What does it take to get a new company off the ground? Or to bring a new product to market? We all know that new business development requires a certain kind of “right stuff”—an entrepreneurial spirit, if you will—a kind of energy and enthusiasm which aims to do something new and different because it’s worth doing. It takes a certain kind of character and spiritual energy to push past all the obstacles that stand in the way. There seems indeed to be some kind of “right stuff” which is just as important in launching a business as it is in launching a space capsule.

Strength of human spirit is required in such endeavors. In business, we may refer to this strength as “spiritual capital,” an ingredient just as crucial to success as financial capital. We find spiritual capital in people who seem to have the right stuff when it comes to entrepreneurism. This spiritual capital seems to be like art—we know it when we see it, but we have a hard time defining it. But what if we could get better at recognizing it, understanding it, cultivating it and rewarding it? What a benefit that would be for building high-performance businesses with integrity and the “right stuff”! That’s exactly what I hope to help do with my current research project. I’m researching companies where spiritual capital is on display: identifying it, interviewing the entrepreneurs who have it, and analyzing the organizations where it thrives. I can think of nothing more thrilling in my business career than to have been a part of entrepreneurial start-ups in several different places. One of those places (which has become famous for its own special mystique) is Silicon Valley, and that's where my research into this topic will begin.*

California’s Silicon Valley symbolizes the entrepreneurial spirit which has made American business the world’s pace-setter for inventiveness and technological advancements. The success of start-up companies in Silicon Valley can be traced back to the early days of “Bill & Dave’s” garage in Palo Alto, where in 1938 they developed the audio oscillator which launched the company that still bears their names—Hewlett Packard.  The prolific productivity of the Silicon Valley entrepreneurs who have followed in their footsteps during the past 70 years has become legendary, and has led to the creation a venture capital industry which leads the world in wealth-creation through entrepreneurial start-ups.

The culture of these entrepreneurial companies deserves to be studied for the sake of the witness it can bring to a theological understanding of human inventiveness and industriousness. How do entrepreneurial companies recognize, enhance and harness the creative talents of the human spirit? What can we learn from their experience about the concept of spiritual capital? To what extent do these companies formulate and communicate an ethos that recognizes and builds upon the source of human dignity found in the imago Dei? These are some of the questions I’ll be pursuing.

In academic terms, the hypothesis to be tested is that there are models of transformational leadership at work here which point to a transcendent concept of human nature. This understanding of human nature transcends other concepts, such as homo economicus, an idea popularized in 20th-century economics based on the idea that human nature can be reduced to utilitarian, conscious decisions to maximize happiness. The flaw in that idea of human nature is that the quintessential humanness of human kind cannot be reduced to economics functions; but rather it has to be understood in a larger context of spirituality expressed in and through relationships with one another and with God.

This research project therefore aims to discover how the goals, aspirations, leadership styles and corporate cultures represented by Silicon Valley companies bear witness to a bigger notion of human nature—that is, to a theological understanding of human nature. By studying the entrepreneurial ethos of representative companies, our hope is to learn practical lessons which managers and entrepreneurs can use to build up and deploy spiritual capital for the sake of their employees, customers and the greater community.

If this sounds interesting, I would love to hear from you. Here’s how you can help: send me an email. Share your ideas with me regarding what “spiritual capital” means to you. Share stories with me, and give me examples of people and companies you know. Perhaps you would even be willing to take part in a personal interview on the topic. I’d love to hear from you. Thanks! And thanks for your support of the Center for Integrity in Business. They occupy a unique and much-needed niche by providing thought leadership in some of the most crucial aspects of business.

* By the way, Seattle is right there on a par with Silicon Valley these days, but I’m going to start my research with the Silicon Valley, which is where a critical mass of the start-up culture seems to have first arisen.
---
Dr. Bruce Baker is Asst. Professor of Business Ethics at Seattle Pacific University. His previous work includes founding and leading high-tech companies, and serving as a general manager at Microsoft. The CIB is pleased to sponsor his current research project: Silicon Valley and the Human Spirit: an inquiry into the entrepreneurial ethos of California’s Silicon Valley with lessons for the development of spiritual capital. For further information you may contact Dr. Baker at bakerb@spu.edu.

Second Treatise of Government

by John Locke, edited by C.B. Macpherson (Indianapolis: Hackett Publishing Company, 1980; originally published in 1690. 124 pp)

Widely known as the Father of Liberalism, John Locke’s work in epistemology and political philosophy has influenced countless nations. Born in 1632 in England, Locke attended Westminster School in London earning a bachelor’s and master’s degree. Having fled to the Netherlands to escape suspicion of an assassination plot, Locke began publishing his writing upon his return to England. With his writing gaining widespread influence, Locke died in 1704. He never married nor fathered children.

C.B. Macpherson was born in Toronto, Canada in 1911. From 1935 to his death in 1987, he taught primarily at the University of Toronto on political economy and political science. The author of numerous books, Macpherson received the Benjamin E. Lippincott Award of the American Political Science Association in 1979.

Review by Donovan Richards

“Mine!”

It begins early with a child yelling, “Mine!” We have all heard him/her bursting into tears and the quick crawl/run/waddle to a parent claiming the injustice of lost property. From an early age, we feel the seemingly self-evident truth of private property. We were given an object; we collected items; we connected those items in ways that made a new and much better object.

In business, this principle transforms into the rubric behind which we operate. Our work gives precedence for ownership. We develop goods and services and by ownership we are capable of buying and selling.

In John Locke’s Second Treatise of Government, the author presents a theological case for the principle of property and the need for government authority to maintain property rights. Despite the density of the prose, the short length and topics offer a valuable read for business practitioners.

The Premise of Property

Any discussion regarding John Locke’s Second Treatise of Government must center on property. A highly influential writer on political philosophy, Locke’s tome details the ways in which a society organizes and manages itself. But before one can state maxims regarding political government, one must discuss the reasons for organizing societal connections. For Locke, this reason begins with private property.

Locke’s justification for private property begins with the assumption that God the Creator fashioned a world for humanity to subdue and manage. Locke writes,

“God, who hath given the world to men in common, hath also given them reason to make use of it to the best advantage of life, and convenience. The earth, and all that is therein, is given to men for the support and comfort of their being” (18).

The earth, then, exists in a supporting role to humankind; it carries no first order intrinsic value. Instead, it functions instrumentally for the good of humanity.

From this position, Locke believes that private property arises from mixing personal labor with land from the God-given commons of the earth. Locke argues,

“Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others” (19).

Thus, while God provides commons for the good of all humanity, the ability for any human to conduct work allows him or her to transfer land held in common into private property.

To illustrate, under Locke’s philosophy of property, I cannot travel to a pristine wilderness and, upon discovering it, proclaim the land my property. Instead, I must cultivate this discovered land. By building on it and utilizing its soil for food, I then possess the right to proclaim the land my private property.

In short then, Locke suggests that God, who created humanity through labor, considers humans God’s property. God provides the earth as a common for which humans can use their God-given gifts of manual labor to cultivate and transfer the earth into private hands.

Governance

The need for political government arises from this principle of private property. When a society expands beyond the simplicity of cultivating open commons into private property, the need to protect and govern property becomes an important issue. Locke reasons,

“Political power is that power, which every man having in the state of nature, has given up into the hands of the society, and therein to the governors, whom the society hath set over itself, with this express or tacit trust, that it shall be employed for their good, and the preservation of their property” (89).

Even though the Second Treatise of Government explores many specific matters in the execution of governmental affairs in a united society, the core principles behind these discussions surround Locke’s theological notion of property and the need for governing those God-given rights.

Locke: An American Ideal

Interestingly, I find that Locke’s arguments sound natural as if they are ingrained in the psyche of American society and capitalism as a whole. John Dunn, in an essay titled “Measuring Locke’s Shadow” confirms this idea when he writes,

“Locke is still intractably America’s philosopher, and still very much America’s philosopher for what still seems ever more peremptorily America’s globe. He is the sign on the banner of America’s imperious external reach, her cultural, imaginative, ideological, economic, and even political Griff nach der Weltmacht [bid for world power].”

Put differently, Locke’s ideas on property and the need for government to authorize and protect it are the modus operandi for American business and politics.

Property as Dominance

In fact, Locke’s ideas seem to be the foundation for the domination of nature for which society now encounters drastic repercussions. In other words, to align theologically with Locke’s views on property, one must translate “dominion” in Genesis 1:28 as “domination.” What else could private property mean other than the absolute control of a specific portion of God’s creation?

By assuming “domination” of God’s creation in Genesis 1:28, I find tension in Locke’s arguments. Given Locke’s premises, God owns humanity because God created us through work. Under the same assumption, God possesses all of creation. Therefore, humans cannot possess an absolute right over a portion of creation because they were not the first to labor on it.

It then follows that the God-given commons for which humans carry the right to fill and subdue is not a space which humans carry the right to section off into private property, but an area owned by God given to humans in common to share and steward for the good of the whole.

Locke centers his political philosophy on a theological case for private property. By mixing labor with the God-given commons, private property arises. As an extension, political governance exists to protect that property. Nevertheless, the notion that God created and thus possesses the created world forces us to consider the earth in stewardship instead of domination. Even though we feel the pull of private property from an early age, our connection to an item through work does not require it to become our private possession.

With dense philosophical writing, Locke’s Second Treatise of Government is a difficult but rewarding read. Despite my reservations regarding Locke’s premises, this book is a must read for anyone interested in the foundations behind the modern conception of business. Locke’s writing is the bedrock of American politics and the principle of property holds sway over much of our popular thought. Our labor is valuable. Likewise, the way we create carries the capacity to help others through stewardship. A product of God’s labor, humans too possess the capability to work and mold resources into goods and services that promote human flourishing. The government, too, possesses the ability to direct a society where property functions for the good of everyone. If you are in business, you need to read this book.

“Imagine a world without free knowledge…” begins Wikipedia’s protest page, “Right now, the U.S. Congress is considering legislation that could fatally damage the free and open Internet” [BBC News, NY Times, Jan. 19, 2012]. This must be some powerful bad medicine, if it threatens to kill the patient. At least, that seems to be the position taken by Wikipedia’s publicists.

Whether or not these pieces of legislation have been well-crafted is certainly open to debate. I’m not concerned here with the legalities, but rather with the moral stance of the corporate protesters. The invective being thrown at these bills calls into question the integrity of the internet companies’ response. What moral weight do their tweets and texts bear? Consider the source: these proclamations and accusations are voiced by the companies who make their living by building and driving traffic in cyberspace.

The protesters are careful, of course, to avoid any appearance that they are in favor of piracy. They don’t question the motivations or intentions of the legislation aimed at reining in the pirates out there far from our shores (China, Russia and the Middle East are frequently listed as pirate-friendly safe harbors).

Rather than offer constructive suggestions however for how to combat piracy, the corporate protests seemed designed to upset and rally people to the cry that this legislation may be bad for business. For their business, that is. Let’s be clear about that, because it was designed specifically to protect the business of other companies who produce the valuable content being peddled in cyberspace.  One protester in San Francisco, representing an online travel company, put it plainly, “this legislation is bad, it would directly impact our company.” [NY Times, Jan. 19, 2012]

It’s the self-serving tone of such protests that raises the question of integrity. There is precious little moral content in the argument that what’s bad for my business is bad, regardless of how it affects others.

Of course the protesters do not mean to suggest that their moral footing is grounded in self-interest; rather, they imply that their moral authority stems from their concern for freedom as a general principle, as well as concern for the individual information consumers in particular. Of course, this argument is also suspect because their altruism seems to flow from concern for their own customers—the consumers of information services.

These moral arguments are weak. In the first instance, the argument for freedom could just as well be claimed by their opponents who argue for the freedom to earn a living and not to have their products stolen by pirates. Freedom of information is not an issue being questioned by the legislation; piracy is. In the second instance, concern for their own customers once again begs the question of whether the protests are self-serving.

A sincere moral argument rooted in altruism would take a different course. It would demonstrate motive and desire to help solve the piracy problem. It would demonstrate resolve and commitment on the part of the Board of Directors and management to help address a problem that is significantly undermining other significant businesses in our economy.

To protect one’s self-interest with defensive arguments lacks integrity to any source of morality higher than hunger or survival. True integrity recognizes a higher calling, namely, to act out of sincere concern for others’ welfare. That is why biblical notions of morality, based in kenotic self-emptying of self-importance, are just as critical to corporate moral authority as they are to personal integrity.

Perhaps the protesters had valid reason to question the structure of these bills. In that case they might have addressed those issues head-on in a manner which carried much greater moral strength. They might have shown integrity by demonstrating their sincere concern to solve the problem. They might have offered ways to strengthen their current anti-piracy policies. And yes, because “business is business”, this would most likely cost them something in the short run. But in the long run they would have demonstrated a concern for our entire economic system and not just for their own slice of it. They would also be living into the higher calling of integrity which flows from an understanding of the biblical call to be witnesses to a greater reality than pecuniary self-interest.

---

Bruce Baker is an Assistant Professor of Business Ethics at Seattle Pacific University.

What Happened

In the early 1990s, the world was just emerging from a modest recession and a long run of “good times” began.  The Internet was new and it was the beginning of the “dot com” boom.  Many nations of the world moved forward economically.  In 1995, the U.S. revised its Community Reinvestment Act, adding fuel to policies that encourage home ownership for all (a practice deeply rooted in government leadership from both political parties).  Demand for housing increased and prices started to rise.  The half-century trend of one percent annual home price escalation jumped to seven percent in 1998, a pace that continued until 2006.  But the Community Reinvestment Act was only one trigger for this period of growth.

In 1999, the Glass-Steagall Act was repealed.  Enacted after the Great Depression, it had separated the roles of commercial banks and investment banks; its repeal now allowed any bank to get into the investment business.  Some argue this had a minor role in the investment crisis, as provisions of the Act had been eroded steadily since the 1980s; but the timing of this repeal makes it appear as at least one factor in the change of banking behavior.

The collapse of the tech bubble in 2000 was another key event.  Leading up to that time, any company with “dot com” in its name could attract huge investment.  But investors finally began to realize that even “dot com” did not change the rules of business.  Companies still needed a viable product and still had to make money to survive, and many companies were exposed as shams.  The tech market (NASDAQ) dropped from 5,000 in early 2000 to almost 1,000 a couple of years later in what was often referred to as the “dot bomb.”

This seemingly unrelated event connected to the housing boom in an interesting way.  Investors seeking better growth in their portfolios responded to the “innovation of the market” in the form of investment products built on home mortgages.  With the run up of housing prices, investors could move their money to a new kind of investment vehicle based on home values, including the collateralized debt obligation (CDO).

The first CDOs were created in 1987.  A number of mortgages were put together in a package and sliced up so each CDO contained a small piece of many mortgages, reducing the risk of owning one particular mortgage.  The value of the investment is represented by the risk of default on the mortgages and the potential increase in value of the homes represented in the package.  Not much happened with this market for several years until a spike began in 2000 and continued into 2007.  In the U.S., a partial factor may have been the repeal of Glass-Steagall.  More broadly, these mortgage derivatives looked like the new best opportunity for investment growth after the collapse of the NASDAQ.  These packages were purchased by banks all over the world, by pension funds, and other financial institutions.  The widespread purchase of these investment vehicles by banks and pension funds is what connected home prices in America to financial holdings in Zurich.

As this market grew, there were not enough mortgages being sold to satisfy the demand for the investment vehicles, and this resulted in two things. A new kind of mortgage broker emerged, loaning money for mortgages without keeping the loan on its books. After making the loan, it sold the mortgage to a broker who bundled it with other loans to create packages of securitized mortgages. The payment for these mortgages could then be loaned to the next group. Not to be outdone, traditional banks started selling their loans as well. Those selling mortgages were paid on commission, and were not really “bankers.” Instead of serving the public as a trustworthy financial intermediary, their motivation was to make money by increasing the number of mortgages sold.

Other factors fueled the growth of the sale of mortgages. Interest rates were at an all time low during this period, making a mortgage more attractive. Low interest rates also closed out traditional savings options as a way to grow retirement funds.

To meet the investment demand for more mortgages, new types of loans were created to attract more “home buyers” who may not have qualified for a loan under the old arrangements. ARMs (adjustable rate mortgages) became one of these instruments, allowing very low interest rates at the beginning (sometimes as low as 3%) with the stipulation they would rise to something higher (say 10%) in five years. They even came with no initial payment, since the lender knew this would attract more buyers and they would minimize their risk by selling the loan anyway. Since the buyers believed they could re-sell at a profit before that time, they thought they were limiting their risk as well. And if the buyer actually lived in the home, then they thought they could simply refinance before the higher rate kicked in. More and more people entered the home market because of these favorable terms. But still there was a demand for more mortgages.

Fewer and fewer borrower qualifications were checked, since the market became obsessed with the growth of sales. Some loans required interest-only payments, with nothing paid toward principal over the first few years. Some reduced even this, resulting in growth of the principal. Loans were made with no paperwork, merely the borrowers’ verbal assurance of his or her earnings. Not surprisingly, these became known as “liars loans,” and “subprime” loans were made to buyers who would otherwise not have been considered qualified.

Assessors, supported by lending institutions, were encouraged to raise the valuation of homes, allowing larger and larger mortgages. Contractors were motivated to build more and more homes since the demand seemed insatiable. Rating agencies placed AAA ratings on CDOs made up of pieces of bad mortgages.

Abuses also abounded on the buyer side. Speculators in New York purchased condos in Florida sight unseen, multiples at one time, with the intent of “flipping” them to make money. Poor people bought homes they could not afford (one migrant worker earning $20,000 per year bought a home valued at $1.8 million, according to Michael Lewis in The Big Short).

Not surprisingly, this practice was unsustainable. As things began to crash, innocent and many not-so-innocent people got hurt. Home prices went into sharp decline in 2007, and the packages sold around the world started to fail. Highly-leveraged banks and pension funds that owned them began to crumble. Owners who were stuck with multiple houses and condos were defaulting. Adjustable rate mortgages moved up and people could neither refinance nor sell their homes. When the market stopped buying the mortgage packages, many lenders were stuck with unreasonable and uncollectable mortgages on their books. The resulting lack of available capital and the losses for banks forced businesses to lay off workers or close altogether. Those who had bet that prices would always rise were caught and punished by the market. Home builders, mortgage brokers, and banks went out of business. Washington Mutual became the largest bank failure in U.S. history, having built its strategy on vastly increasing its position in subprime loans; the Federal Depositors Insurance Corporation filed suit (and lost) against its top officers for reckless leadership. Other long-standing investment firms like Merrill Lynch and Lehman Brothers were bought for pennies on the dollar with the government’s help. Meanwhile, unemployment on Main Street peaked at 10.2% in the U.S. with similar numbers in many parts of the world.

Assessing the risk of a total financial collapse, many world governments insured bank deposits, leading to deep government debt. The U.S. government put money into automakers, banks, and other institutions to keep them viable, fearing a much broader collapse.

Innocent parties were also hurt. Banks that never entered the subprime business and held the mortgages they made found that many people owning homes could no longer make payments when owners lost their jobs. Unable to sell the homes which had dropped in value below the amount of the loan, owners walked away and left the bank holding a mortgage for more than the asset was worth. Those who were duped into buying something more expensive than they could afford lost whatever they had put into the mortgage and were forced out of their homes.

Some not-so-innocent parties prospered in this mess. Investment banks which had bought and sold toxic packages of bad mortgages sometimes bet against them as well, hedging their own liability while simultaneously promoting the value of the assets. And in the wake of the crisis, new exploiters emerged. Agents purporting to help those in need sometimes merely took money with the promise of helping cash-strapped households get out of debt, but did nothing. As in other crises, some stepped in to help, and some stepped in to exploit.

In the aftermath of these events, governments acting to help were punished at the polls. The government of Ireland was toppled early in 2011; Democrats lost their majority in the U.S. Congress; many states in the U.S. are deeply in debt; Greece, Portugal, and other countries need varying degrees of rescue from financial collapse. The crisis has gone deep and wide.

Part 2 - "Who is to blame?"

Al Erisman is Executive in Residence at Seattle Pacific University.

After the 1999 season, when we lost to Connecticut in the national championship game, several of our top players left Duke earlier than expected. Shane Battier, who had played a supporting role on that team, was going to have to become our star.

Shane and I agreed that he would need to emerge as the team leader, but there was one problem: Shane had never imagined himself as a star.

After the players had gone home for the summer, I gave Shane a call.

“Shane,” I said, “this morning, did you look in the mirror and imagine that you were looking at next year’s conference player of the year?”

He chuckled, “Coach, I…”

I hung up.

The next day I called again. “Shane, it’s Coach. When you were on your way to work this morning, did you imagine scoring 30 points in a game this season?”

He laughed cautiously and began to respond before I hung up again.

Seconds later, my phone rang. “Coach,” Shane said, “Don’t hang up on me.”

“I won’t hang up on you if you won’t hang up on you,” I told him.

Shane needed to imagine these sorts of things in order to become the player that he could be. Before he graduated, Shane earned National Player of the Year honors while leading our team to the 2001 national championship. He had all the tools necessary to become a great player, but he fully realized his potential only when he allowed himself to imagine great things.

Few of us will coach college athletes in national championship games. But those of us in business are uniquely positioned to open doors to greatness and to push for change. We can call those entrusted to our leadership to uphold higher standards. We can do the same for our profession, as many are questioning the role of business in society following a tumultuous time of economic crisis and moral failure. The need for renewal and a clear and compelling vision for the marketplace may be greater now than ever before.

As you pause and consider your own leadership, what do you believe those in your organization need to hear in order to rise to their potential? What parts of your business can you wholeheartedly affirm, and how can that best be done? What segments need radical transformation? How do you inspire greatness and character in others, inviting friends and co-workers to steer clear of misdirected ambitions that lead to mediocrity - or worse - to being shamed and disheartened?

The CIB (and partnering organizations in this broader movement) are driven by a desire to help business lay hold of its full potential as a force for good in the world. We believe that business’ rightful place is as a creative partner, an ethical steward, and a life-giving institution. We recognize business’ strategic opportunity to urge individuals to become all that God intends them to be, and to work and lead with integrity in shaping a more just and sustainable world.

As Coach K observes, “meaning is understood by seeing a word in action.” The need is urgent for business to put good ideas and intentions into practice. Leaders who model high character and exemplary practice ignite our imaginations, guide our ambitions, and spur us to re-envision our work. It is our high privilege and our great responsibility to help recreate business so that it inspires, earns, and keeps people’s confidence and trust. Will you imagine that high calling in the year to come?

---

John Terrill is Director of the Center for Integrity in Business at Seattle Pacific University.

Our Canadian entrepreneur said that although some of these businesses are at the top of their game, many of them choose not to grow bigger. “Why should they?” he said, “They are great at what they do, they don’t answer to outside investors and they have happy employees. As long as there is a market for their goods and services, why should they get bigger?” As an example, he discussed a custom bike manufacturer that has consistently refused to go beyond its current staffing of around 500 employees. “The larger they get, the more they risk damaging the quality of what they do. As a small business, they can continue to make high-end, personalized bikes.”

I’ve been thinking about this example ever since. It seems that many today assume that growth is a given — that a growing bottom line, a larger staff or an ever-increasing GDP is the natural state of things and a sign of economic health. When we follow the business news or check stock prices on our phone, we often get excited about news of an acquisition or merger or giddy over better than expected earnings, assuming that these reports demonstrate a healthy economy or business success.

Growth in Nature: What It Says about the Natural Limits of Business

Although small, Meerkats function well in their environment

But is this true? In the natural world, most plants and animals grow to a certain size and then cease getting larger. They may get stronger, smarter or wiser, but their physical size has a limit.  If they continue to get bigger beyond their natural parameters, it is seen as a sign of disease or imbalance (e.g. an invasive plant species or a cancer). Are businesses fundamentally different?

There was a time when small businesses were the norm and the natural limits placed on human endeavor by geography, communications, weather and other factors would not allow most economic pursuits to grow to massive scale. However, the Industrial Revolution changed all of that and 21^st-century globalization has pushed the envelope even further.

The Impending Swing of the Pendulum

Perhaps, after 150 years of pushing size, growth and economies of scale, the pendulum is beginning to swing back the other way. In April 2010, the PBS News Hour ran a report called Manufacturer Goes Small in Era of Too Big to Fail, in which they profiled small and mid-sized businesses that have intentionally remained small in order to stay nimble and adapt to a changing business environment. The implicit suggestion was that such businesses were an antidote to the misguided or toxic idea of a business “too big to fail.”

Earlier than that, in 2005, Bo Burlingham published the seminal book Small Giants, highlighting entrepreneurs who kept their business modest in size for a variety of reasons — to retain creative control, to focus on quality (à la the aforementioned bike manufacturer) or to create great workplaces. The book was subtitled Companies That Choose to Be Great Instead of Big.

Roll back further, to 1973, and you’ll see similar ideas promoted in the book Small is Beautiful by British economist E.F. Schumacher. In one of his essays in this book, Schumacher describes a world in which large businesses are divided into many small units, so as to ensure quality control, appropriate flexibility to changing projects and allow adaptation to external economic pressures. Rather than assuming they needed to grow bigger, Schumacher recommended that businesses form partnerships and create articulated business units rather than expanding for growth’s sake. Such a strategy would allow each business unit to stay lean and focus on its core competencies.

Growth as a Measuring Tool

Despite these examples, this counter-movement toward small business often seems overlooked in the larger narrative of business today. Why? Perhaps it is because we want or need a way to measure success and failure. Growth — of the bottom line, of the number of retail locations, of the size of the staff or even of market capitalization — is an easy thing to measure, see, and understand. It is harder to measure intangibles such as quality, customer service, employee satisfaction or company culture.

But if the old business axiom that “you get what you measure for” is true, is it any wonder that our economy has suffered a series of boom and bust cycles, followed by the bail-out of companies dubbed “too big to fail?” Growth has been artificially pumped up as investors and managers chased the Holy Grail of bigger is better. But is it? Are bigger businesses truly more stable, more creative, and more prosperous? Do they add more value to the economy than a small business? How do we measure success? Will we not need new metrics if we wish to develop an economy that creates businesses that contribute to true human flourishing — at any size?

Size is Relative

Let me pause for a moment to say that none of this is meant to suggest that there is no room for large businesses or corporate entities. There are some things that larger businesses can do better than small businesses. Projects of high complexity and endeavors that can benefit from economies of scale are good candidates to be larger in size. As one of my colleagues, a former Boeing employee, is quick to point out, “No one wants a Mom and Pop shop building their next airplane.” I suspect he is right. In the meanwhile, small businesses are generally better at customized products and “high touch” customer service (among other things).

How does one determine the right size for a business? Factors to be weighed might include the product or service the business is delivering, the nature of the market and the organizational culture the entrepreneur is trying to establish. Every business owner should at least consider how big they need to be to do what they do effectively, efficiently and with excellence. The intersection that best maximizes these qualities may help determine the “right size” for the business.[1] Growth beyond the minimum size should be given careful consideration.

Every business probably has a right size — a size at which it will retain maximum flexibility and adaptive attributes while at the same time delivering the highest quality product or service.  Some will be smaller and some will be larger. But how does a CEO know when he or she has reached that point? Let’s just hope that when they get there will they brave enough to say, “We’re big enough. Now let’s get better.

---

Mark Oppenlander is married to Beth, who is a 2003 MBA from SPU's School of Business and Economics.  Mark is the Director for the Center for Applied Learning at Seattle Pacific University.

Do you remember the last disaster movie you viewed? As buildings tumbled, did society turn into chaos when people looked to self-preservation above societal good? In this typical movie, were stores looted, innocents trampled or shot, and did the government violently seek to regain control?

Do you believe this representation to be the repercussions of lawlessness? Or, is the government so crucial to human functioning that when catastrophe strikes, and government loses its grip on authority, all hell breaks loose?

A Paradise Built in Hell

Photo by NASA

I recently read a book by Rebecca Solnit titled, A Paradise Built in Hell: The Extraordinary Communities that Arise in Disaster. For her main thesis, Solnit argues that the disaster clichés flashing on the silver screen have no bearing on reality. Researching the stories of a wide variety of people over the disasters of the last century, Solnit concludes that the overall mentality of a society in response to catastrophe is to work together collectively for survival.

Of course, utopia does not spring from the ashes of a disaster; people can and do act selfishly. However, Solnit also notes that the response of those in authority during disaster is typically an overreaction. For example, looting is an obvious occurrence in the wake of a calamity. However, stealing possessions for profit and taking goods for basic survival carry completely different ramifications. Too often, leaders use excessive force in keeping looters at bay when a majority of the “looters” just need basic, life sustaining supplies.

Whether by sharing resources, administering medical treatment, or sacrificing safety for the sake of a stranger, most caught in a disaster work together.

What about Economic Disasters?

Given this counterintuitive observation, could a communal ethic help our approach to economic catastrophe? With the United States’ recent credit downgrade, and depressing economic outlook, it might be a good time to apply some of Solnit’s observations to the process of economic rebuilding.

Could our national government put politics aside long enough to respond to our economic challenges in ways that invite a spirit of cooperation amidst the chaos? Unfortunately, in all the partisan fighting, one refrain from Washington D.C. seems to be that Democrats’ and Republicans’ first goal is not to solve an issue for the benefit of society but to ensure the appearance of conservative or liberal values on a bill.

Moreover, representatives often work not for the good of the whole but for their specific regions and corporate donors. Too often, proposed bills resemble the needs of a select few instead of the many.

Photo by Anna Destrac

With Derek Thompson of The Atlantic suggesting that the current events in America and Europe point toward a no-end-in-sight recession, it might be time to assert that we face the kind of long-term economic uncertainty that warrants a calamity-type response. In the aftermath of 9/11, the United States encountered a period of unprecedented unity — an excellent example of community arising in disaster. Could we harness the same sense of shared mission today to solve our financial and economic woes? Is it possible for a nation to adopt the sense of urgency that comes from a catastrophe mindset without invoking total chaos?

Luckily, at the very worst, Rebecca Solnit reminds us that as a collective, we are more than capable of surviving, and eventually flourishing in the wake of a disaster, even one in the self-imposed, economic form.

---

Donovan Richards is the research assistant for the Center for Integrity in Business.

Photo by Jason Tavares

With a new crop of fresh graduates submitting resumes on the open market, Michael Margolis at the 99% suggests in a recent article entitled, “The Resume Is Dead, The Bio is King” that job applicants should reconsider submitting a weighty resume in an effort to impress. Instead, a well-crafted narrative will do a better job of piquing the interest of potential business associates.

On the surface, the reason for the shift in viewpoint seems simple: thumbing through a large stack of resumes can be a daunting and mind-numbing task for potential employers. A captivating bio can break the monotony of an endless sea of self-reported accomplishments, former employers, and schools attended.

Richard Nelson Bolles in What Color is Your Parachute writes, “an employer is going through a whole stack of resumes, and on average he or she is giving each resume about eight seconds of their time… Then that resume goes either into a pile we might call ‘Forgeddit,’ or a pile we might call ‘Bears further investigation’” (73).

The bio, as Margolis suggests, has a greater chance of ending up in the second pile because it helps the employer distinguish who one really is beyond a tedious list of deeds done.

But the bio, apart from offering a release from the monotony of reviewing resumes, has a deeper influence: the human psyche seems predisposed to story. From an early age, we are drawn to the hero or heroine, enraptured by the ensuing conflict or struggle that inevitably comes, and renewed by a character’s victory or hope of redemption. As children, stories ignite our imagination when protagonists battle dragons and slyly outwit venomous villains. In The Uses of Enchantment, Bruno Bettelheim writes, “Like all great art, fairy tales both delight and instruct; their special genius is that they do so in terms which speak directly to children” (53). And we might add, adults, too. We never lose our appetite for a good story.

And herein lies our point: story transforms who we are as human beings. We’re shaped by it, and we shape it. When we tell our story (or attend to the story of another), we wake up and experience more of life. Story, like few other experiences, stirs passions and remembrances of days foregone, and reminds us that pain from failure and disillusionment from broken promises can bring growth. Through story we become more human.

Photo by Stephen Poff

In A Million Miles in a Thousand Years, Donald Miller asserts, “I’ve wondered, though, if one of the reasons we fail to acknowledge the brilliance of life is because we don’t want the responsibility inherent in the acknowledgement. We don’t want to be characters in a story because characters have to move and breathe and face conflict with courage. And if life isn’t remarkable, then we don’t have to do any of that; we can be unwilling victims rather than grateful participants” (59).

Yes, in today’s limping economy a bio might increase your prospects of landing a job, which is good news for the job seekers out there. But maybe you should write your bio with a desire to become more integrated, as well as connected to the world around you. Drafting a resume is safe; penning your story and sharing it with others requires risk and fortitude. In a slowly recovering economy, let’s take time to look inward, outward, and upward. It is these postures of learning and our capacity to intuit self and the larger world that makes one truly desirable in organizational life.

---

John Terrill is the director of the Center for Integrity in Business.

Donovan Richards is the research assistant for the Center for Integrity in Business.