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Introduction to “Wealth & Wellbeing – Volume 1: Management”

by Imdat on May 16th, 2013

I’ve been working in companies for over 25 years now. In small companies, the size of seven employees as well as in corporations with over 120,000 employees. I’ve run my own businesses and worked as employee; as “simple” employee as well as as senior manager, lastly in my role as Vice President of one of the most multi-national companies in the world. In the latter case, I had teams comprising of over 20 nationalities – all with their different cultures, values, and expectations.

One question popped up time and again: what is the purpose of what I am doing? Or more importantly: am I doing the right thing in the grand scheme of things?

During my work at my last employer, I kept asking myself whether the work, the effort and all the hardship is worth doing or should we look closer at something else? This something else was more connected to the question of whether what we are doing is worth doing at all… The company was in a turmoil; the underlying business was crumbling and the top management had reacted too late, too little, to the changes in the industry. The industry was mobile communications and Apple had, two years before I joined this company, introduced the iPhone and was gaining market share at a tremendous speed.

Since I was in some way skeptical of the way of working in our company and the speed in which things were implemented (or rather not implemented), I kept asking myself the question whether it would be better, in the grand scheme of things, to purposefully and actively decide to manage the decline of this company and free up resources (money, time, raw materials, people) for other companies, other tasks and other products. Products and services that could be provided by other companies at higher quality, lower prices and in shorter time-frames.

This finally resulted in the main question of Why a Company is doing something (and no, it’s not “because we want to make a profit”). More generally, the question in my mind that kept bothering me for two decades finally took shape: “What is the Purpose of the economy”.

Looking at the question closer, I realized that in order for something to have a purpose it needs to have an impact on … people! People in the economy means consumers. But people are not only consumers, they are people – humans with needs, values, expectations, and feelings.

After reading many, many a book (about economy, management, business, quantum physics, psychology, and even science-fiction), my conclusion so far is that in order for the economy to function properly, we must understand the impact the economy has on people’s lives.

When I started reading Bohm, Stapp and other quantum-physicists that are also concerned with mind and perception, I could see that things that have no impact on humans have no meaning. Impact doesn’t necessarily mean something large or physical. Even, and especially, seeing, hearing, smelling, tasting, touching have impact on people’s lives.

If we eat something that doesn’t taste well, it has a negative impact on our wellbeing. If we hear a loud noise, see something “ugly”, smell something foul – all have impacts on our life and wellbeing. Same is true if we eat something that tastes amazing, smell a beautiful flower, see a beautiful scenery or just hear beautiful music – beauty, as we know, is in the eye of the beholder. Every person decides beauty differently, let’s not discuss what I mean with beautiful…

If, on the other hand, there is something beautiful (or ugly, for that matter) somewhere on Jupiter and no human ever sees, feels, smells, hears or tastes it – it will have no impact and is therefore not relevant.

So, my conclusion was that whatever the “economy does”, it needs to have an impact on humans in order to be relevant. Since I don’t believe that humanity can invent something that is purely “evil” (ugly in the sense as described above), I believe that the “invention” of economy was for the good of people.

Then I started thinking about what it means “for the good of the people”. More importantly, what do people perceive as “good for them”. It is important to understand that nobody can decide for others what is good for them. People themselves usually don’t even know what is really good for them.

One thing, though, seems to be for sure: people want to feel well – and in this most people look for wealth.

This brings us to the title of this book – Wealth & Wellbeing. I believe, in the grand scheme of things, people link wellbeing with wealth, but all of the people on this world want to feel well, i.e. have a balanced wellbeing.

Though I will dive deeper into how the economy can contribute to the wealth and wellbeing of people further in the following chapters and how it happened that economy (markets, businesses, transactions) were the key to increasing people’s wellbeing, I have come to the conclusion that the only purpose of economy is to increase the wealth and wellbeing of people!

economy, in whatever form, is not an end in itself – it is a means to increase the wellbeing of people as such – and thus the wellbeing of humanity in its entirety. Whatever we do in the realm of economy needs to conform to this notion and needs to be directed at increasing the wealth and wellbeing of humans.

Many people will interject and ask what about the wellbeing of animals, the nature, Earth in itself… but they, as I will outline further down the chapters, are contributors to the peoples’ wellbeing.

If we were to look only at the wealth, we might conclude that animals, nature and even Earth need not to be taken into account with regards to their wellbeing. But when we think and talk about the wellbeing of people, of humanity in its entirety, we can never exclude the “externalities”.

This book is first about why we enter in economic activity, create and run businesses and what value the economy adds to the wellbeing of people and humanity in its entirety.

Secondly, it is about one of the key roles in this activity: the manager. I believe management is one of the key roles in the human activity and thus needs a closer look at its principles, values, activities and tools. Management is, in my opinion, such an important role that it deserves many books, discussions, and guidelines – it is, in my opinion, even more important than most of the other human activities since it has the biggest impact on our lives.

Again, though I will outline it in more detail in the chapters below, we need to understand and accept that management, through its use of resources (capital, human, knowledge and time) has the biggest leverage and thus the highest potential to be used for good as well as for evil.

In this book I will look closer at how management needs to change to fulfill its promise and how managers need to act in order to deliver the highest value-add possible for the people and the humanity. Though there will be practical examples, it is of utmost importance for every manager to read through the complete works of Peter Drucker as he has defined managements tasks in the most detailed way possible. I will keep referring to his works many a times in cases of practical guidelines.

My work, though will concentrate on how the manager can and must work in order to create the highest value for the people – as this is his foremost task. Even more than a medical doctor, a manager has significant responsibility towards people.

Management, though, has no principles (such as those for medical doctors), no guidelines (except for practical work such as budgeting), and no written values (again such as those for medical doctors).

I will outline values, principles and guidelines for managers in order to fulfill their responsibilities towards their companies, towards the economy, the people and humanity as a whole.

In order to make this book as practical and comprehensible as possible, I will avoid any scientific analysis wherever possible. Wherever possible, I will stick to practical guidelines, frameworks and tools for the “normal person” so that everybody can learn to be a good, effective and practical manager.

Moreover, I will try to explain why I think the economy is such an important part of our lives that understanding economic activity is necessary for every individual in our society. I will try to shed light into the obvious, seen parts of the economy as well as the not so obvious, not-seen parts (as described by Bastiat back in the 19th century).

Since I had personal, first-hand experience on the impact of the free economy on the increase of wealth and wellbeing of people (and the absence of both in case of the absence of free economy), I hope to be able to explain why we need to protect the free economy, nurture it and take responsibility – specifically as managers – since I believe that managers as such have the highest responsibility in our society.

The reason why I chose “Wealth & Wellbeing” as the topic of this book is that the economy can not be seen and experienced in its entirety if we exclude wellbeing. If we concentrate on only the wealth, we omit the key reason why we undertake any economic activity. Contrary to traditional belief, according to my point of view, any exchange we undertake with another person creates a certain economic activity. Economic activity is the result of self-interest-driven interaction between two persons.

Self-interest (not in the sense of selfishness) is the key ingredient to any economic activity. People know themselves what is best for them. And they know what value they assign into any self-interest-driven activity. “Other-interest”, i.e. interest in the wellbeing of others, is not necessarily what creates the economic value. In fact, it is one of the key ingredients to destroying economic value and creates more destruction than it helps (according to the old saying, “the road to hell is paved with good intentions”).

It is tantamount to understand that we can never know what is in the interest of others and can never correctly and rightfully assume that we are helping others if we work in their interest instead of our, personal interest. Again, this has nothing to do with “selfishness” – self-interest doesn’t necessarily mean “selfishness”.

Let me give you an example out of my personal experience: While I was growing up in Central Turkey in the 70ies, my key self-interest was to have enough to eat, get a good education and … have a can of Nivea cream. Why Nivea cream?

During the dry and extremely cold winters in Central Turkey, the air gets so dry that the backs of our hands would crack-open and bloody. The only solution we knew of at that time was using creme to protect our hands.

The Turkish Government, though, thought that the best thing for Turkish people was yo be self-sufficient. Self-sufficience was the key driver of Turkish economic policy. Obviously, there were enough Turkish companies that wanted to sell locally-produced goods to us.

The problem was that (a) their products were highly inferior to Nivea creme and (b) they were absolutely, exorbitantly expensive so that we couldn’t afford them. The solution for us was “smuggling”, i.e. asking our relatives in Germany to bring Nivea creme when they visited (usually in summer).

You can imagine that the small amounts they smuggled couldn’t really suffice until the cold, hard winter was over – moreover, through their smuggling the Turkish government even lost tax and customs income (whether taxing and customs is a good idea, will be discussed later).

So, in the end, everybody lost. We had, as children, cracked-open bloody hands, the Turkish economy (the creme producers) couldn’t sell to us because it was too expensive and the Turkish government lost tax income… And trust me, having cracked-open bloody hands is really a horrible experience.

Once, in the 80ies, the new Turkish government of Turgut Özal opened up the Turkish economy and introduced a free economy, the living standards (wealth) increased dramatically. Children didn’t have to suffer in the winter anymore of cracked-open bloody hands (and more), Turkish companies that couldn’t compete went bankrupt but others, more creative entrepreneurs entered the market and created competitive cremes that are now selling at the lowest price possible and employing hundreds if not thousands of people and overall, the wellbeing of the Turkish society increased dramatically (not just by being able to buy cremes, but you get the picture).

The Turkish society is now so well that many economists believe that it will overtake many of the European, developed countries within the next generation from the wealth and wellbeing perspective. Nowadays, it takes about 48 hours (down from nearly a year) to set up a company in Turkey – for foreigners! Compared to still more than two weeks in Germany. The tax rate in Turkey is so simple, that I even considered moving back to Turkey – not because of low tax-rate (highest is 35%, just as in US) but because the whole income-tax structure and policies are … humanely simple (e.g. the employer deducts the tax from the salary, transfers it to the government. If, as an employee, you are ok with that, no tax declaration is required at all! What a bliss…)

In any case, I have experienced the benefits of free economy first-hand – after experiencing the impact of the absence of free economy and have come to cherish the wealth- and wellbeing-creating abilities of it in such a way that the defense of free economy became a personal matter for me… But the realization of the responsibilities we have, as managers, in order to not only protect the free economy but also understand the impact, the purpose and then take action in the right direction is the key reason for this book.

I hope you enjoy reading the book as much as I enjoyed writing. I also hope that, in the future and if you haven’t done so yet, you will act more consciously towards fulfilling the Purpose of the economy as the key contributor to it: The Manager!

While discussing this book idea with a close friend, he noticed that I might be trying to reconcile “Occupy Wall Street” and “Wall Street” – or, as I would say it: “Reconcile ATTAC and Business”.

I believe that both, Occupy and Wall Street want to achieve the same thing. The only problem, it seems for me, is the means. The actions of both remind me of an old Italian novel about “Don Camillo and Peppone”: Don Camillo, the priest whose only interest is what is best for the small town/village of Brescello, and Peppone, whose only interest is also what is best for the people in his small village but who is the member of the Communist Party (the story plays right after World War II).

They fight each other at every opportunity, but in the end, they know that they need each other in order to achieve their goals – the only fact they disagree on is how to achieve the goals set by themselves: the greater good of the community.

They even help each other out on various occasions, but the best results for the community, they achieve through negotiations, deal-making and peaceful endeavors – after having fought each other for quite some time…

I hope this book becomes such a guideline for the opposite parties in the fight for the greater good of people. I hope that, at least on the business and economy side, our managers understand that what they do has huge impact on the society and that they have the highest responsibility. And I also hope that our managers, once they have accepted that their task is to increase not only the wealth but also the wellbeing of people and humanity in its entirety, start acting in this direction with all the values, principles, tasks and tools – including learning from their nemesis such as Occupy Wall Street and ATTAC.

Two notes: this book is mostly concerned about the tasks/roles of management in companies, i.e. for-profit organizations. Most, if not all, of the principles outlined are also valid for not-for-profit organizations.

Also, throughout this book, I will refer to the manager as “he”. This in no way means a preference for the male manager; rather it is meant to avoid disruptions while reading this book. I would be more than happy if we’d achieve, in all of our organizations, the average world-wide gender-ratio of 48:52 (male:female). We can only gain if we achieve that ratio one day…

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