How Corporate Groupthink Squashes Talent

When J. Robert Oppenheimer watched the first fission bomb explode in the desert near Alamogordo, New Mexico, the first thing that popped into his head was a line from the Hindu Upanishads: “I am become death, the destroyer of worlds.” That would not happen today. The idea of a useful scientist reading outside his “field” would be frowned upon by his doctoral committee, for one, but it would also be dismissed, as would he, by the corporation that would, these days, likely employ him. Yet Oppenheimer’s ability to think broadly and to make connections served as a warning to the potential dangers the world would face with the creation of this new, and terrifying, technology.

Imagine if the Wall Street wunderkinder who authorized selling and repackaging all those high-risk loans in the mid-to-late 2000s had had that kind of perspective. Would we face the economic hardships we now face? Imagine if these people’s bosses had had even half of Oppenheimer’s perspicacity. But it is hard to imagine these things. Here’s why.

We would like to think that capitalism is best suited to recognize and exploit talent. We have been told since Adam Smith wrote Wealth of Nations over 200 years ago that the market fosters creativity by rewarding the smartest and most innovative workers and letting the incompetent and the merely adequate languish. Some elements of this way of thinking are no doubt true: the intense competition among car makers in the past 25 years has produced automobiles that are, pound-for-pound, safer, better performing, and more fuel-efficient than ever before. But that same system has led two of America’s Big Three over the edge of bankruptcy. It has also seen the proliferation of clearly inferior products, such as Microsoft software and SUVs. It has seen the utter failure of the health care industry to self-regulate or produce decent cost-effective patient outcomes for those it does insure, and it has failed, even more tragically, to insure nearly one in five Americans.

Before I proceed, I must make clear that I am not advocating Socialism or Communism or any other “ism”; rather, I’m suggesting a more enlightened approach to the way we think about talent and the goals to which we set it going. To think that any reform of our current system is tantamount to Stalinism is a product of the marketing departments of major corporations, the thinktanks they fund, and the lobbying groups they set up. It is also absurd. Sadly it has impaired our ability to think clearly about the subject and gotten in the way of reforms that would allow the truly innovative to save American manufacturing and service industries.

At the heart of the problem is that, rather than nurture and encourage thinking that challenges old, outmoded ways of doing business and creating products, contemporary capitalism recognizes as useful and good only those ideas with which it already agrees. The bankruptcy of GM and Chrysler happened not just because they couldn’t see the rise in gas prices coming—anybody with half a brain could see that. These companies failed because top executives refused to look in the first place. Corporate groupthink among the capital aristocrats at the top led them to accept that the global oil crisis of 2008 was as improbable as global warming. After all, didn’t the scientists and economists hired by the oil companies’ thinktanks say so?

Management at the corporate level is virulently anti-democratic. Despite recent trends toward “employee empowerment” and flattened company structures, decision-making still rests at the top and among a very few individuals, an aristocracy of mostly white men with MBAs. Those MBAs are almost invariably the product of a few key business schools, most of which have been heavily influenced by the Chicago School of Business and its extreme laissez-faire ideology. We can see how this groupthink influences decision-making when we see company after company making the same decisions about outsourcing, downsizing, union-busting, just-in-time delivery. Homogeneity of thought pervades investors as well, most of whom are also products of the same ideology. So a company can be guaranteed an increase in stock price when, say, it cuts a thousand jobs and sends them overseas, no matter the actual impact on the company’s bottom-line or the quality of the product. The CEO, who is answerable to the shareholders, has made them happy by making them richer despite the possible long-term effects on the company and the customers it serves. In keeping with this mentality, American corporations essentially gutted their workforces over the past thirty years, simultaneously destroying the ability of their workers to buy their own products, leading in part to the financial mess we’re in now.

Supposedly “innovative” financial products like credit default swaps and bundling of risky loans into higher-rated products just exacerbated the problem, forcing more and more already over-leveraged Americans into bankruptcy. These products were created by the “best and brightest” Wall Street had to offer, and the result of them proves that these men and women (mostly men) were neither the best nor particularly bright. But they were judged with the very narrow terms corporate America is used to using, one that ignores long-term consequences and is studiously ignorant of human impact. They were judged by an ideology that opposes labor in vehement and often personal terms, that cannot conceive of a good or useful tax. A truly innovative economist, and there are a few out there, could and would have taken these factors into account. But alternative perspectives are not welcome and seldom heard in the corner office.

This tin ear to new ideas extends to the very businesses themselves. Consider what motivates an engineer. Sure, like everyone else she wants to be well-compensated. But she didn’t get into it to get rich; if so, she would have been an entrepreneur. Rather, she is in it because she enjoys it. Our engineer likes working out the design of a new bridge or water pump. She loves seeing the numbers become real things. She gets a kick out of making things work. She’s a wonk, and that’s what makes her capable of doing a good job. Her boss, on the other hand, with his MBA, is schooled to think that what motivates people is self-interest and that manifests itself primarily as cash. He might give her a bonus if the product is successful, but he’s not likely to let the engineer influence his thinking on what product is really market-worthy or deserving of R&D. This disconnect, a frequent subject of the Dilbert cartoon strip, indicates just how our narrowly-drawn notions of corporate leadership can hurt industrial production. The CEO, after all, is the “decider,” and no doubt thinks himself better qualified to make decisions.

Chances are, of course, that the CEO has never designed anything at all. “Working your way up” from an assembly line or design department is an idea as quaint as parasols and haberdashery. But, like them, it also had a reason for being, an extremely practical component: those who work their way up know how things work and understand the mindsets and motivations of those doing the job. The number of engineers and line workers and designers and other nerds who are also tireless self-promoters, in other words, those likely to appeal to a corporate executive’s view of the way people should act, are few. Furthermore, such things take away from what those workers do best: design and build things, provide services and create ideas. The MBAs are unlikely to understand how a marketing person reading Faust at work would be anything other than a waste of the company’s time and money. They might even not recognize why an engineer would want to read the latest blue-sky research in physics.

Of course, American companies, at one time, were involved in blue-sky research themselves. Bell Labs produced groundbreaking research from the 1920s up through the 1990s, pioneering and perfecting lasers, transistors, contemporary microprocessors, and the C computer language, among many others. This was primarily due to the fact that its corporate minder, AT&T, largely kept its hands off and let the eggheads be eggheads. AT&T, not to mention the rest of society, ended up benefitting in uncountable ways from basic research driven by the sheer curiosity of the scientists at Bell Labs. Deregulated markets, though, tend to breed corporate hegemony: all must be brought to heel at the command of the bottom line, or, more importantly, what the MBAs upstairs think will be most immediately profitable. The free market was not kind to Bell Labs, and it completely ceased to be by 2008, according to Wired magazine.

Another object lesson in how the corporate mindset tends to kill innovation can be found in the now infamous story of the creation of the mouse-driven graphical user interface. This technology, with which we are now so familiar as to render it second-nature, was actually developed by Xerox at its answer to Bell Labs, the Palo Alto research facility. But, of course, the MBAs at Xerox corporate had no idea what to do with it; they made copiers, after all, and copiers, everyone knew, used buttons. Fortunately, Steve Jobs of Apple computers did know what to do with it, and, since he is both a good businessman and a good designer, the McIntosh was born. Despite the Mac’s popularity, though, it still has a tiny slice of the computer pie. Windows, still a buggier, less secure operating system, dominates the PC market, and competes not with Apple, but with older versions of itself. Contemporary free-market reasoning would dictate that the superior product will always win, in this case despite its premium price. But, of course, PCs dominate because they have traditionally been considered the more “serious” business machine by the MBAs calling the corporate shots. Windows wins because of groupthink, despite the fact that each iteration comes with its own set of security flaws, and each new version is even more of a bloated memory hog than the last.

Lockheed’s Skunk Works is another ready example of the way a bunch of extremely smart people, left alone, can produce innovative products. This team of aeronautical engineers created the P-80, America’s first jet fighter; the P-38, the first fighter to break 400 miles an hour in level flight; and the innovative U2, the SR-71 spyplanes, aircraft that have set altitude and speed records that have yet to be broken. The latter two are designs that are half a century old, and they’re still better than anything flying today.

What is at issue here is the type of thinking that goes into innovation. It is holistic thinking, connective thinking. It is not beholden to ideology or the bottom line, or even immediate practicality. It is done primarily for its own sake and is therefore not hampered by the constant need to please a market perception or even a boss. Rather than “thinking outside the box,” truly creative thinking doesn’t even recognize a box, and corporate groupthink is not equipped to even recognize these possibilities.

But other problems plague the way corporations deal with innovators. Hiring is often a matter of sheer luck, and truly talented individuals must not merely be what they are, but must be in the right place at the right time to get noticed, much less hired. In theory, getting noticed in the Internet Age should be a breeze: just put your innovative, creative work out there on the Web, and they’ll beat a virtual path to your virtual door. Practically speaking, though, your unique voice is bound to get drowned out by the sheer cacophony of all the voices out there doing exactly the same thing. The power of search engines like Google means that unless a potential employer is looking pretty precisely for you or for your specific label, you’ll just be one of a million or so hits. This is made worse by the fact that corporate executives often don’t even know what they’re looking for. A CEO might want “creative business solutions,” but if he Googles that, he’s going to have to work through 24 million hits (but a mere 42,000 is he is smart enough to put it in quotation marks). And if the solution the corporate king wants is very specific and technical, what chance is there that this person knows the business well enough to see the possibilities or to search for the specific strengths that will solve his problems?

How many immensely smart and talented people just never got the chance to make the pitch? How many creative and innovative thinkers are just too weird to seem like good risks to the suits upstairs? We always hear of big companies descending onto college campuses in the spring to pick the best and the brightest young people to help them gear up for the future, but these best and brightest are already the products of departments that have geared their curriculum to the industries their graduates serve. How does this foster innovation? Further, how do we know these companies aren’t risking inexperience merely for the sake of a younger worker who will be relatively cheap to employ? If human resources departments and executive aristocrats were really interested in the most creative people, why are they so quick to look abroad for workers trained in schools and societies for whom creativity and originality is not a virtue? When power rests in the hands of a few who already think they know best, looking for innovative workers is really just looking for trouble, and if it’s a toss-up between that and people who will work cheap, the corporate aristocrat will always choose cheap.

Rather than take the risk on new talent in the executive ranks, the suits upstairs are more likely to hire people they know, people who are not scary, but also people who have perspectives very much like their own. Creative people, after all, are scary. They keep strange hours and wear strange clothes. They sometimes have tattoos and green hair. They read. They obsess over things like the way aluminum fractures and how cognitive frames develop instead of normal things like golf. They listen to post-Bop and Arnold Schoenberg instead of smooth jazz. They don’t network in the clubhouse or at mixers, preferring to hole up with books and microchips and solder. Sometimes, they have beards. Networking tends to bring us in contact with people who have similar educations and socioeconomic backgrounds, and so it is not all that helpful when a company is seeking to find the most innovative thinkers. The aristocracy of the corporate office tracks well with the existing aristocracy of wealth, and creative thinkers are, literally and figuratively, often “out of network.”

Networking, as currently practiced, is actually a form of protectionism. As much as contemporary capitalism decries economic protectionism based on national borders or the status of employees, the corporate aristocracy is quick to network truly new upstarts right out of the business. The status quo, after all, has been good to them; it has given the aristocrats what they have. And what they have is, at last check, substantial, with the top 5% controlling 40% of all wealth in the US. Innovation that can’t be directly and immediately harnessed into profits through existing means becomes, therefore, a threat worthy of destruction. Consider what happened to T. Boone Pickens’ grand plan to increase wind power production in the US. It collapsed for lack of backing. One of their own, a member of the corporate aristocracy, crossed the line and was yanked back in. Pickens is a maverick, but he’s not a revolutionary, and he quickly fell back in with the rest of his class. The history of American industry is full of bold innovations that were too good to succeed: the Tucker, the Betamax, the EV1. Even universal health care should be the sort of innovation the corporate aristocrats would like to embrace. After all, it takes a massive expenditure off the books. But it also comes from the wrong people, from people who are not “in network,” from people who are not “like us.” Rejection of universal health care acts as a rite of intensification, an indication of ideological purity among the corporate classes. They cling to their opposition despite the fact that it is against their long-term best interests to do so.

One need not posit conspiracy to see how this happens. It’s the regular and familiar process of the creation of a social group, one centered around a limited set of roles and positions, one sharing patterns of thought. Instead of a conspiracy, all you need are people who know one another and share educational and socioeconomic backgrounds. But it also demonstrates that the fact of capitalism is not enough to grow and recognize innovation. Innovation must itself be a shared value, and for that to happen, the people who really run the economy, namely the corporate aristocrats, must begin to embrace change; they must share their power just a little in order to keep our remaining collective power intact.

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