Yesterday in the car, my wife and I got talking about the recent demise of Hostess Brands, Inc. (longtime maker of Twinkies, Wonderbread, and other mainstays of American pop culture) after their bakers' union turned down a pay and benefits cut. We'd heard some people blame those union members for bargaining themselves out of 18,500 jobs. We'd also heard, though, that union workers had agreed to pay cuts to save the company after a previous bankruptcy just a few years before. And so we wondered: when would you accept a pay cut to save your company? When would you vote for your own employer to go under?
With limited information on the Hostess case, we decided we'd probably have voted against the pay cut. After all, what's the point of sacrificing just to extend the decline of a dying concern? If changes American eating patterns have made pay cuts the only way for Hostess to survive, why not just let it go and try to find work with a company better in touch with the industry's future?
Now--if I felt like company leaders understood why Hostess was struggling, I said, and if they had a clear plan to turn the company around and get wages up again, then it would be much easier for me to make a short-term sacrifice to keep the company alive.
In short, I said, I would make a sacrifice to back a leader with a plan for success but would have very little loyalty to a leader who allowed his or her own company to decline and then expected me to fix it. And with a union potentially multiplying workers' anxiety as well as influence, it might be quite difficult for a leader of a failing company to really convince anyone he was worth a second chance.
Which is when our conversation turned to the House of Saud.
I once read that before the late 1700s, the interior of the Arabian peninsula was typically ruled locally, with various families and tribes competing for dominance. Periodically, one family's leader would defeat another, and still other families would align themselves with him in exchange for promises of security. Gradually, the leader of that family might come to rule much of the peninsula as people rallied around him after military victories--but a leader's rule ever lasted long, because the first defeat not only limited his expansion, it also shook the loyalty of all his subjects. A losing leader was less likely to have his former allies show up for the next battle, and therefore more likely to lose again--starting off a chain reaction that resulted in rapid decline. In the end, many once-great leaders died as little more than village patriarchs, or even as exiles and wanderers, no longer supported even on their families' native lands.
And so it was with Hostess: a weak leader can't hold a coalition together on a "sacrifice because we're weak" slogan. They should have known they were doomed: people are naturally inclined to support the ascendant.
And yet--if we support on the ascendant, aren't we also doomed (like Arabs in the 1700s) to the insecurity of rapid cycles of change? It's human nature to want to side with winners, but people who change sides too quickly risk their own stability and security, which are also powerful motivators for supporting a given ruler or boss. So how can a leader keep a coalition together through ups and downs long enough to establish stability?
One possible answer comes from the House of Saud. In the mid-1700s, a local chieftain named Muhammad ibn Saud joined forces with a preacher named al Wahhab: ibn Saud swore to govern in a way that would promote al Wahhab's vision of a purified, fundamentalist Islamic order. Ibn Saud won battles, to be sure, but it wasn't just his military ascendance supporters were drawn to. They also bought into his ideological vision. Even when ibn Saud suffered defeats and setbacks, allies who valued that vision were willing to stand with him. Within just 70 years of their adoption of Wahhabism, the heirs of ibn Saud ruled an area just larger than they do today.
A possible corporate parallel can be found in Apple under Steve Jobs. At various times, Apple has been ascendant and weak. But its core supporters have remained committed because of their faith in the company vision even at times when its fortunes seemed to be running low.
Thinking about House of Saud, I theorized that ascendance, security, and vision are the three main glues all types of different governments and companies use to keep their organizations together.When a country or company loses these three things, it's likely to lose the support of its people soon afterward. The stronger it can keep each of the three, the more claims to people's faith and support it has to fall back on.
Hostess probably had an inspiring vision once upon a time. Maybe back in the Depression its workers took pride in their ability to provide people with affordable, technologically-sophisticated bread. Maybe in the 1950s and 1960s, they took pride in their ability to give hostesses a startlingly convenient way to share obviously complicated desserts with their guests. Along with that vision, workers in those eras probably enjoyed a sense of ascendance as they saw their company uniting with other regional bakeries into an industry powerhouse. They probably also developed a strong sense of security as company leaders promised them reliable benefits packages and wages above the industry average.
The advantages Hostess has probably didn't disappear all at once. But the culture around them shifted. As inexpensive turned to cheap, the company's talent for lowering the bottom line by extending the shelf life of goods probably lost much of its lustre. As people began to value the wonders of the natural over the wonders of technology, the company likely lost more meaning.
And with the vision slipping, ascendance probably settled into plateau and then market share erosion. When a product becomes uninspiring to make, odds are it will soon struggle to sell.
Finally, probably after years and years of subtle warnings, Hostess found itself unable to meet its old promises of security. They asked their workers to accept a pay cut in 2009 and got it. But they lost the last leg of their legitimacy in the process. When they had to come ask for concessions again without a vision or a hope of ascendance to support them, it was over.
And maybe we'll live to see the same happen to the House of Saud. The personal behaviors of some members of the ruling family have undermined their credibility as heirs to Wahhab's vision--which may also itself lose cultural power as hardline Muslim governments around the world fail to thrive. Their credibility for providing security was compromised during the first Gulf War, when they had to ask the United States for assistance and accept American bases on their lands. And their ascendance is certainly in jeopardy if the world transitions from oil--or if their oil runs out.
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