Both states and corporations are, at some fundamental level, cooperative enterprises. Yes, political elites and corporate managers are motivated by personal gain, power, status, and prestige. And that even can be the majority of their motivations. But in addition there has to be something else, at least some of these elites (whether political or economic) some of the time must behave in a cooperative prosocial manner, that is, putting the common interest of their state or corporation above their private interests. When they stop doing that, states crumble and corporations go bankrupt.
Pointer from Jason Collins. I would add that as a business grows, it changes as its size exceeds the Dunbar number. Once there are more than 150 people, you have strangers dealing with one another within the business, and the dynamics change. In order to maintain prosocial behavior, you need a lot more formal rules at that point, and veterans of the smaller, informal company often cannot adjust.
Having said that, the formal rules help to make the company more robust. So I think it takes more than a few rogues to cause a breakdown in the company. It takes a more systemic cultural decline.
In business, as in government, bureaucracies grow around the rules that are ostensibly required once the Dunbar number is exceeded. These bureaucracies themselves bear the same social dynamic qualities as any other organization and inevitably engage in self-serving behaviors that can undermine the health of the larger organization. It seems that there must always be a countervailing cultural value of questioning the rules to bring about a healthy equilibrium. I once thought this was the case for government only, but years in a large corporation have opened my eyes that the same problem exists there as well.
I thought this was so blindingly obvious that I had to go read the article to see what the big deal was. With corporations there are so many checks and balances — including summarily being shown the door that day, no impeachment and trial required — that it is quite rare for an executive or manager to be anywhere close to 50% disinterested in the company.
I think the whole approach of the article is way off on the reasons that corporations devolve and fail, and even how they collect knaves. Don’t attribute to evil what can be attributed to stupidity: Most corporations fail not because management becomes evil or even disinterested, but rather because the business model of the company is left behind by exogenous changes.
The article completely downplays this effect, even considering it the second filter of start ups instead of the first filter that it is. Most entrepreneurial teams don’t fail because they don’t get along: they fail because their idea doesn’t pan out.
And aging companies lose their best and brightest because their best and brightest see that the business model is failing. Management will necessarily become less competent as there is less promise in the business model. Disinterested knaves may even recognize this hollowing out and move in to take advantage, but the corporation is already on the path to failure and needs a turnaround in business model to survive.
The knaves are a symptom, not the cause.