How Ancient Chinese philosophy is connected to different ways of thinking in business

In ‘The Path’ - a book on ancient Chinese philosophy by Harvard professor Michael Puett, I was struck by two opposing worldviews that have their counterparts in two different ways of thinking within businesses.

Rational order

On the one hand, Puett introduces Mo Zi who lived in the fourth century BC in the South-West of the current state of Shandong. He argues  that the way to reach a good society is that everyone looks inside to  discover who we really are. Next we craft a plan to become successful  and work hard to realize this plan. If we do so we will get prosperous.  The worldview behind this way of thinking is that we are computable personalities in a computable universe.

In other words, a certain action will always result in a certain  reaction; the result of an action can be calculated. Mo Zi was convinced  that society should be organized in a way that rewards good behavior  with success, fame and money, and that punishes bad behavior with degradation, fines and loss of face.

This reads very much like a contemporary reasoning about personal responsibility, accountability and success and Puett points out they are similar to early protestant ideas that are on the basis of our modern worldview.

Emotional disorder

On the other hand, Puett describes Mencius who lived in the third century BC and is a follower of Confucius. He opposes Mo Zi’s worldview. According to Mencius, things that happen in the world cannot be calculated: hard work doesn’t necessarily lead to prosperity, and evil deeds are not always punished.

Mencius, from Myths and Legends of China, 1922 by E. T. C. Werner

He believed that we have to give up the idea of a coherent system of rewards and punishment. Otherwise, we wouldn’t strive to become better  human beings, but just do what gives us the most rewards. Mencius feared  that this calculated behaviour would drive rational and emotional  abilities apart, while they are the people who are in touch with their  emotions and deliberately work to refine them are good people.

This idea comes from Mencius’ mentor Confucius: life is an endless sequence of encounters, different ways of reacting and being thrown from  one emotion to the other. However, we can learn to refine our reactions:

Only by exercise will we be capable to react correctly (…) In the beginning of our lives we react with emotions; in the end with decency.

It is not by conquering or suppressing our emotions that we can  develop decency. They are what makes us human. It is by refining our  emotions and teaching ourselves to react to others in a better way that  we can create a better way to create moments of order in our lives.

On the defence of emotions

Although we are convinced that both worldviews have their value in specific contexes, we would like to go a bit deeper into the value of emotions in the decision-making process. To do this we can link Mencius’ view of emotions to a more recent attempt of the contemporary American philosopher Martha Nussbaum to argue for their importance in ethical reasoning in her book ‘Upheavels of thought’:

Instead of viewing morality as a system of principles to be  grasped by the detached intellect, and emotions as motivations that  either support or subvert our choice to act according to principle, we  will have to consider emotions as part and parcel of the system of  ethical reasoning.

We immediately recognise a different tone of voice in this definition  that makes it clear that this ancient Chinese idea that Mencius  described so intuitively and almost lightheartedly, has now turned into  an idea – paradoxically – that needs thorough research and that needs to  be defended against ages of dismissing emotions as misleading and even suspicious.

We have the feeling Nussbaum thinks she needs to incorporate emotions in the rational scheme to grant them a legitimate place in her system: they are an important part of rational deliberation even if we don’t  fully understand them and by doing so we can be successful in what we  try to obtain.

The relevance for businesses

If we now try to make a bridge between this philosophical analysis of these two different worldviews and the world of business, we can see a divide between different areas in a business. Some areas are more dominated by the one worldview, and some more by the other.

On the one hand, we have the areas where we try to use emotions to convince people – for example - of the value of our brand. They are hard to measure or to assign a financial value to, and the attempts to do so sometime result in peculiar result - like bookings of goodwill on the intangible fixed assets account (example in Dutch). These are the area’s of business that are more in the hands of the creatives, the graphical designers and the storytellers.

On the other hand, we have the areas where pure logic and emotionless calculations are king, like finance and supply chain. Cash-flow and forecast accuracy can be measured exactly by KPI’s, but they don’t sell the product, they enable the sale.

Different approaches within departments

And these areas only take the interactions between the business and  the market into account. What if we also try to incorporate the  interactions within an organization? There are different examples that  can be given of departments where the two worldviews work together with  one organizational unit.

One example of both worldviews, coming together in one department is the HR department, where there typically is a hard and a soft part. The former being the payroll, the reporting on headcount and FTE, the analysis of the personal cost. The latter covering the recruitment, the trainings, the organizational design.

Another example is bimodal IT, where one part of the information technology department is more loosly organized to be able to keep up with the almost associative way the business wants to approach the market and provide them with the tools they need to do so. Once it is clear what works, and what doesn’t in the market, the other part of IT takes over to industrialize the tools that survived the business need  for change and to set up the necessary infrastructure and processes to guarantee that everything keeps spinning as it should.

Conclusion - Contextual worldviews

We hope that we have made clear that both worldviews have their value in different contexes - here my education in philosophy by prof.  Baetens with his adaptive logic reasonates. Recognizing this can already  take us a bit further in understanding certain decisions we might not  grasp when we evaluate them with the wrong worldview-glasses on.  Defining actions in a certain area rooted in the wrong worldview has to  be avoided: creative accounting is frowned upon, copy-writing algorithms haven’t put people out of a job yet. So when we go back the Chinese philosophers we conclude that when we limit the scope of where we want to apply their different worldviews to business, they are complementary. In life? That’s another story for another time.