Walter - September 05 02 meeting

Good morning dear friends,

Let me first introduce myself to you in a little more details. I have started my career as a chemical engineer. I then worked for a large oil company for 8 years. When I left that company, I was in charge of Refining and petrochemicals, a division that supervised 4 refineries, two petrochemical complexes and about 20 small plastic transformation plants. Because of the extensive maintenance program that we had to maintain at that time already I was aware of the critical importance of tools for industry, even if I did not know the Walter company.

I went back to study management and did my Msc in management at the Sloan school, MIT, Boston, and then did my doctorate at the HBS in Strategic management. After that I taught at McGill University and in a leading French business called ESSEC. I joined HEC in 1984, after JMT, then head of the management department, made me an offer that I could not refuse.

Most of my research has to do with Managing in situations of complexity. These are the situations where people at the top have hard time understanding cause-effect relationships. That means that they do things, but do not know what is going to happen in the organization. They sometimes learn about it much later, if they are still in the company. Because of the multiplicity of factors that affect the organization, many managers of large complex organizations learn soon enough that they cannot understand al the effects of their actions and develop an ability to protect themselves and camouflage their responsibilities, until they are gone. The bureaucratic behavior is not a pathology of government offices and agencies alone.

To deal with complexity, one has to go back to basics. A long time ago, in 1938, a famous manager, who happened to be also an intellectual, a rarity, Chester Barnard wrote a book that provided the best understanding that we have today about organizations, especially complex ones. Barnard was writing at a time where the taylorian theories were both dominant and contested by new thoughts about human relations and their effects on behavior. Barnard argued that Organizations are cooperative systems, that without cooperation, you have no organization. Cooperation is the willingness to surrender one’s decisions to someone else’s logic. Barnard suggested also the reason why people would accept to cooperate. He provided what is now known as the theory of exchange. People cooperate when they perceive that what they bring to the organization, their contributions (in the wider sense of the word, including their creativity, and other non measurable contributions) is equal to what they get out of the organization, their compensations (again perceived in the wider sense of the word and including many non tangible compensations that we all receive from our association to organizations). More importantly, Barnard argued that it is not the managers who decide on the balance between contributions and compensation, but the individuals who cooperate. Managers are only in the business of convincing everyone that there is a balance. Achieving cooperation is the primary source of competitive advantage, yet few managers today give their attention to ensuring and maintaining cooperation. This explains why “most cooperation fails in the attempt or dies in infancy or is short-lived.”

In my opinion that is where Family businesses have a critical advantage in situations of complexity. Top managers being there for the long run, they worry about cause-effect relationship more and are better able to develop their intuition about them. Further, they come to learn soon enough that their success is related to the level of cooperation that they can get from their employees and managers. They cannot simply walk away when things turn sour. They have to be concerned before things turn sour. They best play consistently three roles important for the creation and maintenance of a cooperative system : (1) Being the architect of purpose, conceptualizing the reason d’être of the organization and providing a clear sense of direction; (2) being the organizational leader, to ensure the result through supervision and a disciplined approach to the organization’s problems, and (3) being a personal leader, providing the emotional support and affection that all human endeavours require, and being an exemplar for those in need of a role-model.

Family concerns force the consideration of a long term perspective along with the necessary short term requirements of survival. They are a good protection against the narrow perspective forced upon managers by stock market dynamics.

I have had a chance to meet and discuss with Pierre Somers, and he was gracious enough to guide me through a visit of some your facilities in Montreal’s West island. I have been very much impressed by the atmosphere and the nature of the relationships among people, that were transpiring everywhere we went. He told me also about the family history, and the great contributions and legacy of Walter J. Somers, the company founder.

Before this chair was created, I was worried that it would bear the name of some large and, generally, insensitive corporation. I even lobbied JMT to give it the name of a professor who has contributed to the development of our school. He was sensitive and was willing to consider. Then, he came with the proposal to associate my work with the name of Walter. I felt some emotion that, by chance, the chair that I am in charge of, will bear the name of a good and moral man, who through his own practice, has contributed much to the understanding of our world, and who has left a legacy of fairness and appreciation of his many modest partners. It reminded me the final developments of Barnard’s book. He said: “The morality that underlies enduring cooperation is multidimensional. It comes from and may expand to all the world; it is rooted deeply in the past, it faces toward the endless future. As it expands, it must become more complex, its conflicts must be more numerous and deeper, its call for abilities must be higher, its failures of ideal attainment must be perhaps more tragic; but the quality of leadership, the persistence of its influence, the durability of its related organizations, the power of the coordination it incites, all express the height of moral aspirations, the breath of moral foundations.”

I am happy and proud to work in this chair that bears a name you all value. I am convinced that you will inspire me and my colleagues great academic achievements, some of which may be related to your own practical concerns.  Thank you Pierre for your concern about the development of knowledge in general management and for your faith in our ability to contribute to it. Thank you all for your attention.