Huge Profits… At Any Cost?


Recently, I was having an ongoing online conversation over Skype with my good friend in Australia, Laing Stokes, about the potential role of business in the shift to new paradigm consciousness.

… And this got me thinking about the old way of doing business, the old paradigm and it’s particular approach and… above all… the limitations and frustrations about the old way of doing business.

You see, over the course of my life I have worked in several different industries – building, civil engineering, electrical power generation and distribution, mobile tele-communications, geospatial data, and a lot of I.T.

I have seen some examples of great business practice… and some truly horrendous examples of the downright low and dirty… and a lot of muddled and confused thinking inbetween.

And if in the Western world, business is essentially about how we organise our collective resources, get our needs met, and allow ourselves to find a degree of fulfillment in our lives (plus feed and clothe ourselves and our families, and put a roof over our head)… then we ain’t going to make it into the 22nd Century using the current business model on offer.

It’s too aggressive, it’s too confrontational, it’s too wasteful, and it’s too harmful… to ourselves and to the planet.

We are writing bigger and bigger cheques which, very soon, our Earth bank is not going to be able to cash… and seeing we only have one planet… we don’t have any other alternatives… it’s either change or lemmings off the cliff.

Not that I am a socialist, or a raving communist, and I have a great respect for the many good people I have met during my business career… but in my opinion there are certain elements of the Old Paradigm Business model that are no longer workable, or sustainable, in the environment and conditions which are rapidly evolving all around us… and things either have to change… or there is going to be an almighty crash of global proportions.

Or so think I.

Now… after this evolving conversation with Laing… I thought it would be a good idea to start sharing some of my thoughts and observations about the Dark Side of Old Paradigm Business.

And the reason… because there are still so many people trapped in companies and organisations locked into the Old Paradigm way, methods, and approach…

… methods which seek to dis-empower people, and exploit them… and are destructive for our culture, society, and planet (the only one we have)…

… That the more this information can be disseminated, and thought upon and considered, then the more people can perhaps wake up and realise what is happening, and so the more they can protect themselves, and instead figure out whether they want to play a different game, or just go and do something different with their lives.

I reckon the more people can figure out what they truly want out of life, the better off they will be… and the better off we will all be in the medium to long term.

So, I decided to write a series of posts on what I perceive to be the areas of wrongness… and I have decided to start with…


Cyclical Growth versus the Boom / Bust Cycle:

In Nature, there are these things called Seasons.

Winter follows Autumn, Autumn follows Summer, Summer follows Spring… and Spring follows Winter.

It’s been going on for a billion of years, and has been very successful.

And this pattern is, hopefully, repeated wherever you go on the planet… and it is cycle of expansion and then contraction… flowering, fading, and then rebirth.

Which is the thing which it is most important to understand… and which our ancient ancestors understood.

No matter how much we dislike Winter, how cold and bleak it may feel… it is essential to the process.

It is a time when the Earth energies sink down into the ground, re-charge themselves, and then re-appear in Spring. If there were no Winter, or Winter is cut short for any reason, then you get a weak Spring, and a poor harvest in late Summer / Autumn.

Without the period of Winter, there would be no period of re-charge, and so no new energies to kick-start the annual process once again.

Every season within the annual cycle is equally important, and it is foolishness to think otherwise.

Now, let’s track this ancient wisdom against the current business model… the Old Paradigm approach to business.

Do we see a cycle of expansion and contraction… expansion and re-charge?

No… we absolutely do not.

What we see instead is the demand for… 20% … 25% … 30% growth each year, every year, for the rest of eternity!

Which is totally impossible… and so in the world economy we have something called the Boom Bust Cycle, where the economy continues to expand relentlessly until it suddenly crashes, and is forced to lie fallow during a period of recession… and governments all crave a return to the good times, because their popularity is largely based upon telling people they have never had it so good.

And with individual businesses, the medium, large and multi-national ones, they are driven forwards, relentlessly, by their pursuit of profit… until some event occurs which shows up the whole enterprise to be unsustainable, or having no real foundations, and the whole thing collapses into a heap, in need of re-structuring, or bankrupt and beyond salvaging.

And usually, this event of doom can be tracked back to an act of arrogance, or hubris… where the senior management didn’t listen to wise counsel, thought they could buck the trend, allowed their egos to run away from them.

You see, what really distorts things is the thinking of the men at the top (sometimes women, but most often men).

As the Ancient Greeks used to say, those the Gods want to punish, they first make mad.

Although in our modern age, that could be re-written as… those companies who the Gods want to punish, they first get a bunch to total ego maniacs elected to the Board of Directors (in fact, all it takes is one or two… and the Titanic has suddenly changed course, and is heading straight for the iceburg, because the Captain has decided there is no money in shipping, and so they are now in the ice capture and refining business).

OK, I am going to be fair here… and usually a Middle / Senior Manager is under pressure to deliver from their Director, who is under pressure from their Parent / Holding company, who is under pressure from their Shareholders, who are really large Pension companies, who are under pressure to perform so they can deliver a good return to their Customers… etc… etc… a whole, system where the Groups above are pilling down the pressure on the people below… and the people down the bottom are utterly crushed.

And I mean this quite literally. I have seen this time and time again… at the start of the financial year, the Managing Director gets up, tells the workforce that the company needs to achieve 30% growth that year, but not to worry, because we are all in this together… But then, 8 months later, when they have 4 months to go before the end of the financial year, when sales are low to non-existent, and things are looking dire, the Managing Director and the Financial Director get together and decide to boost the accounts by… getting rid of 10% of the workforce (redundancy in UK, severance in US)… thus making up the shortfall in the growth (because if they do it 4 months before the end of the financial year, that gives them 4 months to smooth everything over).

Hey, everyone is a winner… Well, no, the people who have been let go aren’t too happy about it… but the Managing Director and Financial Director have hit their profit targets, and are due a nice big bonus, so can afford that loft conversion, or the family holiday in Tahiti, or to send Freddie off for his year studying in the Sorbonne.

OK, am I being too cynical here?

No, I have seen this scenario played out too many times… this is what happens.

Because the pressure is always on for constant expansion… squeezing until the pips cry out in pain, and then throwing a few on the fire, the ones who are surplus to requirements… all so that the people are the top can reap the rewards (and the promised benefits never seem to trickle down to the people at the bottom, who did all the hard work, and were at risk of losing their jobs).

OK, putting morality to one side, and just looking at it from the point of view of business structure and dynamics… you can probably do this once or twice and get away with it. But the constant pressure to continually make 20% each year, year after year after year, with no let-up, especially when your market isn’t as healthy as you would like, puts incredible strain on a business… and is usually the thing which kills them off in the end (although we could argue that this is healthy… the winning factor in capitalism… competitive natural selection etc).

But here is the interesting thing… here is the words that you never hear uttered in the boardrooms of the world… a period of consolidation.

The commercial equivalent of Winter… a period where things are allowed to go fallow for a short period, and the organisation can re-charge before the next period of expansion.

It doesn’t happen. Because the pressure for constant expansion from above is too great.

And what Director is going to stick their neck out and say… I think we need to go slow for a while.

In the Old Paradigm Business set-up, these things just don’t get said, they would be considered a sign of weakness.

And yet, those phrases which are most beloved by Directors and Senior Managers… thinking outside the boxblue sky thinking… they are most likely to occur during Autumn / Winter, when someone has a chance to relax and stand-back… then during the hectic times of Spring and Summer.

And I can guarantee you, they seldom occur during times of stress and anxiety… during the We are all in this together periods.

Let me explain with an example.

I used to work in a company which had front-office products, and back-office systems (production, customer management systems, accounts, stuff like that).

Now, the company was based on a product set that had been created about 20 years ago, fit the market perfectly, and had continually generated the profits since, but now dominated that particular market, and so this left very little room for growth and new development within that product set… and every attempt to come up with new products, which were just as successful, had largely failed… even though the expectation from above was that this company was capable of generating 20% growth every year, like it had done for the past 20 years.

So the pressure was on, each year, to deliver a minimum 20% growth in profits… and for the last 2 years, there was an annual laying off of people to close the gap, so the Directors could achieve their targets.

Now… one year, using blue sky thinking perhaps, a senior manager pointed out that… those back-office systems are so old, and so inefficient, that if we spent some time and resources up-dating / up-grading them, the increase in productivity, the savings through greater efficiency, would help to boost the companies financial health… in fact, the company would probably save more money that way then all the money it might make through releasing that years weak new products.

So she pitched the idea to anyone who would listen… and was totally ignored.


Well, maybe it was because she was a woman… maybe because all the Directors and salesmen and account managers had their annual bonuses tied into developing / selling the new products… making the thought of sorting out back-office systems appear very unattractive. Maybe they just didn’t understand what she was talking about, because they were so focused on delivering to the External Customer, they had no real understanding about how their business worked internally.

Who knows?

Anyway, she was ignored… the company tried to hit the 20% target with the then new products… failed dismally… and so another wave of people lost their jobs so that the magic numbers (which might have been plucked out of the air for all we knew) could be achieved.

Oh… and notice, in the above stories I have never once touched upon the whole outsourcing phenomenon… where Directors suddenly realise that they can make massive savings by transferring jobs to Mexico, Eastern Europe, India, or China… or whatever country has the lowest cost base at the time… and yes, companies will close down a factory in one country and transfer to another if they think they can lower their costs. I have seen jobs moved from the UK to the Czech Republic for 2 years… and then transferred out to India… all because the costs were lower… and if the Indians start to cost too much, those same jobs might then be transferred on elsewhere… out to Indonesia say.

The whole outsourcing debate is a whole different post entirely… But what I will say now, based on my own experience… and I have worked with many good people in Eastern Europe and India, where my previous companies have outsourced, and it can work. But from the perspective of Directors / Senior Managers, they assume that once outsourced they will have the same but cheaper, but in reality they have something different but cheaper… and the question is whether their business can handle the impact of these cultural / organisational differences… and that is the real and important question (and one which they seldom stop to consider).

Where were we?

Oh… yes… Cyclical Growth versus Constant Expansion.

To round off this discussion.

I am not arguing that it is wrong to earn money (personally, I love having money… it allows me to do cool stuff)… and I am not arguing that business expansion is wrong either.

But what I am strongly suggesting is that the Western, macho, aggressive approach of Constant Business Expansion leads, eventually, to more problems then it solves… and to more pain for more people… especially the little people down the bottom.

Unfortunately, it is the people at the top of these organisations, the ones making the decisions, who need to change their thinking to avoid the pain… but all too often they are totally isolated from the pain, and can walk away from the consequences of their actions, with their bonus cheque safely tucked in their shirt pocket.

Which in terms of Old Paradigm Business thinking, until recently has been totally acceptable.

But if the times are a changing… and people are starting to think and question… and getting themselves empowered…

If we are indeed shifting to a new Paradigm approach… then much of this will no longer be acceptable… and 21st Century business will need to change to remain relevant.

And those businesses which cannot change… or do not want to change… will increasingly find themselves out of step with the rest of society, and so fall out of favor with their Customers.

Which is actually the most important thing to remember.

That over the next 20 years or so, the biggest change won’t be within Business… but it will be that their Customers, and the Customer’s wants, needs, dreams and expectations are going to change radically… and so that will be the real driver for Business change.

Which, for the people struggling down the bottom, under the weight of all the pressure, may be a change long overdue (remember, most Customers are also the average employee… there are more people down the bottom then there are up top).

And now I leave you with an interesting thought.

It has been noticed that as the pace of technical change increases, and will increase even more as the 21st Century continues, the life expectancy of companies is generally decreasing… that they are burning out more quickly.

But is that because the competition is much greater… or because in this new world of ours, it is more important for organisations to know how to grow and flow with the seasons?

Discussing another facet of Old Paradigm Business tomorrow.

(c) Brian Parsons, March 2016 https://www.planet-streamingnet/ https://www.planet-streamingnet/