Several years ago I presented a dinner-lecture
Strategic Positioning of a Corporation for the top executives of Mars’
electronic division. After the lecture one of the vice-presidents thanked me
for the presentation. This looked like a pure formality. But then he added:
“You gave me a license for subjectivity.” This remark reflects the deep
understanding of my message and I have taken his thanks seriously.
It requires a long journey to help a reader to understand why I be-came
excited by the last remark. Let me start from a couple of business stories.
Once upon a time a famous scholar has been invited by a paper mill to help
increase its profits. The firm expected that the scholar would use
sophisticated linear programming procedures for setting an optimal schedule
of production for different kinds of stationers. Instead the scholar offered
a very different approach: to eliminate as many unprofitable products as
possible. A new incentive system for salesmen had been offered to implement
this suggestion. The new system proposed that the salesmen are not only
given a commission from sales but also from the profit from their orders.
The scholar’s suggestion was successful. Meanwhile it has some pitfalls that
I will discuss a little bit later.
Another example. An American firm had financial troubles because it did not
produce all the equipment types demanded by their customers. This was a
result of a deliberate policy, not an oversight: the corporation was simply
inefficient in producing certain kinds of machinery in small amounts. A
large foreign producer of all relevant types of equipment entered the U.S.
market by initially offering the dealers who served the American firm good
discounts on the equipment they did not have. In due time, when the dealers
got used to their high profits and learned the corpo-rate ways of the
foreign firm, the latter began offering them good discounts on all types of
equipment under the condition of exclusive rights for sale. The dealers
accepted the offer. The American firm, loosing the dealers, soon found
themselves on the brink of bankruptcy.
What is in common between the two stories mentioned above? The growth of
profit was achieved at the cost of narrowing the breadth of product lines,
that is, at the cost of such an important strategic factor as the variety of
manufactured products. Potentially, the resulting opening created holes in
the set of products that could be exploited by competitors. If, nonetheless,
the decision is made to proceed with a variety-reduction plan, steps should
be taken in advance to prevent future competitors from encroaching via the
holes on a firm’s territory and undermine it from the back.
An analogous conflict between profit and strategic factors (they are
sometimes called invisible assets ) concerns also such a factor as market
share. Often, the increase of market share requires a sacrifice of profit.
In many cases firms that are making such a sacrifice don’t succeed. This
convinced several authors to claim that managers should avoid such
sacrifices and pay attention only to profit.
Scott Armstrong and Fred
Many management techniques focus their attention on market share.
For example, portfolio planning methods examine performance relative to
their competitors. Use of these methods seems to be detrimental to profits.
In laboratory experiments with 1015 subjects, Armstrong and Brodie (1994)
found that use of the Boston Consulting Group matrix as a decision aid
substantially reduces the profitability of subjects' decisions. Slater and
Zwirlein (1992) concluded from a study of 129 firms that those whose
strategies are consistent with portfolio planning models have lower returns
to shareholders. Farley and Hulbert (1987, pp. 316-317) found that firms
that use the Boston Consulting Group portfolio matrix methods report a lower
return on capital than those not using them. (p. 190)
The authors conclude:
Because of the evidence to date, we believe that micro economic theory, with
its emphasis on profit maximization, is the most sensible course of action
for firms; that is, managers should focus directly on profits. Our findings
also raise concerns about information systems— having information about a
competitor's performance may be harmful to a person's own performance.
Improvements in the ability to measure market share, first through survey
and more recently through scanner data, might lead to a stronger focus on
competitiveness and to less profitability. (p. 198)
M. Miniter has made similar conclusions, with some variations in the
argumentation, in his recent article, which was published in the Wall Street
Positioning a Firm
A very natural question arises: “Why should strategic
factors be considered along and, in fact, on par with profit in positioning
a firm?” It seems that profit encompasses all aspects of the firm’s
performance and its interaction with the environment. Optimal market share,
for example, is then a function of the maximum level of profit. In fact,
putting a firm’s market share on par with profit gives rise to some nasty
problems of commensurability between these two sometimes-conflicting
indicators because the growth of market share may require a sacrifice in
A reader even slightly familiar with the workings of an economic mechanism
will immediately respond with general and, for the most part, sensible
arguments in favor of evaluating market share independently and on par with
profit. His argument will be based on the obvious statement: “Profit is the
general criterion to measure a firm’s performance but is often impossible to
link in a complete and consistent way (even in probabilistic terms) to
future profit with the present situation.” Meanwhile, a reader would be
stumped if asked to explain the proper amount of a sacrifice in profit in
favor of increasing a firm’s market share.
The prevailing approach to firm performance, expounded in the literature on
economic theory and mathematical economics, in particular, operates under
the assumption that profit is the criterion of firm performance along the
whole trajectory of its dynamics. For the most part, this category of
economic literature eschews a conceptual explanation of the very critical
question of why it is necessary to introduce criteria other than profit when
evaluating a firm’s performance (for instance, market share). I want to
point out in this connection that there is a gap between economic literature
and business literature, which does touch on this topic. However, the latter
also lacks a conceptual framework within which to study this problem. It
distances the business literature from the real-life work of successful
business leaders who solve these perplexing problems intuitively. In fact,
on those occasions when this far-from-perfect literature on business does
make its way into business practices, individuals who are not sufficiently
critical of it can find themselves in trouble.
Let me clarify the last statements. I propose that the explanation may hinge
on one and the same poorly elaborated two-fold problem: introduction of the
notion of indeterminism and its degree. But here I avoid a philosophical
discussion on this subject. I will try to clarify the problem of
implementation of strategic factors via the analogy with chess; in its turn
chess is becoming more and more an established source for solving business
problems. The reader has to forgive me for the following lengthy elaboration
of the chess model. I hope he/she will be rewarded for their kindness by a
concept and a language that will save them a lot of time for understanding a
Chess as a Disruptive System’s Model
Chess is simple because it has fixed boundary
conditions – a fixed goal and fixed starting position – and also fixed rules
of possible pieces interactions. (The word piece is used in a broad sense,
including also squares.) Meanwhile chess is a disruptive system, i.e., time
and space in this system, using Hamlet’s words, is “out of joint.” We are
unable to cre-ate an operationally viable procedure that could completely
and consistently link the beginning of the game with its end in such a
system. It means that in spite of the fact that chess is a finite game we
are unable to check all of the possible permutations (even the fastest
computers operating at the speed of light might spend many years to check ~
10120 permutations) or to find an algorithm that allows us to elaborate
optimal local solutions that are simultaneously globally optimal.
As a result, the players have to proceed from start to finish without
knowing the consequences of a given move. This indeterminacy makes the
formulation and the solution of an intermediate local problem the crucial
aspect of the process of move selection. Many ingenious devices have been
invented to make a more satisfying move. In other words, the chess players
avoided the temptation to find one exhaustive method for playing the whole
game and created different methods relevant to different structures that
appear along the game.
In this way the game of chess has been divided into several stages--the
opening, the middle game, and the end game. The opening is associated mainly
with the reflective style that is based on the repetition of the past. Case
studies in business remind us of this style. Extrapolations are just a
modification of the reflective style. But such a style cannot be used on
other stages of the game because they are disposed to many fast changes in
the structure of the situations.
Those who play chess know that two styles prevail after an opening:
combinational and positional.
Setting a concrete narrow goal (as usual material), and elaborating a
detailed program to achieve this goal distinguishes the combinational style.
This style reminds the solution of local business problems concerning some
investment projects, marketing, etc. especially if they can be solved by
But what can be done if a combination could be paralyzed or a vulnerable
position has been created afterwards? This is as relevant to chess as it is
to business when an impossibility occurs to create such intermediate goals
that could link in a complete and consistent way the future with the
The positional style in chess, which was originated at the end of the
nineteenth century by Paul Morphy and William Steinitz (unfortunately, both
of them ended their days in a mad house), was an answer to the last
question. This style assumes that the development of the game is going via
step-by-step improvements of a position by disposing the future development
in unknown situations. This does not preclude the usage of other styles; the
positional style only postpones the usage of the combination until the
position is mature enough to shift to the combinational style.
Thus, the function of a position is to induce the development of the game in
a certain direction (offensive or defensive), absorb unexpected outcomes in
a desirable way, and minimize the negative influence of these outcomes.
The choice of a better position among many possible ones requires its
evaluation. The obvious solution to the problem is to find probabilities
(frequencies) of successful continuations on the basis of statistics of
previous games. But such a solution is not always possible because new
positions appear, and any attempts to make the last position similar to the
previous one are failing because the criteria for similarity are not clear.
This situation becomes very dramatic when taking into account that a
position has to keep its wholeness. A widely spread opinion is that for
holistic situations it is not permissible to dissect a position because the
holistic effect can be lost.
The originality of the positional style is first of all expressed via a
non-trivial procedure that allows dissecting a position and reviving it as a
whole in such a way as to preserve its holistic effect.
Two major features distinguish a structure of a position in this procedure.
First is the recognition of material parameters (the pieces) along with the
relations between them as independent (controlled) variables.
When one deals with a combination it is sufficient to know only the
coordinate and sometimes the number of moves (analog to time) that each
piece can make; the linkage between them will be done via a procedure that
is complete and consistent. Now let me come back to the evaluation of the
pieces in a combination. These values are fully conditional, i.e., they are
reflections of the complete and consistent way in which to link the given
goal, starting conditions, and the rules of pieces interaction. As a matter
of fact, prices of equilibrium in economics, or the so-called shadow prices,
have the same meaning.
The following example should help an uninitiated reader to under-stand the
meaning of fully conditional values of the pieces. It concerns a chess
problem usually given to the beginners. Suppose we have a position on the
board (Figure1) and it is white’s turn to move.
Figure 1. Initial state
The player with the white pieces knows the rule that allows a pawn to be
promoted to any piece upon reaching the eighth rank. The beginner's first
impulse is to promote his/her pawn to a queen, for he/she knows the queen is
generally the strongest piece.
But if he falls victim to his natural impulse, black will mate white in one
move (Figure 2). However, if white was to promote his pawn to a knight,
black king would be checked and mated immediately (Figure 3.)
Figure 2. The Tempting Move
Figure 3. The Winning Move
The above example vividly shows that if all conditions for a problem are
specified, and it is typical for a combination, the value of a piece is
fully determined by these conditions, i.e. the value of the piece has to
reflect its direct contribution to the goal and must be subjected to the
given constraints (initial state and rules of interaction).
Another situation is in disruptive systems. Along with the coordinates and
time have been elaborated many other dimensions. The last ones characterize
relations between the pieces – so called positional parameters. If, for
example, we have on the chessboard on the side of each player a king and two
pawns we cannot say that their position is equal. The value of a position in
a combinational style, as I have shown above, is distinguished by its direct
contribution to the goal. It is not so for the positional style because it
is impossible to link in a complete and consistent way the given position
with the end game. In this case along with the pieces – material parameters
- have to be elaborated positional parameters.
To explain the last statement I will continue the consideration of the
previous example. One can say that if one player has two pawns that are
located on the same row and close to each other and the second player’s
pawns are sporadically dispersed, generally speaking, the first player has a
different position: his pawns could help each other.
In chess, there are hundreds of positional parameters like closeness,
doubling pawns, backward pawns, open file, etc. As a matter of fact, a
deductive concept for elaboration of positional parameters does not yet
exist. Professional chess players are setting positional parameters on the
basis of their knowledge and intuition.
Now we are facing the next problem: the evaluation of the material and
positional parameters in a way that preserves the holistic effect. The chess
players developed a new system of evaluations of these parameters that we
don’t see in other fields. In other words, the chess players developed two
systems of evaluations; respectively, for the combinational and the
positional styles. The first system, so-called, fully conditional values,
has been mentioned above during the discussion concerning the combinational
A different situation appears along the positional style. Here we cannot use
fully conditional prices because we cannot set a proper inter-mediate goal
and connect it with starting conditions of a given situation. Meanwhile, we
have to measure the influence of a given position on the end game. The chess
players for this purpose dissected the full conditional value and elaborated
a two-part system of unconditional values for material and positional
parameter. Different methods of setting values are used for each part.
The first part is concerning material parameters and is based on
un-conditional values for single pieces. Of enormous interest from the
general methodological perspective is the fact that chess is, apparently,
the only area where there has been any success in revealing in a rigorous
fashion the necessity of unconditional values for material parameters and
how to construct them analytically.
To be more precise, these values should be called semi conditional. Such a
clarification is arising from the analytical procedure to find these values
offered by Henry Taylor. This procedure is based only on one condition - the
rules of pieces’ interaction; the boundary conditions (intermediate goals
and starting conditions) are not taken into account.
These semi conditional values are well known to the chess players – they are
normed relative to pawn=1 and evaluate a queen by 9 pawns, rook - 5 pawns,
bishop and knight - 3 (3.5) pawns.
The second part of the set of unconditional values concerns values of
positional parameters. These values are formed in the same way as positional
parameters: professional chess players are setting these values on the basis
of their knowledge and intuition.
Generally speaking, a high degree of subjectivity is intrinsic to the
positional style. The role of the executor, his/her strengths and
weaknesses, become vital because the actual realization of the position is
not known be-forehand, and future moves have to be based on the contingent
situation at hand. The role of subjectivity is clearly seen in a positional
sacrifice, the sacrifice of material on the name to improve the positional
parameters and in general the value of a position. To the reader not
familiar enough with chess, please recall that positional sacrifice is
differentiated from combinational in that, at the moment of sacrifice, it is
not clear how the loss will be concretely compensated, that is, how the
positional advantage gained at the cost of the sacrifice will transfer into
a possible effective combination in the unknown future. That is why, the
chess textbooks recommend a positional sacrifice only for highly skilled
chess players because ordinary chess players will be unable to realize a
Here we can clarify the differences between subjectivity and
objectivity. It is very important for further business considerations, and
enlightening the title of this paper. Some novelty in these definitions is
related to their operational aspect. Objectivity means that the evaluation
of the result will not depend on the subjective values of the observers, it
is impartial to them; in other words, the evaluation of an object could be
separated from the person who will further elaborate it. Subjectivity means
the impossibility to separate the evaluation of an object from the person
who will further elaborate it.
Thus, everything was done to create a weight function for an
evaluation of a position. Claude Shannon elaborated a formal expression of
f(P)= 200(K – K') + 9(Q – Q') + 5(R – R') + 3(B – B' + N – N')_
– .5(D – D' + S – S' + I – I') + .1(M – M') + . . . ,
in which K, Q, R, B, N, P is the number of White kings, queens, bishops,
knights, and pawns on the board; D, S, I are doubled, backward, and isolated
White pawns; M- white’s mobility (measured, say, as the number of legal
moves available to White). Prime letters are the similar quantities for
Black. The coefficients 9, 5, and 3 are the widely accepted valuations of
relevant chess pieces; the coefficient 200 for the king allows recognizing
the end of the game; the coefficients .5 and .1 are merely Shannon’s rough
estimates of valuations of corresponding positive and negative positional
Chess computer programming based on the idea of
choosing the best (satisfying) position via a weight function combined with
other devices (e.g., the library of openings) had experimentally proven that
such a con-cept works and even have bitten the world chess champion Gary
Kasparov. But we have to keep in mind that a chess computer program is to a
great extent a formalized version of certain subjective views of an expert
who includes in the weight function the set of the positional parameters and
Application of the chess model to the behavior of a firm
First of all, the chess model clarified that solutions
to problems in disruptive systems are found by a diversity of styles. On
each level of the hierarchy of a firm all three styles are used. Meanwhile
different layers (a group of levels) in a hierarchy are distinguished by
different prevailing styles. On the lower layer the reflective style is
prevailing; on the middle layer – the combinational style; on the top layer
(presidents, vice presidents, etc.) – the positional style. If the
combinational style is mainly oriented to elaborate an efficient project,
the positional style is mainly oriented to setting the strategic position of
Such a simple statement concerning different styles that are used in a firm
could have some practical applications.
Since different styles require different types of people, it is necessary to
be careful with the promotion policy. A manager who is very good in the
combinational style (usually left hemisphere oriented) could be bad in the
positional style (usually right hemisphere oriented), and vice versa.
Moreover, the understanding of the relation between different styles could
help to avoid some corporate conflicts. It is well known, that new comers
with a MBA degree have in their disposal modern sophisticated tools to solve
business problems. The middle age and old people that mainly occupy the top
layer as usual don’t know the modern techniques. That is why the new comers,
especially from first class business schools, often treat the top layer
managers as “dead wood.” But if one keeps in mind that the new comers tools
are mainly oriented to the solutions of problems that require the
combinational style and these people don’t have enough experience and
intuition that is required for the positional style, it is becoming clear
that the conflicts between generations are to a great ex-tend artificial and
could be relaxed.
The understanding of the differences in style could help to avoid
misunderstanding in communication between different layers. Sometimes top
layer managers could face difficulties explaining a certain task to the mid-dle
layer manager, and it may be difficult for a middle layer manager to
understand the ideas of the top layer manager. These kind of
misunderstandings especially concern the role of investments in human
relations that are so vital for top layer managers. The conflict between Lee
Iacocca, as Ford’s company President, and Henry Ford, as its chairman of the
board, to a great extent was stipulated by Iacocca’s inertial middle layer
kind of thinking. The last one misses the importance of human relations to
which Henry Ford paid enormous attention.
Below, I mainly want to concentrate on the usage of the chess positional
style for setting an evaluation of a corporate strategic position. The
corporate weight function also includes along with inputs-outputs (material
parameters) strategic factors (positional parameters). The value of this
function requires a special term. Let us call it predis (shortening the term
predisposition.) Setting a price in the process of buying a business could
justify the relevance of the introduction of the term predis: the price for
a business includes not only its material components but also strategic
factors. Meanwhile, the elaboration of these prices was not conceptualized.
But let us further develop the structure of this function. The set of
material parameters is given. The set of strategic factors was defined in an
empirical way, mainly by acceptance of the well-established indicators. The
ingenuity of a businessman is stipulating the further development of this
It is more complicated to find the proper values for the material and
The prices for the material parameters have to be semi conditional. The
economists did not yet develop the concept of such prices. Meanwhile some
elaborations that have been done in economics for different purposes could
be used for setting the proper prices for the material parameters of a
weight function. The development of the concept of dynamic equilibrium by
John von Neumann exactly satisfies the requirement for such semi conditional
prices. The trajectory of dynamic equilibrium and their dual characteristics
– prices - are revealed in an assumption about their limitations only by
technologies (equivalent to the rules of interaction), regard-less of the
boundary conditions - initial resources and goals.
Certainly the application of such prices could not be done in the pre-sent
time because it requires the development of a huge statistical base and its
elaboration. That is why this part of the weight function does not have a
practical application at this time. But it has a practical application in
the long term.
The ideas relevant to the other part of the weight function, i.e., the
positional parameters, could be used today. They could help us clarify the
controversy that has been mentioned in the beginning of the paper concerning
the usage of strategic factors as a part of the criterion for a firm’s
evaluation. It seems to me that failure of many firms to exploit the
sacrifice of profit on the name of improving the value of strategic factors
is rooted in their attempt to objectify this process rather than to
Certainly, everything said above concerning subjectivity is not easy to
apply to the real business world. Because managers usually do not own the
firms they work for, they either have to come up with some objective
(statistical) justification of their subjective decisions or simply reject
the efficient subjective decisions in favor of the more standard, but
scientifically corroborate strategies. Sometimes, the managers simply make
up the data to support their decisions, which eventually ruin the business
ethics of the firm.
Thus, there are many attractive scientific methods for objectifying
evaluations of a firm's positional variables that have been undertaken by
some leading consulting firms, e.g., Mackenzie International Consulting,
Boston Consulting Group, etc. In this context, the model PIMS (Profit in
Market Strategies) merits a close examination.
Sidney Schoeffler , the founding director of The Strategic Planning
Institute (SPI), established in 1975, is one of the people who initiated the
development and the promotion of PIMS. The PIMS model is based on enormous
amount of information from its firms’ clients — hundreds of leading firms
from North America and Europe, represent¬ing several thou-sands of
businesses (by business I mean division, product line, etc.), each
characterized by more than 100 indicators. At first, the SPI focused on the
analysis of the effect of separated positional parameters, such as the
market share, the degree of vertical integration, etc. on the firm's ROI
(Return on Investment). Later on, the research shifted to assessing the
linkages between, on the one hand, interrelated positional parameters, and
on the other, profitability.
Ambitious as it may sound, PIMS model was designed to provide, as in natural
sciences, a scientific approach to business management based on the
objective market laws. Meanwhile, the concept of such laws as leading rules
governing a system is more relevant to natural sciences, and, particularly,
to physics, because the physical system is relatively stable. It seems to
me, that this concept is not relevant to economic systems because the last
are highly dynamic.
There is generally nothing wrong with the idea of collecting and analyzing
data about different firms performances in order to determine what appears
to be in average a good strategic decision. On the contrary, many firm’s
leaders can benefit from having access to such a data bank if they are using
it as an auxiliary means (but not as a substitution) to their subjective
decisions; in other words, if they compare the value of their subjective
decisions with statistical ones and use the differences between these values
only as warnings for their subjective decisions.
The conversation between Sidney Shoeffler and chess grandmaster Sergey
Kudrin can help to clarify the statements made above concerning the
subjectivity of strategic decisions. The conversation took place at the
symposium Calculus of Predisposition that I have organized in 1992 at the
University of Pennsylvania.
Shoeffler asked Kudrin the following question: “Suppose that you have a data
bank that contains information about every chess game ever played. Also,
suppose that you can instantaneously retrieve any information on either
material or positional parameters that you might be interested in. Do you
think that such information would be sufficient for you to make an accurate
evaluation of the position?” Kudrin's answer was as follows: “If one
compares the evaluations of the same common positions given by the two
grandmasters their verdict regarding a given position will coincide. In that
respect, this data bank might be quite useful to me. However, the
information contained in this data bank concerns mostly standard and
well-known positions. A grandmaster usually wins because he/she can
introduce original positions or come up with an unexpected series of moves
in a well-known position. Then, if we get two grandmasters to analyze novel
positions, their subjective evaluations will most likely be different,
reflecting each player's individual style as well as his/her intuition and
his/her ability to develop the new position.”
Finally the understanding of the role of subjectivity in the process of
evaluating the firm’s behavior could help to reorganize the accounting
sys-tem. The balance sheets under the name of the firm’s top leader also
have to contain the set of the subjectively chosen positional parameters and
their values. It could be very productive to put on paper what the leaders
have in their mind.
Aesthetics and a Firm’s Position
The analogy between the behavior of a firm and the
progress of a chess game seemed obvious: in each case both participants are
facing competition from one another and the achievements of their remote
goals are exploiting a process where “the time is out of joint”. Later, when
I be-came familiar with George Birkhoff's works on aesthetics, I was amazed
by the similarity of the formal structures of chess positions, the positions
of a firm, and aesthetic measures by Birkhoff. His formula for the aesthetic
measure M is a function of two variables, C – complexity (relevant to
material parameters) and O –order (relevant to positional parameters). To
illustrate his ideas Birkhoff uses, for example, a convex polygonal tile.
The measure of its complexity is determined by the number of its sides -
(equivalent to material parameters) and the measure of order — by such
parameters as repetition, similarity, contrast, equality, symmetry, balance,
and sequence - (equivalent to positional parameters.)
Needless to say, the issue is not the simple assertion of the formal
similarity of these structures. A deeper consideration of these structures
shows that they have a surprisingly similar meaning.
From the history of various sciences, we know that the homogeneity of
mathematical formulae can be used as a pretext for pronouncing a hypothesis
on the homogeneity of the phenomena concealed behind them. Just that sort of
phenomenon took place in the nineteenth century when James Maxwell, on the
basis of the discovered homogeneity of the differential equations describing
wave forms of electric, magnetic, and light waves demonstrated their common
Starting with an understanding of Birkhoff’s mathematics, I began my search
for isomorphisms. I found that in all three cases we deal with
predispositions—the structures, which are not completely and consistently
linked to pragmatic goals but, at the same time, are somehow organized.
Thus, I assumed that in the light of the contemporary view of a chess game
and a firm's behavior, it might be beneficial to search for an analogy
between the criterion used to evaluate a position in chess, a firm's
strategic position and an aesthetic measure.
I supposed that the generic term for the value of a predisposition is
relevant to beauty.
Intuitively many professionals and amateurs, when it concerns beauty, agree
that there are some obvious features of beauty: beauty can be applied to any
object; beauty is not pragmatic (please, don't confuse it with applied art);
meanwhile beauty has some order; beauty is unique; some features (elegance,
symmetry, asymmetry, etc) are accepted as features that belong to beauty;
beauty is holistic (synergetic): beauty cannot be dissected in a simple
mechanical way; the holism of beauty can be recognized via its influence on
the whole; beauty is perceived by intuition along with rationality; beauty
is subjective; beauty has a sign (positive-negative) and a degree.
But until today there is not even an intuitive clear reply to the major
question that concerns the essence of beauty. The question "Where is the
‘meat’ (‘seed’) of beauty?” does not yet have an answer.
My answer is: “Beauty is a predisposition, i.e. a value of a position via
evaluation of its parameters in unconditional (semi conditional) values.” I
tried to find the core of beauty, i.e., its rational part, as an invariant
of any disrupted system. A reader could grasp the meaning of this core from
the above descriptions of the positional style in different systems. This
core could be later covered by artistic means and human beings perceptions.
In the latest case beauty is represented in a most complete way and is
becoming the leading category in the domain of art.
Such an approach to beauty could help to elaborate some hints concerning the
linkage between aesthetic and business that is very badly developed. Russell
Ackoff recognized beauty/fun along with the other three major aspects of
development – truth, plenty, the good. Meanwhile, Ackoff mentioned
“The Aesthetics is the least understood aspect of development. The terms
“management science," "management tech-nology," "management education,"
"managerial economics," and "managerial ethics” convey at least some meaning
to most managers. On the other hand, the “aesthetic of management” conveys
little if any meaning to anyone, let alone managers.” (p.277)
The inability to elaborate the category of aesthetics in business has deep
roots. It seems to me that this elaboration requires a sharp turn in the way
of treating beauty. I guess that my approach to beauty via the concept of a
predisposition allows finding a linkage between business and aesthetics.
I understand that there are no short ways of elaborating these linkages. One
way – from the final end - pure art, e.g., classical music. (As matter of
fact, Birkhoff in his previously quoted book, has analyzed the aesthetic
measure of music by the same terms as ceramic and architecture.) The other
way – from the beginning, i.e., very specific human business activities. To
avoid vulgarization several intermediate stages should be put between these
At the present time a lot is being done to such a linkage between both ends,
i.e., in a "tunnel manner." On the one end we see John Cimino's and his
colleagues activities. The company, Creative Leaps International, that Mr.
Cimino is heading, is oriented to stimulate a starting predisposition to
creativity via primarily musical performance accompanied with some mimes
performance. As Mr. Cimino declared during his recent visit to the Wharton
School, the major idea of his performance is to ignite the creativity (the
imaginary power) of managers before they are becoming involved in a session
of solutions for certain business problems.
The Center for Creative Leadership is developing the next stage in the
linkage of art and business in particular by involvement of the business
participants in performances.
I highly appreciate all the above-mentioned artistic activities. But let me
repeat that there is a large gap between the ignition of imagination and a
solution for certain business problems. It may be that some managers could
intuitively jump via the gap between these two ends and successfully solve a
certain business problem. But I guess for the majority of managers it is
It seems to me, that my work together with Dr. Vera Zubarev creates an
opportunity to attack the problem of increasing imagination from the other
end. We have taught together a course Aesthetics in Decision Making for
Benjamin Franklin undergraduates students at the University of Pennsylvania;
I myself taught a course of strategic planning, limited to the rational part
of beauty,. for MBA students at Wharton school and for executives at the
Organizational Dynamics Center at the University of Pennsylvania.
In our course for undergraduate students we are trying to build a bridge
between art and business starting from the core of beauty (on the basis of
chess), developing it to the formation of a strategic position of a firm (as
it was described above) and mapping these ideas to decision making by major
protagonists in literature pieces. On the other hand, we are trying to use
the great ideas and artistic means from art to enrich the core of beauty as
it is represented in chess and business. Since the ideas and explanations of
this concept reach to great depth we concentrate only on one piece of
literature, Romeo and Juliet by Shakespeare. Along with the text of the play
we analyze two different versions of the movie Romeo and Juliet by
Zeffirelly and by Luhrman.
I think that the above mentioned understanding of the linkage between art
and business will stimulate business people to deserve more of their very
limited time to art. The business people often recognize art as a luxury.
The long obscure journey from art to the solution of certain business
problems seems to me is the major reason why the business people resist
spending their time on art even if they understand that art broadens their
vision. It is known that such prestigious schools as Sloan and Dartmouth
tried to link business and art. But mainly they failed. May be the absence
of a more pragmatic linkage between art and solving business problems was
the major reason of these failures.
I hope that further elaboration of the linkage between art and business in a
“tunnel way” could make art more pragmatic for business people and bring
provocative means to increase theirs imagination.
Instead of a Conclusion
The existing mathematical methods are unable to solve the
general problems in disruptive systems to which business belongs. The
solutions to problems in such systems are done sporadically and specifically
for each system and even for each problem. Often it was done under the name
As it is well known, classical mathematics assumes that
a mathematical result has to be complete and consistent. The famous
mathematician Israel Gelfand called attention to the necessity to create a
new mathematics that could conceptualize the ways of solving problems for
systems that I called disruptive ones. As Gelfand said, perhaps, it makes
sense “to resist the dangerous and careless use of exact mathematical and
logical systems outside the domain of their applicability.” He contends that
new ideas must come from mathematics. He mentions two: “One is a radical
shift in the concept of space, quantum gravitation, and the like. The other
emanates from the ancient field of combinatorics, which is still lurking in
the backwaters of mathematical sciences” (p. 16).
Gelfand also spoke about the need to elaborate a universal language—a
language that will help reconcile the two mathematics and bridge the void
fraught with so much pain and suffering for mankind.
To my best knowledge, independently only Ron Atkin under the principle of
connectivity had done an essentional attempt to find a new mathematical
approach to the solutions of problems for disruptive systems. Unfortunately,
his work is far from being finished.