring institution must be the Roman Republic and its successors, the Roman and Byzantine empires. The western Republic and empire lasted a thousand years; the eastern empire about two thousand five hundred. Many a scholar has been fascinated by the question "Why did the Roman Empire fall?" To my mind, the astounding mystery is: Why did it succeed?

For succeed it did, by any measure.

The Roman Empire (for simplicity’s sake, I’ll call the whole the Roman Empire for even the Republic was imperial) encompassed both many hundreds of years and tremendous geographical and cultural diversity. It’s hard for us to imagine any institution lasting as long it lasted: three times longer than the longest Chinese dynasty (Chou Dynasty, 1027-256 BC), eight times longer than the British and Russian empires, ten times as long as the United States has been independent. At its height, it ranged from a northernmost apex in Britain, through all of Europe south of the Rhine and Danube Rivers to the northern edge of the Black Sea. It spread south, including all of modern-day Turkey, Palestine, and Egypt, and finally swept west across North Africa to modern-day Casablanca.

[Fig. 10-1 here]

The Empire controlled a population of 70-100 million people, and had a capital city of one million people at a time when nearly everyone lived in small villages and on rural farms3. Its diversity was far greater than the diversity so celebrated in the United States today. And this diversity was accented by the fact that most peoples had their own language, religions and political systems. They laid by hand 50,000 miles of first class roads and 200,000 secondary roads. In the time of the Peace of Augustus interest rates were at their lowest levels in the ancient world, a commendable 4-6%, at a time when you’d think any debtor could hide in the woods4.

Today the popular mind, when it thinks of the Roman Empire thinks of it as wracked by cruelty, conspiracy and civil war. But though true, especially when measured against today’s comfortable Western standards, the Roman Empire often enjoyed relatively long periods of tranquillity, stability and security. This is especially true given the standard violence of the time. For example, the Roman Republic achieved 150 years of relative tranquillity from about BC 287 to BC 1345. During the Roman Empire, the reign of Julius Caesar’s successor Caesar Augustus was called the Pax Augustus. Edward Gibbon, the classical historian of Rome says that later, from AD 96-180,

….if a man were called to fix the period in the history of the world during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of [Emperor] Domitian to the accession of Commodus.6

The eastern, Byzantine Empire enjoyed remarkable peace and stability for at least 150 years, from AD 3657.

There’s another thing astounding about this institution that can’t be measured by numbers of miles or percent. Visit the Roman Legionary Museum at Caerleon near Cardiff in Wales and the restored Roman baths in nearby Bath, England. Bring your imagination back to a cold, rainy, heavily forested countryside, mysteriously distant from warm, sunny-drenched, crowded, raucous and splendid imperial Rome. Imagine it is any one of the clammy days of the nearly 400 winters Rome not only held, but colonized Britain. Imagine you are a German-born, forty-year-old veteran legionnaire on leave from building the network of outposts that is supposed to protect eastern Britain from the barbarous Celts. Having finished a particularly vicious job and having survived the sickness that has killed many of your fellows, you have a month’s leave in Bath.

Ahead, as you crest a muddy rise, you see your first destination, the graceful, multi-columned bath building complex. You march, not knowing how to walk, down the first paved street you’ve seen in years toward the bath’s imposing entrance. You turn the corner, and suddenly behind you see a huge columnar temple with terraced steps emerging from the dark forest background, as if they’d been suddenly dropped in from the sky direct from Rome. A white toga-clad figure slowly toils up these stairs, an offering in his hand. Turning again towards the baths, you hear the laughter in Latin of the bath’s own open-air marketplace, a place where everything from hot food to coiffures is being peddled while townspeople chat, flirt, and make deals. A servant of the bath approaches, offering to scrape the dirt and sweat from your skin before you dip into the baths themselves. You are finally loosening your metal-clasped cloak and loosening your thick sandals after a week-long walk. You smell rather than feel the heat of the natural springs chasing away the dampness on your skin. You’d forgotten what it was to be warm. Finally you enter the huge, tiled two-room gymnasium and slip into the divine bath. You could be in the heart of Rome.

What was it that made this imagined, muscular, bone-weary legionnaire bound to a way of thinking, a way of taking orders, a way of marrying and raising a family, a way of building, a way of working with others—a way of carrying out with near perfection his tiny part of a vast imperial strategy so far away from the center of policy, command and direction?

The Roman Pivot and its Bearing

There are many reasons for Rome’s success. If there was one thing Rome pivoted on it was its ability and passion for organization and administration. Within that broad realm, the organization, discipline of the Roman legions is legendary. At its height, only a maximum of 150,000 to 174,000 men maintained order and the borders of the Empire plus about as many auxiliary troops (lower-quality troops raised and commanded locally8).

If the organization and effectiveness of the legions were the Pivot of the Empire, then the Bearing in the Pivot was the Roman conception and implementation of the concept of citizenship. It was the enfranchisement of citizenship that led the conquered frontier people in general to take Rome’s aims on as their own. The earliest example is how the fledgling Romans co-opted the defeated Latin tribes near Rome, as mentioned at the beginning of this chapter. Historian P. A. Brunt underscores how critical this was to giving the Romans a competitive advantage:

This practice of enfranchising other Italian people was frequently pursued down to the middle of the third century. All the new citizens were bound, like the old, to pay taxes and fight in Rome’s armies, and all had the same rights of intermarriage and private contractual relations, but many like the Capuans, were initially denied the right to vote or hold office at Rome; they preserved some local self-government. This inferiority was resented by the Capuans, who revolted in 216…it was removed, all received full rights9.

Citizenship: Pragmatic in Purpose, Broad in Conception

From this short description, we learn several pointed lessons about Roman citizenship:

Number one, it was a pragmatic response to the strategic situation. First of all, granting citizenship gave the new peoples a stake in the empire rather than a cause for resentment. Second, it was efficient: allowing self-government allowed the Roman center to avoid the costs of police action—a tremendous cost borne by totalitarian states, where expensive, numerous secret police lurk everywhere. Third, "This liberality with citizenship, though peculiar to Rome, is easily intelligible; it helped give Rome numerical superiority over each successive enemy, and was an important factor in the growth of her strength."10 Fourth, especially in Byzantium, citizen-farmers on the Empire’s periphery were given as freeholders, which they had every incentive to defend for themselves and their families. In return for their self-defense, loyalty and tax-paying to the center, they knew that a professional, paid, and highly effective regular army would come to their support when raided by their neighbors. The citizen-farmers would break the momentum of the attackers and buy time for the heavy reserve of legionnaires to make a trip to the front and restore order11. Even in the west, toward the end of the empire, the benefits of citizenship were so attractive that the service of Rome found many Germanic legionnaires, Germanic officers, and even Germanic commanders-in-chief. And lastly German emperors.

Number two, citizenship had concrete meaning. First, it made it possible for less law-bound tribal members to enjoy the rule of law, particularly the sanctity of contracts. This means that commercial contracts between private parties could be enforced in Roman courts. That promotes commerce and lowers interest rates. Even slaves were eventually protected from abuse by law12. Second, it meant that the provinces had a voice in their own government and (depending on the era and the level of enfranchisement granted) a voice in Rome or later Constantinople.

Third, it was inclusive. It meant that a non-Roman could marry into an enfranchised family and thus become a citizen.

Fourth, it meant that in contrast to the eastern despotisms and the western tribal communalism, citizens could enjoy the sanctity of private property that could not be taken without due process even by the sovereign.

Fifth, it meant a citizen could appeal and get relief from unlawful imprisonment. St. Paul was first arrested by the Romans to save his life when he was threatened by Jews who were angry at his vigorous and violent evangelism. He appealed the arrest on the basis of his citizenship and was granted a change of venue. His case was heard in Rome where he spent time merely under house arrest before being imprisoned, tried and executed13.

Sixth, until the fourth century, it meant religious tolerance even though Rome was a theocracy. In particular it meant no persecution on account of religion as long as the religion did not propose earthly loyalty to other than imperial rule (which early Christianity certainly seemed to).

Finally, it’s important to note that citizenship was typically earned rather than granted, though this varied depending on age, emperor and the strategic situation. Usually, any legionnaire who was recruited automatically became a citizen; and any auxiliary (that is, non-Roman serving in the secondary forces) who survived to retirement was granted land and citizenship no matter what his racial or ethnic origin14.

Now, far be it from me to whitewash the Roman world. Women, though they could attain powerful positions, were not enfranchised; and the family was highly patriarchal. Rome was a slave-holding state in a world of slave-holding states, let there be no mistake. In fact, the increasing expansion of slave-holding landed estates, the resulting decline of the middle class, and the effects on the Roman Republic (and later Empire's) economy, in my opinion, are some of the signal causes of the decline and fall of the Empire.

But western Rome did last nearly 1000 years. And Rome, "unlike other ancient states, also allowed slaves manumitted by citizens to acquire citizenship along with freedom.... their descendants, born in freedom, were not subject to any disability and added to Rome's numerical strength,"15

Then, too, in its last years in the west, the Empire was desperate for revenue to support the army, mainstay of the empire. But in its unwillingness to tax its large, wealthy, slave-employing noble landholders (in a pattern which was to repeat itself throughout subsequent history, from Romania to Argentina), it squeezed the free citizens of its middle class almost into oblivion. Not only in the sphere of taxation, but the broader galaxy of economics, trade and related law, the center seems to have done everything possible to corrupt and destroy the foundations of its strength, prosperity and rule of law. Finally, while often very prosperous compared with its contemporaries, the lives of the average farming family and certainly of slaves were tremulous in the extreme16 leading to periodic uprising and consequential slaughter of both populations17.

Yet even the roots of Rome’s downfall lend credence to the power of the concept of citizenship. For nearly every one of its choices seemed to damage that very concept: the reduction of free-holding farmer-citizens to serfdom little better than slavery, the conversion of soldiers’ loyalties from the center to the generals who could pay them, the inequality in conscription (draft-dodging), the stamping out of the de facto freedom of religion once Christianity became the state creed, the enforced inheritance of certain occupations, and the corruption of the courts and tax collectors.

Indeed, historian Michael Grant believes that once citizenship became nearly universal in AD 212 and was no longer a reward, many men lost the incentive to serve in the army, thus providing yet another brittle link in the imperial armor18. The whole of Grant’s book on Rome’s demise is a short, comprehensive look at the antipathies that tore apart the Empire. The wonder is that it lasted so long.

Why Did Citizenship Work?

If we put our analytic microscope to the Roman experience, we see the elements that made citizenship work:

  1. It matched duties and responsibilities. In other words, it wasn’t free, but it was a bargain and a deal. Citizenship implied not just rights in law, but very heavy obligations: above all to pay taxes and fight in the army. In return the male citizen (all citizens were male) enjoyed an inalienable plot of land, the enforcement of contract and the rule of law.
  2. It tied rewards to success. The Roman army was a professional army; men joined it as a career. Citizenship was granted upon enlistment. The rewards upon retirement related to rank and accomplishments. On the frontier, auxiliary troops received the privileges of citizenship upon completion of their enlistment term. Later, when citizenship was granted by Rome in a frantic bid to buy the allegiance of wavering tribes, enlistment dropped as citizens saw no point in risking their lives for something they could get anyway.
  3. It provided a place to go. Since a grant of citizenship provided land, it provided the means for survival. You weren’t forced to go to the city and scrap for work or set up a shop, although you could choose to do so. There was in effect, a G.I. Bill that let you get started in a new life.
  4. It protected a voice and participation in governance. Locally your voice could be heard through city councils (curiae) and in some eras, it could be heard, though muffled by oligarchy, in Rome.
  5. It maintained the rule of law and due process, especially in regard to family, property and contracts. The case of Paul, imprisoned and powerless, is the most famous case.

It’s also instructive to uncover what wasn’t required:

  1. Citizenship apparently involved no allegiance to any particular ideology. Allegiance was to the Empire and Emperor only without insistence that a citizen was pledging himself to the establishment of a religion, or spreading of any particular political belief or, even saving the world for a Roman way of life. Contrast this to later Crusades, appeals to nationalism, and political movements of all kinds, from America’s Wilsonian idealism to evangelical Marxism. Later, some Emperors declared themselves gods, so one could suspect that they were trying to import a theological element into the citizenship concept. But this was so transparent a fiction that it is hard to think it affected the motivation of citizens very much.
  2. Citizenship wasn’t based on money. At its republican and imperial best, Rome didn’t bribe its soldiers to stay loyal nor (at its best) was citizenship for sale. Rather, it paid soldiers far too little19 and for foreigners the exchange for citizenship was loyalty and taxes. When soldiers did get bribed, they became loyal to the generals who promised them fantastic bounties. And with this came nothing but civil war.

How these Elements Worked Together

These elements with expansion and amendment show why, at is best, Rome had strength and flexibility. And why it could succeed in huge projects, such as the invasion of Britain, over a long period of time, and withdraw without creating a rout. It could even withstand bouts—even decades—of civil war, yet keep its own territory largely intact.

The concept of citizenship provided strength through that most pragmatic of conditions, stability. The ordinary legionnaire or farmer or shopkeeper could depend on the sanctity of contracts, enlistment terms, and that the state would recognize the integrity of the family in the ordinary course of business and life. That meant that over the terms of those agreements, the law would enforce contractual terms—making life predictable and more productive. Recognizing the debilitating effects of uncertainty, the Romans extended these practices even to non-citizen foreigners, so everyone knew what could be expected in the behavior of everyone else. Citizens had recourse to the law and to courts and foreigners doing business within the empire to a "law of nations" as it emerged20. Coins from Byzantium and artifacts from sub-Saharan Africa have been found in Bath—legal tender across distances that would even now challenge the most experienced foreign exchange wire transfer specialist.

The fact that the citizen traded taxes and military service for participation in governance and Roman law made that citizenship valuable, and worth fighting for. In contrast, in the empires of Rome’s archrivals, Parthia and later Persia, the emperor’s subjects were his property: their labor’s products and limb and life itself were disposable at the whim of the tyrant. Taxation was confiscation and arbitrariness as the order of the day. This contrast, between fighting for something of value and fighting under compulsion or for a privilege that might be wiped away tomorrow was once the source of the Roman Legion’s strength.

At the same time the citizen knew what he owed in terms of service and loyalty. The citizen likewise knew how much in taxes he could expect to have to pay. And though they were not progressive—giving the slave-holding rich a competitive advantage—at least there was stability in that knowledge.

Thus citizenship with its comrade, the rule of law, made for personal stability. And stability made for strength.

Flexibility came from the citizen’s participation in governance. The citizen could raise a voice at town counsels, where in the short-term, the most life-affecting issues were decided. We’re not talking New England town hall democracy of American mythology here, because Rome ever more became dominated by the landholding knights (equites riders of horses, hence our equestrian and stockholders take note equity). These landowners influenced (or in many cases they held positions as Senators themselves) the Senators in Rome who made the big decisions largely in their own interest. But the citizen’s voice had weight locally, nevertheless, and could sway even if it did not convert the local patron. You wouldn’t go to the gaol or be sold into slavery for speaking your mind about the local state of affairs.

Paradoxically, flexibility also derived from the rule of law. The law, rather than fashioning a straitjacket, provided a framework for what was and wasn’t tolerated. At the personal level, the law provided flexibility because the Roman citizen had title to and thus could buy, lease or sell land, the main source of wealth. When there is no rule of law, the human tendency is to become ultra conservative, to be chary of what you have gained lest you lose everything. With the rule of law there is at some security—you know where you stand and so you can take risks. You can be flexible.

At the imperial level, the Empire rested, when all is said and done, on its army. But the center could change strategy—become flexible—because its legions were a corps of professionals, resting easily in the knowledge that if they survived, their retirement would be secure. Thus the army could be thrown round the Mediterranean world, and it was. A legionnaire’s career could easily span three continents. Yet you could dream of that quiet little farm in Tuscany or Aquitaine or southern Lusitania.

How important is this? A cardinal cause of the Empire’s final crumbling were laws and decrees that corrupted and diluted this complex of bargains among citizens in its last years. As we mentioned, emperors made certain professions, and eventually farming and soldiering, mandatorily hereditary in fear that no one would take them up—and for other reasons having to do with the pride, might and greed of the oligarchy, they had become uneconomic. You could no longer take comfort that your land was of inalienable value. Because it had to be passed on to your sons, it ceased to have value, and you and your sons became bound to it—the beginning of serfdom. At one point even town councilorships—once esteemed posts representing locally the very might of Rome—were made compulsory because they didn’t pay. When land for the soldiers wasn’t forthcoming, they revolted. So it became commonplace to owe allegiance to a general, rather than the empire. This was part of the power that made Julius Caesar dare to cross the Rubicon.

With every snip at the edges of the bargain, Rome and its officials became corrupted, finally corrupting the rule of law itself.

With perhaps equal paradox, citizenship and the rule of law permitted diversity, one of the root conditions for experimentation, falsification and intellectual honesty. The prime example is the fact that the Roman concept of citizenship, because it was pragmatic, from its roots tolerated, as we’ve noted, diversity in religion. It sought numerical superiority, taxes and secure frontier. As long as religious practice didn’t threaten security, people could worship as they liked.

And did. Cults came and went. Rome imported ideas of worship from the East, transmogrified them into its own constellation of gods, goddesses, and spirits without persecution. It’s interesting that many scholars believe Byzantium lost much of its citizens’ support after Constantine made a minor cult, Christianity, the official state religion and his successors for the first time, made other forms of worship criminal acts. (Paul was executed at the instigation of Jewish Christians who used Christians as a scapegoat for the Great Fire of Rome21). This drastic change in the law, under which all had lived for generations, put religious practice on a par with, or even superior to, the law itself, thus dissipating the rule of law itself.

Finally, the eventual reward of inalienable land provided the citizen with a place to go and the prospect of a secure living, as secure as life got in those days. If you were a dissenter or outcast, or simply hated the crowds and mob psychology of Rome, you had an inalienable place to retreat to.

Thus, even if you were from one of the Germanic or even southern Asian tribes, once inside the empire with the duties and privileges of citizenship, you were far more likely to stay inside the empire than to revert to tribal or nomadic life.22 And too, once this promise was diluted or broken, when Rome and later Byzantium became racist instead of inclusive, people on the frontier started to turn up their noses at Roman citizenship. Alaric, the Visigoth leader who eventually sacked Rome, and his son envisioned a united Gothic-Roman people23. And so failed Rome’s strength.

Citizenship: An Ideal and a Machine

The brilliant thing about the Roman concept of citizenship is in my mind, the fact that it was a machine. It was a machine that meshed the needs of the imperial state with the needs, energies and capabilities of people. The rule of law and the ideal of citizenship that we now uphold as sacred (as indeed we should) were, bluntly, ideas that worked for personal and imperial survival and prosperity. Rome realized, however imperfectly, that enfranchisement, the predictability of contracts, lack of arbitrariness, participation in governance, due process and a way for the individual to drop out (while staying ‘in’) provided strength in numbers and flexibility of response.

Strategy and the Corporate Citizen

And they provide something else: a counter-force to the drift of culture away from strategy. We see this in Rome itself. It was able to metamorphize itself from tribe to republic to empire; to co-opt, incorporate and finally be led by the very "barbarians" it defended itself against; it absorbed and digested diversity in religion and culture, including what was best of Greek culture; it successfully renewed itself in military strategy a number of times24.

There are five important analogs to the Roman experience for the corporation. These five fingers of the hand that tames culture in the service of strategy are:

  1. The corporate analog to the rule of law
  2. The corporate analog to tolerance and diversity
  3. The corporate analog to participation in governance
  4. The corporate analog to have a place to go
  5. The corporate analog to mutual rights and duties.

The Rule of Law and Due Process

This is simply the idea that there is an objective, fairly precise statement of what is and isn’t permitted by both company and its team members or employees. The purpose is to let everybody know where they stand—what they will be praised, censured, promoted or fired for.

Now there is nothing that says that these statements themselves must well up from some democratic process. They may spring from the founder’s head one day. There’s nothing that says that they must be inherently reasonable or fair, although they must contain no glaring internal contradictions.

And I am not thinking of thick notebooks of regulations and rules. Far from it. I am thinking of something much simpler.

The most important guidance top management can give today's overworked middle managers is this: When I, as an employee, am faced with conflicting demands for my time, what is the company-sanctioned touchstone by which I choose to meet one demand over another? For example, a touchstone might be: "Choose to meet the demand which has the most immediate and greatest positive effect on the customer." A different one might be: "Choose the course which is in the greater long-term interest of the company."

These two are very different; both can be valid touchstones25. The touchstone of a law firm should be, but seemingly seldom is, "Do what is in the best interest of the client, not what is in the best interest of the firm."

All of these provide a basis for a manager to justify her actions in the quarterly review. They are just examples; you will have to generate the ones that fit your strategic goals.

Why is this so important? Because it provides a basis for right action under stress and when there isn’t time or circumstance to huddle with a superior. It is a like a moral compass similar to the Golden Rule that managers can consult immediately and after long habit instinctively. It establishes the criteria against which an employee's choices of action can be judged. In legal terms, it provides the criteria for a defense. Thus, it goes to the root of what it is to be a corporate citizen because it takes away the tendency for arbitrary Monday-morning quarterbacking that is today’s idea of performance reviews. In a world that’s changing so fast that goals in today’s Management by Objectives scenarios are obsolete before they are ejected from the laser printer, only a rule of thumb like this is likely to last.

Second, the idea of a generalized touchstone works because its interpretation requires participation by the team member. So the team member buys into the actions, just as the new Roman landholder is likely to buy into the defense of the local township if he had a say in the town council meeting.

Third, there’s nothing that says that the interpretation of the touchstone is at the team member’s sole discretion. For it is valid and useful to have as a companion touchstone, that "When there is room for doubt as to what’s in the best long-term interests of the corporation, you must consult with your peers and seniors. Mistakes are tolerated, but their cover up or the failure to ask for help is not."

Are these touchstones too general for your taste?

That may be their very strength. Peter Drucker relates how less than a thousand "untrained, not very bright, and totally inexperienced youngsters ran districts comparable in size and population to small European countries" as members of Britain’s Indian Civil Service in the 19th century, providing India, he says, "for the first time in its long and tragic history, peace, a measure of freedom from famine, and a little security of life, worship, and property." The Civil Service placed these young men, often totally alone in remote locations with no rule books but simply standards: they were to administer justice impartially, collect taxes fairly, maintain order and safety and religious and civil peace by means of persuasion and "mere presence" without calling on military force. These standards were his touchstones.

Rule of Law Part II: Due Process

Just as there is no action without reaction, there is no point in the rule of law without due process. Law that is arbitrarily upheld is as arbitrary as any tyrant’s dictate. In the corporate setting, this means that the team member is entitled to an open hearing in defense of his or her actions. And the criteria of defense are the touchstones for behavior I mentioned above.

Now the best implementation of this I have seen is the Oxford University tradition of the "don rag" as adopted in the U.S. by St. John’s College. In the don rag, the student’s tutors collectively meet and orally report on the student’s progress to the student’s advisor. This process is far from the one-on-one evaluation of subordinate by superior that is the mainstay of American management evaluation. The student gets a chance to respond at length to any praise or criticism.

The most important feature of this process is that it is public. This makes people much more objective and careful about what they say, and makes them substantiate judgments in front of peers. The risk for misunderstanding is greatly reduced. Further, any demands for penance, agreements about how deficiencies are to be cleared up, or plans for meeting next year’s objectives—are made in the presence of witnesses.

The don rag has the other advantages of a group process, in that generally several heads are better than one, especially when it comes to human issues. Then too, in today’s world, middle managers seldom have just one boss. Rather they must balance the normally conflicting demands of many. So it’s only reasonable to evaluate a manager in a simulacrum of the environment that manager faces everyday. What may to one boss appear to be a deficiency will to another appear as an understandable compromise to save her own project’s needs.

And there’s a curious dynamic that goes on when an employee explains himself in front of a group. Unless you’ve convened a kangaroo court, there will usually be actual discussion among managers and employee of issues and real-time problem solving. As Madison says "different opinions will be formed." That’s why nearly every form of practical problem-solving and truth-finding occurs in groups, whether it is a jury, a group of federal appeal judges, scientific experimentation, or crafting legislation. It is one hedge against fallibility.

Finally, this process just because it is public and involves a number of high(er) level people, creates more buy-in both on the part of the employee and the company.

How far this is from the concept of due process American companies now employ! Nowadays, due process means only that the employee who has fallen out of favor gets the warning notices favored by the court rulings of the moment. These are in writing; oral warnings are done in private; and the whole is usually managed through a personnel department. The primary goal of the personnel department is to avoid lawsuits—rarely to implement strategy. And only secondarily to improve team member productivity.

Some years ago I met a former colleague from a firm I had worked with. He is now a successful manufacturing company turnaround manager. He told how, when we were colleagues together, he’d been evaluated by one of our mutual supervisors. According to my friend, he’d been told exactly what sales he needed to make to be promoted. In the next few months he made them—astounding the senior managers of the company who thought only themselves capable of these relationships. Instead of promotion, the hurdle was raised. But with the same result. Now there’s no way to know who promised what and how. All the meetings were private.

In the end, of course, my friend left the company and both he and the company were the poorer for it. It’s hard to rid myself of the thought that if these performance demands and promotion promises had been made in anything like a group forum, both company and colleague would be together and wealthier today, not to mention having avoided a decade of mutual hard feelings.

The Corporate Analog to Tolerance and Diversity

We’ve argued that the house of strategy should be built on a foundation of testing and falsification. Falsification implies intellectual conflict. The problem is that culture tends to perpetuate and augment conformity rather than conflict. Fortunately, there is a natural diversity of opinions among people, even if it stems from neurotic contrariness, territoriality, or some deep-rooted human need to declare independence.

Citizenship can harness this in the cause of strategy by securing a place for the extremist and the dissident—subject to the Roman requirement that when the decision is made and the call comes, both the dissident and the extremist march in step with the rest of the team. The corporation is not a rest home for malcontents.

But diversity of opinion and on occasion extremism are sources of thinking that help keep the rest of us honest in our strategic thinking. George Bernard Shaw once published a witty syllogism proving that only irrational people create progress. All the rational people have long ago compromised with the material and intellectual status quo in pursuit of their personal safety. And it’s hard to argue that many of our most successful industrialists were extremists bordering on the eccentric. That goes in modern memory for technology extremists like Henry Ford but also for those with a more subtle form of extremism like Ross Perot. Perot in founding EDS was extreme about a squeaky clean (read: "conventional") personal life, conservative dress, correct demeanor, and the primacy of making sales quota.

One political pragmatist I know in San Diego has tremendous respect for the role political ideologues--yes, crackpots—play although he himself is far from being one. "They are the ones who push the rest of us to examine what we are doing. They are the ones from whom the energy comes. Without the extremists, society would go nowhere."

Think of the diehard environmental bicyclist commuting to work along busy, rain-slicked streets every day at the risk of his life. He could be safe in his Toyota. But he's the one who makes the rest of us normal commuters think again. And some of his thinking sinks in. No, the majority won’t likely vote tomorrow for the wholesale abandonment of our cars or push their pension fund to sell its GM stock. But, remembering people like the cyclist, they might support a mandated percentage of alternative energy vehicles on the next ballot referendum.

Let it be known that none of this is to say that the voice of the extremist or partisan is any the more intellectually honest than that of the corporate conventionalist. Far from it. However it is the process of their conflict, as each appeals to evidence or logic to support their position—and falsify the other’s at the same time—that can make the corporation as a whole approach intellectual honesty.

But only if these far-from-Socratic thorns are protected by the law of the corporation—a law that may well include outstanding job performance and laws that may restrict the time, place and manner of display in a way consistent with the company’s strategic needs.

Corporate Freedom of Speech

From every minaret of business guruship we hear the cry that corporations must have more risk taking! More innovation! Yet all of this is for naught without those preconditions: (1) the rule of law—and thus freedom from arbitrary punishment and dismissal and (2) freedom of speech.

By adding a modicum of free speech you get the conditions for a culture which has the atmosphere and raw material for experiment. (1) You have in principle the ability for a culture to reform itself, because it is open to the ideas of reform (2) You have as well the conditions for discussing, proposing, and carrying out of business experiments. Consider in contrast the following true story, one which I’m sure enjoys daily repetition on a global scale.

I joined a team of consultants advising a large transportation company with severe labor problems. The CEO was an amateur body builder, but without the paradoxical gentleness and empathy athletes of true accomplishment often exhibit. He ran the company as his own fiefdom. His executive actions and temper matched hurricanes for randomness and violence.

One of our team's main contacts was a fine lawyer with sound business judgment, a VP of Corporate Affairs. We explored with him some strategic options that might well have saved the company and thousands of jobs. But he would have to broach the idea with the CEO. He nixed the idea. "Around here," he stated flatly, "the tallest blade of grass gets chopped off."

No rule of law, no security. And then certainly, no risk tasking.

Let’s look how this affects the team leader managing a portfolio of strategic pinpricks such as those discussed in Chapter 10. An experimenter, who is operating within the law of the company—and buffered by law from executive arbitrariness, can at least suggest if not champion the experimental pinpricks. Thus the champion of a bold experiment--say in the launch of product modification X into market segment Y--may not be made personally culpable for the results of the experiment (provided, of course, that the experiment was done competently, etc., etc.).

Likewise, the right of freedom of speech requires that a critic of the experiment may not be silenced simply because the experiment is a pet project of a senior manager. On the other hand, the senior manager (under the rules of this corporation) has every right to expect, demand, and require that this critic support with all of his or her efforts Phase II of this experiment if the decision of the company so ordains.

Turbocharging Freedom of Speech: The Duty to Dissent

A modicum of freedom of speech is not too uncommon in companies. Certainly in many companies it lurks in lunchroom conversations. But to be really effective in a world of changing strategic needs it can be turbocharged.

Consider the experience of a friend of mine, now a successful venture capitalist. He told me of his experiences in the 60s and 70s at Ford Motor Company and Proctor and Gamble:

When you were at Ford, you were proud to be at Ford. For one thing, you were proud to be part of a successful organization. For another, you always felt you had a say. You had a say in both your own performance review and how you were going to do your job. You felt you had some influence on the way decisions were made.

How different it was at American Standard. The top group didn't know anything about the business. All they were interested in was money for their own pockets. There wasn't any pride in the business. If you weren't in the "in group" (which fortunately I was) you were expendable. There was no depth, no one from the younger, lower ranks to bring into the business. That's why they hired from outside at high salaries26.

Contrast this with a more recent experience:

A high tech startup I had been advising was on an increasingly desperate search for a VP of Sales. This job had been hitherto aggressively but rashly prosecuted by the company's founder, resulting in a struggling sales effort. A new president renewed the search, and was frustrated by being unable to offer enough money, certainty, and security to top candidates in the industry. The president was under pressure from the board and investment bankers to quickly fill this crucial slot.

In the end the new president offered the job to a candidate I harbored reservations about. I found out about the job offer at a chance encounter with the VP Human Resources at our mutual dry cleaners the very day the offer was to expire. Turned out she had reservations, too. But she’d said nothing. Then I said, "Well, as a total outsider, I can just tell Tommy (the president) what I think--which is that we can do better if we just wait. The worst he can do is fire me."

She gave me the briefest odd look and said, "I was hoping you would say something like that." We scheduled a meeting with Tommy. In two minutes I made plain my concerns. She said almost nothing, but at least by her presence sanctioned the legitimacy of my expressing my concerns. It turned out my comments revived some sparks of doubt in the mind of the president. His attitude shifted immediately to whether he had any options in the situation. As we left his office, the president's secretary presented a phone message: the job offer had been accepted. The president was boxed in; the offer couldn't be rescinded or modified.

One year later, the companies’ sales are at almost precisely the same level as the day that offer was accepted.

What a difference it might have made if our VP of Human Resources had spoken up sooner! We could have hired more headhunters to supplement the single-shingle who had provided only one candidate so far. We could have rejiggered internal responsibilities to cover the absent VP Sales slot. In this case it wasn’t fear that stifled dissent, it was a case of "that’s not my job."

These and innumerable similar experiences suggest that really superior organizations go one step further than the rule of law and freedom of speech. They turbocharge permission for freedom of speech with a positive duty to speak up. This is active citizenship. It is not permission to participate in governance; it is an ethical requirement. Silence is guilt.

My venture capitalist friend says:

I would say at both Proctor and Ford, you felt that the company expected you to have your say and wasn't going to lay you off or transfer you for having your say. In return you were expected to provide the very best thinking and answers that you could. And I must say, the people at the top of both these companies on the whole deserved to be there. They knew their stuff and felt it was part of their job to bring people below them along, to educate and challenge the younger people who were supporting them.

A formal duty to dissent can keep a company out of grave trouble, too. In August 1999, the consulting firm of Ernst and Young agreed to pay $184 million to settle a law suit stemming from advice it had given the failing retailer Merry-Go-Round. It turns out that instead of slashing expenses and closing failing stores, E&Y gave the appearance of milking Merry-Go-Round with long drawn outgrowth plans, billing them millions of dollars. It also turns out that Merry-Go-Round was referred to E&Y by its law firm, Swidler Berlins, with which E&Y had a close relationship. One of the law firm’s main clients was a real estate developer who stood to lose money in lease payments if Merry-Go-Round shuttered some of the money losing stores.27

Surely there must have been at least one junior E&Y consultant on the team who suspected that closing unprofitable stores and other basic turnaround maneuvers rather than long lead-time growth plans was what was called for. A duty to dissent might have saved E&Y the $184 million and a black mark to its reputation from which it may never recover.

The duty to dissent doesn’t mean the obligation to be quarrelsome. It does mean the duty to criticize the current hypothesis based on the "evidence, logic and judgment," as Federal Express’ official principles for leadership put it.28

The consequence of making it a positive duty to dissent has the consequence of reinforcing right of freedom of speech. Thus if the duty to dissent had been in effect at the high tech firm, the VP of Human Resources could have been reprimanded for not airing her concerns. It also means however, that the defense, "I felt I had a duty to dissent for reasons A, B, and C" is a legitimate one under the law of the corporation—providing, of course, that there is some substance to A, B, and C.

The Corporate Analog to Participation in Governance

There is no great mystery to the corporate analog to participation in company governance. What it means is that a team member is not simply a person who takes orders, but one who is instrumental in the creation of those orders.

But we can distinguish two cases of this: participation in governance at the project level; and participation in governance at the corporate level. Call them "micro-governance" and "macro-governance."

At the micro or project level, we often underestimate the competency of subordinates. And our subordinates conspire in this. How often have we gotten to know a little about our fellow team members’ personal lives? How often do we discover them in the center of making complex judgments and decisions about health care, transportation, raising children, financing homes and education? And overall, most mature people, it seems, make reasonable decisions and commitments given their circumstances. Yet all that judgment knowledge is more often than not checked like an umbrella at the factory gate office door in the morning. Why not tap those reservoirs?

This is commonsense and commonplace, except for one small factor. It typically isn’t in the subordinate team member’s perceived short-term best interest to participate in governance. No, they await orders, because it is safer to shift blame on the order-giver when something goes awry. Far safer this than to take hand in shaping the order. And it’s the path of least resistance because the project leader, desperate for project control, transmogrifies quickly into order-giver. So we have a mutual acceptance of roles that reflect only too well the roles of master and servant, though we have euphemisms enough to disguise the fact. So the junior team member tacitly affirms: "I’ll offer my opinion when asked; otherwise I’ll keep quiet—just making sure that my own direct interests are served and not threatened."

The attitude is entirely different when the law of the corporation reflects that of citizenship, that is when it:

  • Provides an opportunity to participate in project governance,
  • Assigns responsibility for outcomes to those that had an opportunity to participate whether they participated or not, and relatedly,
  • Accepts as no defense when things go wrong in actions in which they withheld participation.

Suppose a team is assigned responsibility for capitalizing on a strategic breakthrough. Under these laws, a participating citizen raises his or voice in the planning and execution—because she has the opportunity to do so and will be blamed for not participating when things go wrong. After all, unless she is very lucky, the breakthrough will stumble. She joins in the execution of the resulting decision to make sure things go wrong. And she adopts the view of the whole project whether she has a big role or a small one. The project team table is a round table.

This is particularly apposite in a stochastic world. For things will go wrong—or certainly not as planned—and the last thing needed is a team member following project leader directions heedless of changing circumstances. The next to the last thing needed is arbitrary change of direction. Citizenship protects freedom and participation, not anarchy.

Participation in Governance on a Macro Level

Policy, not project objectives, resources, or execution is the object of governance at the corporate or macro-level. We saw that the participation of the Roman citizen was twofold:

  • First, the acceptance of the overall bargain of citizenship in the first place; that is, agreeing to perform certain duties and provide certain resources (taxes!) in return for certain protections and benefits—"coming into the Roman world";
  • Second, participating voluntarily in setting business policy through speaking up locally; and through intermediaries expressing opinions and needs to the imperial center.

We’ve stressed that this model of citizenship gave Rome unparalleled strength and flexibility. The same is true for corporate team members whose relationship is built on the Roman model. To see this, consider today’s most frequent relationships between management and employees:

  • As adversarial bargainers with utterly different interests. The paradigmatic work situations are those with militant unions or which would be unionized if employees are given the life-breath of solidarity and organization.
  • As paternalistic tyrannies, where employee happiness, success and productivity depend on the employee’s luck at drawing wise compatible management. Today this is by far the most common arrangement.
  • As co-gamblers like pirate bands of old, willing to put up with any sort of governance at all—and sometimes a governance which borders on anarchy—in taking a chance on getting rich quickly. This is often true of new companies where stock is spread around in hopes of making a killing in an Initial Public Offering.

Every one of these models is brittle in a stochastic world. Like all things brittle, they may endure if fate is kind, but they generally shatter under the stress.

None of these expresses the ideal of citizenship by including participation in governance. In the first, that of organized adversarial bargaining, that is, unionization, flexibility is discarded and brittleness is the norm. The reason is that because every description of employee activity and every management direction has to be reduced to the written word. When business demands change—and certainly when a stochastic world demands that strategy change—the alteration of those words through re-negotiation is generally too cumbersome and slow to match moves of more paternalistic competitors.

The outcome of bargaining is the sclerosis of the workplace through work rules, hierarchy and job classification—hardly a recipe for handling a stochastic world. (In addition it’s worth noting that the core issue of participation in governance is finessed rather than settled. Workers set up a union whose domain is the factory floor. And you have all over again the issue of who participates in the union with what duties (dues!) and responsibilities (to walk the picket line) each member has).

In the second, paternalistic tyrannies, are the least brittle of the three. But brittle they ordinarily are. These companies are ordinarily dominated by an "in crowd," the members of which serve at the paternalistic pleasure of senior management. Recall our discussion of the psychology of corporate culture in the last chapter. It’s easy to see that when your job is at the sufferance of another without the rule of law, duty to dissent and due process, how unlikely it is that diversity of opinion will surface in meetings, formal or informal, of the in-group. It all depends on the open-mindedness of the pater in charge.

This was driven home to me a few years ago. I was assisting the president of a medium-sized medical services company that ran along paternalistic lines to evaluate a potential joint venture. Executives of the courting company made an interesting if somewhat self-serving presentation in a downtown hotel room . Frankly, the proposed venture had its good points and its negatives for my client. Since this meeting was only the opening round in a negotiation process, that seemed to me to be par for the course.

My client’s senior executives, including the president, retired to the chairman’s suite. Hardly was the door shut when the chairman began denouncing the proposed partner’s concept in the most inflammatory and vile terms. Afraid for their jobs, the senior staff, president included, listened first in silence, then seeing which way the wind was blowing, formulated only murmurs of agreement. Now the chairman was extremely bright; his arguments had merit and it was hard to think of rational answers or even perceptive questions in the wake of this barrage. But under the paternalistic set-up of that company, no one on the senior staff of the committee even thought it was worth trying. Why risk a job for something already settled? This joint venture could have been structured to make my client a powerhouse. Instead the door was slammed shut. Roughly a year later, still struggling for something more than modest profitability, the company sold itself to a foreign corporation. How different the outcome could have been if the senior managers really participated in corporate governance!

The third case is that of governance by co-gambling. It goes against the grain of today’s infatuation with stock options to call this form of governance brittle. But I believe it is. As long as stock valuations are high, and capital is cheap, would-be citizens, now pirates, can afford to take gambles. Lose one, move on to another. But once their stock options are vested or it’s clear the payoff won’t be so big, the pirate-bands scatter. For the only bond of team member to company was the lure of money, not mission or participation. Surviving companies devolve into the cases above, usually paternalistic tyrannies. We witness this already in companies where the staff’s stock options are vested.

Rome itself experienced the same result in the many times it tried to buy off raiding barbarians after citizenship had become so diluted as to lose its appeal. Somehow the tribes never stayed bribed.

The path of citizenship in corporate governance is, under the Roman citizenship model, different than any of these paths. The corporate citizen’s path to a citizenship that includes participation in macro-governance includes:

  • First, the concept that citizenship with participation in policy-level decision-making is not granted, but earned. The rule of law calls for the steps and accomplishments to be laid out beforehand. (That doesn’t mean they can’t be customized for each person);
  • Second, monetary rewards are likewise earned by accomplishment, not just longevity—including those fabled stock options;
  • Third, once an employee has reached a level of participatory decision-making, the rights and privileges include re-making the rules for future participants in light of needed strategic changes.
  • Fourth—and this owes nothing to Roman concept but everything to the need for flexibility—the rules for promotion include a sunset provision in participation. The typical human career now lasts longer than the lifetime of a strategy. So does the typical human mind-set. So it’s necessary to set some term limits on participation in government at the highest level, either through forced retirement or forced rotation. (In fact a defect in the Roman conception was that Senators were Senators for life and the office was hereditary).

This last is an abstract way of saying that strategic shifts demand cultural changes. Among these changes are modifications to the path of promotion itself. A company going on the defensive for the next five years is quite justified in promoting to governance those people best suited to bringing the company through such an era of stringent economy.

You will doubtless recognize the similarities in this discussion of partnership with the ways in which the best professional services firms advance their associates to partnership. There are some differences:

Most professional services partnerships pay only lip service to rotation and forced retirement at the senior levels, even if they include such a provision in their by-laws at all. That’s a sure way to end a culture of strategic experimentation. One reason is that partners in such firms own the firm, so it is natural to set the rules for the owners’ benefit. Everyone is then at the mercy of the perspicacity of owners elected or appointed long ago. So, it’s important to see that the concept of citizenship is very different from the concept of ownership. The citizenship bargain may include ownership, or it may not: that depends on the pragmatic objectives of citizenship in a company’s actual strategic situation.

Second, in most professional services firms, the idea of participatory citizenship extends only to a thin crust of professionals. Yet decisions and behaviors at the micro-level are where strategic theory meets the tests in the marketplace. That means how neat the photocopies are and how fast secretaries return phone calls. So the idea of citizenship needs to leak down to the very front lines. Probation periods for citizenship? Yes. Defined hurdles for citizenship? Yes. Varying degrees of citizenship, and therefore duties, responsibilities and rights? Yes. Exclusion in principle based on rank or job function? No.

The Corporate Analog to have a Place to Go

The Roman citizen, retiring from the legion was (in the best cases) provided a place to go, typically a farm to which he had secure title. But in my discussion of Rome, I didn’t stress the fact that many times the farm was in a border colony rather than a plot in the vicinity of Rome or nearby provinces. It may have been impossible to provide every citizen, however worthy, with land well inside the empire’s borders. It probably would have been at least difficult, given the voracious landgrabbing of the aristocrats. Be that as it may, locating farms on the border suited the imperial purpose of colonizing and thus rendering more secure the empire’s perimeter.

The corporate citizen needs a place to go, too. Today, that is usually translated as a matching contribution to a pension investment, a longevity bonus, or for senior executives, one form or another of golden handcuffs. These contemporary devices serve no direct strategic purpose for the company except as a dubious inducement of dubious effectiveness for the executive with the company. And it’s an inducement that can often be trumped by the next company to bid for an employee’s services.

The Roman citizenship model suggests that the corporate citizen should be a colonist for the company. She should have a business or a piece of a business to run that serves directly or indirectly the strategic interest of the company while providing benefit to herself. We saw how ThermoElectron spins off promising business units, putting its executives in charge of them. These semi-subsidiaries are usually at the boundary, sometimes at the core, of ThermoElectron’s business. The managers sink or swim with them. Consulting companies, accounting firms, and law firms accommodate the young and restless in a way even more directly analogous to the Roman model, by sending them with a little capital, some patience, and a pat on the back to open offices in distant cities or countries.

It takes only a little imagination to make the conceptual leap for managers to "own" various non-geographical strategic initiatives, such as a product line or a line of research. Ownership whether literal or contractual, is likely to bring out the best performance in a person, just as the Roman citizen on the frontier farm was highly motivated to secure his family’s little piece of the border in alignment with imperial needs. We’ll leave to the lawyers to draw up exactly what the definition of "ownership" might be in your specific situation.

The Corporate Analog to Mutual Rights and Duties

As we’ve elucidated this model of the role of the corporate citizen we have simultaneously sketched a citizenship machine like the Roman one, with bands of mutual obligation and responsibilities:

  1. The corporation is obligated to permit dissent, diversity of opinion, and a place to go.
  2. The corporation is obligated to uphold the rule of law and due process in evaluation, criticism,and dismissal. It hasn’t abrogated its responsibility for evaluation and discipline to a legalistic personnel or human resources department; it has a don rag or other public forum for evaluation and performance agreement in place.
  3. The corporation is obligated to provide "touchstones" to generally direct team members how to act in uncertain conditions; action in accordance with these touchstones constitutes a defense in the course of evaluation or criticism.
  4. The corporation is obligated to provide avenues for participation in governance at the project (micro) and policy (macro levels).
  5. The team member owes loyalty to the decisions of the company and full faith and effort in the implementation of those decisions, regardless of whether the team member has registered prior dissent.
  6. The team member has a duty to participate in governance (along the avenues provided) consistent with the corporate mission and strategy.
  7. The team member has the duty to dissent based on facts, judgment, or logic.

[Fig. 10-2 here]

Citizenship and a Company’s Two Cultures

At the beginning of this chapter, we described what a strategist following the OCE framework requires from corporate culture:

  • OCE demands intellectual honesty about what the strategic direction of the company needs to be, where it is now, and how to get there from here.
  • OCE demands continuing revolution in strategy and thus at least a matching evolution in culture, because strategy is based on continuing experimentation, and there is nothing so revolutionary as the effects of experimentation on the open mind.
  • OCE demands that at a company embrace at least two cultures, not just one—those operating on offense (Hammer) and those on defense (Pivot).

In the guts of this chapter, we’ve seen how the concept of citizenship provides the foundations for intellectual honesty by encouraging the testing of opinions. That’s the point of diversity of opinion, freedom of speech, and the duty to dissent. Likewise, our just-concluded discussion of the web of mutual duties and responsibilities provides the foundations for helping a company culture evolve toward compatibility with strategic necessity. That’s the point of several elements of citizenship: making full citizenship—participation in governance—an outcome of accomplishment; providing a place to go for managers that gives them a stake in the success of the strategy; and making loyalty to post-dissent decisions a criterion of citizenship.

What remains to briefly discussed is the relationship of citizenship to the fact that under OCE, companies more often than not need two cultures, really subcultures: one for team members playing offense or acting as Hammers; one for those playing defense or acting as Pivots. When different parts of the company have such different roles to play, how could there be just one culture? One cultural jacket does not fit all.

This analysis has the appeal of common experience as well as common sense. "Those women in sales are wild," thinks accounting, fingering her calculator. "We can’t even get their expense reports to boot." "Operations is too orderly," sniffs marketing. And so it goes; everyone recognizes that culture varies by department, by geography, by who is in charge, even as the team members as a whole belong to an overall company culture.

Of course, this kind of cultural variation, based on departmental style only coincidentally would meet the needs of a company’s strategy. At one time, as we’ve seen elsewhere, the sales department may be on the defensive and a penny-pinching culture is what the strategic doctor orders. While sales plays the Pivot, R&D may play the Hammer. Or even within a function, North American sales may go on the defensive while some of its stars are transferred to Southeast Asia to preempt competition there. In response, North American sales might curb its freewheeling ways. It might mutate into a culture of high discipline, economy, and operational excellence as it spreads fewer salespeople over large territories and more accounts. And so on, throughout the company.

The concept of citizenship provides bedrock for these shifts in culture through the fact that as citizens, they have participated in governance. This means that they’ve slugged out the behavioral changes needed by strategy in the course of discussions. They have mentally rehearsed the new changes in behavior. All that prepares the psychological ground for changes in team members’ habits. And that is so far ahead of what is today typical in paternalistic organizations: the ex cathedra announcement, the bolt from the ozone, that from now on, say, North American sales is "going to be one lean, mean organization!" after years of profligate spending on fancy dinners and football tickets. Common psychology tells us that it is voluntary, visceral, and public commitment to change emerging over a period of time that bends or breaks habits. That’s what participation in governance offers.

Next Steps: Breathing the Life of Citizenship into the Corporation

When a company is brand new it may be possible for a wise founder to create the framework for citizenship. Such a rare founder can then write a mission statement, establish touchstone policies, and outline the bargain of citizenship before hiring employee Number 2. This is the case with the recent startup Mindspring, a large U.S. Internet Service Provider. MindSpring’s founder, Charles Brewer sat down in 1994 and wrote the rules under which his employees would operate even before he’d decided what business he was going be in or written Word One of MindSpring’s business plan. Or, therefore, before MindSpring had a culture.

But the more typical case is that of the already-existing, en-cultured company that sees advantage in moving toward citizenship. The burdens and promise of citizenship clearly can’t be imposed in a few minutes or days on a company with a long history of paternalism. So…

The first step is to take advantage of traditions and habits your culture now has that can be converted into the building rocks of citizenship. The next step is to build on those current habits or traditions and sculpt them into firm foundation-stones.

Here’s a framework with some examples for assessing your preparedness and next steps:

Citizenship element

We have this now in the form of…

But we could take these steps:

1. A clear overall mission

A published mission statement—at least, it’s on our website and in our annual report. (But how many team members can recite it by heart?


2. A well-formulated and precise strategy

We’re disciples of Chapters 1-7. (But outside of senior management, again, how many really now what it is and what it isn’t?)


3. A published obligation for managers to preserve diversity of opinion

A tradition of allowing shouting matches, but many don’t participate—we don’t hear from them

Organize our management meetings to call for other opinions before the CEO or president affirms a decision

3. A published "duty to dissent"

Not on your life!

Publication of the duty and making a few examples of people "who knew better" but didn’t speak up would help. Also would provide a defense if some of our prehistoric managers tried to discipline them.

4. A place to go

In the past, we have posted promising managers to posts where they can make a lot of money, but more as a reward than send them out as colonists

Make a list of "colonial" opportunities which serve our strategic interest—and a matching list of names of promising candidates. Take a look at ThermoElectron and some professional services firms.

5. An established, published rules of due process for evaluating our team members—not excluding the duty to loyalty once a decision has been made

Nothing beyond the typical one-on-one annual review. Oh, and a "mentoring" program that has never quite caught fire—seems to come and go

Work up a published due process document. Since we’re forced to do matrix management, the don rag concept isn’t a bad one. Maybe requiring the mentor to be present in the don rag would help the evaluated manager translate the commentary into a personal action plan.

6. A published touchstone for right action, when hard choices must be made

Nothing here! We say we are "customer oriented"—but when the chips are down, we do what we think will make us the most money.

We need to gather some examples, then meet on this core idea.

7. A public requirement on project managers to ensure team members participate in micro (project) management

Some of our project managers are autocratic and laconic; some are open, inclusive. People fight to get on their teams.

We need not only a published ‘project management manual’ but a little training in how to bet the most out of team members-by treating everyone as if he or she has a contribution to make.

8. A published route to participation on policy (macro) management detailing accomplishments required to ascend to greater levels of participation

Nothing doing here. People expect to be promoted. With promotion they expect to be involved in more policy-level. But nothing said about how to earn those stripes—and frankly in this company it means the development of good judgment, not just good job performance. We must avoid promoting until we’ve reached a team member’s level of incompetence

We need to look at 3 or 4 outside models. General Electric might be one.

  1. To kick these changes off, a published memorandum setting for the appropriate behavior for every department or region: who is to

--play offense

--play defense

and for the strategy specified in No. 2 what behaviors in particular are required for each.

Well, we know that this year we have to launch a major sales effort after all we’ve spent on the New Galaxy project! Looks to me like OEM sales are on the offense with support from marketing. R&D needs a breather. We’ll have to look into manufacturing and distribution—some of us don’t think distribution can handle the coming load.

Print this page
Email this page


1. Michael Grant, History of Rome, New York: Scribner’s and Sons, 1978), 57-58.

2. Acts of the Apostles, 22

3.Grant, 247.

4.Ibid., 264.

5.P.A. Brunt, Social Conflicts in the Roman Republic (New York: W.W. Norton), 60-61.

6.Quoted in Michael Grant, The Fall of the Roman Empire, New York: Macmillan, 1990, p. 4.

7.Grant, History of Rome, 470.

8.Edward Luttwak, The Grand Strategy of the Roman Empire (Baltimore: Johns Hopkins University Press, 1976), 16. 9.Brunt, 3.

10.Ibid., 3

11.Lt. Col Gary Anderson, Toward a Pax Universalis (Naval War College, 1991), 14-15.

12.Grant, History, 323.

13.Ibid., 233-345.

14.Grant, Fall, 40-41.

15.Brunt, 3.

16.Grant, History, 322.

17.Ibid., 164-165.

18.Grant, Fall, 40-41.

19.Ibid., 40.

20.Grant, History, 104-105.

21.Ibid., 345-348.

22.Brunt, 5.

23.Grant, Fall, 126-135.

24.See Anderson’s Pax Universalis; Luttwak’s Grand Strategy; and Mark Whittow’s The Making of Byzantium, Berkeley:Univ. of California Press, 1996 25.Peter Drucker, Management, Tasks, Responsibilities, Practices (New York: Harper & Row, 1974), 403-405.

26.Private discussion: John Beaulieu, Cascadia Pacific Ventures, June 1998.

27.Elizabeth MacDonald and Scot S. Paltrow, “Merry-Go-Round: Ernst &Young Advised the Client but Not About Everything,” Wall Street Journal, 10 August, 1999, A1.

28.“Business Leader,” Midwest Airlines Magazine, August, 1999.

back to top