Benjamin Graham, author of the venerable “Intelligent Investor,” used the phrase “Mr. Market” to make the point that the stock markets are often irrational, thus presenting profitable opportunities for investors. And today, it is also common for supposedly sophisticated and hard-nosed stock market observers to anthropomorphize the market.
They tell us what it did today, why it did that, what it’s afraid of, what it is struggling to do, or what external influences are preventing it from accomplishing its intent. And when the rest of us are told that the market reacted nervously to the Fed’s statements, plummeted on political news, surged with the release of the latest confidence index, we find it plausible, and typically accept it without comment.
But none of it is true. The market is a place where people gather to do things, not a conscious entity that does things of its own volition. Moreover, the things done there are transactions that occur in vast numbers, at the order of countless people and institutions, motivated by an impossibly diverse array of reasons for engaging in them.
The mechanisms that drive the market may be known, the rules that make them work may be limited and simple, and the consequences of these interactions may result in surprisingly sophisticated innovations and productivity, but it is not a conscious collectivity composed of unwitting and inept individuals. It is a tool employed by purposeful and competent investors.
When commentators tell you what “the market” did today, or why, they are not really telling you about the market, but about what they themselves tend to find convincing or striking, or about what is probably a perfectly coincidental correlation they happen to have noticed, or even just revealing what they simply believe – or want us to believe.
Have you ever heard anyone anthropomorphize your organization that way? If so, what does the way they do that suggest about that organization, or about their assumptions regarding those who people it and how they do or ought to work together?
And is your organization like a market, regulated in such a way that needs and abilities mechanically meet and transact in corporately productive ways? Or does it really take on a super-individual personality of its own, turning its attention back inward onto its components, and independently influencing their very thinking and behavior?
What do the organizational design principles behind the structure and functioning of your organization really say about these questions – and what do you have to say about that?
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Today’s tips: Speaking of the unspoken consequences of the “truth” that some people hold about how things work, please see Miki Saxon for one way we are all affected by, and struggle with this, on a daily basis at work.
And please also see Michael Wade for how differences in how people think about the above questions are reflected both in organizational structure and operation.
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2 Comments
Jim,
The irrationality of the stock market has always fascinated me because of the ways in which you describe its portrayal. A media analyst may pick his or her favorite cause and effect of the moment, thus driving further irrationality into the market when investors decide to act on a “hot” information.
Organizations, like the market, are driven by momentary, situational decisions and actions. While we would like to think that we are organized to rationally initiate or respond, the human condition shows its frailty time and again. Pressures from investors, bosses, customers, etc., often prompt actions that produce results other than those desired. This is often due to the lack of thoughtfulness that comes with speed and stress.
I’ve always thought that there was a reason for the rhyming of “greed” and “speed”. That deadly combination will ultimately undo the best market or the best-organized company.
Keep writing. . .
Hello Steve,
Your point is (as always) precisely on the mark. It’s not so simple to separate our influence on our tools – or our organizations – from theirs on us. As you point out, theirs on us may be merely the cascading effect of our input to them reflecting back on us. But it’s possible that that only represents a level of development, as it were. Asking these questions surfaces distinctions which help make the answers more clear and meaningful.
And the idea here was not to answer questions, but to raise them to try to identify those distinctions for addressing later. And you’ve added another set with your discussion of unreflective action, speed, stress – and greed.
Thanks!
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