The Lesson of the Gold Traders

Via a discussion on LinkedIn yesterday, I discovered an article, written by management consultant Stephen Jones of Clear Vision Consulting, for the Arab Times, in which he draws an analogy to a ship captain encountering a very bad storm at sea.

Jones writes:

"A local Kuwait businessman related a story the other day about when Kuwaiti traders used to send their sons with the family money in the form of gold over to India. During the voyage, if there was a storm, they would have to throw the cargo overboard, to prevent the boat from sinking and everyone dying.

"The issue, raised by my friend, was that it never occurred to them to throw the sailors out instead, and he went on to say that in today’s market that’s exactly what needs to happen...downsize, cut staff — the most obvious cost!

"In business terms, throwing out the sailors from the ship, instead of the cargo is the same as downsizing, reducing the most obvious cost quickly — the staffing budget... it makes sense right??? The assumption is that as business is bad we are not making enough money, so we need fewer people! This is wrong, very wrong, and in fact in business, downsizing as a knee jerk reaction is probably the worst thing you can do, more so than just inaction
!"

What's wrong with business leaders today that they think this way? That they throw the sailors overboard in the storm?

I'm wondering if the root of this insane way of thinking, that seems to predominate in C-suites, is the formative education that leaders receive?

I'm reminded of a conversation I had with Charles Handy where he related a story about meeting with a group of young company presidents. He asked them why they were in business. They answered: to make money, to increase share price, to return value to shareholders, etc. The usual stuff.

Handy and his wife Elizabeth challenged the group to think more deeply about the meaning of business, the role of business in society.

Handy proposed that the purpose of a business is NOT to make a profit, but to produce profit so that people can have better lives. People in the business, as well as customers of the business. It's about business having internal and external integrity.

It's about business leaders having a social conscience.

Where is this taught to our leaders?

Posted by Terrence Seamon, February 24, 2009

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