Beyond the Boardroom: A "Reality Test" for Business Leaders
"The Reality Test" argues that corporate strategies are often "fictions" that ignore reality. It encourages leaders to focus on the human side of business to achieve genuine success.
Why your company might be a work of fiction, and how to make it real again.
I've just finished a fantastic read, "The Reality Test" by former Oxford don Robert Rowland Smith. What makes this book so compelling isn't just its intellectual depth, but its masterful clarity. Smith doesn't hand you a new set of business rules; he challenges you with provocative questions like, "Will your business go to heaven?" and "Who is your business?" It's a format so effective you could use it as a corporate training manual.
Smith’s central paradox is simple: companies try so hard to be rational that they end up suppressing the "wild" reality outside their doors. He argues that corporate strategy often becomes a "work of fiction," bearing little resemblance to the organic and unpredictable nature of the market. He gives many examples of bizarre CEO decisions made in the name of "rational" strategy.
He's also critical of common practices, especially the concept of "brands" which he sees as an attempt to dupe customers. Instead, he proposes "pheromones"—the natural magnetism of a confident company that draws in both staff and clients. This is a much more authentic power.
A key point is that we're increasingly consuming services that give our lives meaning. As Smith writes, "There is nothing quite so pleasurable to consume as a great idea that really speaks to me."
The good news is that this disconnect between corporate "fiction" and market reality presents a huge opportunity. Success, Smith argues, comes from a better grasp of reality than your competitors. He distinguishes between the inner market(inside the company) and the outer market. Making the inner market successful by treating your employees well can lead to breakthroughs in the outer market.
Smith emphasizes the organic nature of business and the importance of human chemistry. He states that people come to work primarily to bond, not just to earn a paycheck. CEOs must factor this in, as all the org charts in the world can't overcome the relationships that forge great collaborations or create deadly enemies.
Finally, he suggests that genuine breakthroughs happen when you intentionally break your routine and mix up the people you meet. This is a very useful and thought-provoking book that every business leader would find profitable to distribute and discuss with their staff.
