With ordinary People to extraordinary Returns

Nico Rose - Handelsblatt Jahrestagung Private EquityA couple of weeks ago, I was invited to give a dinner speech at a private equity convention that was hosted by Handelsblatt, one of the most eminent (business) newspapers in Germany. I was a little surprised since – to be honest – I don’t know sh.t about private equity, mergers & acquisitions, etc.

So instead, I decided to talk about some subjects I do know, e.g., Positive Psychology, Self-Determination, and alternative forms of leadership.

Subsequent to my talk, I was invited to put into writing what I said that evening. The result is a feature that spans topics such as burnout, employee engagement, managing organizational energy, and the theory of the Kondratieff waves. My tagline was:

Extraordinary returns will be realized where ordinary people are empowered to achieve extraordinary results.

An English version of the piece is available available here. Enjoy!


The Rise of Positive Psychology: Linking the Movement to the 6th Kondratieff Cycle

One very interesting question about Positive Psychology is: Why now? Meaning: Why is it booming at this point in time, why is it gaining so much momentum, why is it turning into a – sort of – movement, attracting the attention of thousands of researchers (plus: institutions that fund research) and practitioners in business, education, healthcare – and elsewhere?

An easy answer could be: Because Marty Seligman chose it as the central topic of his tenure as president of the APA in 1998. Apart from being a brilliant researcher, Marty has proven to be a very good “salesman” and is also highly skilled at securing grants and other third-party funds. But I guess this response is too simple.

The core ideas of Positive Psychology (first and foremost: looking at the “positive” side of the continuum that comprises human behavior and development) have been around for a while, starting with some of the Greek philosophers – and leading all the way up to 20th century humanistic psychologists such as Viktor Frankl, Erich Fromm, and Abraham Maslow. They all do have their well-deserved spot in the psychology hall of fame – and they are widely respected for their (theoretical) contributions. But they did not really manage to turn their ideas into a widely-accepted and especially well-researched “field”, a broad and comprehensive sub-domain of the academic community.

All the forces in the world are not so powerful as an idea whose time has come. (Victor Hugo)

Turns out it may not be their fault after all. There is a good chance that they were simply introducing their ideas to the world…too early. Positive Psychology may be booming during this era of economic development (and human development in general) because it could be the decisive force to spur growth and well-being over the next 50 years (or so…).

Positive Psychology and the sixth Kondratieff Wave

Enter Nikolai Kondratieff (1892-1938). Kondratieff devised an economic theory that today is known as Kondratieff Cycles (often called „theory of the long waves“). They are a concept in macro-economics that describes the development (expansion, stagnation, recession) of entire economies. Yet in contrast to most modern economic theories, Kondratieff did not focus on cycles that last for a few years. He tried to describe waves that last approximately 50-60 years.

A core concept of the theory is the notion of “basic innovations”: Kondratieff posited that a wave arises from the clustering of technical innovations that consecutively serve to launch technological revolutions that in turn create leading industrial or commercial sectors (please see the following graph taken from a research report created by German insurance giant Allianz for a basic overview of the first five cycles – and a projection for the upcoming sixth cycle):

Kobdratieff Waves

As you can see our economy is depicted as entering the sixth wave since the first industrial revolution. What you can also see is a list of candidates for the basic innovations that are projected to drive economic growth during the upcoming cycle (e.g. nanotechnology, biotechology, green-tech).

But there´s another important candidate on the list that is also elaborated on in the Allianz whitepaper – but was introduced to the public a lot earlier through the book The Sixth Kondratieff by Leo Nefiodow (which has recently been reissued in a 6th edition): Holistic health. This encompasses all those products and (medical) services that cater to the needs of an aging society. But it also decidedly incorporates all the services that cater to the psycho-social wellbeing of the workforces in our organizations.

This is where Positive Psychology as a growth driver may tie in. Phenomena such as the burnout syndrome have been on the rise for at least the past 15 years – resulting in billions and billions lost for corporations and society as a whole as a result of absence from work and medical costs (…and I´m not even trying to incorporate the “psychological costs”; and the “social costs” for families, friends, communities). And according to Gallup, the U.S. economy loses some 450-550 billion Dollar per year due to a disengaged workforce (for Germany, the number is depicted at around 130 billion Euro).

Positive Psychology (especially positive organizational scholarship) offers well-researched and at the same time practical solutions for (a lot of) these problems, at the individual and organizational level. For an overview, you might want to check the recently published book How to Be a Positive Leader: Small Actions, Big Impact by editors Jane Dutton and Gretchen Spreitzer. Other valuable books can be found on this list.

To sum up: I propose Positive Psychology may be the decisive basic innovation of the 6th Kondratieff wave.

What do you think of this?