In the popular cult film, ‘The Matrix’, our hero, Neo, is confronted with a stark choice. He can choose between living in the computer-fabricated world of the matrix (blue pill) or be unplugged from the matrix to wake up to painful reality of his true existence (red pill). His mentor, Morpheus, sums up the choice with the following words:-
‘This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill -you stay in Wonderland, and I show you how deep the rabbit hole goes. Remember: all I’m offering is the truth.‘
Neo hesitates for a moment and then opts for the red pill. Neo chooses an uncomfortable truth over a comfortable illusion. This is the same choice that business leaders face each day in a transparent world where nothing can be hidden.
In the blue pill world of leadership, we colluded regards the illusion that work could be reduced to an economic necessity and the illusion that business leaders were purely rational beings motivated only to maximise their own self-interest. The architects of this illusion were 19th century economists led by Adam Smith. In the blue pill world, organisations worshiped financial profit and the business leader could not be trusted because the economists decreed that, left to their own devices, business leaders would exploit the system for their own ends. Be careful what you pray for! In academic circles, this business paradigm is known as agency theory. Professor Sumantra Ghoshal summed up the inevitable consequence of agency theory in his influential paper, ‘Bad management theories are destroying good management practices’, when he said:-
‘Many of the worst excesses of recent management practices have their roots in a set of ideas that have emerged from business school academics over the last 30 years. In courses on corporate governance, grounded in agency theory, we have taught our students that managers cannot be trusted to do their jobs.’(Ghoshal 2005)
In the red pill world of leadership, the uncomfortable truth is that work requires a broader social purpose to justify the scrutiny of diverse, modern stakeholders. The uncomfortable truth is that, before they were CEOs, business leaders were human beings; complex, unique individuals with personal values, deep-seated emotions and a fully-developed conscience. The new architects of the red pill world of business are 21st century psychologists. The alternative to agency theory is stewardship theory – the idea that the business leader is someone who ‘rises above the level of an agent and is committed to the welfare of all stakeholders’(Donaldson and Preston 1995). In the red pill world organisations justify their existence not through profit alone, but through the triple bottom line of results, relationships and reputation. In the red pill world, we contemplate the uncomfortable truth that business leaders may be trustworthy! This is uncomfortable because the hard-wiring of corporate life has not yet been engineered to accommodate such a species; not in its structure, its processes, its reward systems, its goal-setting or its talent development. The Morpheus of the business world confronts every executive with the following ultimatum:-
‘This is your choice. After this, there is no turning back. You take the blue pill – its business as usual, you’re the boss, you maximise profits for the owners and your other stakeholders will believe whatever you want them to believe. You take the red pill – you become a trusted steward, the world turns upside down, your job is to serve the broad needs of your diverse stakeholders and I will show you how deep the rabbit hole of narrow, economic thinking goes. Remember: all I’m offering is the truth of leadership in a world where nothing can be hidden.‘
I can feel you hesitating and, unlike the film, I don’t know what is going to happen next. Are you one of the ‘old guard’ dutifully propping up the creaking edifice of the blue pill world; comfortable in your ever more extreme sense of denial? Or are you one of the ‘new guard’ digging the foundations of the new red pill business architecture; uncomfortable in the vulnerability of not knowing ‘how deep the rabbit hole goes’? Untrustworthy economic agent or trusted global steward? This simple and painful choice is yours. And, just in case you were wondering, there is no purple pill: you cannot be half-pregnant!
John explores how to become a trusted steward in his new book, ‘The Trusted Executive: Nine leadership habits that inspire results, relationships and reputation’. Available to order now via Amazon UK.