The Horizontal Imperative
Immanuel Kant’s moral philosophy was summed up in his “categorical imperative:”
Act only according to that maxim whereby you can at the same time will that it should become a universal law.
Much has been written about this—I won’t add to it. Except to say its relevance is growing due to the “horizontal imperative.”
Think what these themes have in common:
Declining transaction costs
They all deal with horizontal, not vertical, relationships. And they’re all increasing.
Business is increasingly conducted via horizontal relationships—peers, partners, professionals/clients. Yet we still think in terms of vertical relationships—command, control, performance measurement, reviews, rewards.
Our vocabulary is little changed, but the denotation of words is shifting. Think what these words meant 15 years ago—vs. now:
Kant’s second formulation of the categorical imperative was:
Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end.
In a corporate world of vertical relationships, people can preach Kant, but those in power don’t have to listen. They are free to—and often did/do—treat others as means.
In a horizontal world, even dotted-line authority is rare, much less straight line. In horizontal relationships, people can and do insist on being treated as ends.
In a horizontal world, power comes from influence, not authority. Paradoxically, the greatest influence comes from a genuine concern for others. Client focus without the microscopic quid pro quo. Reciprocity with more than a 15-minute leash. A predilection for “we” not “me.”
In a horizontal world, Kant’s abstract principle becomes an empirical descriptor of successful behavior.
The newest New Economy does not imply an egalitarian utopia. But it does mean increased connectivity. Butterfly wings have impact. We are in the same (bigger) sandbox, forced to learn to play together nicely. Those who learn to do so benefit.
Collaboration is the new competitive advantage. Trust rules.
It’s the horizontal imperative.
Don’t know Kant but he sounds an awful like Gandhi who said simply, “Be the change you wish to see in the world”. My sense is, and has been for some time now, that as I act like that my feelings of inferiority and superiority wane………a bit! Also, as those feelings diminish I find I have only peers.
My first read of this was that it was about how companies should succeed. So my take was, perhaps a bit different than one might expect.
rom where I sit it seems like the easiest way to pull down good returns is to engage in the carry trade. Borrow in Japan at concessionary rates and lend in the US or elswhere. The money is essentially free. There are some risks, no question – the carry trade was a big part of what caused the 98 crisis and caused Long Term Capital to go under, when the Yen suddenly spiked up against the dollar, causing a whole pile of people to have to cover their positions – now, but on the other hand, for much of the last eight years borrowing from Japan and lending elsewhere (or speculating elsehwere) has been essentially risk free money. (And note that the principles of LTC are all ensconsed in well paying jobs. There really were no consequences for them to blowing it.)
That’s just one form of arbitrage. There’s also labor arbitrage (make the same thing in a sweatshop for 1/20th the wages); and regulatory arbitrage (go where the taxation is cheap and the regulation nonexistant).
This stuff amounts to "free money". It’s effectively risk free (or it appears to be, until there’s a discontinuity – either political, from an unexpected event, or from the laws of economic gravity, depending on the specific type) and it’s very top down driven. You don’t need to get along with your customer, or your peers, or anyone except whoever is lending you/investing in your operating capital.
And as such, while I agree that there’s a great competitive advantage in the horizontal imperative, what I find is that while there are the Googles and the Apples, and the small startups, and so on, so much effort today is being used to make money from what is nothing more than arbitrage. We aren’t seeing the sort of explosion of new goods and technologies that one might have hoped for, and part of the reason is because there’s no reason to take such risks – no reason to do business, when you can get as good or better returns by shuffling bits around.
And that’s before we even get into the question of the private capital explosion (which, I would note, is caused partially by years and years of using the carry trade to create double digit, risk free, gains for private capital companies).
http://www.rgemonitor.com/blog/setser/175928 (be sure to read the comments.)