Natural Corporate Management

From the Big Bang to Wall Street

William C. Frederick

• Publisher: Routledge
• Year: 2017
• Topic: Business
• eBook ISBN:
  9781351277549
• Subtopic: Business Ethics
• Index: Business

This groundbreaking new book by business scholar William C. Frederick presents an innovative, exciting – even revolutionary – view of corporate management and the challenges it confronts in today's world. The author proposes a management paradigm shift transforming the way corporations do business. Management scholarship and research may well be rechanneled from current orientations to new models, concepts, and theories of what it takes to manage corporations in a planetary world confronting climate change, energy crises, and securing the well-being of all global citizens.

Natural Corporate Management (NCM) is an awareness and an acceptance by the managers of today's business corporations of the close functional linkage between natural forces and human economic choices. NCM is not a set of techniques or methods but is a growing consciousness by managers of the presence and influence of nature in all managerial decisions.

The book's central theme is that business and nature are locked into an evolutionary partnership that defines all aspects of corporate management, including decisions, policy, goal-seeking, organizational design, workplace behavior, and productive operations. This partnership of Nature and Nurture yields economic, social, and ecological dividends for corporations, their stakeholders, and the global community.

An "Evolutionary Cascade" depicts the various phases of evolutionary change – physical, organic, genetic, human, neurological, symbolic – beginning with the Big Bang origin of the Universe and continuing to modern times. These evolutionary events collectively influence the operational activities of all business firms.

A "Natural Theory of the Firm" summarizes the NCM approach, as well as the mind-set of corporate managers, and the bio-socio-economic consequences of their decisions. This theoretically-innovative book proposes an agenda of corporate actions to promote long-term sustainability and economic well-being of business, its stakeholders, and planetary citizens everywhere. It will be essential reading for managers and researchers at all levels who wish to engage seriously with the challenges of organic life and its long-term sustainability.

1
The Big E ≈ Energy

Everything in the observable universe can be seen, analyzed, and explained in energy terms.

Vaclav Smil

Energy is the ultimate agent of causation in the universe.

Alexis Mari Pietak

Energy is where it all began—at the Big Bang beginning of our Universe 13.75 billion years ago. Today’s energy is a remnant of that initial, primordial explosive outburst—an energy constant that pervades everything that presently exists. Energy is literally the original substance or essence of the world we know. Energy generates, even creates, the biosphere and ecosystems that shelter and sustain organic life, including our own human lives. Energy takes myriad forms, both living and non-living: menacing destructive storms; earthquakes; volcanic eruptions; subtle genetic organic drivers; neural modules of stunning complexity; unique symbolic patterns; behavioral networks; life-sustaining economic systems; and the diverse ways the organic world copes with the Big Bang’s energy legacy.

One of the most important forms that energy takes in today’s world is the modern business corporation. In all corporations, from top-level corporate executive suites to cramped computer cubicles, energy is the major player, the ultimate driver, the motivator, the organizer, the evaluator, the strategizer, the policy maker, the decision-maker, the goal-setter, the profit-and-loss calculator, the competitive network, the capital sources, the productive output, the polluting wastes, the technological dynamic, the longevity determinant, the workforce driver, the consumer choice, the supply-chain diversity, the regulatory controls, the global expansion of trade, and the current energy crisis and questions of sustainability. All of these aspects of corporate life reflect—literally—the leftover glow of nature’s Big Bang. Business is all about energy and how and what to do with it.

Just how energy became so central to the business corporation is best understood by starting at the Big Bang’s initial moments and tracking its pathway through the ages to the present. In doing so, we draw on a dramatically unique, new concept of evolution developed by physicists—not the more familiar evolution advocated by biologists and fathered by Charles Darwin. Darwin will get his moment later in the story but not yet. For now, a physics perspective on evolution adds a new dimension that tells about the forceful drive to change that is built into nature. In fact, as we shall see, energy evolution is all-encompassing and provides a broad platform from which to understand not only business but many other life features that we take for granted. You will be amazed by what it reveals.

The Big Bang

“Somewhere between 10 and 15 billion years ago, a flash of radiation marked the beginning of the Universe. This radiation filled the cosmos with energy, part of which soon transformed itself into the matter we see today . . . The cosmic radiation . . . grew ever weaker but continued to permeate all of space, a relic of the fierce brilliance of the big bang” (Goldsmith 1997: 126-27).¹

Energy is the most basal, primal component of the Universe. There was nothing but energy in the form of radiation as everything began. The Big Bang concept (widely accepted by scientific experts) captures that central idea—an explosive force of truly unimaginable size and proportions. More remarkably—but not always grasped by most of us—is that the initial energy outburst almost immediately began to assume various forms and shapes—which kick-started an evolutionary process that has never ceased. The most basic ingredients—space itself, matter, time—had their beginning here at this moment. “Initially, it was pure radiant energy, but as it expanded it congealed into a gas cloud of particles [the basic atomic constituents, protons, neutrons, electrons]. And as it continued to expand, tiny ripples developed, which over billions of years condensed into galaxies, stars, and planets” (Parker 1993: 1; Greene 2005: 285).

Take note of that last sentence, and remember that Earth is one of those planets revolving around one of those stars, our Sun, located in one of those galaxies, our Milky Way. This says it as clearly as anything can: Earth is a direct descendent of the initial Big Bang. It is literally one of the many forms taken by the energy radiation flowing out from the Big Bang. Matter, space, time—in all of their varied forms—are a potent energy cocktail spewed out to become in time our familiar Earthly world. We experience a continuity of time, a thread of matter, a spatial link, and a chain of energy stretching, as one author has said, “from eternity to here” (Carroll 2010).

Thermodynamic (energy) evolution

Thermodynamics is the physicist’s way of talking about energy and its movement.² Literally, “thermo” means “heat” which is a form of energy, while “dynamics” simply means the “movement” or “flow” of energy. The thermodynamics (the heat flow) of a cup of Starbucks cappuccino occurs when it begins to cool off. As you sip it and talk to a companion, the hot coffee and its toppings lose heat to the coffee house and warm your mouth and throat as you swallow it. The coffee’s heat moves, is “dynamic.” That’s the basic idea of thermodynamics: heat (as a form of energy) flowing and cooling off as it goes somewhere else. Physicists have a formal name for this kind of energy movement: the Second Law of Thermodynamics, which says that energy (in all forms) has a tendency to do just what your Starbucks cappuccino does—cool off. In this book, the more user-friendly “heat flow” will substitute for the physicists’ technical term “thermodynamics,” and “energy evolution” will replace the more cumbersome-sounding “thermodynamic evolution.” So, how can so simple an idea explain much of anything? Here’s how.

Energy from its very first moments of existence in the Big Bang was unevenly distributed in the emerging Universe, thus causing energy to expand, move, flow, and to evolve ever since. The Big Bang’s initial burst of energy encountered no resistance because there was nothing there to push back against it, so it moved outward. From that moment onward, all subsequent forms of radiation and matter emerging from the Big Bang became different forms of energy. In interacting with one another, these energy components did not possess energy in equal amounts or of equivalent content. Those energy differences—called energy gradients—set up the essential conditions for the subsequent flow or movement of energy from one point to another: the flow was then, and is now, always from higher-energy levels to lower-energy levels. That is the essential meaning of what physicists call the Second Law of Thermodynamics.

Physicists speak of this high-to-low flow as a difference of energy “gradients,” which means simply that some forms and types of energy represent or contain a higher grade or amount of energy than others. So when energy flows from one place to another, the energy gradients that initially separated them are reduced or lessened, moving toward an equal balance. This is the core meaning of energy evolution: the reduction of energy gradients through flows from one place, or in one direction, to another, and from higher-energy levels/amounts toward lower-energy conditions. If in your coffee house conversation, you talked too much and forgot to sip your cappuccino, you would find it had evolved while you weren’t looking or listening—from warm and tasty to cold and unpleasant. Its higher energy flowed out of the (hot) cup into the lower-energy (cooler) coffee house atmosphere. The lesson: Heat flow = energy evolution.

This book will try to convince you that energy evolution is the focal, core, master concept underlying and driving all phases of the Evolutionary Cascade leading to Natural Corporate Management. Energy evolution is an active force appearing over and over again that shapes and molds ecosystems, the appearance and evolution of organic life, genes, Homo sapiens, neural modules, symbolic/cultural systems, organized networks, economies, and business firms. Energy evolution should be understood as a basal natural force that generates, accumulates, multiplies, aggregates, replicates, and maximizes—but also degrades, reorganizes, and drives—all aspects of the natural world, including business.³

How energy evolves

Knowing how—as well as why—energy evolves is the key that unlocks many doors in the modern corporation, revealing the firm’s basic functions, goals, strategies, and decision-making apparatus—and even telling a bit about a company’s chances of having a long (or short) life. The reason is straightforward: the modern corporation is one of nature’s principal promoters, carriers, and facilitators of energy evolution. In carrying out this natural function, the firm has lots of company and help from other parts of the natural world: ecosystems, organic life, the Sun, even volcanoes, earthquakes, floods, hurricanes, and monsoons. All such natural systems, including business firms, help move energy from one place to another, sometimes supporting life in its many forms, other times diminishing its quality and longevity.

These energy-flow facilitators are called “energy transduction mechanisms” in the technical language of physics. Fortunately, their activity is much simpler than the arcane-sounding term itself. They make possible, promote, and speed up energy flows from the Sun to Earth, from the top of an ecosystem’s food chain to the bottom (and vice versa), from coal, oil, and gas to factory-produced goods, from store shelves to consumer purchases, from spring-time green leaves to autumn’s riot of colors, from El Niño’s fluctuations to tropical storms. Wherever nature displays energy gradients, those differing stores of restless and unstoppable energy move toward a lower level or a less energy-dense gradient.

Listen to a principal author of these ideas, Arto Annila, and one of his colleagues, who point out how this process works. “Evolution as an energy transfer process aims at an equilibrium where gradients and differences have vanished. Energy does flow from higher to lower potentials within the system in the quest for a stationary state with its surroundings. In general, all paths are explored to distribute energy flows through them [and these] excursions will sooner or later naturally converge on the most probable, the shortest paths that follow the steepest gradients in energy” (Kaila and Annila 2008: 3,058-67).

All parts of the natural world are potential candidates for carrying out this energy transfer activity. Consider the energy differences between Sun and Earth: solar energy radiates constantly toward Earth, with some of it absorbed and other amounts reflected back into space. Ask yourself, how does Earth capture the Sun’s radiant light? Some sinks into the oceans, some heats the landmass, some of that solar energy interacts with inert chemical compounds thus creating new combinations of basic elements. Tropical rainforests absorb immense amounts of solar radiation. A small portion is captured by manufactured solar energy panels. All such actions convert the Sun’s powerful radiant energy to new Earthly forms that absorb only a tiny fraction of that solar influx. In other words, the disparate gradients are lessened and reduced, moving toward (but not actually achieving) an equal energy balance of Sun and Earth. Energy constantly seeks such an equilibrium. The general rule is this: Energy moves to eliminate all higher-to-lower energy gradients, regardless of where they are, what form they assume, or how long it may take. As Annila says, all such energy-flow “excursions” will “converge on the most probable, the shortest paths that follow the steepest gradients in energy.” In doing so, the energy is indifferent to what or how long it takes to carry out this activity. All systems—inanimate (nonliving) and animate (living)—couple external (solar) energy sources to internal (Earthly) receptors capable of becoming energy-transfer mechanisms.

Energy fitness

Some of those energy packets that speed the flow of energy from higher to lower levels are better at it than others. We’ll see many examples in the following chapters because these superior energy transfer agents appear in all guises and take highly diverse shapes. As the Gulf Stream’s warmer waters flow toward Europe, it is transferring its built-up southern heat to the cooler northern waters (and keeping Europe warmer in the process), but it eventually cools off entirely (like your cup of cappuccino). A fierce tornado organizes atmospheric heat and spins it out destructively by reducing the different heat gradients found between the atmosphere and the Earth’s surface. A tropical rainforest is an extremely efficient system for taking in the Sun’s plentiful energy, converting it into multiform plants while sheltering a diversity of animal life—in contrast to the relative barrenness of a desert’s climate where much of the Sun’s energy influx is bounced back into space.

The same principle—superior efficiency in promoting energy flows—applies to many human activities. Modern technology-driven economies gather, organize, and use energy in larger amounts and in more diverse ways than was true of earlier farm-based economies or even more ancient hunter-gatherer modes of economic life. Some organic species are obviously more successful than others at energy intake and its use, especially when one recalls that over 99 per cent of all Earthly species have disappeared—with many others facing extinction. Human and animal muscle power are no match for water-and wind-driven mills, gasoline-powered plows and reapers, productive machinery, electric grids, and the stupendous reach and power of modern electronic technology.

In other words, energy evolution comes with a built-in fitness criterion—a standard of survival and continuity. It’s not quite like the one Darwin promoted but tends to work toward a similar result. Any device, mechanism, or entity found in nature that can support, push forward, and maximize the flow of energy is more “fit” to survive than others less efficient in doing so. Nature displays a plethora of such devices. There can even be, and often is, a competition between these energy transductors. Stronger, bigger, more powerful animals (of any species) oftentimes can and do dominate weaker, smaller, less aggressive members of the group. And as we shall see in a later chapter, it’s not just physical strength that promotes fitness. Brain power (another form of energy) c...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• Introduction
• 1 The Big E ≈ ENERGY
• 2 The Big L ≈ LIFE
• 3 The Big D ≈ DARWIN
• 4 The Big G ≈ GENE
• 5 The Big H ≈ HOMO
• 6 The Big B ≈ BRAIN
• 7 The Big S ≈ SYMBOL
• 8 The Big O ≈ ORGANIZATION
• 9 The Big M ≈ MARKET
• 10 The Big C ≈ CORPORATION
• Bibliography
• Apologies and confessions
• Acknowledgments
• About the author
• Index of names
• Index of subjects