The Books I Read: “Why Nations fail” – and companies?

In today’s installment of The Books I Read, we’re taking a look at a book called “Why Nations Fail” by Daron Acemoglu and James A. Robinson.
Why this book, though? After all, I am not currently head of state in any shape or form. But I figured, my current company has over 100.000 employees at the moment. 100.000 people would put a company at place 183 of 195 in Wikipedia’s list of countries by population (as of September 2020). When a company has as many people as a small state, at least some of the same mechanisms have to apply, right?

With astonishing attention to detail, the authors give insight into why nations across the globe and from different cultures strive – or fail to strive. Their hypotheses is that the success or failure of nations depends directly on how inclusive their political and economical institutions are. Which means, the more chances people have to benefit from their innovative spirit, their hard work, and their engagement, the more successful economies and nations tend to be. The more extractive the institutions are, i.e. how much of people’s hard work benefits a select few, the less successful the nation.

Large organization probably spend tons of money on bonuses and monetary rewards for their employees as a way of participation in the company success. People react differently to that, but I presonally never felt particularly rewarded by bonuses. There’s just too much of a disconnect between what I do and a yearly bonus to create an emotional connection for me. I mean, when bonuses happen, I sure appreciate them (who does not like money?), it’s just not direct feel-good reward for my work. A bonus that depends on the company success means that the individual has mininal impact on the reward that they get, and humans tend to like more direct rewards to connect them with their behavior.

Reading this book will definitely get you thinking about the ways your employees can and do participate in your companie’s success and how to strengthen their engagement. Of course, a nation-spanning global company is not something you can set up as an inclusive organization today or tomorrow. We are way to entrenched in the established structures to change that drastically, that quickly. There’s shareholders to consider! But the same difficulty is true for many nations (without the shareholders, hopefully), and quite a few of them have managed to change in the past. Some ideas I got from the book: set up parts of your organization with partial employee-ownership and let them make democratic decisions (or let your company be employee-owned alltogether). Or allow people more freedom in the decisions how their work space is set up. Why not have an employee-driven change initiative instead of a top-down transformation? You could even let them pick what they want to improve in their daily work. None of these will work from day 1, because we are not trained to behave this way. But if we want to move towards more inclusive organizations, we have to start somewhere.

The books not an easy read – although it’s not the book’s fault that I had a hard time with it, on the contrary. The authors have done a great job at making a difficult subject approachable and understandable. It was just a bit too much detail for me, and after a while, the chapters seemed a bit repetitive. Of course, when presenting evidence for your scientific hypothesis, it makes total sense to point out the pattern in many different circumstances, so the fact that I found it a bit hard to finish is completely on me. In addition, it’s just really, intensely difficult to digest the impact colonialism still has on so many people, and there were times when I felt sick about what white people did in the pursuit of wealth. Sometimes, we suck.

That being said, I absolutely recommend giving the book a try. Even if you don’t finish it, you will have gained valuable insights into the mechanisms of human organizational structures.