Category Archives: Economics

Shifting perspectives on management

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Professor John Wilson, the Director of Newcastle University Business School (UK), introduces a blog which will offer new perspectives on topical issues in management, economics, and innovation.

What does the term management mean to you?

We live in a world of uncertainty and with this we have witnessed some huge failures of management, namely, failure of those in charge to make sense of a business issue and make the right decision.

Management is a term that has become imbued with tales of disaster, from Enron and the current financial recession to the BP Gulf oil spill of 2010.

In many scenarios top management have set targets – often financial – related to sales and returns to shareholders; meaning that the focus of the organisation has become the achievement of these targets at the expense of customer service and, in extreme cases, legality.

Here, at Newcastle University Business School, we want to make management a career of choice for people who want to make a difference. Our mission is to build excellence in our teaching while providing new, global business perspectives that contribute to the responsible and ethical shaping of society.

So how do we start to solve this issue and make sure our future leaders can manage safely, efficiently and sustainably; not focused on the bottom line, but on the holistic picture? How can we start to shift this current perspective on management?

Quite simply, we must go back to the basics: the education of management practice and how we teach this craft.

At school and university there is a risk that management (business studies) is seen as either a second-rate subject or studied primarily as a route to employment, rather than having a passion for the subject.

Here, at Newcastle University Business School, we want to inject it with a new perspective: to give it a true meaning that has been lost and overwritten during recent crises.

The true meaning of management is centered upon some key principles:

• responsibility – changing the world for the better through ethical supervision;
• bravery – employees standing up to forces driving them to do the wrong thing;
• innovation – constantly seeking and adopting improvements to products, services and ways of working;
• collaboration – enabling individuals from different backgrounds, disciplines and cultures to work together effectively to create value and to develop their effectiveness; and
• being ambidextrous – exploring and innovating to create the ‘business for tomorrow’ and at the same time making sure that the ‘business of today’ operates effectively and continues to develop.

Good management practice is vital for new enterprises, growing successful organisations, tackling complex issues including societal challenges, research commercialisation and the successful development and operation of the public sector and not-for-profit and social enterprises.

The Business School draws on its research strengths, learning community and business engagement to engage students in active, learning activities that help develop higher level managerial competences.

We are working hard to ensure that management graduates are ready to share their knowledge with colleagues, teams and organisations, in a bid to develop their ability to make a difference, and start to develop a new perspective on management.

Professor John Wilson, Director of Newcastle University Business School.

Failure of strategy

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The failure of strategy has led to an era of fiscal, institutional, and legitimacy crisis with major moral tensions.

Five years after the financial crisis hit, almost destroying the UK banking system, we continue to try to understand the factors that contributed to the disaster. This was a disaster that, as the world knows, overwhelmed the Royal Bank of Scotland and HBOS to the extent that UK taxpayers are still majority owners of these banks (HBOS having been taken over by Lloyds).

The UK public may well be puzzled as to how the disaster happened and who, apart from the publically scapegoated and dishonoured ‘Sir’ Fred Goodwin, is responsible for its occurrence. 

This month (April 2013) has seen the Parliamentary Commission on Banking Standards produce a report in a bid to continue to try and unravel what happened when private loss was made a public debt, and we slipped into a recession. 

The Commission has been set up to consider and report on:
• professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process
• lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and Government policy
The report on HBOS is refreshingly willing to name names, and allocate blame to the leaders of HBOS at the time of the crash, naming in particular Sir James Crosby, Andy Hornby, and Lord Stephenson.

The (formerly) highly paid senior bankers quoted in the report continue to claim that the crisis was a sort of unforeseeable natural disaster (‘tsunami’ is a term used on a number of occasions). This report and the written and oral testimony collected by The Commission provides invaluable evidence of individual, group, and institutional dysfunction.

In particular, the main issues that emerge from the report are (1) that HBOS was doomed irrespective of the financial crisis; (2) the bank’s ‘retail culture’ played a role in perverting the aims of the bank as a customer service organisation, (3) that the HBOS board lacked banking, rather than retail, experience, and was (4)  unwilling or unable to address issues of existential risk that were undermining the bank, even when brought to the board’s attention by a whistleblower.

The report raises questions for practising managers and for business school academics concerning how managers can manage large and complex organisations.

Hopefully this report will contribute to another lesson: how we teach future business leaders to sufficiently analyse corporate issues with responsibility and ethical practice. 

Dr Ron Kerr,  lecturer in Organisation Studies at Newcastle University Business School. 

 

Budget reaction from Professor John Wilson

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Penny for your thoughts 

As with any budget, the devil is in the detail.

And after watching today’s Budget for an ‘aspirational nation’, I feel that while the political analysis takes up the margins of our newspapers, as a region and nation we must stick together to make this work for us.

I am a business historian and have analysed many fiscal policies and Budget announcements over the last sixty years; I’ve seen the good, the bad and the ugly.

What is clear from Osborne’s budget today is the need to ‘fix’ our state through monetary activism, supply-side reform and fiscal policy.

From curing the ethics within our banks to attracting new businesses to our shores, as a nation we need to be ensuring that confidence in investment is the foundation on which we build our reformed state.  And how do we get this confidence? Through innovation stimuli, is how. Innovation acts as a bedrock for demand, job creation and, ultimately, assurance in the system that generates real wealth.

Many commentators will be discussing the implications of Osborne’s policies, but I want to talk about what we can control.  And that is our networks and knowledge economy.

As part of a civic university, the Business School needs to work with business and regional policy makers to build an industrial and business strategy that can work for us.  From cutting edge research, leadership and management training to harnessing innovation, the Business School’s doors are open to support the needs of the region to help us grow again.

In this spirit, open collaboration between higher education and businesses can lead to some of the most disruptive and ingenious work: bringing with it vital market share and wealth creation.

The importance of academia, industry and commerce working together as a triple helix for success can also be seen in Heseltine’s review ‘No stone unturned in pursuit of growth’.  And with Osborne’s nod to Heseltine’s suggestion of creating a single funding pot for skills, housing and transport, I am looking forward to further details being released.  Regions need to know how much and when to expect this to be implemented.

Moreover, with emerging business models like employee ownership and cooperatives operating in a rapidly changing business world, universities and businesses need to work together to decide how we can best do things differently.

As Osborne said today ‘Britain is open for business’, but what I would like to stress is that, yes the economic and fiscal policies outlined today will have some impact in the coming months and years, but we are the people who can add value through being ‘truly’ open for business through collaborative networks leading to innovation.