Tuesday, June 21, 2016

“There is always work to be done, a second curve waiting to be invented.” – Charles Handy’s new book

Technology threatens jobs. Old institutions cannot guarantee employment any more. To sum it up: The future is uncertain! What to do?

There are no simple answers. But Charles Handy provides a tool that might help – The constant search for a second curve.


The concept of the second curve

The sigmoid curve is a mathematical concept that, according to the author, applies to all aspects of our lives: organizations, businesses, governments, empires, alliances, etc.



A sigmoid curve has four phases:

  • Investment period: During this period, you invest (money, time to educate yourself, etc.) and have less in return than what you have invested. The curve goes down.
  • Growth period: You benefit from your investment and your output exceeds your input. The curves goes up.
  • Peak phase: Your output doesn’t increase anymore; it is simply enough to cover your input. Profits have gone; the curve flattens out.
  • Decline phase: Your output declines but your input remains. You start losing out; the curve goes down again.

Charles Handy makes two central assumptions:

  • First, he argues that the decline phase is inevitable.
  • Second, he says the shape of the curve has been proven. Only its speed varies. The decline of the Roman Empire, which took 400 years, serves as an example here.

You have to accept these assumptions. If you don’t, it’s actually not worth reading the book.

Nobody likes decline. The only way to avoid it is to start a second curve before the first curves peaks.




The problem of timing

The second curve approach is easy to understand. But it seems to me that its application is all the more difficult. How do you actually know where you are on the curve and when the next phase comes?

Charles Handy admits this, writing that “the problem is knowing when the first curve is about to peak:

  • On the one hand, first-curve success can make you blind and not see the peak, for example due to a new technology. On the other hand, acting too early makes you miss the growth phase.
  • Acting too late, i.e in the declining phase, is psychologically difficult because you will have to start something new precisely when your income, productivity, and reputation are going down.”

I haven’t really found a solution to this problem in the book. But I tend to think that a solution is impossible because it depends on the underlying facts to which you apply the second curve image.

In the rest of the book, Charles Handy applies his idea to various aspects of our life. I only pick a few examples here.


The second curve in your career – “Work is what we do, not where we go.”

Charles Handy’s message is pretty simple: Jobs change more and more rapidly and technology threatens everything besides jobs where creativity is key and where personal attention is needed (nursing, health care, social work, care of the elderly); performing arts, tourism, and entertainment might also escape.

Therefore, people will have to change jobs frequently. If you have to do that anyway, the author recommends that you do it before the declining phase, when things are (still) going well.

Instead of today’s big employers, Charles Handy imagines a pure contractual organization, where you as a specialist contribute your know-how only if and when it is needed. But instead of seeing this gloomily, the author turns it upside down: “Groups of specialists form independent groups and contract their work back to the organization, trading security for independence, better rewards, and more control.”

From the company’s standpoint, this involves not only advantages: “Critically, however, there is no more sense of community in a contractual organization, no core values, nothing to inspire loyalty. Where contracts are key the spirit is lost.”

Let’s turn to the critical question: How can you be sure to earn more money on your second curve? Actually, you can’t. But for the author, it’s not only about money:

It can be more satisfying, and often more profitable, to grow different rather than bigger. This is the premise behind the Second Curve, that different is more fruitful than more of the same.”


The second curve for companies


Shamrock organization

Charles Handy imagines the future company as a “shamrock organization”:

  • The first leaf represents the core workforce.
  • The second leaf represents secondary organizations to which some of the subsidiary work or the organization is outsourced.
  • The third leaf stands for the individuals hired either on a project or on a part time basis. These individuals are either highly skilled or lower-skilled.
  • The stalk of the leaf is the management that holds it all together.

The exact balance between the three leaves depends on the needs and situation of each organization and, therefore, is a major strategic decision for any company.

Contrary to the current curve, the shareholders are not and cannot be part of the shamrock. Charles Handy is obviously not a fan of the shareholder value doctrine.


Doughnut jobs

Surround people with too many rules and regulations and they stop thinking for themselves.”

Charles Handy thinks that people should be granted flexibility and criticizes that too many firms kill their people’s creativity for the sake of efficiency. He uses the image of a doughnut:

  • The jam in the middle represents the core essentials of the job that are required of the person or the group. If you don’t deliver the jam, you will have failed.
  • The dough represents the empty space around the jam which is available for new initiatives.

The current curve tends to produce jam only; the second curve should favor the dough instead.


Federalism

Charles Handy praises federalism as a way to keep people engaged locally while leveraging on the strength of size. In his view, this is not only a political concept but applies to corporations as well.

Good bye to the almighty headquarter that prescribes how things ought to be done! Local issues should be decided locally!


What am I here for?

By the end of his book, Charles Handy asks fundamental questions: What are all these curves good for?

One thing is for sure: It’s not about money: “Many in our capitalist age would settle for money, and then more money. But this only postpones the problem, for money is only an intermediate purpose, a means to a bigger end.” In the author’s view, money only keeps you busy going nowhere.

To determine the ultimate purpose of life, Charles Handy recurs to Aristotle – Achieve excellence in accord with virtue through eudaimonia. He defines eudaimonia as being more than happiness – “doing your best at what you are best at, for benefit of others” or, in other words, “living up to your potential”.


The book is worth reading. It’s sometimes a bit too much visionary stuff for me, but that is, of course, a question of personal preference.


Some additional Quotes





Resource:

Charles Handy – The Second Curve – 2015