Martin de Jong and Hans Cees Speel

W.M. de Jong

Assistant Professor Public Management

Faculty of Technology, Policy and Management

Delft University of Technology

Tel: 00 31 15 2783433

Fax: 00 31 15 2786439

E-mail: martinj@sepa.tudelft.nl

H.C.A.M. Speel

Research assistant Policy Analysis.

Faculty of Technology, Policy and Management

Delft University of Technology

Tel: 00 31 15 2785776

Fax: 00 31 15 2783422

E-mail: hanscees@hanscees.com

Mimicry and camouflage are manipulative techniques some animals use to fool enemies in their natural environment. By looking like other, poisonous animals or taking the colour, form or attitude of objects in their environment they escaping the attention or evoke the fear or 'memories' of bad taste of their natural enemies.

In this paper, we claim that similar processes in which actors outwit the selective forces in their environment by ruse or manipulation regularly also happen in the social world of organisation. We will also give some examples.

Even for highly successful and experienced managers in important multinational companies, treachery and treason, distrust and disgust in the midst of professional organisations seem to provide an awful lot of frustration in their daily work life. Mickey Huibregtsen, Chairman of McKinsey and Company in the Netherlands, expresses his personal feelings about this elaborately in the Dutch newspaper NRC Handelsblad (June 20th 1998):

To be competent, successful and honest at the same time is becoming ever more difficult. And this is because of the all pervading role of the media. It is safest never to stick one's neck out. Whether you look at the world of politics or at the world of sports - you are submitted to power structures which in many respects are insincere. The selection criterion is don't rock the boat. Your actual contributions or intentions are no longer measured, but only your capacity to make a good impression with a minimum of efforts, in terms of disconcerted or shocked people. In the choice between a positive performance of doing something well and the not-negative achievement of not causing trouble you'll see that generally speaking the latter one predominates (translation by the authors).

Many of us will of course share Huibregtsen's moral indignation. But it is striking to see a qualified consultant on organisation innovation and renovation express his surprise and frustration about manipulative behaviour in organisations. If anyone should not have been shocked, it should have been him. And what's more, he apparently notices that the extent to which this impure conduct takes place is even on the increase in recent years. That's definitely a worrisome development!

But is right? Is it new? And is it getting worse? Impressing your environment by making a good cheer, where have we seen that before?

Biologists have for a long time studied various examples of the manipulative behaviour by some animals to escape their predators or to catch their preys. These manipulations occur in many variations, from relatively innocent to rather mean to as good as lethal to the victim. But two specific variants stand out because of their beauty or visibility: mimicry and camouflage. Mimicry has been defined as a physical similarity of one animal (the mimic) to another animal (the model) strong enough to ward off predators from both because of the model's unpleasant characteristics (bad taste, toxicity). Some small brightly coloured snakes, such as coral snakes, are poisonous while specimens from other non-poisonous species look very much alike (Greene 1997). In this manner both are sheltered relatively well from selective pressures in their environment. The same phenomenon we can find among certain flies whose backs are hardly distinguishable from those of wasps that are distasteful or that possess a sting. In some cases mimicry is also used in a wider context when animals resemble something inedible in the environment or by giving confusing stimuli. Butterflies are known to use eye-dots on their wings to fool birds when their camouflage does not seem to work. Mantis species (although usually predators) are known to look like the twigs they sit in, and some larger insects (stick-insects, walking leaves) are also known to look exactly as parts of plants. Mostly such an appearance is complemented by behaviour such as sitting in such a way that the body indeed looks like a part of the plant the animal sits on.

But more often this version of sly animal self-protection is called camouflage. Camouflage refers to a general colour, pattern and attitude resemblance to the environment, that results in the avoidance of being spotted by other animals, whether they be preys or predators. Obvious are examples as white rabbits, foxes and bear in polar regions. Interruptions in the body forms by a pattern of contrasting dots and stripes (coral fishes, zebras) have similar effects. Many other animals lift the shadow effects on the bottom of their bodies with brighter colours, a phenomenon known as 'counter shading'. Sometimes, one can find a light and shade pattern on the animals themselves (tigers, bitterns). Finally, some animals can adapt their own colours and patterns to those around them (plaices, chameleons and some lizard species).

All of the preceding species have found ways to increase their survival chances by adapting purely physical aspects of their being, complemented by behavioral patterns. The animals that are involved in mimicry have organised a masquerade to evade dangers posed by other organisms in their selective environment. If we define the selective environment (Brandon 1988, Speel 1997) as all aspects in the ecology of an individual, population or species that weed out exemplars, we can say that mimicry and camouflage are fascinating ways By which living beings cover up their weaknesses, impose unwarranted fear on persecutors, and mislead the perceptual abilities of predators and preys. In all cases, the consequences of these refined masquerades are the same: a deactivation of selective forces in the environment pointing at a species and an increase of the manipulator's fitness. The criteria on which the manipulated creatures judge the edibility of their potential prey or the cues that are used to point to the presence of their potential predator (form, colour, scent) are manipulated and this leads them to misjudge the situation.

The selective environment in the natural and social worlds

The evolutionary theorist Richard Dawkins would certainly have been able to clarify Huibregtsen's predicament. More than anyone else is he focused on manipulative techniques used in both biological and social environments (1976, 1982). In one particular passage he even connects the biological with the social world:

Krebs and I suggested that animals signals could be thought of as employing psychological tactics in rather the same way as human advertisement. Advertisements are not there to inform, or to misinform, that are there to persuade. The advertiser uses his knowledge of human psychology, of the hopes, fears and secret motives of his targets, and he designs an advertisement which is effective in manipulating their behaviour (1982: 62).1

Dawkins takes the example of human advertisement to shed light on manipulation in the process of natural selection. In this paper, we aim to do the opposite. The phenomena of mimicry and camouflage derived from the world of biology will be introduced to the world of human organisation. In order to see the analogy, we need the concept of 'selective environment' coined by Brandon (1988) and adapted to describe policy making processes by Speel (1997). The selective environment for animals comprises all aspects in the ecology of populations or species that are involved in the weeding out process (food provisions and defence against predators). The selective environment for organisations includes all aspects in the ecology of organisations that are involved in the weeding out or weakening of organisations, for instance in terms of money, personnel and/or military work force (Hannan and Freeman 1977, 1989). If a particular commercial company in Belgium suffers from inadequate management or the economic situation in Asia grossly affecting the size of their sales, profitability will drop and shareholders and banks will withdraw future loans.

Selective environments in the social sphere can include 'memetic filters' sieving out alternative options to spend resources by judging information which is provided on them on the basis of certain criteria (Dennett 1986, 1991, de Jong 1998). Examples of such memetic filters are applications for bank loans by companies or private individuals and submissions for academic research funds by univeristy faculties. The selective environment consists of criteria these institutions use to decide what proposals they will and will not accept. On the one hand, these criteria allow selective forces to 'weed out': the filters do their work. On the other hand, the threatened animals, species, companies or nations may evolve strategies to ward off their elimination by means of providing manipulative information to this environment: they employ mimicry or camouflage to 'fool the criteria' and save their own skins.

The utilisation of someone else's means or actions to increase one's own fitness

To consistently work out the analogy between mimicry and camouflage in the natural and social worlds, we present one example of both. The animal example is on brood parasitism, to be more specific the cuckoo egg mimicry example derived from Dawkins (1982: 68-69). The organisation example is on companies that tinker in the way they calculate and present profitability rates in the bill of accounts. Various cosmetic methods have been designed by which companies can influence or mislead their shareholders on their performance and extract more funds or raise the value of their stocks.

Cuckoo adults lay their eggs in the nest of the much smaller reed warblers, but the eggs look much the same on the outside and are only very slightly bigger than the warbler eggs. As the cuckoo baby comes out first it throws out the other eggs or otherwise eclipses the warbler parents attention for their own genetic offspring. And in order to keep them working and spending energy on 'their own' parasite, it opens up its deep red mouth which seems to work as a supernatural stimulus on the warblers' nervous system. As it is hard to realise how the adult birds could not recognise the baby bird as a manipulator and parasite, we are inclined to believe 'its huge gape and loud begging' somehow paralyse or hypnotise the warblers' defence. The stimulus is too strong to resist despite its negative effect on the reed warbler's fitness. Why, Dawkins rightly wonders, do not manipulated creatures in the course of evolutionary time develop a kind of counter strategy enabling them to recognise their enemy? He gives the following explanation:

It may be that the 'winner' is such a rare species that it constitutes a relatively negligible risk to individuals of the 'loser' species. The winner only wins in the sense that its adaptations against the loser are not effectively countered. This is good for individuals of the winner lineage, but it may not be very bad for individuals of the loser lineage who after all, are running other races simultaneously against other lineages, possibly very successfully. This 'rare enemy effect' is an important example of an asymmetry in selection pressures acting on the two sides of an arms race (1982: 65).

The phenomenon described above bears a strong resemblance to what political and institutional economists know as 'information asymmetry' or the 'principle agent theorem' (Niskanen 1974, Jensen and Meckling 1976). One actor, the principle, spends resources on the realisation of a particular goal and charges some other actor, the agent, with the execution of the task. The agent, however, is striving for its own objectives and purposely furnishes incomplete or wrong information to the principle. The agent receives the means or funds, but spends at least part of those resources on the realisation of its own interests which not necessarily correspond with those of the principle. Now, one could wonder how it is possible that principles do not develop counter strategies, sets of more adequate criteria and monitoring approaches to prevent agents from displaying such unproductive behaviour and compensate for their selfishness. Here, economists and political scientists would come up with something remarkably similar to the 'rare enemy' argument Dawkins suggests: it is not cost-effective to spend many resources on a counter strategy in the form of an expensive and time-consuming information machinery if the risk of enormous losses as a result of agent mimicry or camouflage is rather limited.

Information asymmetry between agent and principle is essentially what matters in the organisation example we take from 'Intermediair', a Dutch weekly. In 'Misleadingly attractive; how companies manipulate their annual reports', Smit shows what 'conjuring tricks' big companies with quotations at the stock market, utilise to make return on investment, solvency or any other relevant indicator appear more attractive and to render financial and entrepreneurial adversities as good as invisible. For example, Vendex, a Dutch chain of superstores, had its introduction at the Amsterdam stock market planned in 1995, but its financial position was less than reassuring in the preceding years. By ruse Vendex's forward looking directors found their way through the stock market filter thereby leading most stockholders up the garden path:

In 1992 Vendex possessed a lot of first class real estate which value had been rising in recent years. Instead of valuing it against its 'replacement value', they decided to book it at its initial costs many years back. After this revaluation these buildings were worth 860 million guilders less than before the calculation. At first sight this may seem an unattractive measure. But it was not, because the 'equity capital' (company's own funds) decreases accordingly. In this manner, Vendex almost doubled its profitability (profit in percentages of its equity capital), up to a very nice 11.2% as compared to the 6.6% according to the previous method of calculation.

The following year the conglomerate sold part of their shop buildings at market values, leading to an additional profit of 184 million guilders. Three other cosmetic tricks made the same year's results look extra shiny by 96 million guilders. As a whole, net profits in 1993/1994 doubled up to 246 million guilders.

And that is not all. In 1994/1995, Vendex sold some more real estate, once again contributing to sunny results. The introduction of Vendex shares at the Amsterdam stock market in 1995 were an unequivocal success and the stockholders were downright enthusiastic about their newly acquired stocks.

The author adds:

This example from the book 'Kille cijfers, warm gevoel' (chilly statistics, warm feelings) from FEM-editor Floris Hers, is a beautiful illustration of the way companies can manipulate financial outcomes by means of window dressing. Shareholders, creditors and other interested parties often fixate on net profits and rates of return. In many cases, these statistics tell little about the true course of things.

Entrepreneurs have lots of accountancy tricks at their disposition to camouflage adversities. These methods usually have a positive impact on profitability and other financial ratios. Not always immediately; the consequences sometimes turn out in the future, March 5th 1998: 47, translation by the authors).

Later on in the article, a few popular alternative forms of window dressing are pointed at:

Incidental constructions. The creation of facilities to anticipate reorganisations and other one-time events such as the introduction of the 'euro' and the renewal of software packages for the year 2000. All may be a practical preparations for future adversities, which then can be covered up. These constructions have the advantage of keeping wage demands from trade unions away in times when shareholders are not that concerned. When necessary, such camouflage can be changed back again to please shareholders. By shifting between these various company appraisal methods organisation members get themselves extra leeway for manoeuvre at the cost of actors that make up part of the selective environment: shareholders and employees.

Off balance investments such as sale and lease back facilities with real estate, licences, patents and goodwill. All of them can temporarily boost profitability. Many of these facilities can be seen as mimicry because it seems as if activities with outside parties are embarked on, whereas in fact they are practically still done by the company itself.

The splitting up of goodwill into 'real goodwill' and other immaterial assets. The latter ones are activated. This raises the equity capital and improves solvency (the relation between equity capital and loan capital). Such facilities can be handy for companies which have decimated their equity capital too much in the preceding years. This is practically the opposite of 1).

Once again, it seems surprising how those who rule the stock market and have great interests in investing their financial resources wisely get fooled around by company reports. But here too, we can speak of a strong information asymmetry between the agent on the one hand (the company and its personnel) and the principle on the other (the stockholders, trade unions and other interested parties).

All the available mimicry, camouflage and other intricate manipulation techniques make organisation performance only more intransparant. All hints Smit gives to better read bills of accounts and reports have one thing in common: they are complicated, annoying and time-consuming. Perhaps shareholders are contented with just an overall view of all the companies they invest in. Implicitly for them too the 'rare enemy syndrome' comes into play again.2

Selection in biology and selection in economics and political science have more things in common than the totally different terminologies in these disciplines seem to suggest. In this paper, we hope to have shown, although incompletely and unsystematically, that cross-fertilisation may benefit both. Possibly the concepts of mimicry, camouflage, selection criteria and information asymmetry are inadequate to describe processes of evolutionary manipulation in the natural and social worlds. But the only way to find that out is to apply the concepts from the one side more systematically to the other and the other way around.

Brandon, R.N. (1988): The levels of selection: A hierarchy of interactors. In: Plotkin HC (ed) The role of behavior in evolution, Cambridge Massachusetts, MIT Press.

Dawkins, Richard (1976). The selfish gene. Oxford, Oxford University Press.

Dawkins, Richard (1982): The extended phenotype, Oxford University Press.

Dennett, D.C. (1991). Consciousness explained. Boston Massachusetts, Little, Brown & Company.

Dennett, D.C. (1996): Darwin's Dangerous Idea: evolution and the meanings of life. Touchstone Books.

Eggertson, T. (1990): Economic behavior and institutions, Cambridge University Press.

Greene, H.W. (1997): Snakes; the evolution of mystery in nature. University of California Press, Berkeley.

Hodgson, Geoffrey M. (1993): Economics and evolution; bringing life back into economics, Polity Press.

Hannan, Michael T. and John Freeman (1977): The population ecology of organizations, The American Journal of Sociology, pp. 929-964, Volume 82 nr 5.

Hannan, Michael T. and John Freeman (1989): Organizational ecology, Harvard University Press, Cambridge Massachusetts/London England.

Hull, David L. (1988): Science as a process; an evolutionary account of the social and conceptual development of science, University of Chicago Press.

Huxley, Sir Julian (ed) (1974): The Mitchell Beazley atlas of world wildlife, Mitchell Beazley Ltd London.

Smit, Jan (1998): Misleidend mooi; hoe bedrijven hun jaarcijfers manipuleren. In: Intermediair, 5 maart.

Jensen, M.C. and W.H. Meckling (1976): Theory of the firm: managerial behavior, agency costs and ownership structure, in: Journal of Financial Economics, pp 309-311.

Jong, Martin de (1998): The mobilisation of conceptual bias in institutional structures, paper presented at the Warwick conference (March 1998) of the European Consortium for Political Research (ECPR).

Niskanen, William A. (1971): Bureaucracy and representative government, Aldine Publishing Company, Chicago.

North, D.C. (1990): Institutions, institutional change and economic performance, Cambridge university press.

NRC Handelsblad (1998): De overheid moet inspireren als een Oprah Winfrey; Mickey Huibregtsen van McKinsey, Katern economie, zaterdag 20 juni 1998.

Owen, Denis F. (1982): Camouflage and mimicry, University of Chicago Press,.

Sober, Elliott (1984): The nature of selection; evolutionary theory in philosophical focus, University of Chicago Press.

Speel, H.C. (1997): A Memetic Analysis of Policy-making. Journal of memetics - Evolutionary models of information transmission, 1. Http://cfpm.org/jom-emit//1997/vol1/speel_h-c.html

Wickler, W. (1968): Mimicry and in plants and animals, Weinfield & Nicolson London.

1 Though we would say that some forms of social and biological manipulation can be seen as clear misinformation.

2 In our opinion, Eggertson (1990) has given the best account of power struggles between actors within and around social organisation, taken information symmetries and principle agent relations into account. His work provides many other examples of information manipulation in the social world which could be reformulated in terms of mimicry or camouflage.