The best leaders realize that their people are wise, that they do not need to be coerced into alignment through yearly goal setting. These leaders strive instead to bring to life for their people the meaning and purpose of their work, the missions and contributions and methods that truly matter. These leaders know that in a team infused with such meaning, each person will be smart enough and driven enough to set goals voluntarily that manifest that meaning. It is shared meaning that creates alignment, and this alignment is emergent, not coerced. Whereas cascaded goals are a control mechanism, cascaded meaning is a release mechanism.

Mark Templeton, former CEO of the software firm Citrix, makes a lovely argument about the difference between the need for hierarchy versus how people ought to be treated:

You have to make sure you never confuse the hierarchy that you need for managing complexity with the respect that people deserve. Because that’s where a lot of organizations go off track, confusing respect and hierarchy, and thinking that low on hierarchy means low respect; high on the hierarchy means high respect. So hierarchy is a necessary evil of managing complexity, but it in no way has anything to do with respect that is owed an individual.

Even more important is the social need for executive effectiveness. The cohesion and strength of our society depend increasingly on the integration of the psychological and social needs of the knowledge worker with the goals of organization and of industrial society.

Cooperation – whether it is between a team of workers driving an engine, a board of directors planning a new line or many individual savers providing capital to the business – requires trust. Successful collective action requires that you believe what others tell you and that you can expect others to do what they say they will do. Trust begins in personal relations; humans are strongly predisposed to trust family members and to form friendship

groups.

I believe it is appropriate – indeed necessary – to view the business organisation in the same way. The proper goal of corporate activity is the flourishing of the multiple stakeholders of the corporation: employees, investors, suppliers and customers, the communities in which it operates and the corporation itself. For the corporation to flourish, it must contribute to the flourishing of the society in which it operates. And ‘the doctrine of the mean’ is as relevant to the business organisation as it is to the individual. The directors and executives of a flourishing company operate within a mediating hierarchy, which meets the needs of all its stakeholders, gives them an opportunity for voice and protects the business from the adverse consequences of stakeholder exit.