The Integration of Organizational Relationships: The Role of Authority in the Global Economic Order

by A. Earl Swift
Chairman, Swift Energy Company

We are all internationalists now, whether we like it or not. –  Tony Blair, April 22, 1999  

William Golding's famous novel, Lord of the Flies, portrays a world without authority. After English schoolboys are stranded on a deserted island without adult supervision, their moral values gradually begin to peel away, revealing dangerous animal drives within. Written in 1954, Golding's novel could become a prophecy of 21st-century life on a global scale, a fulfillment of what international correspondent Robert Kaplan warns may be a "coming anarchy." In Africa, where population growth, unemployment, AIDS and ethnic unrest have created millions of youth vulnerable to exploitation, mobs of adolescent soldiers have committed horrific acts of violence from Rwanda to Sierra Leone. In Palestine, where decades of conflict have produced a climate of lawlessness and despair, young suicide bombers perpetrate acts of violence with no realistic purpose other than to perpetuate killing. In Baghdad, where the toppling of Saddam Hussein's regime marked the end of tyranny and the beginning of anarchy, looters of all ages have ransacked homes, hospitals and many public and governmental facilities. Wherever authority breaks down, Beelzebub — the Lord of the Flies — takes command. 

At the beginning of this new century, breakdowns of authority appear to be occurring in greater frequency and variety. In the United States, the recession of 2001 led to revelations of fraud and mismanagement in corporate America on a previously unimagined scale, which inturn has helped accentuate the decline of the U.S. stock market and contributed to a weakening of the dollar. 

In Russia, economic shock therapy has produced an almost two-thirds decline in per-capita gross domestic product since 1990, largely because the existing legal and regulatory system proved inadequate to govern a free-market economy. In the developing world, economies are languishing because traditional authority systems have been unable to guarantee the basic property rights necessary for capital markets to function efficiently, contributing to the abysmal fact that more than 50 nations around the world have per-capita national incomes of less than $2 per day. 

These breakdowns of authority are occurring as the world enters a momentous period of transition, with organizations across the planet merging into a single global economy. This transition has forced organizations up and down the scale, from families and businesses to national governments and global institutions, into the throes of dynamic and turbulent change. If the world is to avoid growing anarchy, we must find peaceful and productive mechanisms for reforming the governance of a myriad of organizations and institutions. If catastrophic violence is to be avoided, authority systems at every scale and in every culture must develop new ways of working effectively within an integrated global framework. 

Success is not inevitable. The protests and scattered violence surrounding the meetings of global economic institutions — in Seattle in 1999; in Washington, D.C. in 2000; in Canada, Sweden and Italy in 2001; and at the G8 meeting in Switzerland earlier this year — should give us all pause. Even in the developed world, there are serious disagreements with the course globalization is taking. In developing countries, the disagreements have often been more substantial, and protests against globalization have frequently turned violent. It is no accident that the World Trade Center was the primary target of the heinous attacks of September 11. The terrorists saw its symbolic value. 

Globalization will not be imposed on the world by force. The only way a stable and prosperous global framework can be achieved is through voluntary cooperation, and that cannot happen until more of the world begins to benefit from globalization's potential. If the global economy continues to be seen as a mechanism for concentrating wealth in the hands of few, it will ultimately fail. 

From Interdependence to Integration 

Although international authority structures have only begun to emerge, global economic interdependence is now a fact of life. Nowhere is this more obvious than in the production and use of energy. The United States now imports over half of its oil because its own production is unable to keep pace with domestic demand. But even if the U.S. could reduce its dependence on imported petroleum, it would still be irrevocably tied into a global economic system that depends upon international trade in energy. As UK Prime Minister Tony Blair once stated, "We are all internationalists now, whether we like it or not." The key question of our time is whether we can move from mere economic interdependence to an integrated system of global authority, where the benefits of increased prosperity are shared by all of the world's people rather than just a wealthy elite.

Mere economic interdependence will inevitably lead to instability. Without an integrated authority system, cooperation among organizations is limited to areas of mutual advantage, and relationships are tentative and continually tested, making it difficult to pursue long-term commitments. In contrast, an integrated system of authority provides a unified purpose that fosters a climate of trust and cooperation. This climate of trust based upon common authority, common goals and common values makes more challenging and productive undertakings possible. Achieving any goal on the path of progress almost always requires a group of people working together toward a common purpose, motivated and bound together by some form of recognized authority. 

Common Ground 

Every form of human endeavor requires some form of authority to direct it, and the emerging global economy is no exception. Betting on an invisible hand to solve our global economic and social problems is about the same as betting on the tooth fairy to save the day. Clear direction is required, but that direction will not come from one person, nation or culture. Instead, it will come from an integrated network of businesses, institutions and governments that have agreed on a limited set of common values and common goals. 

The key to success will be the creation of a multicultural value system that can permeate every type of organization and guide decision makers within an integrated network of authority structures. Creating these universal values will require the cooperative efforts of leaders from all walks of life, but during the current early stages of globalization the business community must play a leading role. 

The world is currently tied together almost exclusively by common economic interests. Outside the economic sphere, a clash of cultural and religious values is leading toward anarchy. To overcome this clash of values, we will have to find common ground, beginning with the acknowledgment of our worldwide economic interdependence. 

The interconnection of the world's economy has become unmistakably evident. When Asia suffered banking failures in 1997 and 1998, the fallout reverberated as far as Russia and the United States. The interruption in Venezuelan oil production in 2002 impacted oil prices across the globe. Perhaps most dramatically, four airplane crashes at the hands of terrorists in the United States on September 11, 2001, affected financial markets around the world. We are all in one economic boat, and we sink or sail together. Consequently, the first steps toward multicultural values must be taken within the global economy, the one area of human activity where the interests of the world can converge. 

Business leaders are largely responsible for building the global economy, and they are in the best position to bring diverse cultures together in pursuit of common goals. Business leaders are also the world's experts on peaceful competition. Human nature thrives on competition between differing points of view. Creating new ways of doing things inevitably challenges the status quo. Without competition, human progress would be impossible. Globalization is threatening the status quo at every level of human society, reshaping our families, businesses, neighborhoods and governments. Sweeping changes of this nature will inevitably lead to serious conflicts in values. A key question will be how many of these conflicting values can be resolved through peaceful competition rather than through violent clashes. With the proliferation of terrorism and weapons of mass destruction, violence today no longer threatens individual governments and societies alone. Violence now threatens civilization itself. We must find ways to resolve both economic and social conflicts through peaceful competition if we are to achieve the promise of globalization and avoid the peril of worldwide anarchy.

Moral Leadership 

If the business community is to play its role in guiding the world toward multicultural values, then business leaders must accept the mantle of moral leadership. Many effective business leaders accepted this responsibility long ago, realizing that shaping the vision and values of their organizations is their primary responsibility. Leadership requires much more than just knowing what to do. Leaders must create an organizational consensus around a course of action that resonates with the deep instinctual and emotional drives that motivate human behavior. Leaders do this by communicating moral values and tying those values to a vision of a better future. 

Accepting the mantle of moral leadership is not only the right thing to do, it is the prerequisite for sustained success. In even the smallest organization, no leader can personally monitor and motivate everyone. If an organization is to compete in a dynamic marketplace, its goals and controls must be internalized as vision and values. Only internalized direction can be flexible enough and decentralized enough to cope with today's complex competitive landscape, particularly in a multicultural setting. 

How, then, do business leaders determine the appropriate multicultural values to build into their organizations as well as into the broader society? 

First and foremost, they must promote the bedrock values they believe in personally. Anything other than deeply held personal beliefs would be both hypocritical and ineffective. Leaders must accept the fact that they are role models. As long as they are in a leadership position, the members of the organization constantly look to them for both direction and motivation. A leader's thoughts and emotions no longer belong exclusively to him or her alone. Over time, the true attitudes and values of the leader will inevitably weave their way into the fabric of the organization's culture. Under this kind of scrutiny, any insincerity on the part of the leadership will become apparent. Leaders must therefore follow the ancient admonition "know thyself." Only through realistic self-knowledge can leaders hope to articulate a common vision and set of values that have any significant chance of long-term success. 

Second, leaders must be open to personal change and growth. Multicultural values will be created through a process of competition and dialog. No one person, not even the leader, will have the complete set of values that can succeed in a multicultural environment. Therefore, the flow of values between leaders and their organizations must become a two-way street. To some extent, leaders must let their organizations shape their own personal value systems if they are to be effective in shaping the values and culture of their organizations. 

Third, business leaders must become good students of human nature. By definition, multicultural values cannot be based upon one religion, culture or nationality. They must be based on what we have in common, and the only thing that we all share is our common humanity. The basic drives of human nature must ultimately become the common thread from which we weave a multicultural tapestry.

Balanced Drives 

As technologically advanced as we've become today, with land rovers exploring Mars and computers communicating around the world, the fundamental drives that motivate us go back millions of years into our evolutionary heritage. As we evolved from what our ancestors were to what we have become, three fundamental driving forces became deeply ingrained in our nature: our self-centered instincts, our group-oriented emotions and our purpose-centered intellect. 

Our self-centered instincts goad us to meet our individual material needs. These drives go back into our very distant past, and we share them with many other creatures. Because territories provided food and water, places of rest and safety and the context for procreation and power, competition for territory often became a means of satisfying many other basic material needs. Just as animals compete for territory, human beings compete for property. Individual desires for property and wealth provide the primary fuel that drives the engine of economic competition. 

However, individual desires to acquire material wealth do not provide sufficient motivation to build a successful business or any other organization. We also have basic social drives to belong to a group that must be satisfied. As with our self-centered instincts, our social drives were formed in distant recesses of our past. Human beings require an extensive period of nurturing and training. Complex familial relationships evolved to help provide a needed degree of protection for children and mothers and to spread the burden of child rearing. Because of this evolutionary heritage in the family, we all have deep yearnings not only for companionship with significant others but also for belonging to groups outside the family. 

The third basic drive of human nature is the intellectual quest for meaning and purpose. Human beings have demonstrated time and again the capacity to transcend biological and cultural limitations through an exercise of purposeful action to turn a common vision of the future into reality. Consider human flight. Long before the ancient Greeks told the story of Daedalus and Icarus, people had imagined what it would be like to soar above the heavens. Only by the beginning of the last century, however, had technology progressed to the point that two bicycle shop owners could turn that vision into reality. Less than 70 years after the Wright brothers' historic flight, an American was standing on the moon. The seemingly impossible often becomes possible when people work together to achieve a powerful vision born of shared imagination. 

Meaningful common purposes resulting from shared imagination form the basis for all organizational authority. People reach out for authoritative leadership because they want to come together with others to achieve goals they could never attain on their own. Without a meaningful shared vision, organizations could not function. Without organizations, humanity could not survive and prosper. 

These three basic drives — to acquire, to belong and to achieve — motivate everyone, and balancing these three drives provides the best starting point for creating a common set of multicultural values.

For individuals, a state of balance means that a person's three basic drives are fulfilled at least to some rudimentary level: we have freedom to pursue our material needs and individual desires; we feel a sense of belonging to various groups defined by family, faith, career or community; and our lives have a sense of meaning that comes from achieving goals, learning new things and pursuing some common vision of a better future. 

For an organization, balance means that decisions are made with all three basic drives in mind. As mentioned in some of my previous articles in World Energy, the three basic drives correspond to three universal decision-making processes: individual decision making based on self-interest, group decision making based on consensus and authoritative decision making based on values, rules and hierarchies. In today's specialized society, no single organization can be responsible for meeting all of a person's basic needs, but when it comes to making decisions, each organization can provide a balance of individual freedom, group consensus and authoritative values. The founders of the United States inherently understood the need to balance these three processes when they established three branches of the U.S. government, each of which serves to check the power of the other two. The judicial branch protects individual rights, the legislative branch creates group consensus and the executive branch provides authoritative leadership. 

At the level of the broader society, as well as the emerging global order, balance means that all of our organizations and institutions are operating together in an integrated fashion to meet the full spectrum of human needs for the largest possible number of people. Ultimately, a balanced global system cannot confine itself to purely economic matters, nor can it continue to concentrate economic benefits in the hands of the few. Because no individual or organization can meet the full spectrum of needs alone, a lack of integration and balance in society as a whole will create imbalance and inequity up and down the organizational scale, from the individual all the way up to the global economy. It is precisely this lack of integration and balance at the global scale that is stressing most of our organizations and institutions today, leading to the breakdowns in authority we are now observing throughout the world.

Stakeholder Orientation 

Achieving integrated authority systems will require that every organization look beyond its own narrow mission to the goals and values of the broader society in which it functions. No organization is an island. Effective business leaders must therefore focus on the needs of all their stakeholders, not just their stockholders. Unfortunately, one of the most important negative impacts of corporate scandals over the last couple of years has been the reinforcement of the market's obsession with short-term changes in shareholder value. 

Business leaders are at least partly responsible for this obsession. They have not effectively communicated to the public that real value is not built in a day by a few celebrities. A widespread understanding of this simple truth could have avoided some of the excesses of the dot-com bubble, and it provides one of the best protections against corporate abuse in the future. 

Value creation requires diverse peoples in diverse organizations dedicated to the joint pursuit of long-term goals, and that network of endeavor is not bounded by the limits of the corporation itself. Businesses require an integrated group of stakeholders to succeed. In addition to stockholders, businesses need sources of debt financing, a network of suppliers and customers, a just and impartial legal system and an educated and skilled workforce. Cooperation from a variety of organizations — businesses, governments, communities and nonprofit institutions — is always a necessary ingredient for corporate achievement. It follows that a corporate mission must include more than earning a return for shareholders, and a corporate culture must include more than the desire to make money. A mission focused solely on shareholder value, ignoring the needs of other stakeholders, is inherently unbalanced, and a culture focused solely on money is skewed too heavily toward individual motivations to the neglect of group consensus and common purpose. Nondiscrimination and Equality of Opportunity If multicultural values are to be created through peaceful competition and dialog, then religious and cultural tolerance and equality of opportunity are mandatory. Within most cultures, religious traditions have generally provided the ultimate basis of authority. Religion provides a picture of a perfect state of affairs and ultimate goals in life. Religious truths taught in parables and stories shape our common imagination. Moral values evolve from this shared vision of a desirable future, and morals taught by religious institutions have provided the primary mechanism for evaluating the common purposes of other organizations. 

Because purpose-centered authority is central to survival, spiritual yearnings for ultimate authority have been wired into our nature. However, it was only during what has been called the "axial age," from around 800 to 200 B.C., that these yearnings began to be organized into universal ways of looking at the world. During this period, monotheism, philosophy and rudimentary science started to flourish simultaneously in various parts of the globe. This transformation sowed the seeds of the modern world, but it also formed the roots of our current international conflicts. Over the last century, we have seen a clash of many of these "universal" worldviews, from conflicts between science and religion to clashes between various religious faiths and between various secular ideologies. More often than not, religious and ideological intolerance became a proxy for ethnic and racial hatreds. 

It is important, even essential, that the world encourages healthy competition between conflicting worldviews. Every faith and ideology needs enough humility and enough confidence in its own precepts to allow proponents of conflicting worldviews to express their opinions in peace. We will have conflicts in values, beliefs and ideologies as long as humanity survives. Competition in the free marketplace of ideas is the primary pathway to progress. 

Multicultural values therefore must promote a peaceful competition of ideas. As a practical matter, a global society will fly apart unless we cultivate an appreciation of diverse points of view. For the business leader, this means that religious, cultural or racial discrimination cannot be tolerated anywhere within a business organization. But businesses must go beyond nondiscrimination to promoting equal opportunity. Human capital is the engine of growth in the information age, and no one can know beforehand who will have the talent and skills to revolutionize the world for the better. If history teaches us anything, it teaches that talent and leadership knows no religious, cultural or racial boundaries. Equality of opportunity is common sense, and it is also good business. 

Community Employment 

Successful business organizations also must exhibit a real commitment to the local communities where they do business, and one of the most important contributions a business can make to a local community is to create jobs. All too often, nations have dropped their barriers to international trade and investment only to see burgeoning unemployment with accompanying social disruption. Some disruption is inevitable, but it can be minimized if corporations take their responsibilities as a local employer seriously. At Swift Energy, one way we do this is by hiring locally. In our New Zealand subsidiary, approximately 90 percent of our employees are from New Zealand. We have found that as a local employer, we become part of the local communities where we operate. We influence those communities, and those communities influence us. 

Creating jobs in local communities is critical if business organizations are to become successful proponents of multicultural values. The boundaries of the organization must become permeable to the flow of values and ideas between the business organization and the wider culture. Business leaders must articulate a limited set of universal values that apply to every business unit in every community in which the company operates. These core values — founded on a balance of individual freedom, community consensus and common purpose — should then flow out into the community, just as community values simultaneously flow into the organization. Business organizations can then become a melting pot from which multicultural values emerge; however, this two-way flow of values cannot take place unless the business enterprise is a significant local employer. 

Companies that attempt to create a corporate value system isolated from local cultures have missed the boat. What is needed is a way of tying the diverse cultures of the world together through a limited set of multicultural values, not a uniform international culture that seeks to impose its will on local communities using brute economic force.

Cultivating Leadership 

Another critical responsibility of business leaders is to cultivate leadership abilities in other people. No organization can attain long-term success unless it can create a climate that attracts and mentors good leadership. But business leaders should take a wider view when cultivating leadership within their organizations. They must encourage their employees to become community leaders as well as leaders within the company itself. 

Once business organizations inculcate their corporate cultures with multicultural values, they must facilitate the dissemination of those values into the broader society. They can accomplish this objective by becoming involved in their local communities and by encouraging their employees to do likewise. As religious tolerance, nondiscrimination and equality of opportunity become ingrained in the corporate culture along with the principles of individual freedom, community involvement and respect for authority, employees can take those principles into other organizations and institutions in which they participate. 

A key area for community involvement will be education. Outside the family, education plays the most important role in the formation of values. The business community needs to invest in education to facilitate the growth of human capital, but it also needs to be concerned with the values being taught. Preparing children to succeed in a global marketplace will require that they be exposed to religious, ethnic and cultural diversity during the education process. Basic skills such as reading and math are crucial, but basic skills also include learning to work effectively in a diverse environment. Diversity benefits everyone, not just minorities. As Supreme Court Justice Sandra Day O'Connor recently stated in one of the Michigan affirmative-action cases: "American businesses have made clear that the skills needed in today's increasingly global marketplace can only be developed through exposure to widely diverse people, cultures, ideas, and viewpoints." 

Leading by Example 

Businesses must lead other organizations by example. Just as a business leader is a role model within his or her company, a business organization can be a role model within a local community.

Businesses are familiar with competition and change. They were the first organizations to adapt to globalization, and they continue to lead the way. Religious, political and social institutions now must find peaceful ways of competing with rival organizations that promote conflicting values. Like businesses, these organizations must break down the barriers to the exchange of conflicting points of view and prepare to compete in the free marketplace of ideas. Multicultural values will eventually be formed through a process of dialogue between diverse points of view. All of our organizations and institutions need to focus on creating forums for that dialogue to occur. Business organizations can provide an example of how this goal can be accomplished. 

Anarchy or Authority 

We have come to a fork in the road, and we have a choice to make. We could resist the historical forces that are driving us toward an integrated system of global authority, but if we choose that path, our current authority structures will be dismantled brick by brick with nothing to take their place. Population growth alone has taken us past the point of no return in global interdependence. Without a global economic system, we cannot feed everyone or maintain our current standard of living. If we choose the road of resistance, the destination is clearly anarchy. 

The other path requires us to create a common set of multicultural values based upon our shared human nature, values that can provide the foundation for integrated authority systems for the world as a whole. To create these universal values, we must break down barriers to competition in the global marketplace of ideas, embrace diversity and dialogue and open ourselves to change. 

Which path will we choose? It's too early to say. Which path should we choose? There is only one path to progress, and it is the path to revitalized authority that respects human rights, binds us together and provides us with common goals. It is the path we must take. Otherwise, the Lord of the Flies will have won.    

Together with his brother Virgil Swift, vice chairman of the Board of Directors of Swift Energy, Earl Swift represents the third generation of the Swift family in the oil and gas industry. Terry Swift, also a director of Swift Energy, represents the fourth generation.

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