FOUR NARRATIVES OF IDENTITY: APPLICATIONS TO THE FINANCIAL SECTOR Robin Matthews Kingston University Kingston Surrey, UK, KT27LB [email protected] ABSTRACT The nature of capitalist systems changed in the late 1970’s becoming increasingly concerned with the production of symbols and images. Interdisciplinary methods are required to understand the process of complexity. Four narratives in the paper each contain the kind of contradiction, ambiguity, and imagery that enhance understanding of complex processes. A fifth narrative is provided as an example: that of a global financial services company, Aleph (an alias). I. INTRODUCTION The subject matter of paper is the way that identity, and the related concepts of image and reputation, act as means of communication. An implication of the new business environment that emerged in the 1970’s, as a result of the interaction between international finance, information technology, and globalization, is the dominance of capitalism as a system of business organization: the pre-eminence of a single system worldwide is unique historically. Further, the system has increasingly become concerned with the production of symbols and images, and business enterprises, organizations and institutions have, over the last twenty years or so, made the transition from the production of use and exchange values, to the creation of virtual organizations, virtual products, and the manufacture of dreams. The boundary between the real and the vicarious, in the media, Las Vegas, or the world financial system, for example, is difficult to define. The power of each of these examples, is that they determine the stage on which communication takes place: in politics, art, sport, and especially, as this is the focus of the paper, in business, and the way strategy is designed and evaluated. The process of communicating dreams is two-way: the sender and the addressee mutually determine the content of the message. Whilst audiences have become diversified, segmented, and undoubtedly are important in the production of content, businesses in the media, gambling and finance have become more oligopolistic, globalized and influential. Understanding the new stage of capitalism requires interdisciplinary approaches. To a limited extent, this is reflected in modern scholarship. Understanding also requires new and richer metaphors and narratives. Four such narratives are presented in the paper. Their interpretation is left open. The narratives are as follows: the Hermes myth, Kafka’s doorman, the picture of Dorian Gray, and Dostoevsky’s Gambler. II. THE NARRATIVES One Hermes escorts the dead to the underworld. He is the patron of good fortune, of merchants and thieves, of athletics, boundaries of property rights, and oil cultivation. He is a trickster who often leads men astray, and an inventor. He is deceitful, a criminal, but also transformative and constructive. He is the God of markets. Hermes uses his winged sandals to help him steal cattle belonging to his half brother, Apollo, and his winged thoughts to escape from Apollo’s rage. He covets the cattle, and

cunningly drives them backwards, so that they seem to be going away from his stables. This ploy does not fool Apollo. You cannot reverse time in that way. He captures Hermes, and takes back his cattle. Hermes is made prisoner, but he plays the lyre, an instrument he has invented, to appease his brother, and Apollo is so transfixed by its beauty that he offers to become an impresario for Hermes musical gifts. Hermes comes up with an alternative deal. He will give Apollo the lyre in return for the cattle. He will also take on the role of the guide of souls. The deal is accepted. Two Before the Law stands a doorkeeper on guard. To this doorkeeper comes a man from the country who begs for admittance to the Law. But the doorkeeper says that he cannot admit anyone at the moment. The man, on reflection, asks if he will be allowed to enter later. "It is possible," answers the doorkeeper, " but not at the moment." The door leading into the Law stands open and the doorkeeper steps to one side, and the man bends down to peer through the entrance. When the doorkeeper notices, he laughs and says: "If you are so strongly tempted, try to get in without my permission. But note that I am powerful. And I am only the lower doorkeeper. From hall to hall, keepers stand at every door, one more powerful than the others. Even the third has an aspect that even I cannot bear to look upon. [For many, many years the man watches the door keeper incessantly and eventually he asks:" Everyone strives to attain the Law so how can it be that I am the only one in all these to seek admittance"]. The doorkeeper perceives that the man, now aged, is at the end of his tether. He bellows in his ear: "No one but you could gain admittance through this door, since this door was intended for you. I am now going to shut it."’ (The Trial). Three In Oscar Wilde’s story a beautiful youth, Dorian Gray leads a dissolute and immoral life. None of this is recorded on his face. Instead his corruption, (the details of which are largely unspecified and mostly unconvincing) gradually shows up in a portrait painted by a friend. Dorian the youth appears ageless: Dorian in the picture becomes increasingly repugnant. We always see the picture through Dorian’s eyes, so we never know whether the image in it is real or imaginary: the distinction is, as far as story concerned, of little significance. But so long as the picture is hidden from sight, Dorian’s reputation is relatively unsullied. His guilt is huge. Eventually the original painter insists on seeing the picture. Dorian murders him. Finally in despair, Dorian strikes the picture with his cane. He falls dead. The picture resumes its pristine beauty, and the corpse takes on appalling ugliness. Which is the real Dorian Gray? To what does Dorian and his reputation relate - the figure seen in public, the self-image in the mirror, or in the recesses of the mind, or the portrait? Four In Dostoevsky’s Gambler, the hero manages to persuade an heiress to finance a visit to the Casino. In the gambling jargon, he goes ’on a roll’ and wins all night, amassing a fortune. The story ends with his

returning to his hotel, impatient to return to the Casino when it reopens, so that he can experience the thrill of gambling his new wealth, and with every probability, loosing everything. 111. ALEPH In a formal sense, organizations are a series of complex games in which stakeholders, employees, managers, customers, suppliers, and competitors generate and distribute corporate payoffs. Identity is defined as the way the organization presents itself to its audiences (Olins, 1995). It articulates what the organisation is, what it does, and how it is distinctive (Topalian, 1984). The definitions hint at its importance, although this has only recently been recognised explicitly. Identity not only signals to stakeholders what an organization is capable of, but to some extent, determines their responses. It is implicit in economic, and especially in game theoretic models of the firm, but there it is linked almost exclusively to pricing and product strategy. The literature on identity as such is more comprehensive, and appears disassociated from narrower viewpoints. One task is to link the two. The other is to enrich understanding of the process by inventing and borrowing new narratives. Consider a financial services company Aleph, that historically has had a strong emphasis on retail banking. The treasury and capital markets section (the Aleph Group) developed in the 1990’s has gained increasing importance in terms of profitability, but since this is a recent diversification, the Aleph Group is rated low in experience, compared to rivals. So customers associate the operation with relatively higher risk. At the same time competitive pressures are intensifying. The question arises as to whether identity, and related concepts of image and reputation, can be used to enhance competitive advantage. In turn we are led to a more general issue. Are modern organizations like theme parks encountered by stakeholders in a dream? Is it the case that there is no irreducible reality in terms of competitive advantage, core competencies, or attributes of goods and services, and qualities of the firms that produce them, but instead have images, media, and virtual reality become the essential spheres of experience? Increasing emphasis is placed on the production and consumption symbols and signs, as physical needs and wants are largely catered for in mature economies, whilst at the same time, high levels of demand are required to sustain capitalist growth. If society is becoming more and more concerned with symbols, establishing a firm’s identity may be a matter not just of representing what the firm does, but of creating an idealised representation, a corporate imago. The Aleph Group for example has a multitude of products and processes; each is more or less homogenous between firms. Market entry is easy. The existence of a core capability that rivals cannot copy is unlikely. So creating an individualised identity that differentiates the firm from others may be a solution to the problem sustaining competitive advantage. If so, the question arises as to how closely identity must be rooted in use and exchange values, and how much it can be pure symbolism or ideological manipulation. Can the construction of identity act like a one way communication process, in which the sender, the firm, determines the responses of the receiver, in this case, the customer? Three issues arise from the last paragraph; the nature of communication, the realisation of payoffs, and the code of success. Communication is a two way process between sender and receiver. The sender may organise the message according to his own codes, but the receiver is not passive, and may fill the intended message with all kinds of aberrant meanings. Any model of identity must take account of this, whether or not we admit, that the hyper real has transcended the real in a modern mass media

culture. Secondly, the realisation of payoffs is determined by the interactions between stakeholder groups, who have divergent interests. So identity must contain a degree of ambiguity and ambivalence, which in turn may dilute the message. Success has come to be interpreted according to a particular code. The way it is measured is part of a language game. Strategic thinking and policy focuses on the surplus expressed as competitive advantage. It is created out of a subset of the organization’s identity, the scarce factors it possesses that enable it to perform better than others. Competitive advantage is itself an exchange relation, the performance of one company compared to another, a relative surplus. Before considering whether identity a general characteristic, can be used to create competitive advantage, a capacity that is a subset of the firm’s identity, it is useful to look at the signification of the question itself. In a public company, if markets are efficient, outperformance of corporate stock signals competitive advantage. Increasingly in the USA and UK executive pay is tied to the value of corporate stock through reward of options, in order to link the interests of managers closely to those of stockholders. Stock market performance is chosen as an index of success rather than, say, ethical stance, aesthetics of the product, or working conditions. It may be just a manner of speaking, but it acts powerfully to govern the strategy of corporations, and the assessment of them. Yet stock prices are not uniformly considered as efficient indicators. The Chairman of the Federal Reserve spoke of irrational exuberance in 1996. Warren Buffett attributes his success to the fact that market prices are frequently nonsensical . The rise in stock prices has been largely driven by rising corporate profits, and other improvements, such as falling inflation and interest rates. Anticipations of future growth must be added to this. Profits have grown in the USA at 6% per year between 1982 and 1996, but stocks have risen even faster, so that their price relative to a dollar of earnings has risen since 1982 from 8 times to 24 times — about 50% above its long term average. If we associate earnings or profits loosely with use and exchange values, then share prices have risen much faster than the surplus measured in those terms so they are also symbols of success in raising expectations and confidence: symbols that are rooted in a kind of infinite regress rather than some irreducible concept, success. As Keynes (1936) put it, likening stock prices to competitions in which faced with picking the prettiest, each competitor has to pick not those which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, . IV. CONCLUDING REMARKS The underlying theoretical concept is that of complex systems. Complex systems are sometimes described as non-linear adaptive networks. Alongside global businesses and their environment, the central nervous system, ecologies, the immune system, evolutionary genetics, are examples of adaptive non-linear networks. They are characterized by intense interactions among large numbers of variables and agents (decision-makers) limited rationality, uncertainty and limited information, learning and adaptation, increasing returns, and anticipation. The latter aspect is important; players anticipate each other’s reactions and outcomes ant this in turn determines attitudes towards co-operation and realization of potential payoffs. The essential aspect of complex systems is their ambiguity and their capacity to sustain contradictory elements within the same framework. Such is the nature of organizations. The (meta) narratives in Section 2 treat the problems associated with image, identity, symbol, reflection, reality, risk, and competition among other things

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