corporate governance is medieval

The “Stupid manager theory of company failure” (and its corollary, the “Smart manager theory of company success”1) remains the most popular, perhaps even the most universally accepted theory of management. Book after book, thoughtful article after article alludes to this theory and whenever a company is perceived to be under-performing, all fingers point to the leadership with demands for blood letting.

This is not a new phenomenon. When catastrophe strikes, as a thoughtful species, we have always asked for leaders to be sacrificed. In Europe during the Iron age leaders were sacrificed when crops failed. In South and Central America leaders were ceremonially tortured for similar reasons.

Of course most crop failures were due to weather phenomena and the anointed leadership had nothing to do with these causes. Nevertheless ancient correlation analysis would have revealed the pattern that good leadership meant good weather and bad leadership meant bad weather.

There was a balance to the downside however. When times were good the leadership enjoyed luxuries and praise. This was the essential deal societies made: we’ll keep you in riches and allow you to be idle as long as times are good but ritualistically slaughter you when times are bad. We’ll declare you “chief magical officer” and place all our faith in you. But, of course, if you fail, we will will be vengeful.

—Horace Dediu, Haunted Empire

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