The Human Side of Business*

As a business executive, you have to think about the big picture. You need to consider issues such as what trends are affecting your company’s markets, how your company’s strategy should evolve and what new technologies or initiatives your organization should adopt. These are unquestionably important — and a critical part of your job.

But when it comes to the execution of big-picture ideas, so much of business comes down to people — and how they work together, both within organizations and in partnerships between organizations. In this issue of MIT Sloan Management Review, several articles bring out that point from different perspectives.

In his article “Building Effective Business Relationships in China,” Roy Y. J. Chua explains what recent research reveals about the development of trust between Chinese and non-Chinese business partners. Writes Chua:

In cross-cultural business relationships, trust plays an indispensable role since partners from different cultures don’t always have the same values or assumptions about how business works. When trust is developed, partners can navigate difficult issues over time by fostering a candid exchange of ideas, issues and agendas.

In “How to Become a Sustainable Company,” Robert G. Eccles, Kathleen Miller Perkins and George Serafeim also address the importance of trust. As they describe their research into how companies can reframe their identities and become more sustainable, the authors note: “Employees in sustainable companies have a high level of trust in each other, which allows them to take the necessary risks to innovate and change their behaviors to support sustainability.”

Trust and collaboration don’t always develop automatically. For instance, in “What Managers Really Think About Social Business,” David Kiron, Doug Palmer, Anh Nguyen Phillips and Nina Kruschwitz point out that applying social collaboration tools within organization can require a nontrivial cultural shift. “Sharing information may not come easily, especially in corporate cultures where what you know is an important source of your power in the organization,” they write.

There’s also the question of designing structures and processes that help people work most effectively with one another. In their article “How to Create Productive Partnerships With Universities,” Markus Perkmann and Ammon Salter explore the complicated — and sometimes conflicting — incentives that motivate business managers and academic researchers when they work together. And when it comes to applying digital design technologies to product development, Tucker Marion, Sebastian Fixson and Marc H. Meyer point out in “The Problem With Digital Design” that without careful attention to the way people may use digital design tools — for example, for endless tinkering with designs — companies may not get the tools’ full benefit.

A cynical manager might observe that the human side of business makes the implementation of almost any business idea more complex — whether the idea is to launch a partnership in China, make an organization more sustainable or adopt new technologies. Maybe so. But the human element also makes business far more interesting. After all, people not only work together in business but also, hopefully, learn together; they strive not just to achieve organizational goals but also to grow their personal capabilities and develop new skills along the way.

Martha E. Mangelsdorf
Editorial Director
MIT Sloan Management Review

*Not to be confused with the classic management book The Human Side of Enterprise by MIT Sloan School professor Douglas McGregor (New York: McGraw-Hill, 1960). In The Human Side of Enterprise, McGregor described Theory X and Theory Y.