New Management Era: Capitalism and Hyperreality at Academy of Management


Academy of Management, the Worlds largest conference on management with about 10.000 participants and 1.600 presentations and workshops over a five day period. The conference is held in a new state in the US every year and this year it went down in Orlando, Florida – the home of Walt Disney World. The hyperreal world of Disney Corporation and especially the town of Celebration, founded by the same corporation was a surreal surrounding and a stage for contemplations on reality, authenticity, national culture and perception. In my book “The Authentic Company” (Danish Den autentiske virksomhed, released in Denmark 2012) pages 50 – 54 are about the hyperreal, second order realism, construction and the simulacrums of Disney World. I’ll get back to my 24 hour experience of the nostalgic town of Celebration in another blog post.

Authenticity codes in restaurants

During my work with the book “The Authentic Company” from 2008 to 2011 i studied the research of Stanford University professor Glenn R. Carroll (especially Carroll, Dobrev and Swaminathan, 2002) who has specialized in evolutionary theory and market ecology, especially the growth and development of the micro brewery market in the US during the 1990’s. One of the significant explanations of the explosive expansion of the beer market (and especially the number of micro breweries in the market) is authenticity. What the brew pubs and craft breweries can offer, that the large brew corporations cannot, is reflexive authenticity and heritage authenticity, expressed through personal experiences.

This year some of Carrolls PhD students presented papers regarding the codes of authenticity in restaurants, the development of the micro brewery market in Japan largely influenced by external actors and finally a paper on authenticity above and beyond perfection and survival, which are the most obvious claims regarding the functions of authenticity in business.

I’ll limit myself to mentioning just one brief finding from one of the papers. When we go to socalled “authentic” restaurants (and maybe a more precise term here would be “exotic”), nomatter if they are Chinese, Mongolian, Korean or Peruvian, there’s a chance we’ll meet foods that are preserved or prepared in very different ways than we would otherwise find acceptable. For instance, if you visit China Town in New York City you can see lots of BBQ ducks hanging in the window of a restaurant.

Usually the level of hygiene expressed through ratings given by government or local control (ie A-, B- or C-rating or “smileys” in Denmark) and the reviews that the restaurants get online correlate. But recent research shows that restaurants that use codes of authenticity get substantially better reviews then their hygiene reviews would normally allow. When the restaurant guests track authenticity codes, other codes, like those regarding hygiene, are set aside. This implies that companies and organizations who are able of building an image of authenticity based on authenticity codes, are able of creating a stronger connection to their audience and that the image perceived in the audience are based on those codes rather than conventional measures of audience evaluation.

The New Capitalism – Subject in High Demand at AoM
The theme of this years Academy of Management was “A new Capitalism”. More than 90 percent of the participants at the Academy are scholars, either professors from universities around the World or PhD students. The greater majority are from North American universities and about 10 percent are practitioners, primarily consultants that seek new knowledge and inspiration. The widely accepted view of business is value creation in the specific sense of financial profit. At one of this years most popular sessions “Capitalism in Question: Towards an Economics of Justice, Sustainability, and Economic Thrivability”, several alternative views where expressed by leading management professors. Among the speakers where Otto Scharmer, MIT Sloan, Henry Mintzberg, McGill University and Paul Shrivastava, Concordia University. The room was packed, many of us on the floor and people trying to hear from the hallway.

Session om "En ny kapitalisme" på Academy of Management med bl.a. Henry Mintzberg og Otto Scharmer om den nye økonomi hvor glæde, lighed og miljø er vigtigere end profit.
Session om “En ny kapitalisme” på Academy of Management med bl.a. Henry Mintzberg og Otto Scharmer om den nye økonomi hvor glæde, lighed og miljø er vigtigere end profit.

Otto Sharmer, MIT Sloan talks on capitalism and a new economy.

The presenters especially questioned the tension between ever-increasing growth and the ability to be sustainable. Is non-growth an option, and how would that be possible? What is necessary in order to introduce an economics of joy, justice or well being rather than growth rates and profits?

You could argue that thinking about joy, happiness and well being isn’t new. After all, we have been discussing CSR for the past 10 years and lots of companies work with numerous bottom lines (other than financial) including social and environmental reports. What I think is new, is the wide spread explicitation of alternatives at a conference that serves as the public stage for what is right and wrong, and what is acceptable in the academic World right now. These views were not expressed directly and openly by the leading members of the Academy five or ten years ago.

Before I left the crowded room the chair of the session, Sandra Waddock from Boston College, gave the audience a number of questions, along the lines of “Which problems in the World would you like to change” and “If you allowed youself, what kind of research would you do?”. My companion at the session would do completely new kinds of research than before and I think a large part of the audience would serve other, more important, developments of society than they do today, if they were to follow their answers from that discussion.

“Origins (or Evolution) of Organizational Capabilities”

Where do the capabilities of the company come from? Are they somehow inherent in the DNA of the company or are they something that depends on outer demand? Some scholars look more at the origin of capabilites whereas others are interested in understanding the evolutionary processes that they undergo. One perspective on this question presented in an open and rather experimental session at AoM is that capabilities are linked to the problems that the company tries to solve. The definition of those problems – or primary tasks of the company – is the responsibility of management, hence their ability to define and redefine problems and solutions also define the relevance of the companys capabilities.

The capabilities of a company may persist as they are embedded in the culture and the self of the organization, but if the market or outside demand changes, the relevance of the capabilities may disappear. The products and solutions are no longer relevant as other technologies, services or solutions deliver better solutions. In that case the competitive advantages of the company may no longer exist in the market place and in the eye of the customer, even though the organization’s capabilities may be intact and highly efficient due to years of training and optimization.

The managerial challenge is to constantly analyze and understand what the capabilities of the organization are, to spot potential developments in those existing capabilities and to evaluate how they correspond to the demand of the existing or the future market. What most managers – and most companies – do, is to evaluate existing capabilities towards the existing market and expressed wants and needs of the customers. But what is actually called for, is the evaluation and analysis of potential capabilities towards the potential, future market. That leaves us with uncertain (future) capabilities compared to an uncertain need (that may be created or expressed in the future).

Lots of companies talk about their competitive advantages, mostly in the form of USPs and marketing messages. But what if the problems and solutions that are framed by management are not correctly assumed by management either in the view of future possible developments of the organizations capabilities or the future needs of the market? Very few take the time and energy to look at the four-by-four system that I started thinking about during this session and that I am proposing:

1. What are the existing/inherited capabilities of the company?
2. What is the market/customer need for the companys capabilities and the solution that those capabilites produce?
3. What are the future possible developments of the companys capabilities?
4. Which of these developments meet the future demand of the market/customers?

The competitive advantages that companies, public or private, as well as cities, regions and nations, try to deliver in order to create high value in their respective marketplace, are only competitive, if both parts of the equation is met. When was the last time you looked at them?