The STEEL-cameralist Manifesto Part 8 STEEL Sovereignty: From Equipoise to Energy.  

 

Wellington

 

Contents:

 

Act I:

God, Men and Monsters.

AI:1 Steering the Ship of STEEL.

AI:2 What It Means to Be the King of Everything.

A1:3 Fnargl V Twilight-Mountain.

AI:4 The Romance of the Three Tsars (White, Red and Yellow).

 

Act II:

Harbinger.

AII:1 A Day in the Life of a Sovereign.

AII:2 The STEEL Security System.

 

Act III:

STEEL Sovereignty.

AIII:1 (Not) Steering the State of STEEL.

AIII:2 Imperial Equipoise: The Sovereign as an Avoiding and Exploiting Expert.

AIII:3 Command in a Crisis: Imperial Energy.

AIII:4 Wellington at War: Clerking and Commanding.

AIII:5: The Paradigm and Paradox of Pow

 

 

Act I:

God, Men and Monsters.

 

A1:1 Steering the Ship of STEEL.

‘How,’ he [Adeimantus] asked, ‘can you possibly say that society’s troubles will never cease until it is ruled by philosophers, if you agree that they’re useless members of society? ‘To answer that question,’ I [Socrates] said, ‘I must give you an illustration.’ ‘A thing which, of course, you never normally do!’ ‘There you go,’ I said, ‘pulling my leg when you’ve landed me with such a difficult point to prove. But you listen to my illustration, and see just how greedy I am for comparisons. For there’s really no single thing one can use to illustrate the plight of the better type of philosopher in contemporary society; one must draw on several sources for one’s illustrations in defence of him, like a painter combining two or more animals into a goat-stag or similar monster. 

Suppose the following to be the state of affairs on board ship or ships. The captain is larger and stronger than any of the crew, but a bit deaf and short-sighted, and similarly limited in seamanship. The crew are all quarreling about how to navigate the ship, each thinking he ought to be at the helm; they have never learned the art of navigation and cannot say that anyone ever taught it them, or that they spend any time studying it; indeed they say it can’t be taught and are ready to murder anyone who says it can. They spend all their time milling round the captain and doing all they can to get him to give them the helm. If one faction is more successful than another, their rivals may kill them and throw them overboard, lay out the honest captain with drugs or drink or in some other way, take control of the ship, help themselves to what’s on board, and turn the voyage into the sort of drunken pleasure-cruise you would expect.

Finally, they reserve their admiration for the man who knows how to lend a hand in controlling the captain by force or fraud; they praise his seamanship and navigation and knowledge of the sea and condemn everyone else as useless. They have no idea that the true navigator must study the seasons of the year, the sky, the stars, the winds and all the other subjects appropriate to his profession if he is to be really fit to control a ship; and they think that it’s quite impossible to acquire the professional skill needed for such control (whether or not they want it exercised) and that there’s no such thing as an art of navigation. With all this going on aboard aren’t the sailors on any such ship bound to regard the true navigator as a word-spinner and a star-gazer, of no use to them at all?’

The Republic. Plato.

 

“CEO” is probably the only job in the world where any non-trivial steering events are handed off to temporary specialists. The only other such job I can think of, not coincidentally, is ship captain, which is basically a CEO job, so not really a second example. When large, heavy ships enter or leave ports, local harbor pilots must be hired to do the steering, by law. And while they’re on board, they have the authority to overrule the captain on many matters.

Captains don’t steer. Underlings steer during normal times, harbor pilots steer during exceptional times. CEOs don’t steer. Underlings steer during normal times, turnaround/caretaker CEOs steer during exceptional times.

You could even say a CEO is like a railroad engineer driving a train, except the tracks are in their mind rather than in the environment.

CEOs Don’t Steer. Ventakesh Rao.

 

Curtis, dear boy. The fact is that we are all stuck in side this blasted train. We are prisoners in this hunk of metal. Medium rare? And this train is a closed ecosystem. We must always strive for balance. Air, water, food supply, population. It must all be kept in balance. For optimum balance, however there’ll have been time when more…radical solutions were required. When the population needed to be reduced, rather…drastically. We don’t have time for true natural selection. We would all be hideously over crowded and starved waiting for that. The next best solution…is to have individual units kill off other individual units. From time to time, we’ve had to stir the pot, so to speak. The Revolt of Seven, The McGregor Riots…The Great Curtis Revolution. A blockbuster production with a devilishly unpredictable plot. Who could predicted your counterattack with the torch at Yaketerina tunnel? Pure genius. That wasn’t what Gilliam and I had in our plan. What? Don’t tell me you didn’t know, Gilliam and I……. The front and the tail suppose to work together.

Wilford’s speech. Snowpiercer. 

 

 

A1:2 What It Means to Be the King of Everything.

Has anyone ever given much thought about what life would be like being the most powerful man in the world? Sorry, we meant America. Scratch that. We meant U-S-G. Actually, it is N-U-S-G: STEEL G.

What would life be like for a man with absolute power? What do men do with absolute power? Would they spend all their days playing golf; dancing with young girls; binge drinking; hunting and fishing, having sex with their secretaries or do they just run the country and read to their families at bedtime?

The two most powerful men of the 20th Century – Stalin and Mao – were incompetents when it came to (competently) running a country and they spent most of days drinking, eating, fucking, plotting and living in fear of being overthrown.

 

God, Power and Human Freedom.

An analogy can be drawn between secure/insecure power and free will.

Let’s start with free will. If a man has libertarian free will, they are, necessarily, free (secure) from any determining causes. That is to say, no amount of feedback, reasons (reasons are causes) or feelings – their own or of others – will necessarily determine their responses.

The man with libertarian free will is a man with power – the power of God. Only God has the power to act without being acted upon; only God has the means to cause without being caused; only God has the ability to move without being moved.

If man has free will, then man is God(like).

This, however, is a chilling conclusion; as Hannibal Lecter said: “if one does what God does enough times, then one will become as God is.” Which is to say, one becomes “powerful”.

A ruler who is absolutely secure – a ruler who is free from threats to their power of any kind – is a ruler who can act however they like, for whatever reason they like, without any negative consequences or fear of reprisals.

That is, if you have absolute freedom from insecurity, then you are God.

The proper emotional response one should have towards such a being is abject fear and total obedience.

This puts the concept of a “God Emperor” in a new light.

 

A1:3 Fnargl V Twilight-Mountain.

Moldbug is justly infamous for his neocameralism and has the notorious Fnargl – an all-powerful, greedy bastard whose only interest is gold and who only rules well because it pays well.

Napoleon believed that men are motivated by greed and fear, however.

So let us imagine an all-powerful being, who we will call Twilight-Mountain. However, unlike Fnargl, Twilight-Mountain is not secure – psychologically secure, that is.

Twilight-Mountain is greedy for power and is always eager to use power – for profitable purposes (good government for Twilight is good customer service). However, Twilight is always accompanied by the emotion of fear. The fear for Twilight is that when he dies, if he has abused his power, then he will be tortured for a thousand years by a two-headed, snake like, monster called Sally.

Twilight does not want to be tortured, so he does his absolute best – at governing.

Moldbug tried to show, as a logical exercise, that a ruler will govern well if they have enough power and if they are solely motivated by greed.

But rulers need not solely be motivated by greed, of course.

Without fear, humans – nevermind rulers – are likely to behave very badly indeed. However, too much fear and there may be no end to their wickedness.

Stalin is Stalin and Mao is Mao because these men were, we submit, creatures driven by fear.

Rulers determined by fear will be despotic; rulers free from all fear will be psychotic.

The pattern of incentives must be just right; the program of power and the protocol of privilege, married to the proper prescription of pleasure, pain and punishment, must be precise and it must be persuasive.

We need the ruler (Sovereign/CEO) to be sufficiently connected to the consequences of their choices so that there is enough feeling of fear but not so connected that they are completely chained by external causes, complaints and the criticisms of others.

Getting this structure right, however, is the question of political engineering just as the analogous “control problem” is the question for Artificial Intelligence.

 

A1:4 The Romance of the Three Tsars (White, Red and Yellow).

What a contrast Stalin makes with Napoleon.

Napoleon could have built Russia into one of the greatest countries on earth. Fortunately or not – depending on your perspective – Russia had a Red Tsar and not a White one.

Stalin was a gangster/Communist; Napoleon was a general. Stalin was trained for the priesthood; Napoleon was trained for the military. Stalin became Tsar via a vicious power-struggle and one of the most horrific purges in history. Napoleon, by contrast, took power via a bloodless coup. Stalin could think – thanks to his seminary education and was apparently an avid reader, but he was also a vicious brute. Napoleon – a workaholic – was also largely self-taught and was fluent in history, philosophy and law.

Lee Kuan Yew, probably the greatest statesmen and strategic thinker of the second half of the 20th Century, who originally wished to practice law but, as a consequence of chance and circumstance, ended up becoming the Tsar of Singapore. Yew, nevertheless, was determined to make his country work and he studied different systems, different solutions and ultimately chose what worked because he wanted to have the most efficient system. Yew seemed to live an ordered, sober life of hard work and quiet dedication – not unlike, perhaps, the Emperor Augustus.

Of all three Tsars, Stalin is the one to learn negative lessons from (what to guard against and what to avoid); Napoleon is the most dazzling and his reboot and rule in the years 1800-1805 was an outstanding achievement; Yew, however, is the one to learn from, at least when it comes to longevity (or so it seems) and morally sound leadership.

Neoreactionaries talk a lot about kings (or CEOs) but what does it mean to be a king? What would being a king or a Tsar -or a CEO – in a new America involve? What would their life be like on a day to day level?

Let’s try to imagine an answer.

First, we want to describe a day in life of a king – an American Sovereign. Secondly, we are going to discuss security for the Sovereign in the STEEL Security System. Thirdly, we will examine a recent Ribbon Farm article called CEO’s Don’t Steer by Ventakesh Rao. Then, we are going to see how Rao’s thesis connects not only with Lead and Gold’s analysis of why corporate change is hard and failure almost inevitable but with Kuhn’s account of paradigms, normal periods, crises and paradigm shifts that has been the central leitmotif of Imperial Energy.

Afterwards, we look at one example where a CEO did steer and steer successfully – Steve Jobs. Following this, we compare and contrast Rao’s claim that CEOs do not steer in business to the military. There, during wartime, we see both steering and not steering, depending on whether or not the commander is operating in a “normal” or “exceptional” time. Our example is Arthur -“Iron Duke” – Wellington.

Finally, we end with a paradox – the paradox of the paradigm of power.

 

Act II

Harbinger.

 

A2:1 A Day in the Life of a Sovereign.

5:30AM: The King is woken by his Major Domo who brings him a cup of expresso, a bagel stuffed with eggs and chopped sausage and a copy of the New America Times. Breakfast is followed by a quick shower and then the King is dressed by his bodyslaveservant.

(One of the Kings rules, however, is that bad news must always be brought to his attention at once and this means that he is often woken at 2AM to learn of a major Islamic terrorist atrocity in Europe, a new crisis in the South China Sea or another African genocide.)

6:00AM: The King reviews, and if necessary revises, the day’s schedule with his Chief of Staff. After this, the King spends 1-2 hours reading messages and cables from governors and mayors and then diplomats and military commanders from across the empire. Most of the messages are reports, some are requests, some are complaints and some are warnings. The King would mark certain messages for further investigation with the letter K, dictate a reply or an order to one of his many aids or he would drop the papers onto the floor that he considered below his responsibility or unworthy of interest.

8:00AM: The King, accompanied by his court of aids, assistants, bodyguards and family dogs would then take his daily walk around the grounds and gardens of the White Palace (or whichever palace or base he was currently operating from) dictating messages – sometimes up to four at a time – to his aids.

9:00AM: The King, after his daily walk and exercise of dictating, would then retire to his private library were he would receive his daily intelligence briefing. The briefing consisted of three books: the Red Book, the Blue Book and the Black Book.

In general, Red meant military and military intelligence; Blue meant civilian (domestic and foreign intelligence agencies and academic sources); Black meant private contractors and consultants.

These briefings, much revamped and expanded from the Democratic era, consisted of various things. The majority of the briefing books consisted of intelligence reports but also snippets of relevant academic, corporate and independent studies on some relevant or important area; news reports and even outlines of book reviews and articles; memoranda, complaints and criticisms from corporate employees and whatever the daily outrage was on social media concerning some subject from among the King’s subjects. Each book came with two people responsible for compiling its contents and the King would ask them questions regarding the material contained within them.

The King rarely read all the briefing or in full as he would scan and skim the three books. He would, however, place a red tick on a “report” if he wanted to follow it up later, which was taken note of by his Chief of Staff. If he wrote “T”, it meant that he wanted to have a telephone call with the report’s author or important people mentioned or connected with it. If he wrote “D”, meanwhile, it meant that he wanted to have dinner with this person where they would be invited to speak and then be questioned by other members of the King’s dinner party.

10:00AM: On a Monday, the King would hold a senior cabinet meeting. Formally, he was chairman of the board of directors as well as holding the position of CEO; the King thus had a duel role within the sacred corporation. Monday morning was a meeting of the senior operating staff and Monday evening was reserved for the directors.

The senior cabinet meeting was usually attended by the following people:

The King (CEO and Chairman of the Board).

The Chancellor (COO).

The Secretary of State.

The Secretary of Defence.

The Secretary of the Treasury.

The Attorney General.

The Chairman of the Joint Chiefs.

The Secretary of Homeland Security.

The Director of National Intelligence.

The National Security Advisor.

The Chief of Staff.

The Chief Councillor to the King.

The meetings were always brief and to the point. The King always said very little and often only spoke at the end of a report by one of his Secretaries or at the end of a discussion and usually with either a “yes” or a “no” or a “wait and see” and sometimes with a “tighten up”, “more energy” or “cool it down a bit”.

At the cabinet meeting, no one gave “speeches” or indulged in any grandstanding and with the exception of a crisis (of which there were often many over the years) the atmosphere was relaxed, congenial and professional.

The general pattern of the meeting consisted of each Secretary updating the King on what they did and what they were going to do and what they needed input on from the others.

11:30AM: The King would take coffee and “huddle” with his National Security Adviser, Chief Councillor and Chief of Staff and review their strategy over certain long-term policy issues relating to foreign policy.

12:30PM: Lunch with the King on Monday usually consisted of small number of private sector CEOs, corporate directors, major investors and entrepreneurs. The number in attendance was usually around five or six men and maybe, at times, a woman. The usual format was that the King proposed a proposition or asked a question or simply invited one of the guests to speak informally on some matter and the rest would then contribute.

These lunches and dinners – of which there a great many over the years – were part and parcel of the King’s policy of “keeping tabs” on the “pulse” of the people, the powerful and the profit-makers. The King would often secretly signal to his Chief of Staff to mentally make note of some important point for further investigation.

2:00PM: In the afternoon, the King would consult with his senior combatant commanders, diplomatic staff and ambassadors. These briefings would be carried out via video or telephone and the King would usually be attended by his Secretary of State (or Deputy Secretary if the Secretary was away on a diplomatic mission); also in attendance were his Secretary of Defence, his National Security Advisor and Director of National Intelligence.

5:00PM: Before dinner, the King would read a new batch of messages and cables and, like before, mark them or dictate follow ups to his aids and assistants. If there was time, the King would return to some of the briefing books he had looked at earlier in the morning.

6:00PM: The Monday dinner brought together the ambassadors and, at times, the foreign secretaries of various allied and vassal states. Again, the King’s usual pattern was usually to listen and ask questions and much of the talking was done by the guests.

7:30PM: The King, his Chief Councillor, Chief of Staff and Chancellor (COO) would confer together informally and run through various issues for the upcoming board meeting.

8:00PM: The final Monday meeting – which was held monthly – was with the board of directors. This meeting usually involved the following:

The King (Chairman and CEO).

The Chancellor (Chief Operating Officer).

The Chief of Staff.

The Chief Councillor.

The Director of National Security.

The Director of International Security.

The Director of Finance.

The Director of Law and Justice.

The Director of Foreign Policy.

The Director of Corporate Responsibility, Discipline and Inspection.

The meeting usually consisted of the Chancellor giving a presentation to the directors which was followed by a round of questions and then a summary from each director. The King, again, usually said very little at these meetings except to ask questions and usually answered a question with either “yes” or “no”.

When there was no board meeting, the King usually spent the time reading reports and talking over various issues with his Chief of Staff, Chief Counsellor and National Security Advisor. Occasionally, the King invited someone (usually from the military, academic or private sector) to give a short presentation, followed by a Q&A.

9:00PM: Another round of messages, cables and dictating.

10:00PM: The King and his Chief of Staff would review the day. This review would involve key things to follow up on, future meetings and other sundry items. The King would also solicit advice from the Chief of Staff on his behaviour, the behaviour of others and what he thought about various things that had happened.

10:30PM: The King and his wife (the Queen) would talk and drink wine before retiring to bed.

11:30PM: The King’s wife would read to the King in bed as he drifted off to sleep. Usually, she would read history to him or parts of a biography or autobiography of statesmen that she herself had selected.

 

A Quick Look at the Rest of the Week.

Each day focused on a different area of responsibility.

Mondays were a day of briefings and meetings in general.

Tuesdays involved video conferencing with governors and mayors and more briefings with combatant commanders, generals and intelligence chiefs – though this time one on one meetings were common. Lunch was with officers one week and enlisted veterans the next. Dinner, meanwhile, was with military historians, strategists and arms manufacturers.

Wednesdays involved more video conferencing with senior diplomats, ambassadors and other heads of state. Lunch was with foreign policy analysts, various historians and political scientists. Dinner was usually with a single ambassador, foreign minister or even a head of state of an ally or vassal state.

Thursdays involved a meeting with the Chairman of the Imperial Reserve Bank; lunch with bankers, economists and treasury officials; a full cabinet meeting again and dinner with one of the board directors, which operated on a cyclical basis each week.

Fridays, Saturdays and Sundays were usually “inspection” days. Each week, these inspections alternated between military and civilian areas of importance. When it was civilian, the inspections alternated between political, economic, cultural and religious areas of importance and interest – though the King often liked to combine all three.

The military inspections involved visits to military bases; an address to the troops which might include awarding medals or holding a ceremony for the fallen. The morning would be capped with lunch with generals and senior officers; then, the King would listen, privately, to officers and enlisted men air whatever problems and grievances they had with the service and where it could be improved. Finally, the King dined with veterans and their families.

The civilian tours involved inspections of the state capital and at least one town or county.  Lunch was with local dignitaries and dinner involved the senior political and economic leadership of the state, city and county.

On Saturdays, the King was still on an inspection tour. However, on weekends it usually involved at least one recreational activity (shooting, hunting or horse-riding – sometimes all three at once – and just plain old golf) with local dignitaries. Lunch, depending on the circumstances, was either a pack lunch taken outdoors or in a popular local eatery. A Dinner party often took place in the private residence of a local dignitary with other notables in attendance.

On Sundays, the King usually attended a local church and listened to the sermon by a local priest or pastor. The King would then deliver a sermon himself on some topic of importance that was usually connected to morality and ethics in some way.

Lunch involved an array of notable religious leaders, charity workers and other community volunteers.  In the afternoons, the King would spend time with his Attorney General (who would fly “down” to be with the King and they would focus on some specific and contentious legal problem. Afterwards, a light dinner would consist of legal philosophers, jurists and philosophers fiercely debating the nature of justice and other points of law among themselves. Then, the King would fly back to his palace and have a light supper with his family and spend the rest of the evening with them.

The King usually made one foreign tour every three months and usually received a head of state twice a month; however, if a crisis occurred the schedule would change dramatically.

 

AII:2 The STEEL Security System.

 

1: Sovereign.

2: Personal Guard.

3: Household Guard.

4: Imperial Guard.

5: National Guard, National Military and Domestic Security.

6: Civic Guard.

7: Coup-Proofing.

 

Overview.

Personal Guard. 10 men. Extreme loyalty; moderate competence, light weaponry and low intelligence (IQ).

Household Guard. 500 men. Extreme-high loyalty; moderate-high competence; armed with rifles, grenades and rockets; moderate to low intelligence.

Imperial Guard 3000 men. High-extreme loyalty; extreme competence; heavily armed with all instruments of modern weaponry; moderate to high intelligence.

National Guard and Domestic Security (?). Moderate to low loyalty; moderate to low competence; lightly to heavily armed; moderate to low intelligence.

Civil Guard. (Likely to be very large in terms of total numbers, but small as they are decentralised). Extreme to moderate loyalty.  Low competence; equipped with small arms but have access to the biggest private arsenal in the world; moderate to low intelligence.

 

1: Sovereign.

A: The Sovereign always carried three pistols on his person.

B: The Sovereign always slept surrounded by four guard dogs (Bullmastiffs) and a weapons rack on the wall of wherever he was currently residing.

C: The Sovereign was always surrounded by large military guard and a political court.

D: Despite having a palace for every season, the Sovereign moved constantly and unpredictably throughout the country and frequently worked out of undisclosed military bases and nuclear bunkers. The Sovereign also made use of body-doubles and maintained extreme surveillance on all government personnel. The Sovereign required all senior government officials to practice similar “touring”; thus, while there was a formal capital, the reality was that the “government” was radically dispersed and decentralised, but the Sovereign was always the centre.

 

2: Personal Guard.

The Personal Guard (PG) consisted of ten men. Five, two man teams comprising of former Japanese, Eastern European and African nationals. One member of the team was the senior (50-65 in age) and the other was an apprentice (15-30) who took turns, day and night, in guarding the “body” of the Sovereign.

The senior members of the PG were all ex-military or police (the apprentices were sometimes direct recruits, headhunted by the Sovereign’s staff) and were bound to life long-service to the Sovereign in either the PG or the Household Guard.

As they differed in nationality to the rest of the Sovereign’s security system and nation, there was less risk of betrayal. They were paid well, and their families were well looked after – if they had any, which was rare. Should anyone prove disloyal, swift and awful punishment for all involved would be the outcome.

The duties of the PG consisted in sleeping outside the bedroom of the Sovereign; attending to his presence at all times; tasting his food; driving and also acting as personal servants, messengers and observers.

Nevertheless, the PG had all been trained in violence and many of them were trained interrogators and all of them, moreover, were killers.

 

2: Household Guard.

The Household Guard (HG) consisted of 500 men, though the “inner core” consisted of around 40-70 men. Their nationality, while mixed (as some of the PG progressed to HG), was mostly the same as the Sovereign and his nation. Most were “public” and served for life, though occasionally the Sovereign would bring in private contractors or specially selected individuals of the Imperial Guard to supplement security and shake things up.

Their duties were to patrol the grounds, operate all secondary transport vehicles, plan routes and supervise the securing of all locations prior to the Sovereign visiting them, as well as intelligence and counter-intelligence activities.

The HG was broken down into different units.

1: Servant Staff. While formally still security, as they were all armed and trained, the servants consisted of butlers, drivers, cooks, cleaners, messengers etc., etc.

2: Intelligence and Counter-Intelligence. The Sovereign’s personal intelligence (micro) unit provided him with information and potentially different perspectives than the larger, more bureaucratic, intelligence services; the counter-intelligence unit sought out spies, traitors, assassins and other political enemies.

3: Offensive Unit. A small, elite, heavily armed unit that would provide security against well-armed and well-trained attackers.

4: Airforce. The Sovereign’s personal (pocket) airforce that comprised of transport aircraft; attack jets; attack and transport helicopters and drone unit

5: Communication and Media Unit. A full staff of media personnel (TV, radio, print, internet and social media) which ensures that the Sovereign can be in instant communication to not only every single employee but every single one of his subjects and the wider world.

6: Guard and Dog Unit. Sentries, camera-operator and guard dogs.

7: General Staff. Responsible for personnel, pay and the protocols of the Household Guard; planning and implementation of the Sovereign’s schedule; coordination and communication with the Imperial Guard and the National and Civic Guard and the National Military.

 

3: Imperial Guard.

The Imperial Guard (IG) are the elite of the elite. Personally selected by the Sovereign and his close advisers, the IG consisted of veterans of other military and domestic security units. Modelled after the HG, though much larger (3000 men); the IG was a veritable pocket army that consisted of air, naval and ground units (including mechanised units), special forces and intelligence units. The IG was commanded by only a Colonel and answered directly to the Sovereign himself.

Loyalty was high, as well as competence and intelligence. Anywhere the Sovereign went, a large number of the IG went with him. The Sovereign spent a considerable amount of time alternating the units that accompanied him and also spent time personally training (and fighting) with them so as to maximise familiarity, loyalty and trust.

Service was for life and all guards were paid handsomely; should they die in the line of duty – which was rare – their family would be well looked after.

 

4: National Guard, National Military and Domestic Security.

When the Sovereign travelled (such as on inspection tours) the Sovereign Security System consisted of a number of security “rings”. The first ring was the Personal Guard; the second ring was the Household Guard and the third ring was the Imperial Guard. After this, came deputations of the National Guard, National Military and various Domestic Security units.

Depending on the locality, the Sovereign would have in his procession units from the local National Guard and local and federal police units, as well as, lastly, volunteer units from the Civil Guard (see below).

The National Guard (NG) were a reserve army of “volunteers” that were expected to serve if and when necessary. All male citizens were required to be familiar with the rudiments of military life from school and college (if they attended military schools), but service in the NG was voluntary.

In addition to the NG, there was the National Military – which was, again, an all-volunteer force – though heavily supplemented by private contractors. Whenever the Sovereign toured the country, he selected, depending on the situation, either a company or a battalion to also fill out security. It was a mark of prestige to serve as the Sovereign’s escort, and while he alternated his selections, he had two “favourite” national regiments that were shown particular care and attention from which companies or battalions were chosen.

While the Sovereign had his own personal intelligence unit, supplemented by additional intelligence from within the IG (and also from the private sector), the main intelligence work relating to Sovereign Security was carried out by State Security Office. From within the State Security Office a special unit had the task of anticipating and preventing any and all groups or persons attempting to target the Sovereign.

 

5: The Civil Guard.

The Civil Guard (CG) consisted of armed citizens who voluntarily formed militias in order to defend their homes, towns and businesses. If the Sovereign visited their location (when on an inspection visit) the CG also had a role in Sovereign Security (though mostly an ornamental one).

The Sovereign cultivated a close relationship with the CG, and many of the groups and individuals were fanatically loyal to the Sovereign. Yet, they were often small in number and dispersed across the nation.

Nevertheless, the Sovereign brought them all together once a year for a shooting competition, gun show and other recreational activities.

If need be then, the Sovereign could call upon several hundred thousand men who were armed and trained to aid and assist him should the need arise in a domestic crisis.

 

7: Coup-Proofing.

The Sovereign feared assassination and worked tirelessly to guard against it.

The Sovereign also strove to prevent any coup or revolution.

In general, the Sovereign lived like a man at permeant war in his own (peaceful) country.

There was no parliament, no senate and no real permanent government headquarters to speak of. The Sovereign maintained a “palace” for all four seasons but constantly moved about the country, either staying in military bases or in domestic locations.

Constant and often unpredictable movement was what the Sovereign considered the best guard against either a coup or an assassination.

Thus, the location, movement and intentions of the Sovereign were a closely guarded secret. Furthermore, the Sovereign used a body-double to potentially confuse enemies and frequently resided in undisclosed, underground nuclear bunkers that were often connected to each other by underground rail.

The role of the media was a new factor in military coups and revolutions and was seen as a threat. To offset this threat the Sovereign kept with him a communications unit which maintained a 24/7 news channel, as well as an internet feed. Furthermore, the Sovereign had complete control of the media airways and internet and while personal liberty was high, the Sovereign could exercise absolute control if necessary.

As for the intellectuals, who were the ultimate trouble-makers of modern history, the Sovereign developed an elaborate system for handling them.

The Sovereign established a formal ranking system, based on his own criteria. High rank brought pay, prestige and personal influence and many dinners with the Sovereign and his court. These intellectuals, however, were all supporters of the Sovereign and the system more generally and thus acted as the intellectual guardians or attack-dogs.

Nevertheless, there were always “croakers” and the Sovereign’s method of dealing with them was unique. The Sovereign set up an alternative ranking system for “bad boy” intellectuals and used his influence to have private persons to sponsor rewards, prizes and other perks. In addition, the Sovereign’s minister of culture would annually bring together both sets of intellectuals for a public and private debate. Furthermore, the Sovereign would also meet and dine with the “Alternatives” and by humouring, and often (intellectually) seducing them, he tamed them.

Free speech was allowed, with one exception: no one could mock, satirise or publically criticise the Sovereign – anyone and anything else was fair game.

While democracy was non-existent, the Sovereign, nevertheless, was assiduous in attending to public opinion. One of the Sovereign’s rules was that he wanted to be told at once what people were “unhappy” over and when he was given an answer he usually responded with “but tell me what they are really unhappy over”.

The Sovereign met frequently with members of the public – often, but not always, in a private setting. In these “private audiences”, the Sovereign listened to people’s grievances and problems attentively and was always swift in ensuing that the Sovereign’s ministers, or whoever was the relevant person, took the necessary action to address injustice or a government failing. Nevertheless, there were always a few “set-piece” public addresses and military parades and reviews each year.

As for the Sovereign’s political cabinet, which met twice weekly, the Sovereign made them practice the same itinerant lifestyle that he did. The result was that it was extremely hard to launch a coup against the government, for while a government did indeed exist and was extremely effective, it was radically dispersed and kinetic. The thinking here was that if a coup was attempted, where would it take place? Nevertheless, the Sovereign always had a political cabinet around him at all times, even if it was only the under-secretaries of the different departments.

Despite dispersing the offices and personnel of the government across the country and making his ministers move about constantly, the Sovereign did have an elaborate court system and would have dinners, walks and talks with his key political and military staff.

In addition, the Sovereign cultivated a myth of omniscience and omnipotence. Political failure was never attributed to the Sovereign but always to his ministers or employees (who could always be replaced and often were). Furthermore, there was extensive de-centralisation on many political, legal and economic issues and individual ministers, governors and mayors succeeded or failed on their own standing, or so it always seemed. Success was lavishly rewarded but failure was often seen as disgraceful and ministers or lower-level employees would usually resign of their own accord. Nevertheless, those who failed were often, after review by the Sovereign, personally re-appointed to a high stress, do or die position. Success restored the minister, failure ended their career forever.

The Sovereign supervised his staff with an obsessive eye for detail and would frequently intervene to spur his underlings to do better or work harder. The means used for this were somewhat novel. Every government employee (military or civilian) was fitted with an inner ear piece and video glasses that allowed communication with not only the rest of the government network but the Sovereign himself (though there was extensive de-coupling among government and military units and personnel regarding this technology).

The Sovereign often made use of this technology to personally communicate with an employee anywhere in the empire. Such an intervention was always signalled by a three tone note of a mellotron musical instrument; then, the Sovereign would speak to the employee directly and privately.

The Sovereign had a system of radical honesty, in which his key political and military staff was expected to speak honestly and critically if necessary. Nevertheless, the Sovereign had a system of total surveillance regarding his government. Private or secret communication was forbidden (for employees) and every staff member was subject to video and audio recording, which was usually reviewed by his Household intelligence unit, though the Sovereign would often “surf” the various “channels” and observe employee behaviour.

The Sovereign and his top ministers mercilessly fought government corruption, waste and bureaucractism. In the early years, a considerable number of bureaucrats were executed or imprisoned for life over corruption, embezzlement, spying and treason. As a result, the Sovereign built up one of the most efficient and least corrupt political systems in the world. Nevertheless, there would be frequent “downsizing”, “re-structuring” and “privatizing” periods – but the Sovereign was never seen to have initiated or be involved in any of them.

Finally, the Sovereign let rumours circulate around the government that if ever there was a coup or a revolution, he had numerous “sleepers” in place that would target any usurpers and their families for death.

Over the years, the public often wondered what the Sovereign actually did; all they knew was that the system appeared to work.

 

Appendix A: Absolutist Model.

The Sovereign has a handful of princes who serve as potential Sovereigns; these princes have a smaller, though similar, security detail. The princes operate out of various bases and bunkers from across the country and if the Sovereign is killed or immobilised, the successor “comes online”.

The line of succession was clear, unequivocal and formalised.

The Sovereign chose his successor in a spectacular public/military ceremony that signalled to everyone who the successor would be.

Appendix B: Cameralist Model.

The boards of directors lived in various military, air force and naval bases across the country or empire. While the directors formally met with the Sovereign/King once a month, they maintained contact via all the tools of modern technology. If necessary, the board could “fire” the Sovereign, which meant using their cryptographic codes to “lock-out” the Sovereign from communicating to government ministers, bureaucratic officials and military personnel. Furthermore, the board could cryptographically lock the weapons on the Sovereign’s Imperial Guard, though not his Personal or Household Guard.

 

 

Act III:

STEEL Sovereignty.

 

AIII:1 (Not) Steering the State of STEEL.

Venkatesh Rao has written a fascinating article on the psychological nature and organisational function of the modern CEO.

Rao:

CEOs Don’t Steer [and this is a good thing].

Big business ideas are the way they are because they are designed to feed and nourish this CEO trait. It’s a proposition that, at first sight, sounds both wildly untrue and something that would be really bad if it were true.

Other kinds of leaders steer. Political leaders steer. Military leaders steer. Investors and central bankers steer. Artistic and creative leaders steer.

But CEOs don’t steer.

When I read or listen to exemplars of other categories of leaders, I am often impressed by the subtlety, nuance, agility, and complexity of their thinking.

This is not true of most things CEOs say or write.

Public displays of CEO thinking are impressive primarily for their sheer banality, far above and beyond the needs of non-offensiveness, political correctness and perception management. You can tell it’s coming from deep down. It’s not an act. I’ve seen it on display in candid, private settings as well, where there’s no particular reason to keep things simple. CEO world views really are that simple. That does not mean they are simplistic or entirely a consequence of survivorship bias and attribution errors.

When CEOs “pop” in the public imagination, it is almost always due to an energizing emotional or aesthetic quality in things they say/write/show/demonstrate. Not cleverness, complexity, or intellectual depth. And again, it’s not marketing. It’s a symptom of how they think: in simpler ways than the rest of us. Other kinds of leaders are generally playing a higher-dimensional kind of chess than the people they are leading or influencing. CEOs are playing a lower-dimensional chess.

Though the banality not an act, neither is it an intellectual or character failing. On the contrary, it is a strength, and possessing it is the primary job qualification.

Why does Rao think that other leaders “steer” but CEO’s don’t? Rao never answers that question, though we will below.

If CEOs don’t steer, what do they do?

Rao:

At the level of abstraction at which a CEO views what is going on, direction does not change, and more importantly, the CEO’s job is to make sure it doesn’t.

CEOs are orientation locks. The opposite of steering is orientation locking. To enforce Newton’s first law, the inertia one, on dancing human systems inclined to violate it. Contrary to popular belief, it isn’t inertia that’s the problem for most companies, it is lack of sufficient inertia in the right direction. Enough to punch through any resistance that might be encountered. And the reason they lack the inertia is that CEOs aren’t steady enough in their jobs as orientation locks, providing a steady True North signal to everybody else doing more local kinds of steering work.

The primary CEO function, and the trait the good ones are selected for, is to provide the gyroscopic stability required to keep a company vectored in the chosen direction. They end up in the jobs they do because they counterbalance an organization’s natural tendency towards distraction, ADD and momentum dissipation. A typical company is a wandering, wobbling hive mind, liable to spend all its time chasing distractions if you let it, before dissolving into a bunch of clever tweets about crappy prototypes.

As the orientation lock, the CEO becomes the human locus where momentum compounds; the psychological platform others build on. They are the steward of whatever snowballing network effect or unleashed natural wealth-creating dynamic is the company’s raison d’être. Their primary job, and ideally their only one, is to protect and feed that dynamic, and get everything else out of the way.

What Rao says above is echoed by Adam, over at the Generative Anthropology blog, when he describes the practice or discipline of “centring”. Adam:

Power entails, first, occupying the center and, second, using that occupation to direct attention to another center….. He must, in centering himself, be deferring conflicts by directing attention to a more permanent center, a model of order.

We can say, then, that centering is power.

….

And, of course, the largest scale power is also limited while being absolute within its spheregoverning is really a matter of retaining absolute power within that sphere while not (or by not) reaching for power outside of it: the sovereign will rule as long as he directs the attention he draws away from the signs that he causes the resentments he contains and towards the permanent center.

In a later post, Adam discusses a solution and a dilemma regarding our old friend and nemesis, Imperium in Imperio, in the following post Absolutism, the Axial Age and the Laboratory:

The moral and intellectual innovations of the Axial Age—from Confucianism and Buddhism in the East to philosophy and monotheism in the West—create an interesting dilemma in thinking through the implications of the abolition of imperium in imperio, or divided sovereignty. 

Originary thinking, or anthropomorphics, helps us out here because it provides us with the hypothesis that the axial is in fact a recovery of the originary scene, in which the newly human community all participated in “addressing” a shared center. Such a recovery was needed in the massive dislocations, brought about at a high level of civilization, leading to the axial age. One way of superimposing the model of the originary scene on imperial civilization is to imagine a single human center: Truth, or God, toward which all can orient themselves and partake of this new center. 

If we put Rao’s and Adam’s ideas together, we could write the central principle of governing in the following way:

The sovereign maintains an orientation lock on the permanent centre.

What kind of cognitive characteristics and personality must a CEO possess in order to keep himself and others focused on the centre?

Rao describes the CEO as a cross between a “tank” and a “terminator” – a “force of nature” with the following:

You want a grinding, relentless, tank-like drive in a seemingly unshakeable direction that builds shareholder value. If you’re in the way, you get crushed. If you’re off to one side, you are ignored. You’re looking for resistance is futile affect. Terminator, not Tarantino. Force of Nature, not Beautiful Mind.

The last line reminded us of the following:

REFLECTING ON THE FIRST TIME HE SAW THE EMPEROR NAPOLEON, HEINRICH HEINE, THE SO-CALLED ‘PANEGYRIST OF NAPOLEON’, ALSO DESCRIBES HIM AS A LAW UNTO HIMSELF, THE STATE OF EXCEPTION INCARNATE, A VERITABLE FORCE OF NATURE.

Nietzsche and Napoleon: the Dionysian Conspiracy. Don Dombowsky.

Rao provides a “script” (what Moldbug and Reactionary Future call a “protocol”) for CEO thought and behaviour:

So the CEO algorithm not-steering algorithm basically looks like this:

Filter everything as either relevant or not relevant (this is where books like The World is Flat or The End of Power come in handy). Black and white. No fuzzy logic or Bayesian bullshit.

Almost everything is not relevant, and almost all of it can be judged to be not relevant by an somebody else. Only the edge cases need to bubble up. Peripheral vision is critical for steering jobs, but over-rated for the staying-vectored job.

For things that are relevant (and actionable), it is either a steering decision or a not-steering decision. If any kind of map exists, it is a steering decision and belongs to whoever owns the relevant map.

If it is a steering decision, it is likely one that belongs in a functional pigeonhole. Delegate it to somebody lower down with the right maps, sense-making skills, and specialized situation awareness.

If that person or functional competence does not exist it’s a hire-and-learn decision.

In either case, understand and inspect what functional point-people do well enough to assess whether or not their steering activity is a threat to the don’t-steer vector, but otherwise leave it alone.

If it is not a steering decision, it is usually an acceleration or braking decision (advancing and delaying things are degenerate stop/go versions of acceleration/braking decisions, as are “punch through resistance” decisions about obstacles and “harness this as a tailwind” decisions about new resources, external developments, and novel phenomena).

Less frequently, it is a drop/add decision: adding or losing momentum through inorganic, surgical means.

Why does Rao think that CEO’s cannot and should not steer?

Because most change efforts fail:

The rarest kind of decision is a steering decision that does not belong in a functional pigeonhole. Some broad-based change in the environment that offers no obvious “make it somebody’s job” approach to getting a handle on it. Something that requires reimagining the business.

A decision that requires imagination; imagination requires many things but one thing it needs is a wide “Peripheral vision” – which is something a good CEO will probably lack.

Regular readers of Imperial Energy will know that we often make use of Thomas Kuhn’s concept of paradigms and paradigm shifts. What Rao is describing can, of course, be neatly fitted into the paradigm of paradigms.

A “reimagining” of the business which requires a “re-orientation steering decision” is to execute a “paradigm shift” and it is an “existential threat” for a CEO:

Such a decision is a reorientation steering decision. An existential threat for the CEO, and possibly the entire company. The reorientation will most likely happen via the CEO being replaced or a disruptor taking over the market.

Like most people, I resisted this conclusion for a long time because it suggests the null hypothesis that most of what people do to support or influence CEOs in their jobs is bullshit.

Most of the time, in the face of an existential thread, there will also be some sort of foolish attempt at a “change” theater. Because everybody will want to see some steering being done so they can stop panicking. And as most business leaders know thanks to John Kotter’s decades of evangelism, most change management efforts fail.

What few will admit is that this has nothing to do with poor change management capabilities.  Most efforts at change fail because they are either unnecessary, or because they are impossible.

I’ve spent a depressing fraction of my career aiding and abetting change theaters around reorientations that ended up ultimately happening through CEO changes or disruptions. Sometimes because I gullibly bought in, sometimes because it was a way to make a cynical buck when I needed to.

Increasingly, I just say no. If it’s really an existential threat, change the CEO or go work for/invest in the disruptor instead. If it isn’t, it’s probably best to do nothing. Just resist the temptation to steer, or give the CEO steering ideas.

In an absolutist model, the Sovereign/Chairman of the “family business” will have to replace the Chancellor or CEO.

In a cameralist model, the board of directors will have to replace the CEO.

The alternative would be to create/invest a charter company who can handle the “disruption”.

Disruptions and paradigm shifts must not only be anticipated but prepared for. This, however, is easier said than done.

Compare with what Rao says above, with what Kuhn says below about revolutions.

Kuhn:

Why should a change of paradigm be called a revolution? In the face of the vast and essential differences between political and scientific development, what parallelism can justify the metaphor that finds revolutions in both? One aspect of the parallelism must already be apparent. Political revolutions are inaugurated by a growing sense, often restricted to a segment of the political community, that existing institutions have ceased adequately to meet the problems posed by an environment that they have in part created. In much the same way, scientific revolutions are inaugurated by a growing sense, again often restricted to a narrow subdivision of the scientific community, that an existing paradigm has ceased to function adequately in the exploration of an aspect of nature to which that paradigm itself had previously led the way. In both political and scientific development the sense of malfunction that can lead to crisis is prerequisite to revolution.

This genetic aspect of the parallel between political and scientific development should no longer be open to doubt. The parallel has, however, a second and more profound aspect upon which the significance of the first depends. Political revolutions aim to change political institutions in ways that those institutions themselves prohibit. Their success therefore necessitates the partial relinquishment of one set of institutions in favor of another, and in the interim, society is not fully governed by institutions at all. Initially it is crisis alone that attenuates the role of political institutions as we have already seen it attenuate the role of paradigms. In increasing numbers individuals become increasingly estranged from political life and behave more and more eccentrically within it. Then, as the crisis deepens, many of these individuals commit themselves to some concrete proposal for the reconstruction of society in a new institutional framework. At that point the society is divided into competing camps or parties, one seeking to defend the old institutional constellation, the others seeking to institute some new one. And, once that polarization has occurred, political recourse fails. Because they differ about the institutional matrix within which political change is to be achieved and evaluated, because they acknowledge no supra-institutional framework for the adjudication of revolutionary difference, the parties to a revolutionary conflict must finally resort to the techniques of mass persuasion, often including force.

The Nature and Necessity of Scientific Revolutions. From the Structure of Scientific Revolutions.   Thomas Kuhn.

When the CEO has to steer, either in a pre-crisis situation or during the time of crisis itself, he will begin to re-examine the corporation’s basic assumptions, purposes, practices and personnel. He will begin to try to re-orientate or centre himself again.

As a consequence, what tends to happen is that even if the CEO comes up with a new orientation – a new paradigm – they, nevertheless, will fail. They will fail because most attempts at change fail.

One of the reasons why they fail is that they do not have the right cognitive traits to anticipate, avoid or exploit a paradigm changing event or phenomena.

Rao claims that the traits needed for being a good CEO (“tunnel vision”) are necessary and desirable in normal periods. Furthermore, the CEO must inculcate “blinkers” or “shared truths” in his employees. However, as we will soon see, these virtues are not the same as the traits and virtues needed for analysis, innovation and change in times of disruption or crisis.

Rao:

One reason (though not the main one) the CEO shell script needs to be simple is to allow at least a partial copy to be installed in everybody’s head through frequent reinforcement.

What would the CEO do? is a dangerous decision-making heuristic to install company-wide because it extends the CEO’s blindspots all the way through the company. But done to a judicious extent, it creates the right kind of tunnel vision to make not-steering at the top a manageable job. Shared blinkers are as important as shared truths. What nobody sees is as important as what everybody sees. This is what it means to project a reality-distortion field.

If everybody were to participate in the business of Lafley’s “interpret external reality for the company” you’d get constant chaos.

Does this not sound like democracy?

This runs counter to everything many people sincerely believe about the value of employee empowerment and autonomy, and turning the entire company into some sort of innovation hotbed running on “20% time” (a bullshit idea I believed in for far too long). The truth is, if you actually tried doing things like that, you’d turn the noise and distraction levels up to “impossible to manage.” If you think management by committee is bad, imagine what happens when the entire company turns into one giant committee.

If the idea of turning the company into an entire committee is “bad”, then why is it considered “good” when you turn an entire country into a committee?

If somebody actually has an idea worth a “20% time” project, it’s probably best if they leave and pursue it as a startup idea that might potentially grow up to be a disruptive challenger.

 

Corporate Change  is Hard and Failure is Almost Inevitable.

The always insightful blog, Lead and Gold, comes to a similar conclusion as Rao over change. However, the starting premise for L&G is different, for it begins with a broader view of institutional functions and psychological factors among corporate senior management. The following series on why Corporate Change is Hard and Failure Almost Inevitable begins with a review of David H. Maister’s book, Managing the Professional Services Firm:

Maister’s first signal contribution is an evocative typology of client work. He divides the work of PSFs into three categories: “brains”, “gray hair”, and “procedure“. The respective client benefit for each is expertise, experience, and efficiency.

(These three categories make us think of INTP/J; ENTJ and E/ISTJ.)

L&G:

 “Brains work” involves problems with a high novelty quotient. Risks are high and the key to success is intensive, accurate diagnosis of complex, ambiguous problems followed up with creative and innovative solutions. A procedures practice is dramatically different. The problems are not novel; they are well understood. Here the key to success is intense execution with an eye toward efficiency and standardization. “Gray hair projects usually fall between “brains” and “procedure” on most critical dimensions.

In Rao’s conception, CEO’s are not doing “brains work” but a mix of “procedure” and “gray hair”.

L&G:

An expertise (brains) firm will have completely different approaches to professional development and employee retention than will a procedures PSF.

For example, PSFs which succeed in the procedures realm gain efficiency through repetition and the construction of templates. They achieve maximum leverage by training a body of junior professionals in the firm’s methodologies and deploying them in a series of engagements that are nearly identical. There is room for average performers who can be billed out on such projects.

Recall that this point is echoed by Rao when he says:

One reason (though not the main one) the CEO shell script needs to be simple is to allow at least a partial copy to be installed in everybody’s head through frequent reinforcement.

And:

Shared blinkers are as important as shared truths. What nobody sees is as important as what everybody sees. This is what it means to project a reality-distortion field.

This point is also present in Kuhn’s work when he described how young, “apprentice” scientists would be inculcated (“indoctrinated”?) into the current scientific paradigm during a period of normal science. Later, however, if and when that paradigm is thrown into crisis, these same scientists cannot (and usually will not) adapt to the crisis by adopting a new paradigm.

L&G:

But there is no avoiding the fact that most companies operate as “procedure practices” and that Maister’s insights into them have the same validity as his conclusions about “expertise practices.” Using those insights we can gain a better understanding into the reasons incumbent firms fail to adapt and why change programs are difficult to complete even when they are started.

Most companies are procedure practices. Routinized, programmatic solutions are their raison d’être and represent the essence of managerial work inside their walls. Such an approach works most of the time. It produces efficiencies and profits. If this structure did not usually produce competitive advantage, the work would be carried out by another form of enterprise.

Francis Fukuyama wrote in his now infamous End of History thesis that political problems are now just “technical problems” because the political paradigm has been settled – forever. Thus, a politician, as much as a wonk, learns the “script” and follows a routine procedure for solving these “technical” problems.

Henry Kissinger often points out the contrasting paradigms of American and Chinese statecraft. For instance, in the American paradigm, if a problem (such as a war or international crisis) cannot be solved according to the dictates of the “election cycle” then you have gone “off script”. The Chinese, meanwhile, believe that the solution of one problem is an “admission’s ticket to a new one.”

But there comes a time when the script won’t work. L&G:

If tomorrow’s problems are much like yesterday’s, a procedures mindset works best. Under those circumstances an expertise approach will sink into obsolesce and anomie; its expensive investment in intellectual capital will provide no advantage and will not generate good returns.

During a period of “normal science” and “normal politics”, smart, original, innovative thinkers will not only be shunned but also, at least with politics, “sacked”; indeed, most of them will not even be “hired” in the first place. A Donald Trump presidency would not have been possible in 2006 or 1996, his triumph is a sign that USG was in crisis.

Nevertheless, even during the normal periods, “outsiders” will point out fundamental problems and existential dangers but they will be almost always ignored.

Here are a few examples:

1: Enoch Powell’s “Rivers of Blood” speech.

2: Daniel Patrick Moynihan’s The Negro Family: The Case For National Action.

3: Samuel Huntington’s Clash of Civilisations.

4: Edward Luttwak’s Turbo Capitalism.

5: Ray Dalio’s warning to the Bush administration in 2007 regarding an impending financial crisis.

Eventually, however, a crisis comes; then, various players compete for the power to change the paradigm and a paradigm shift occurs:

Inevitably, if unpredictably, every industry and every firm faces periods of change. The causes are well known: demographic shifts, new competitors, technological breakthroughs. At these times, the procedures-practice model proves a disadvantage.

Why are “procedure” practices at a disadvantage?

L&G:

First, because the implications and exact nature of a particular change-event are unclear at its onset, the premium (and competitive advantage) shift to diagnosis from execution.

Here is how Rao describes how difficult it is for a CEO to undertake the kind of diagnosis and execution that is necessary:

A hint as to why not-steering is rational can be found by examining the risk/uncertainty structure of a “full” steering decision. A full steering decision around some conceptual obstacle or landscape feature has a form something like:

IF X then {LEFT and after T1, RIGHT}, ELSIF Y THEN {RIGHT, and after T2, LEFT}

There are at least 6 variables you can get wrong: 4 turning decisions where you can under or oversteer, and 2 timing decisions where you can be too early or too late. There are also 2 testing conditions that can yield false positives or negatives.

Here is how Henry Kissinger described the challenges that statesman faces when making decisions under conditions of uncertainty:

…requires [the] ability to project beyond the known. And when one is in the realm of the new, then one reaches the dilemma that there’s really very little to guide the policymaker except what convictions he brings to it.… Every statesman must choose at some point between whether he wishes certainty or whether he wishes to rely on his assessment of the situation.… If one wants demonstrable proof one in a sense becomes a prisoner of events. 

 “it is in the nature of successful policies that posterity forgets how easily things might have been otherwise.”

Thus, as Kissinger argues, statesmen faced with options tend towards inaction. But in a crisis, you must act. However, as we have seen, if you do act – as you must – the likelihood is that you will fail.

Consider 9/11 as a paradigm changing event. The Bush administration did seem to recognise that this was an event that required a change in American statecraft. However, the “implications” and the “exact nature” of this “change-event” were not only “unclear” to the administration but their “diagnosis” and course of action was fundamentally misconceived.

Here is a “script” for reasoning about 9/11:

Either America was at war or it was not.

If America was at war, then who was it at war with?

(It was not at war with a state, at least not any state in any straightforward sense.)

If America was at war, then Bin Laden and his men were not soldiers, for they were not part of a state and they wore no military uniforms or followed military protocols and thus they were not party to the Geneva Convention.

Thus, Bin Laden and his men could be shot out of hand; that is, they can be killed by any means necessary.

If Bin Laden is a criminal, then legal procedures should be utilised and the invasion of Afghanistan is really a “police action” to arrest Bin Laden and bring him to justice.

However, what did happen is that the Bush administration, and every other administration after them, followed a middle path that blurs, incoherently, the line between war and law enforcement

Bush was no “deep philosopher.”

What then is required to think clearly in a crisis and reason strategically in the face of a paradigm disrupting event?

The following extract, while taken from L&G, is a quote from Henry Mintzberg’s Crafting Strategy. Here, Mintzberg describes the cognitive abilities needed to perceive, analyse, understand and then respond to paradigm disrupting events and situations of crisis:

The real challenge in crafting strategy lies in detecting the subtle discontinuities (read “anomalies” IE) that may undermine a business in the future. And for that there is no technique, no program, just a sharp mind in touch with the situation. Such discontinuities are unexpected and irregular, essentially unprecedented. They can be dealt with only by minds that are attuned to existing patterns yet able to perceive important breaks in them. Unfortunately, this form of strategic thinking tends to atrophy during the long periods of stability that most organizations experience.

Henry Mintzberg, “Crafting Strategy”, Harvard Business Review, (July -August, 1987)

L&G appears to endorse Maister’s pessimism about the possibility, in times of crisis, that there will be the right person with the right stack of expertise, experience and efficiency for the right end with the right people.

In other words, it is unlikely that a successful paradigm shift can be executed:

In truth, the implications of Maister’s research are quite pessimistic on this score. A corollary to the idea that professionals who excel within the expertise-practice model will not willingly engage in repetitive projects is this: Professionals who succeed in a procedures environment rarely have the aptitude and inclination required for diagnosis under ambiguity and the formulation of customized solutions. This helps explain why denial is so common a response to discontinuous change.

The last claim about “denial” describes how the left responded to Trump’s victory to a T, as we demonstrated here.

An ISTJ will probably not be able to engage in the same kind of free-wheeling, creative, “expert” thinking that E/INTP can do or have the confidence of an INTJ to barrel through others in getting (seemingly) necessary, but novel and risky, changes implemented.

For example, just after we completed a draft of this post, we encountered a similar analysis put forth by William S Lind in the post: The OO Loop Problem.

Lind:

One of the more curious aspects of the current U.S. military is its institutionalization of failure.

The custodians of failure are our generals and admirals.  The problem is not what they do but what they do not do.  They preside blandly over the status quo, terribly busy all the time but changing nothing.  They have half an OODA Loop.  They observe and orient – then observe again.

Lind then puts forward the hypothesis that ISTJs are, essentially, to blame:

How did we end up with this equivalent of the Soviet Union during the Brezhnev years?  As with so many of our military problems, it comes back to our personnel system, specifically to the kind of people we promote.  Years ago, one of my students, an Air Force officer, discovered something interesting while researching his dissertation.  He found that the Air Force academy made all its cadets take the Meyer-Briggs Personality Inventory, and, much later in their careers, the National War College did the same.  He looked at the ISTJs, who are the bureaucrats:  data-oriented, risk averse, people who never color outside the lines.  At the Air Force Academy, they were one personality type among many.  By the War College, they were completely dominant.  Why?  Because one of their characteristics is that they only promote other ISTJs.

The result is evident in our general officers’ OO Loop.  ISTJs avoid making decisions and taking responsibility.  By promoting only other ISTJs they ensure our armed services cannot reform themselves.  All they can give us is more of the same, i.e., more of what has not worked.

According to the following paper on military leadership and the MBTI, ISTJs are the most common type of leader. ENTJ, however, make for the best kind of leader, at least on average.

This is an intriguing hypothesis, but we disagree with it as a root cause analysis of the problem. Political structure determines political psychology. The problem is ultimately political. (Our solution, meanwhile, to USG string of military failures will be discussed in subsequent posts.)

Returning now to corporate or institutional change in general, even if you get your diagnosis right and have the right idea, the bureaucracy will resist change:

Second, even those professionals who attempt to address the challenge of understanding the change-event find that they must fight the inertia and active (though unpremeditated) opposition of most of the organization. In a procedures firm, whole departments exist solely to produce routinized, programmatic outputs and to ensure that the rest of the organization follows uniform procedural templates.

Consider Rao’s “script” for CEOs to follow during “normal” times. During a crisis or a paradigm-shift, the CEO will either not have a script or will have a poorly designed script – one he has little experience with. He is steering by the seat of his pants, in other words.

The rarity of a successful, paradigm-shifting CEO:

To deal with unstructured questions on the frontier of expertise while still satisfying the demands of the guardians of procedure requires a sort of blessed schizophrenia that is exceedingly rare.

You don’t need a “blessed” schizophrenic: you need a great ENTJ!

Consider three examples of such leaders who demonstrated excellence in “efficiency”, “expertise” and “experience”:

1: Julius Caesar.

2: Napoleon Bonaparte.

3: Jack Welsh (which L&G, in a later post, posit as a role model).

All three were able to pull off “paradigm shifts” and respond effectively in times of crisis.

The third reason, according to L&G, why firms fail is that:

….formal planning systems magnify this problem instead of alleviating it. As Henry Mintzberg notes in The Rise and Fall of Strategic Planning, planning exhibits a bias toward a particular type of change in organizationsnot quantum change, with which its procedures have difficulty coping, but incremental. [p. 192]

Many, if not most managers can relate to Mintzberg’s description of formal budgeting/planning environments where managers may be so busy discussing strategies and budgets on schedule year after year that when real change becomes necessary, they miss it. [p. 179.]

It is not surprising, then, that companies like General Motors fail spectacularly after decades of success. If this is not inevitable, it is certainly the norm. The failure of established firms to grasp the importance of technological breakthroughs is a recurrent theme in Utterbeck, Mastering the Dynamics of Innovation (1994) and Christensen, The Innovator’s Dilemma (1997). As both authors point out, focusing on operational excellence today easily leads to that tunnel vision which blinds executives to tomorrow. Maister’s work helps explain why this should be so.

As Rao makes clear, while “tunnel vision” is necessary and sufficient for normal times, it is fatal in exceptional times.

Here is L&G’s explanation of what made Jack Welsh such a successful, paradigm-shifting CEO:

  1. His dictum that all GE businesses be number 1 or number 2 in their marketplace was the perfect antidote to denial (Especially so since managers knew that under performing divisions would be “fixed, closed, or sold.“) 

    2. Welch did not change GE’s culture just by changing minds. The world-beating GE of 2000 was created by purchase, pink slips and divestiture. In 1981 the firm employed over 400,000. Over the next decade, 150,000 new employees came in through businesses that were acquired. During the same period, 190,000 employees left via businesses that were sold, and 170,000 left through layoffs and headcount reduction. When allowance is made for individual employees who left and were replaced by new hires it becomes clear that the vast majority GE employees today never worked at the pre-Welch GE.

    3. During his tenure, GE tackled a major initiative every three years. This is in sharp contrast to the “solution de jure” approach that many companies fall into. By having fewer programs and committing completely to each, GE was able to reap real benefits from the programs. It avoided the cynicism which follows in the wake of multiple programs pursued halfheartedly and incompletely (i.e. fad-surfing).

    4. Welch recognized that firm type imposes constraints and that effort is required to overcome these. Few CEOs devoted as much time to leadership development. He was not afraid to ask if GE had “the right gene pool” for a digital age and a global economy. At the end of his tenure, Fortune noted that he thought “a merciless push to upgrade human capital [was] vital.” This, remember, at a firm considered by many to have the best and deepest management group in the world.

    5. Welch recognized that change in a procedures environment is not pretty. As his fix/close/sell strategy demonstrated, it requires hard choices and painful decisions. After almost 20 years as CEo he was willing to admit that “we’ve got to break this company” to get ready for future changes.

    6. By embracing “constructive conflict,” Welch did not force GE-ers to stifle doubts, questions or disagreements. Instead, he helped the organization learn by opening feedback channels at all levels of the organization and throughout the life cycle of the change programs.

    7. The face-to-face communications central to his leadership style forced GE out of its procedure ruts. The medium is also a message. Written plans and communications denote stasis and predictability. By demanding informal, fast, verbal feedback, Welch sent the message that GE no longer faced an environment which was stable and predictable.

In other words, the man had Imperial Energy.

 

AIII:2 Imperial Equipoise: The Sovereign as an Avoiding and Exploiting Expert.

Civilizations are complex things. For centuries they can flourish in a sweet spot of power and prosperity. But then, often quite suddenly, they can tip over the edge into chaos.

For most of the next three centuries, as we have seen, Ming China was the world’s most sophisticated civilization by almost any measure. But then, in middle of the seventeenth century, the wheels came flying off. This is not to exaggerate its early stability. Yongle had, after all, succeeded his father Hongwu only after a period of civil war and the deposition of the rightful successor, his eldest brother’s son. But the mid-seventeenth-century crisis was unquestionably a bigger disruption. Political factionalism was exacerbated by a fiscal crisis as the falling purchasing power of silver eroded the real value of tax revenues.

Harsh weather, famine and epidemic disease opened the door to rebellion within and incursions from without. In 1644 Beijing itself fell to the rebel leader Li Zicheng. The last Ming Emperor hanged himself out of shame.

This dramatic transition from Confucian equipoise to anarchy took little more than a decade.

The results of the Ming collapse were devastating. Between 1580 and 1650 conflict and epidemics reduced the Chinese population by between 35 and 40 per cent.

What had gone wrong?

The answer is that turning inwards was fatal, especially for a complex and densely populated society like China’s. The Ming system had created a high-level equilibriumimpressive outwardly, but fragile inwardly. The countryside could sustain a remarkably large number of people, but only on the basis of an essentially static social order that literally ceased to innovate. It was a kind of trap. And when the least little thing went wrong, the trap snapped shut. There were no external resources to draw on.

Civilization: The West and the Rest. Niall Ferguson.

 

Can the nature and function of CEOs tell us anything about the nature and function of the Sovereign?

The answer depends on whether or not the Sovereign is operating in a “normal” or “crisis” period, a period of equipoise or a period of exception.

Periods of equipoise require efficiency; exceptional periods require exceptional expertise, experience and energy.

During normal periods, the answer is to maintain equipoise and the security of the centre while preparing for paradigm shifting events so that one can either avoid or exploit them.

In order to maintain equipoise, the role of the sovereign in a normal, functioning paradigm is largely twofold:

1A: Prevent internal deviation from protocols (stopping the individual and bureaucratic ADD that Rao describes and conserving what Adam refers to as “centring”); 1B: Prevent external interference from rivals, parasites and predators (clarifying and enforcing the friend/enemy distinction).

2: Practice perpetual OODA loops.  Scan for anomalies. If an anomaly has been detected, delegate someone to observe and analyse it; if the situation calls for something to be fixed, delegate someone to design a solution and then delegate an appropriate person to implement that design. This assumes that all of the above is possible and necessary, relative to the cost/benefit calculus – which it may not be.

If the first design fails, delegate someone else to analyse, not only the anomaly, but why the first design failed.

This loop, like all loops, can grow exponentially.

For instance, in the second cycle, the Sovereign could delegate Team B to address the anomaly and delegate Team C to investigate why Team A failed the first time.

Now, suppose this cycle also fails.

The Sovereign assigns Team D to investigate why Team B failed; Team E to compare and contrast the failures of Team A and B; Team F to audit the findings of Team C; Private Contracting Team Z to investigate the anomaly afresh and all previous teams and come up with a new solution.

Clearly, this begins to sound comical but this is the way government bureaucracies tend to grow. The problem they were assigned to address does not get solved, but grows worse and soon pulls in more resources. Nevertheless, this problem is not the one we are addressing here.

To go back to the first task, the Sovereign must have secure and stable information channels, reliable sources and relevant information; the Sovereign must scrupulously supervise that senior personnel are following protocols. Finally, the Sovereign may be called upon to pass judgement (or delegate judgement) over corner cases. Finally, the Sovereign must have the means of enforcing protocols and preventing and punishing parasites and predators.

The second task is more difficult, at least cognitively speaking. Firstly, the Sovereign must understand that the “paradigm” is a paradigm. Secondly, the Sovereign must have some idea of what constitutes a “standard” anomaly and be able to identify it. Thirdly, the Sovereign must be open to the possibility that an anomaly exists but that he may either not perceive it or not consider it an anomaly.

As the paradigm approaches the point of perfect equilibrium, the Sovereign should devote more resources (time, money, and people) to scanning for anomalies and processing the information obtained by such scans. Nevertheless, this is insufficient and it is here where things become challenging.

The Sovereign should always assume that nothing lasts forever and that sooner or later a paradigm disrupting event will occur. The “disrupting” or “inciting” incident and period of crisis is one that will have probably be long foreseen. A crisis is usually telegraphed by a number of anomalies that have occurred in the past.

For instance, prior to 9/11, U.S intelligence agencies, government officials and intellectuals and academics were well aware of the possibility of something like 9/11 or worse occurring. 9/11 was still a crisis and it was still an event that was disruptive, but it was not something completely unforeseen or, indeed, unavoidable.

How, then, does a Sovereign become an avoiding and exploiting expert?

Observation, testimony and causal reasoning by themselves cannot provide a Sovereign with the ability to anticipate and then avoid or take advantage of paradigm disrupting possibilities and events.

In order to anticipate and either avoid or exploit such possibilities, you need not just facts and logic but imagination. You need what in chess is called “fantasy“.

Following Rao’s, L&G’s and Maister’s explanations, a Sovereign is probably not going to be good at “fantasy”, except for the rare “great man”.

The problem for the Sovereign is that they are unlikely to possess the necessary traits, tools and talents to meet this challenge:

1: Cognitive traits (analytical powers but, crucially, imagination and what is called coup d’œil).

2: Cognitive equipment (ideas, concepts, theories).

3: Not just the relevant facts but a grasp of the significance of these facts in order to explore and then exploit the space of paradigm possibilities.

4: Energy.

The Sovereign needs, as Maister calls them, the “brains”. That is, the Sovereign needs philosophers, analysts, artists, futurists, and mad men.

These “thinkers” can inform the Sovereign and his key staff – and the next generation – of what is coming over the horizon. Thus, the Sovereign is prepared to observe and understand the anomalies WHEN and NOT IF they arise. In fact, what the Sovereign is seeing is no longer, technically, an anomaly but simply information that either indicates the need for adjustment or, more radically, the need to revise and even reject the paradigm itself.

This issue of advisors and assistants then returns us to the subject of what Adam calls the “attentional structure of sovereignty”.

In normal times, the attention is mostly on routine matters; in exceptional times, more attention must be invested in scanning for anomalies and being able to anticipate and exploit opportunities.

In a crisis, however, routine is and must be broken.

 

AIII:3 Command in a Crisis: Imperial Energy.

When battles and sieges occurred, he threw routine to the winds. But routine – ‘method’ as he called it – was essential to his operational success. It was almost unvarying. How did he organize his day and the surroundings in which he spent it?

It also required a particularly intense ‘managerial’ style – ‘taking trouble’ with the battle, as Wellington himself would later put it.

The general must make himself the eyes of his own army, from which the enemy is hidden as much as vice versa, must constantly change position to deal with crises as they occur along the front of his sheltered line, must remain at the point of crisis until it is resolved and must still keep alert to anticipate the development of crises elsewhere. Hence the distinctive ‘in front sometimes’ (but not always) style which Wellington, in the tradition of Caesar and again of Frederick the Great and of all other great post-heroic commanders, made distinctively his own.

The Mask of Command. John Keegan.

 

What are the habits and routines of military commanders, especially on “normal” days? What do they do? How do they think? How do they reason?

The commander is faced with a complex, epistemic challenge, otherwise known as the “fog of war”. A commander is a man who must not only see but think and decide in the face of great uncertainty and risk – and must do so urgently.

John Keegan, in his deeply illuminating book, Mask of Command, argues that one of the key questions that a commander must ask themselves in order to think and decide effectively is the question of position: Where should you be? In front? In the rear? Moving around?

A commander will almost never have anything approaching certainty and what information he has will be incomplete and often unreliable.

But how does a commander obtain information?

Reports.

From who?

Telescopes”.

Where do these “telescopes” get their information from?

From observations; from the testimony of others (captured soldiers and civilians) and from drawing inferences.

But how do you analyse and evaluate this information? These telescopes often get their information from eye-witnesses of dubious character or soldiers of limited perception and civilians of confused understanding.

This is why, sometimes – especially in a crisis – a leader must be at the front. He must engage in “walking around management” (or on horse, as was the case with Wellington) and what the Japanese call “Gemba”.

As Keegan explains, one of the most surprising and damming of facts about Hitler’s management during the Second World War was that he engaged in the same behaviour as the château generals of the Great War. This is surprising because Hitler had served on the front as a runner and, like most men on the front, bitterly resented the “higher ups”. It is damming, not just because of the grotesque contrast between the comforts that he and his staff enjoyed, but because he was fundamentally cut-off from the “facts on the ground” and was lost in the “fog of war.”

A similar criticism could be levelled against Clinton’s 2016 “campaign” where she and her “high command” were fundamentally cut off and deliberately cut off from the “facts on the ground”.

Napoleon, by contrast, not only commanded armies in the field but a country simultaneously. Napoleon was a ruler who paid close attention to the pulse of the people to the point of being obsessed by the price of bread.

Command in a crisis, especially a systemic crisis, requires that, while having fundamental principles constantly in mind, one have that finger-tip grasp of the facts and the ability to execute what is called coup d’œil. Here is how Frederick the Great described it in his “instructions” to his army:

According to the Chevalier Folard’s system, the knowledge of the nature and qualities of a country which is the theatre of war, is a science to be acquired. It is the perfection of that art, to learn at one just and determined view, the benefits and disadvantages of a country where posts are to be placed, and how to act to the annoyance of the enemy. This is, in a word, the true meaning of a coup d’oeil, without which an officer may commit errors of the greatest consequence. In short, without this knowledge, success cannot be promised in any enterprise, as the business of war requires much practice and experience to be well understood. To learn this before we begin a campaign, and, when engaged in it, to be able to join practice to theory, is the business of every good officer.

But as we are not always at war, as the army is not always campaigning, and the regiments only assemble at certain periods for exercise, we must endeavor to improve ourselves by means of our own genius and imagination, so as to learn, even in time of peace, a science so useful and necessary.

(Note Frederick’s instruction that officers must make use of “imagination” which is what we pointed out above, though for the Sovereign.)

In the opinion of the Chevalier Folard, field diversions are the best calculated to give a military coup d’oeil, for we not only learn from thence to distinguish the difference of countries, which never resemble each other, but we also get acquainted with a variety of stratagems, all of which have some connection with the business of war. One of the great advantages which we derive from hunting, is the knowledge of different countries, which gives us a coup d’oeil almost imperceptibly, which a little reflection and practice will soon make perfect.

Besides hunting, by which few people have an opportunity to profit, travels and walks have their advantages.

(As we pointed out in Act II, the Sovereign must engage in frequent “touring” to get a “feel” for the country and people.)

Whilst travelling, we can look with a penetrating eye over all the country that we pass, figure to ourselves an enemy’s post at whatever distance we please, conceive ourselves on another, judge of all the benefits and disadvantages peculiar to each party, arrange in imagination the plan of attack and defence of our post, and as the unceasing variation of country offers incessantly new discoveries, an imagination a little warmed will never want employment.

Whilst walking, the eye may judge and measure the distance of one place or thing from another; and to be certain that we are not mistaking, we can walk it over and convince ourselves of the justness of our coup d’oeil.

Every country will furnish an officer, who wishes for instruction, with the means of exercising his eyes and ideas: whilst he who engages in the profession from necessity, without any taste, will let slip the most happy opportunities of improving himself without turning them to any advantage.

Everything in life is simple but simplicity is the hardest thing to achieve and when simplicity is demonstrated, it looks like genius, perhaps because it is genius.

Let’s look at one particular example of genius making the complex simple from Steve Jobs, in one of his moments of Imperial Energy. Moldbug called Jobs, upon his death, an “Ableman” – a term from Carlyle’s lecture on Heroes and Hero-Worship:

The Commander over Men; he to whose will our wills are to be subordinated, and loyally surrender themselves, and find their welfare in doing so, may be reckoned the most important of Great Men. He is practically the summary for us of all the various figures of Heroism; Priest, Teacher, whatsoever of earthly or of spiritual dignity we can fancy to reside in a man, embodies itself here, to command over us, to furnish us with constant practical teaching, to tell us for the day and hour what we are to do. He is called Rex, Regulator, Roi: our own name is still better; King, Könning, which means Can-ning, Able-man

I say here, that the finding of your Ableman and getting him invested with the symbols of ability, with dignity, worship (worth-ship), royalty, kinghood, or whatever we call it, so that he may actually have room to guide according to his faculty of doing it,—is the business, well or ill accomplished, of all social procedure whatsoever in this world!

Here is the “Ableman” man at work in a crisis:

After the 1995 release of Microsoft’s Windows 95 multimedia operating system, Apple Inc. fell into a death spiral. On February 5, 1996, BusinessWeek put Apple’s famous trademark on its cover to illustrate its lead story: “The Fall of an American Icon.

In the face of an imminent collapse, Jobs showed that he was an avoiding expert:

By September 1997, Apple was two months from bankruptcy. Steve Jobs, who had cofounded the company in 1976, agreed to return to serve on a reconstructed board of directors and to be interim CEO. Die-hard fans of the original Macintosh were overjoyed, but the general business world was not expecting much. Within a year, things changed radically at Apple. Although many observers had expected Jobs to rev up the development of advanced products, or engineer a deal with Sun, he did neither. What he did was both obvious and, at the same time, unexpected. He shrunk Apple to a scale and scope suitable to the reality of its being a niche producer in the highly competitive personal computer business. He cut Apple back to a core that could survive.

Coup d’œil and Jobs the exploiting expert:

Steve Jobs talked Microsoft into investing $150 million in Apple, exploiting Bill Gates’s concerns about what a failed Apple would mean to Microsoft’s struggle with the Department of Justice. Jobs cut all of the desktop models—there were fifteen—back to one. He cut all portable and handheld models back to one laptop. He completely cut out all the printers and other peripherals. He cut development engineers. He cut software development. He cut distributors and cut out five of the company’s six national retailers. He cut out virtually all manufacturing, moving it offshore to Taiwan. With a simpler product line manufactured in Asia, he cut inventory by more than 80 percent. A new Web store sold Apple’s products directly to consumers, cutting out distributors and dealers.

What is remarkable about Jobs’s turnaround strategy for Apple is how much it was “BusinBusiness 101 is surprisingess 101” and yet how much of it was unanticipated. Of course you have to cut back and simplify to your core to climb out of a financial nosedive.

The power of Jobs’s strategy came from directly tackling the fundamental problem with a focused and coordinated set of actions. He did not announce ambitious revenue or profit goals; he did not indulge in messianic visions of the future. And he did not just cut in a blind ax-wielding frenzy—he redesigned the whole business logic around a simplified product line sold through a limited set of outlets.

Jobs had the “finger-tip feel” as he explained:

The product lineup was too complicated and the company was bleeding cash. A friend of the family asked me which Apple computer she should buy. She couldn’t figure out the differences among them and I couldn’t give her clear guidance, either. I was appalled that there was no Apple consumer computer priced under $2,000. We are replacing all of those desktop computers with one, the Power Mac G3. We are dropping five of six national retailers—meeting their demand has meant too many models at too many price points and too much markup.

From Equipoise to Energy:

In the summer of 1998, I got an opportunity to talk with Jobs again. I said, “Steve, this turnaround at Apple has been impressive. But everything we know about the PC business says that Apple cannot really push beyond a small niche position. The network effects are just too strong to upset the Wintel standard. So what are you trying to do in the longer term? What is the strategy?” He did not attack my argument. He didn’t agree with it, either. He just smiled and said, “I am going to wait for the next big thing.”

Good Strategy/Bad Strategy: The difference and why it matters. Richard Rumelt.

Next, let’s look briefly at one commander in a crisis; one commander who John Keegan studies at length: Arthur Wellington and his command during times of both calm and crisis.

 

AIII:4 Wellington at War: Clerking and Commanding.

Wellington had two completely different command “scripts”.

The first script – “camp script”, let’s call it – was what he called “method” or what we all today would call routine.

Day in, day out, Wellington had the same “unvarying” routine – before battle.

Before battle, Wellington was little more than an administrator – “clerking business” as he called it.

Wellington’s “clerking” consisted of the endless reading and writing of reports; meetings with underlings; inspections and dealing with allies; securing the necessary supplies – wine for the Irish, money for the Scottish and beef for the English say. Wellington was not called “Iron Duke” for nothing, as this “clerking” required tremendous discipline and diligence:

…he maintained his habit of rising early and getting at once to work: ‘When it’s time to turn over it’s time to turn out.’ Wellington was up at 6 every day, wrote until breakfast at 9 – tea and toast, as throughout his life – and then interviewed his heads of department, one after the other, which took until 2 or 3. They were the adjutant-general, quartermaster-general, intelligence officer, commissary-general, inspector-general of hospitals, the artillery and engineer commanders and, if necessary, also the paymaster-general and judge-advocate.

McGrigor, his inspector-general of hospitals, an acute observer of human nature, describes the encounter:

At first it was my custom to wait upon Lord Wellington with a paper in my hand, on which I had entered the heads of the business about which I wished to receive his orders, or to lay before him. But I shortly discovered that he disliked my coming with a written paper; he was fidgetty, and evidently displeased when I referred to my written notes. I therefore discontinued this, and came to him daily, having the heads of business arranged in my head, and discussed them after I had presented the states of the hospitals.

Larpent, his judge-advocate, may have failed to detect his impatience with subordinates who could not imprint fact into the appropriate slot in the mind as readily as he could himself. ‘He is very ready and decisive and civil, though some complain a little of him at times and are much afraid of him. Going up with my charges and papers for instructions I feel something like a boy going to school.’

A French ambassador to London when Wellington was Prime Minister told an acquaintance in later life that he could transact as much business with him in thirty minutes as with a French minister in thirty hours.

Whatever his method for mastering his subordinates’ affairs, the work was soon done. By 2, and certainly not later than 4, he was out on horseback, riding both to take exercise and to see his army at close hand. At 9 he shut himself up to write again and at 12 he went to bed.

In the interval he might have taken dinner in company. His was not a luxurious mess. Wellington ate little and insisted on rice with almost everything. He had largely subsisted on it for three years in India ‘and those who knew his habits had it in readiness when he dined out’. He drank moderately, but less as time went on: in India, ‘four or five glasses with people at dinner, and about a pint of claret afterwards,’; in Spain, ‘no port wine, only thin claret, country wines and brandy’.

He might sit down twenty-eight to dinner, but ‘the conversation is commonplace … on his part he talked with apparent frankness … All however seemed unnecessarily in fear of the great man.’ Nothing of Alexander’s revelry among his companions here. The party was sober and broke up at the Duke’s bedtime.

His headquarters were moved frequently and pitched wherever accommodation could be found. The billeting officers went ahead to find quarters and chalked names on doors as accommodation seemed appropriate (Saint-Simon describes an identical practice when Louis XIV went on campaign). At Bussaco in 1810, Wellington was billeted in a monastery. The abbot recorded that, ‘we showed him his room. It did not please him, in spite of being the best, because it had only one door. He chose another more secure, for it had two.

Sergeant Costello, when posted on guard, observed the Duke ‘walking through the market place, leading by the hand a little Spanish girl, some five or six years old, and humming a short tune or dry whistle, and occasionally purchasing little sweets, at the child’s request, from the paysannes of the stalls’. Even Wellington – ‘there is but one way – to do as I did – to have a HAND OF IRON’ – sometimes felt the need for the warm press of simple affection.

The Mask of Command. John Keegan.

Essentially, “camp script” was all about acting as an “orientation lock”, following protocols and “scanning” for anomalies (opportunities to attack or the need to defend).

However, when battle began, routine was “thrown to the wind”.

The second script – “battle script” – required an “intense managerial style” that involved lots of steering from the saddle, as it were.

He would ride about; observe; order people – indeed whole armies – into positon and PUSH! PUSH! PUSH!

With the “battle script” it was a very different affair as the situation called for energy, flexibility, aggression and hunting for opportunities to defeat the enemy.

Let’s look at one example of this in the battle of Salamanca during the Peninsular War.

In 1812, General Wellington faced Marshall Marmont in Spain. Both arms were manoeuvring round each other like snakes, waiting for the moment to strike if they glimpsed any weakness in the other. After some time of this, Wellington was either on his horse, or at table, eating a chicken leg for lunch while watching the French through his telescope. Either Wellington observed himself via a telescope or was informed by a staff officer that the French were extending to their left. In response, Wellington was reported to have said to his Spanish liaison officer, Alava, that “Marmont est perdu” (Marmont is lost). This was the opportunity that Wellington was waiting for and he promptly ordered his “machine” into motion and battle was given. The result of Marmont’s mistake and Wellington’s exploitation of that mistake was that he achieved a victory which ultimately caused the French to retreat from Spain.

Wellington was often assumed to be a “defensive” commander, a man who avoided unnecessary risk, who made few mistakes but who always exploited opportunities from positions of strength. Nevertheless, the battle of Salamanca established his reputation as an “offensive” commander (though, during the battle of Assaye,Wellington also fought offensively).

Wellington was an avoiding and exploiting expert.

Wellington, with a telescope in one hand and a chicken leg in the other, showed he had coup d’oeil.

 

 

Summing up, command in war features, on the one hand, long periods of routine or protocol and short, intensive and violent moments on the other. Furthermore, the “clerking” side of command requires the psychological qualities that Rao imputes to CEOs.

However, command requires some of the qualities that Maister ascribes to what he calls “brains” and what Minzberg considers necessary for “crafting strategy”.

Nevertheless, there are two important differences to note here.

The first is temporal and the second concerns consequences and feedback.

The CEO or statesman who crafts strategy in business or politics has more time for thinking, research and planning than a General, who is under far greater time constraints. Secondly, and in way not unrelated to the first, strategy in business and politics is harder to evaluate, as the strategy takes longer to manifest and the consequences are often ambiguous and the causal link between strategy and success/failure uncertain. In contrast, feedback in war can be – and often is – fast and unforgiving.

Sovereigns don’t steer – in normal times.

Sovereigns must steer – in exceptional times.

In an absolutist system, it will be one man – the Sovereign – who must select, de-select and steer the non-steering CEO/Chancellor during a crisis and paradigm shift.

In a STEEL-cameralist system, it is the board of directors who must select, de-select and steer the non-steering CEO.

 

AIII:5: The Paradigm and Paradox of Power.

1: If a King steers, then it is likely the King will fail.

2: If the King fails, then the concept of monarchy may be discredited.

3: Thus, a King must not steer.

4: However, if a King does not steer and, therefore, the state functions according to the principles and assumptions of the paradigm, then some people may question the necessity of having a monarchical system because the King is superfluous.

5: If people come to believe that a monarchical system is unnecessary – because the King is superfluous – they may come to view the monarchical system as undesirable; thus, the King is discredited.

6: If enough people come to believe that the monarchical system is undesirable because the King is discredited, then they may desire and, therefore, act to remove the King and end the monarchical system.

7: If a King steers, he will likely fail and thus monarchy will be discredited; if, however, the King does not steer, then people may come to doubt the necessity and desirability of the King and may attempt to replace not just the King but the monarchical system; as a result, the King fails.

8: In conclusion, as Marcus Aurelius said, “it is a King’s lot to do good and be dammed.”

The above argument is certainly not watertight, but the paradox it attempts to capture is to open up for consideration and exploration the concept of a wu wei sovereign.

 

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