Peter Klein on ‘Woke’ Management

Fortune – ICLE Academic Affiliate Peter Klein was quoted by Fortune in a story about his recent co-authored paper on whether past medical malpractice claims are predictive of future claims. You can read full piece here.

“We suggest that going woke is an emergent strategy that is largely shaped by middle managers,” wrote Nicolai Foss, a strategy professor at Copenhagen Business School, and Peter Klein, an entrepreneurship and corporate innovation professor at Baylor University. “Wokeness arises from middle managers and support personnel using their delegated responsibility and specialist status to engage in woke internal advocacy, which may increase their influence and job security.”

…Foss and Klein argue that despite the rise of woke ideologies in companies, there is “little evidence of systematic support for woke ideas” in the population or among top executives. They did not provide any data backing this view.

“And going woke does not appear to improve company performance,” they wrote, adding that it does, however, “provide authority, job security, and career opportunities” for middle managers.

…Foss and Klein also warned that labor and hiring costs may increase owing to conflict between workers in a woke environment, noting that some top execs, including Brian Armstrong, CEO of crypto exchange Coinbase, have decided to ban political discussions at the workplace because of rising conflict among his workers.

“When companies go woke, they risk increasing these internal costs of organization,” they wrote.

…The study’s authors pointed to rising spending on diversity, equity, and inclusion (DEI) programs as an example of other rising costs associated with a woke corporate stance. U.S. companies spent $9.3 billion on diversity, equity, and inclusion programs in 2022, and by 2026, that number is projected to rise to $15.4 billion, according to data from consulting firm StrategyR.

…But Foss and Klein argue companies that adopt woke practices could fall into a “purity spiral,” where employees compete to be considered “the purest proponent of the group’s essential values.”

“This leads to frequently changing internal agendas as the internal bar of moral righteousness is constantly being raised in a game of purer than thou,” they wrote.

The study authors added that the emergence of woke culture “remains poorly understood,” and urged more researchers to investigate the phenomenon.