In this article we examine why executive actions are often seemingly incomprehensible, suggesting this is only so when operating from the wrong set of assumptions. We examine the power of narrative as a technology that does special political work, using sociologist James C. Scott’s concept of the “hidden transcript”. As always, I welcome your emails, conversation, and hopefully, collaboration.
1) Scott and the Hidden Transcript
Borrowing from the work of James C. Scott, in any hierarchical structure there is a power dynamic between subordinates and those above them. This dynamic filters how individuals from different strata will interact. The resulting performance—and it is a performance—that one stratum puts on for another is what Scott refers to as the “public” transcript. Executives often put on a tightly managed (and sometimes scripted) performance for subordinates, whereas subordinates are often expected to maintain a child-parent dynamic.
Due to inherent political risk (indeed risk to the wellbeing of one’s family) subordinates will typically only go off script while offstage, with each other, where they feel it safe. Executives will rarely contradict the dominant public narrative at all. When and if they do, it will also be with each other. This manifests what Scott calls the “hidden transcript”. Consequently, it is often difficult for executives to learn what subordinates really think, just as subordinates often do not know the underlying reasons for corporate actions.
The corporate dominant public transcript functions as corporate mythology, a technology designed to do specific political work. This serves to align people within a common narrative matrix to enable the achievement of specific aims. A mythology is a form of narrative and, as such, is made of assumptions. The act of “narratizing” links these assumptions together as storied package that “sells” the whole, that together makes the assumptions at play seem more believable to the target storyhearer. This increased “believability” is in part its main function. This does not make the assumptions actually more likely, which in judgment and decision making is known as the “conjunction effect”.
Narratives, further, are never neutral. They are always someone’s point of view and in service of someone’s aims. The dominant public transcript reproduces a given power structure, which of course is to the benefit of a particular subset of the population. When making tradeoff decisions, those with power will tend to view themselves as, borrowing from Bob Marshall, “Those Who Matter”, which of course necessitates an outgroup of “Those Who Matter Less”. This economic dynamic will then be fortified by a manufactured superstructure ideology (read “corporate mythology”) which helps sell desired base conditions to Those Who Matter Less.
When the dominant public transcript is not supported by evidence, the resulting contrast should itself be taken as revelatory—it points to the political work of the mythology, which in turn points to the real aim of the design. This does not mean the stated goal is a “lie”; rather, it means that when executives say that something is about “A”, it is often also about “B”, and that “also about” is a vital clue to what is really going on.
To take an example, Americans still seem shocked when they learn they’ve been required for years to sort their trash and yet something like 90% of plastic recycling is never recycled. This was sold as being about preventing pollution, being good stewards, etc., and this is true, but it was “also about” enabling America to sell a portion of its garbage to China for a profit. When China suddenly announced it would no longer buy America’s trash, it left the state of our recycling in disarray.
Another example. When a company brings in a big consultancy and the consultant’s recommendations are presented, this will usually be done using the branding of the customer company and not the consultancy. Yes, this is to help the customer company by making it look like the advice is coming from its own executives, but it is often “also about” the consultancy’s longstanding practice of never taking direct credit so as to also always avoid any blame. Big consultancies know, after all, that they are often being brought in precisely to play “bad cop”.
Making space for the “also about” often makes clear what would otherwise remain an “incomprehensibility”. Once one accepts the difficult truth that stated objectives are often more marketing designed to sell underlying political aims, so much confusion and bafflement melts away. Further, this is not as controversial as it may initially seem. That is, after all, the very meaning of the dominant hidden transcript: Executive political aims are often not considered the business of subordinates, else there would be no difference between dominant public and hidden transcripts in the first place.
2) Yuret and the Seemingly Incomprehensible
Dan Lovallo, whose focus is organizational decision making, shares the story of a top exec pulling him aside and saying, “Look, at this level you’re only in your role for a few years. We can’t have you coming in and making it look like there is something wrong with the decisions we make.” There are occasional such “Executive Moments of Truth”, instances when you are given a glimpse of the dominant hidden transcript. Sometimes executives want you to make them look successful a little more than they want you to optimize value.
The explanation for the seemingly incomprehensible often lies in the hidden transcript. It is, for example, a common lament that executive use of big consultancies invariably makes everything worse…so why then do executives keep hiring them? We’ve hinted at this above: Big consultancies are often brought in to be the public face of and to help with things executives know are not going to be popular. That’s why you have consultancies like McKinsey out there saying things like, “We do execution not policy.” There are many similar examples. Indeed, too many to discuss in this post. Here is short a list inspired by Adam Yuret’s phenomenal Stage 4 Capitalism.
It really should not be surprising that any “best practice” will be variously interpreted from differing seats in the organization. Executives will sometimes tout a best practice while simultaneously altering its intent. It is a common political move to outwardly embrace what is positionally inconvenient in order to bring it to your side.
Real Agile, for instance, would deprive executives of some of their power, driving it lower in the organization. What executives want, however, is their fiat not only preserved but delivered to faster. Never mind that team velocity is seldom the real organizational bottleneck anyway. (As Drucker put it, the bottleneck is at the top of the bottle.)
There is a common bait-and-switch at play when it comes to best practices around systems thinking, complexity, and continuous improvement. This allows executives to claim a focus on systems while still penalizing individual contributors, thereby circumventing any meaningful systemic interrogation. This also conveniently negates leader responsibility for the very systems they are in fact responsible for, simply by virtue of happening to be the ones in charge.
Prioritization is no different. As one consultant recently told me, at many companies if they really fixed their prioritization and flow issues, they not only wouldn’t have to lay anyone off but could easily afford to double everyone’s salary. Executives however are consistently wholly uninterested in best practices that require quantifying the value of time. As Yuret notes, such practices would often make it a little too obvious that certain executive pet projects should not be done. Leaders instead just want to see a Gantt and hear a commitment.
This pattern applies to the other examples. Take, for instance, the controversial practice of “rating and ranking”. This is typically touted to introduce “meritocracy” when often all it does is cause bad feelings, incentivize unhelpful internal competition, and tank employee morale (understandable given that “meritocracy” is code for forced distributions). The truth is that traditional HR approaches to performance management are fundamentally outdated and should themselves now be explored as massive sources of waste.
As Stanford psychologist Carol Dweck notes, such approaches likely even hold employee growth back. You read that right. Rating and ranking creates a brain-hijacking, maladaptive, fight-or-flight culture. This imposes what Dweck refers to as a false “fixed mind-set”, ignoring that research more supports an opposing “growth mind-set”. In doing so, this practice cruelly thwarts much of the very employee “performance” it ironically claims to be in service of. So why do it? For other reasons, of course.
Saving the best for last, consider the reality of nonstop layoffs and all the messaging that they are somehow about making companies more competitive. The evidence indicates otherwise. As reported in Time, study after study shows that layoffs are typically a net negative drag on long-term financial performance. This is a known fact—it is not even a new known fact. Layoffs tank both employee and customer engagement and tend to make companies less profitable in the long run.
If layoffs tend to decrease long-term profitability, then why are they nonstop? You should know by now, for other reasons, reasons having to do with shareholders. CEOs are increasingly pressured to do mass layoffs, even if simply because people see other companies doing them. Marc Benioff, for instance, is out there claiming that all CEOs are now wondering whether they should emulate Elon Musk and start axing headcount, presumably while collectively ignoring the actual effects of Musk’s leadership on Twitter (er, “X”).
Now, you might be thinking, “Well, generating value for shareholders is what companies are really for.” This glosses over much. It also dodges that increasing shareholder value is often quite another matter from maximizing the ongoing bidirectional value generation between customers and the employees actually generating said value.
For present purposes we’ll leave it at this: We now live in a world where more than 90% of all stocks are owned by less than 10% of the population, where a company’s stocks are progressively being bought up by the big investment firms, and where job security is increasingly being sacrificed on the altar of accelerated wealth accumulation. It’s sad and there has got to be a better way.
3) Rao and the Gervais Principle
In his book, The Gervais Principle, Venkatesh Rao argues the top of any upward-narrow pyramidal organization will 1) not have room for very many people and 2) largely consist of those willing to do whatever it takes to in fact come out on top. (Let’s here call these the “Winners”.) Over the course of the last half century, the Winners have increasingly stripped away most worker protections remaining from the ages of greater trade union organizing and working-class solidarity.
As they have done so, the Winners have increasingly recreated organizations in their own image, infusing their own metaculture of cutthroat social Darwinism. As Rao puts it, this has created an ever-revolving door of mergers, acquisitions, reorgs, corporate raiding, and nonstop mass layoffs that do not impact the Winners themselves (in part because they are always job hopping anyway). The result has been more and more “winnings” captured by an increasingly smaller portion of the population.
The middle layer of the pyramid is the managerial class. They tend to wholeheartedly believe the messaging from the top, often with what Rao describes as a perverse loyalty to a company that is not reciprocally loyal to them. (We’ll here refer to them as “shut-eyes”, a concept from late 19th-century psychic investigators. An “open-eye” consciously knows that in the course of their work that they are not being upfront with people, whereas a “shut-eye” honestly believes in all their claimed powers.)
The foundation of the pyramid, what holds the entire edifice up, is the “Losers”. Rao means this only in an economic sense. They are “Losers” precisely because they generate the profits while never being compensated in proportion to the value they create (which is, after all, what “profits” are). Bringing this back to James C. Scott, the Winners are by definition “open-eyes” precisely because they are the only ones privy to the dominant hidden transcript.
4) General Principles and Conclusion
In reality, of course, in some organizations the dominant public and hidden transcripts will overlap more than in others. The more they overlap the more stated values and formal messaging reflect actual motivations. Here leaders cast what is sometimes referred to as a positive “leadership shadow”. Actual culture is dictated by leader behavior and not by stated values (which are themselves just part of the dominant public transcript).
The less the dominant transcripts overlap, the more negative the leadership shadow and the more that official messaging will be marketing to sell initiatives undertaken for other aims. The actual degree of overlap is separate from subordinate belief regarding this overlap, as shown below. Such beliefs, after all, are either accurate or not. As it is the very presence of power dynamics that gives rise to hidden transcripts, any organization with a pronounced power dynamic will likely also have lower overlap in dominant transcripts.
By the way, when employees say they want “transparency”, that does not mean they want to hear from executives more. (Most employees do not want to hear from executives more.) What it means is that employees want to be privy to the dominant hidden transcript. Any attempt at transparency that fails at this is bound to backfire, further fueling the suspicions of open-eyes. “Transparency” means that employees want to know the hidden transcript behind the decisions made, which is a necessary component of understanding the actual system at play. When executives ignore this and make transparency as somehow being about their presence, this often only then generates additional corporate mythology.
This and the above observations allow us to derive some general principles.
OK. Heady stuff. Let’s end on a positive note.
I do not believe that most executives are bad people. Many of them are forced to do certain things by the demands of their position. Make of that what you will. Where we have agency and can help improve things, we should.
Try to protect each other’s jobs. Help those laid off find new work. Continuously nudge culture to become more open, democratic, egalitarian, and cooperative.
Fix your own team first, and then help other teams improve. Build a coalition that is at least the square root of the size of the organization and use influence mapping to start making gains.
Don’t give up, don’t give in, and don’t despair.
Many will vehemently disagree with you if you have similar views. Remind yourself that people are often not aware of our own starting positions, of the narrative assumptions at play. We all begin with the assumptions we have, and we can help one another surface and examine them, thereby raising the level of one’s inquiry.
Until next time.
Charles Lambdin 