CHINA AND OUR FUTURE?

China - How should we approach it?

Just finished reading an excellent book by Martin Jacques entitled;"When China Rules the World." It was very enlightening because the traditional view has always been that China will become more like the West but in fact his thesis revolves around the premise that the West will need to become more like China. In 2007 Goldman Sachs estimated that China would overtake the US in economic terms in 2027. The Economist predicted in 2011 that this would take place in 2018. Chinese exports overtook those of the US in 2007,its fixed capital investment overtook that of the US in 2009 and its manufacturing output overtook the US in 2010. It enjoys net foreign assets of $2 trillion while the US has net foreign debts of $2.5 trillion. In effect China is the banker to the US for all intents and purposes. The Western financial crisis moved the balance of economic power further in China's favour with the EU and Barclay's bank amongst others knocking on China's door for economic assistance to keep both the Euro and a significant British bank afloat. How times do change. The West has been slow to officially recognise this new reality.

 

The 2008 world financial crisis has made the economic decline of the US and indeed of other Western countries much more dramatic in comparison to China's economic advance. The situation needs to be seen in the light of Western warning signs of impending trouble that were largely ignored i.e huge levels of public\private borrowing and indebtedness, current account trading deficits and government budgetary deficits. The US now depends on China's willingness to keep purchasing US debt and total US debt itself is now estimated to be in the order of around $9 trillion - How long will foreign governments hold their belief that the US will remain financially viable? The future for the West as a whole looks bleak for the next decade, comprising low economic growth, cuts to public spending and aggressive deficit and debt reduction - No real cheer there.

Jacques argues that there are two Western views of China's future, the first view marvels at China's huge economic progress but rests in the comfort that China will become more like the West in terms of a liberal democracy. This view is given short shrift for a number of reasons we will return to below. The second view is that China's economic progress although impressive will end in disaster because it will not change itself politically to cope with the pressures it will become more susceptible to. These pressures are significant and include the following; pressures on its environment and pollution, the slowdown of its GDP growth from 10% per annum to more like 7%-8% due to the Western economic slowdown, locally based corruption and internal pressures from its own people on land reform and local planning issues. The aforementioned pressures are real but not insurmountable. Indeed there is still a huge level of confidence in the central government of China based in Beijing however there is less confidence in local and regional government in China where corruption of local party officials and other public officials is a huge problem.

China's huge foreign reserves are both a blessing and a curse. A large proportion of them are held in dollars or dollar denominated securities. If the Chinese were to move part of these out of dollars and into something else -- i.e. its own currency ( the remnibi) then the remainder of its dollar based currency reserves would fall in value. China would be shooting itself in the foot and so she must proceed very carefully here. Its currency, the remnibi (sometimes called the yuan) is not yet traded internationally and is not yet being fully used as a reserve currency like the dollar or to a lesser extent the Euro. China benefits from a huge level of internal saving from its populace even though they are poorer than Western countries on average. If the remnibi were traded internationally then in theory the savings of the Chinese populace could be invested abroad which would act against the current wishes of the Chinese Government. There has also been much pressure from the US in arguing that the non market determined exchange rate for the remnibi against other currencies means that the remnibi is undervalued internationally and Chinese exports are cheaper than they otherwise would be. There is some truth in this view,however before any trade war is undertaken between China and the West, some deep breaths need to be taken.

Why is China different to the West, according to Jacques there are 8 major differences which we should be aware of;

1. China is not a nation state in the Western sense of the word it is a civilisation state which promotes its civilisation values much more than its state values.

2. In South East Asia - there will be a tendency for local states to return to the tributary position of seeing China as the local power they will need to have regard to in a tributary sense - not paying dues but having regard to in terms of the actions they take. Historically these states viewed Chinese culture as superior to their own and borrowed from it extensively

3. The Chinese regard themselves as a unique unified race with characteristics which are not replicated in other races. Someone will always be Chinese wherever they live and whatever other nationality they acquire.

4. China operates on a continental sized basis -- it is so huge that single Chinese provinces are equivalent to the size of European countries.

5. Chinese Polity-- The Chinese political system has historically not shared its power with many significant competing political interests either under the imperial system or under Chinese communism.

6. Chinese modernity -- China will modernise but in its own unique way - its modernity will not be of a Western nature - it will have a uniquely Chinese face.

7. The Communist state -- is different to what happened under imperial system however there are also some real similarities as well -- Not discounting the post 1911 nationalist period up until the 1949 Communist revolution.

8. For many years to come, China will be simultaneously a developing and a developed country. It will have 20% of the world's working population - real progress will be tempered by the rural Chinese population having to catch up with modernity.

An old Confucian proverb states, "May we live in interesting times." We are certainly living through them now !!!



 

SOCIAL VALUES AT CHRISTMAS AND INTO THE NEW YEAR

Kindness allied to social value- An unbeatable combination?

The great Peter Drucker stated that spiritual values are crucial - they do not need to fully offset materialistic values but they do still need to be present. There does need to be a return to compassion. In an age of murder, terrorism and persecution, compassion still needs to be present. Moral indifference besets cruelty and persecution and in these very difficult economic times man is not just physical but also spiritual as well. We need to try and maintain a meaning and responsibility in our lives and spirituality is key to this. The temptation to make money without responsibility should be resisted This is where the concept of social value comes in.

 

Under the Social Value Act 2012, if a potential service provider offers community benefit beyond the contract specification (e.g. by employing people with disabilities), then this should be taken into consideration by the authority in deciding where to award a contract. The Act  requires certain public authorities – such as a local authority or an NHS trust – to consider how the procurement of a service may improve the economic, social and environmental well-being of an area.According to the NCVO in most cases, social value must be considered at the point when an authority proposes to enter into a public service contract i.e. the “pre-procurement” stage. Service commissioners will need to know how to incorporate social value into their commissioning approaches.

 

The Government’s definition of social value is: “a concept which seeks to maximise the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves”.

 

This new legislation will move public service commissioners into considering wider elements than just pecuniary gains. As we move into 2013, how might this new legislation play out?

 

One thing is certain - we will all need to be much better at assessing the social value  of the things we do and the services we provide. We will need to have a look at the tools and approaches to do this and we will need to demonstrate how we have improved social value.

 

So it will not just be about making savings but also about improving the social value that people get from services. We should all be in favour of that.

 

THE BAMBISANANI PARTNERSHIP -- OBTAINING THE DIANA AWARD

Working together even in the most difficult circumstances can make a difference



Instead of talking about the cuts and doom and gloom which we are always likely to do in these straitened times, I wish to mention more of an inspirational story which will hopefully make us all think. Fourteen students from St Mary's Catholic high school in Menston (including my son) and ten students from Mnyakanya High school in rural Kwa Zuku Natal,South Africa  are the first young people in diferent continents to receive the Diana Award for their collaboaration on the Bambisanani Partnership. The Diana award was established in in the UK in 1999 in memory of Diana,Princess of Wales, as a legacy to her belief in the power of young people to change the world.

 

For the past 6 years the two schools have worked together in the Bambisanani partnership using sport as a catalyst to promote education, health,leadership and global citizenship,Bambisanani is the Zulu word for hand in hand and encapsulates the collaboration between the two schools. The St Mary's students visited South Africa in Juky 2012  and worked at the Mnyakanya school,Ntolwane primary school and the Zulufadder Aids Orphanage. Young leaders from Mnyakanya and St Mary's jointly organised Sports and Reading festivals for local primary schools.

 

The area where the students worked has one of the highest raes of HIV\Aids in the world,unenployment is high and adult illiteracy is close to 60%.Education is the key to breaking this cycle of poverty and ignorance. David Geldhart,Assistant Headteacher and founder of the partnership stated," I am so proud of the young volunteers from Mnyakanya and St Mary's.These young people are doing things for others that really do matter. Their positive actions and commitment are making a difference in the world. They are all role models who I know have already inspired others. They are all honoured to receive the Diana Award."

 

Mrs PK Zondi who co-ordinated volunteering at Mnyakanya High school stated," We are delighted that the Young Leaders are the first South Africans  to receive the International Diana award. The Bambisnani Partnership has inspired both our schools in so many ways. My learners have established an Aids awareness proramme which has helped so many. They show love for others and their work is changing lives."

 

Teachers in South Africa have paid tribute to the work of the Bambisanani partnership.Moses Xulu who teaches at the Ntolwane Primary said: “It was wonderful to see the St. Mary’s and Mnyakanya students working together; they are a powerful team, so mature, confident and effective.”

William Vilakazi from Mnyakanya School added: “The Bambisanani Partnership is fantastic. “The joint learning projects that we are developing in art, creative writing and using sport are wonderful in raising aspirations of young people from both communities.”

 

As we approach Christmas let us all draw some inspiration from this and realise that working together in a spirit of constructive collaboration can make a difference. We should all do much more of it.

 

 

 

 

 

LEADERSHIP CHANGE -OUTSIDER OR INSIDER?



George Entwistle - A good example of an unsuccessful insider -
Could an outsider have done better?

There are now many books published about successful historical figures which try to turn their leadership styles into generalised management approaches. These do not always work well but there can be lessons we can learn from what has happened in the past. An interesting article in this week's Economist turns the spotlight on Abraham Lincoln,perhaps the greatest US president ever. He made a series of very courageous moves by provoking the South into Civil War to break the deadlock over the struggle between North and South. He was a great orator who inspired his supporters and he did things that the normal politicians of the time would not have attempted. In regards being the presidential candidate of the Republicans he defeated two of the most experienced politicians in the US to become his party's candidate. A successful leadership outsider. But do outsiders make good leadership candidates for an organisation or are internal candidates the best?

 

If you bring in an insider he\she usually knows how the organisation works and can best keep it on a steady path. However a steady path may not be what is required and often an internal candidate can be promoted beyond his ability. Internal candidates will need to demonstrate they can either steady the ship or deliver radical change. They can be a blessing and a curse as everyone knows what they are capable and incapable of at the same time. An external candidate can offer a fresh outlook on problems but a lack of knowledge of the organisation's culture can cause much resentment as well and create barriers.

 

Guatam Mukunda of Harvard Business school describes leaders as "filtered" - known quantities, insiders who have been subjected to tests and challenges and "unfiltered" leaders who are unknown enigmas. Filtered leaders tend not to make a radical difference -- unfiltered leaders are more risky - they can make a real difference both positive and negative. People who spring to mind are Winston Churchill and Barrack Obama.

 

Unfiltered leaders bring fresh perspectives but for every successful outsider there are also failures. People who try to bring in new ideas to an organisation which desperately needs them but the organisation is not yet ready. Think of Chelsea and AVB or Brian Clough and Leeds. Hunting for stars from other organisations does not always work as their leadership is not always transferable into a new environment.

 

For an outsider to work, the organisation he is entering must be ready,willing and able to embrace a new direction and must be supportive of that new leader. Similarly the new leader must be ready to move the organisation in a new direction and not upset people but take them with him on the change journey to a happier place. There must be a fit between both these elements for the unfiltered leader to work in this new environment because otherwise the unfiltered leader will fall at the first hurdle. Filtered leaders can rarely deliver such new perspectives because people know"what they look like in their underpants."

 

Would you take a punt on an unfiltered leader or would you stay with the filtered alternative? It just depends on what level of radical change you wish to entertain within your organisation. There is a newer emerging trend which is that of the insider-outsider - a leader who has worked within an organisation then leaves it and then later comes back stronger and wiser after having gained new experiences. Steve Jobs did this with Apple and Tony Hall is going to do it with the BBC.

 

A good example of a filtered leader not really stepping up to the plate was George Entwistle of the BBC. Someone who was well known and steeped in BBC tradition but unaware that he had to radically move the BBC away from its complacency on public service broadcasting, employee relations and journalistic standards. He just didn't have a clue as to where the BBC should be going he was more interested in keeping it where it was, in what he perceived was a good place to be.

 

Filtered or unfiltered -- What might your leadership choice be? Does it depend on the degree of change your organisation needs to embark upon? I believe it probably does - but a new leader and an existing organisation need to embrace each other - or else they will both fail.

 

UNCERTAINTY INTO CRISIS?

 

This is always the case with uncertainty

 

Every economic and political crisis involved a certain number of people deluding themselves to some degree. It is always the "...unknown unknowns " according to Donald Rumsfeld,that we need to worry about. We will never have perfect knowledge so there will always be some uncertainty to deal with. We need to try and examine how these elements can be measured. The number of break ins is a cardinal measure in that we can look back at historical data on the number of break ins in say a town and have some basis for say setting insurance premiums for a town and its relevant districts. The probability of a break in, in a certain district of a town is say 1/6 or 16.67% based on what has happened in that district

 

 We then have ordinal probability where you can say that one event is more likely to occur than another but you cannot assign a probability % to it very easily e.g. One team is more likely to win a match than another but we cannot really quantify this very well. The final point here is there are events for which probabilities will remain unknown -- however some commentators believe that they can calculate probabilities for this third type of event. The classic difference between risk and uncertainty. It is clear that uncertainty has the strongest influence in those areas of an economy  like investment and financial markets and this can affect the whole economy very quickly indeed.

 

In the 2008 banking crisis certain events were given miniscule probabilities in sophisticated financial models. However if those events ever occured the results would be catastrophic and they did occur, and although they were identified as being possible -the probabilities assigned to them occuring were so low that in effect their occurence was effectively discounted. It should never have been so - We should not take false comfort in believing we can estimate every probability accurately.

 

We can plan for uncertainty by trying to guess some scenarios which could occur and plan for them as best we can even if the probabilities of them occurring do seem to be somewhat incalculable. Though planning for a a Martian invasion might be taking things to far. We could plan on dealing with the outcomes of some unlikely events occurring rather than the events themselves. This might help us a bit more. This could translate into crisis management or planning approaches. We need to recognise that assigning probabilities for some events is practically impossible and it is a simple yes\no view as to whether they will occur or not. These may be sudden unforeseen events but each crisis is usually different but there is a number of common steps which may need to be taken to try and cope with something you have not anticipated could or would have happened. Coral Bell the management writer looked at the following steps:

 

1. Analyse the situation - As quickly as possible What is happening and why - What will happen if nothing  is done? How quickly do we need to act? Who needs to be involved to tackle the crisis and what resources have we got- People equipment, finance, assistance from other organisations and access to key influencers.

2. Draw up an action plan along with contingencies and set up a crisis management team with key communication channels to key players.

3. Focus on the important issues first - leave others on the back burner

4. Monitor the action plan outputs and and ensure you get information to change the action plans as soon as possible if that is required.

Time will need to be bought as much as possible - things will have to happen quickly but also effectively.

These principles can be applied to any event which has occurred as a result of unmeasurable uncertainty. It can only give the steps needing to be taken and not the more detailed reactions required in the action plan.

The best way is to practice dealing with the unexpected and honing your uncertainty management skills at the same time. We will all have to do it some time - so let's start now?

BEING CERTAIN ABOUT UNCERTAINTY

Can we ever be certain about uncertainty?

It always amuses me, these quants who believe they can measure everything -- even uncertainty - They even build the measurement of uncertainty into complex economic\mathematical models and think they can predict it. There are unique events at the margin and by the time they become statistically significant they have gone,perhaps never to happen again. Like Nicholas Naseem Taleb - who argued for Black Swan type occurrences. No-one had ever seen a black swan and therefore no-one ever expected to see one but that does not mean that Black Swans do not exist.

 

The Black Swan theory of events is a metaphor that describes an event that is a surprise (to the observer), has a major effect, and after the fact is often wrongly rationalised with the benefit of hindsight and everyone is good at doing that. These events are hard to predict, rare and impact hugely on society. They are beyond what we would normally expect. Their probability is difficult to estimate because they have never\rarely happened before and so we don't have much hard evidence to go on. In addition many people are blind or ignore uncertainty and even do not appreciate the huge impacts such events can produce. This mindset needs to change.

 

  Dutch explorer Willem de Vlamingh discovered black swans in Western Australia in 1697 -So you see they do exist. We need to think of a unique event which might affect us hugely in the next 5 years. How might we and our respective organisations cope with something we had never ever thought would happen? Could 9\11 really have been predicted and how did we cope with it when it happened? We seem to think we can plan for everything but do we need a generalised intuitive approach to cope with uncertainty when something has never happened before and\or we do not have enough experience of similar events to create an action plan for coping with them? Some times we need to be intuitive,impulsive and experimental to cope with these outliers. Yes sometimes we need to improvise and we need to get better at doing that.

Indeed Nicholas Taleeb has just published a book on how we can gain from disorder. We all need to be antifragile. He argues that the worst case scenario will be exceeded - instead of trying to predict the future we should try to benefit from these shocks (Black Swans) when they occur.Put more scantly we need to learn from mistakes. Too much stability lets risks accumulate until there is another disaster.Sometimes stability is false - like when dictators keep power by force -- society is then stable but is not healthy. Can we use these unexpected events to improve our position? We need to know when the gains from a surprising position\event outweigh the losses.Over reliance on one employer can imply that sudden unemployment will cause a huge shock to the individual concerned.

The review of Taleeeb's book can be read in the link below:

 http://www.economist.com/news/books-and-arts/21566619-how-surprises-make-you-stronger-stress-best



In certain circumstances -surprises can make you stronger - Image from the Economist

 

 

PLANNING, BUDGETTING AND INNOVATING FOR THE FUTURE



The Future- How are we preparing for it?

 

Each organisation operates at two levels where the future is concerned.There is the budget that tries to keep existing operations on an even keel and can in some circumstances be reduced under pressures from the trade cycle. What is the least spend we need to make to keep going. Not very ambitious I am sure. If there is a future growth strategy then it should be addressed by the question, "What is the necessary funding to produce optimal results from new initiatives". This is a budget for growing and developing your organisation - it needs to be there constantly to assist you in exploiting new opportunities.

 

The two levels are linked and one may spring from the other, however too often the growth level budget is not taken seriously enough or it is just a simple wish list. We all wish for new exciting developments but there is very often little or no seed funding to push those new agendas forward. This can be frustrating but budgets for new initiatives cannot be built on dreams alone. It is however always important not to lose sight of the dream but still keeping your feet on the ground.

 

This probably leads me into the proposition that the future will never happen on its own or shouldn't happen on its own. The future requires thoughts and actions and deeds to-day. There are as many if not more risks of doing little or nothing with your organisation than doing something. Perhaps many short \medium term plans overlap into the longer term plan. Planning needs to be effective over a time span of development -- Long range thinking and planning should stop us from always sticking with the products and services we know, just because we know them and they have worked for us in the past.Long range planning and thinking should rescue us from short term decisions about our futures.

 

Such thoughts lead us into difficult territory, which parts of our organisation should we play down and which should we push? Are we even at this stage at all? The question we all face is not what we should do tomorrow but what should we do right now to be ready for tomorrow's challenges. Do we plan for the future in everything we do today? Probably not but we should try to adopt this approach. As Peter Drucker argued, "We should deal with the futurity of present decisions."

 

Everyone is always tempted to stick with their core competencies but there is seldom a core competence of innovation. Does your organisation have an innovation section that monitors innovation elsewhere and promotes it within your own organisation? Are there product and service innovation targets which have to be achieved each year? Do we have an annual innovation target as far as products and services are concerned? If we are not innovating we are not preparing for the future with actions we can take to-day.

 

If we do innovate - let's not do it on the cheap,let's get the resources to achieve this, as relying on existing fully committed resources will probably ensure that innovation will fail and the future will devour us. None of us would wish that to happen.

 

FREE SPEECH AND A FREE PRESS - EMBRACING GREATER RESPONSIBILITY?

 

 

Are we doing too much to defend press freedom or not enough?

 

There seems to be much talk of the boundaries of press freedom in the wake of the Leverson enquiry ( which incidentally cost circa £6m to put on). What can people report about other people without straying into their private and personal points of view and works? People do have a right to privacy but not if any actions they undertake, which may harm certain sections or indeed the whole public, go un-reported. There is a judgement to be made about whether a report will inform society about a group or individual who is pursuing actions which can harm any element of society. In that case it can be argued that that particular person\group has foregone the right of privacy over those particular potentially harmful actions. The press does report on the human interest dimensions of celebrities for example their sexual partners or even their preferred films, theatre shows etc.It is argued that society is interested in the lives of celebrities and therefore the press has a right to report on those lives. To an extent that argument is true, however celebrities must also be treated with care as regards aspects of their personal lives just like everyone else, however to be a celebrity and in the public eye means that a person must be aware that they will be under much greater press scrutiny than if they were just normal people and they will need to behave accordingly. This latter point is inevitable. If a celebrity pursues certain courses of action he\she will be aware they are in greater danger of wider exposure of this than you or I.

 

How do we define the press?  Given the explosion in blogging and the interweb we are all crypto journalists now. We can write blogs,state opinions and make arguments. Arguments about press freedom do not just apply to the professional journalist but to everyone who writes opinion pieces which are accessible over the web and elsewhere. We now have a greater flexibility to express our views but an increased responsibility to ensure that our views are expressed fairly and honestly without causing needless offence and heartache to any third party. This means we have to act responsibly both the professional journalist and the amateur blogger. This is doubly the case because any e-mail you send or any electronic\digital comment you make cannot be hidden from the wider community - therefore we do need to think carefully sometimes about what we say and report.

 

Freedom of speech is cherished in the UK but it is under pressure in certain instances.Absolute freedom of speech does not exist here because it is illegal to incite racial hatred or physical violence against third parties and perpetrators of these acts can go to prison. Similarly the libel and slander laws in the UK are very strict in the sense that if you say or write something that a certain group does not agree with (libel) or you say something directly about that person or group that they do not like (slander) -- you can find yourself in the eye of a very expensive legal case. Sometimes the threat of such action is enough to silence critical reports about a person or group's activities. A journalist recently made some comments about the state of Bahrain concerning its lack of democracy and treatment of political prisoners and was threatened with a writ.The late great Robert Maxwell was a great exponent of this. When there were critical reports about his financial empire and dealings he would resort to the courts and this would emasculate a "free" press when in reality the activities of such a person should have been given the full glare of publicity and public scrutiny. The UK in recent years has become a safe haven for very rich and powerful people, often foreign oligarchs who have used its legal system to protect themselves from controversial though valid scrutiny and challenge. Journalists have become frightened by this class of people and have sometimes not reported the stories they should have but reported other stories they shouldn't have. 

 

The press and others should report on issues that will significantly affect us all in the way we live our lives -- However they should do this in a responsible way. The responsible approach is often missing. All the issues around phone hacking  were and are illegal and should be dealt with as such. Clearly those journalistic actions were irresponsible although I am uneasy about the state steeping in to determine which stories should be aired in the public interest and which should not be.

 

Whatever the final approach - journalists and bloggers should not feel fettered in reporting very important and pertinent issues about individual and groups -- if that were the case then wrongdoers like Jimmy Saville may have been exposed much earlier. A major exception to this could be issues of national security however these issues can be properly considered by experienced counsellors.

 

I would not like to see a society where press freedom becomes so emasculated that reports about occurrences which people need to know about and act upon are hidden from them. That really would not only be a crisis of press freedom but of democracy itself.

THE STATE - WHY WE STILL NEED IT?

The State should serve us shouldn't it? 

Certain elements of the political right see the state as part of the problem and not part of the solution. That does not always need to be the case, the state and a strong effective government are necessary for a healthy society,whatever Mitt Romney and his acolytes wish to tell us. Government needs to be vigorous,strong and efficient but it doesn't need to do everything itself however it does need to ensure the right services are delivered in an effective way for the benefit of the people. The state cannot be divorced from this process and does need to be part of it. It does have a general responsibility for the welfare of its people and this responsibility cannot and should not be privatised although the provision of services certainly can be.

The state through its democratic institutions should represent the people and their views and aspirations but that is not always the case -- If the state is dominated by the interests of selfish and powerful elites then it too can become selfish and unrepresentative and not an instrument of social justice,equality and peace. This has happened in the past when the people have not taken a stand and let events rule their world. So a strong and respected state is a must have requirement -- however when things go wrong then it is difficult to put the state back where it once was. The first state to fall to the Nazis was Germany and the first state to fall to the communists was Russia. To move these states back to a semblance of democratic control has taken over 50 years. It has been more successful in Germany than in Russia. The latter finding it very difficult to escape from its totalitarian past and still  it sports a very authoritarian government which it seems will remain with it for a long time.

 

Some countries suffer from a lack of state power not too much state power. If you suffer a heart attack in certain parts of the world there is no ambulance service to save you because that state infrastructure just does not exist - even if individual people are rich enough to pay for it. So it is evident that not all state power is inherently evil. Some people are suspicious of the state when it invades every aspect of their lives and tries to tell them what and how to think, we should all guard against this as best we can.

Some economic theorists contend that the state can crowd out private sector activity and ingenuity if public spending is at a level in excess of say 30% of a country's GDP then the state can obtain more resources than the private sector when it is competing with it in private markets hence the private sector is crowded out. If only state spending were lower the private sector would therefore suffer from less crowding out and would deliver more jobs and higher economic growth. The picture of our economy is more complex than that. Reductions in state spending are not inherently good as such -- it depends what the money is being spent on and the impact of any reduction in that spending on the wider population. The idea that if state spending was drastically reduced to say 20% of GDP or less then the private sector would bridge this employment and growth gap seems a bit fanciful. Any private sector impact would take a long time to make any difference in my view and this is already evidenced in the British experience.    

Any reduction in state spending needs to be matched with increased dynamism of the private and not for profit sectors or else there will be long periods of unemployment and economic instability. Austerity on its own will not save us. Austerity coupled with some intelligent incentives for investment and business growth in the not for profit and private sectors could make a difference if properly targeted to foster calculated risk taking and further innovation.


Reductions in public spending might be necessary but are not sufficient in themselves to foster increased non state activity to bridge any gaps. Other moves to improve the conditions for private and not for profit investment should be introduced that make a real difference to the investment plans of individuals and businesses and yes, the state can have a role to make this happen as an enabler and not just a provider of public and not for profit services. This is probably the direction the modern state will need to move in to re-define its role in the 21st century.  If the commercial banks are not lending as much as they should might the state fill their lending void thus encouraging wider growth and prosperity as we really do need it.                             

TRANSFORMATION -- NEEDS TO MAKE A DIFFERENCE TO PEOPLE'S LIVES

Our organisations need to transform to improve their service outcomes for society as a whole.

Everyone seems to be talking about the transformation agenda for public and not for profit bodies. Transformation means services being provided to the public in innovative, timely effective and cost efficient ways which do not necessarily reflect the patterns of service delivery that have been provided in the past when resources were more plentiful in these respective sectors, it also in my book means improving service outcomes. The transformation agenda is being driven to a large degree by resource constraints but even if these did not exist then then there would still need to be service transformation to take account of our demographics (Especially an ageing population) and the rapid pace of change in the development of digital technologies and electronic social interaction. We probably would not be able to hide away from the transformation agenda even if we wanted to. So we should not really kid ourselves that it will go away.

 

Transformation for a lot of people is difficult. They have provided services in the past which they feel were well delivered and consumed effectively by their clients -- it is challenging for them to accept that given a whole host of new political,economic, technological and social realities that the way services are configured, marketed and delivered will need to radically alter to address these new realities far more effectively than in the past. There will need to be a much further move down the road to measuring the social impacts of relative public policies and also more work on the outcomes of these policies. Increasing research on payment by results, especially in a proposed new publication by CIPFA, is also gaining ground. Final tranches of monies will only be paid to service providers if certain social outcomes have been delivered, be that problem families, healthy societies or educational attainment. The outcomes will need to be measured against acceptable benchmarks and this will need to  be developed much further as a more generally accepted approach. In future the starting benchmarks will also need to move forward as well in line with society's increasing expectations of what these services can deliver.

 

There is no real objection to the transformation agenda being angled in this way to produce improved social outcomes for our people. There is a need however to ensure that the transformation agenda is not used as a cloak to hide resource constraints per se. It is all very well having shared services which reduce back office costs, reduce service input duplication and increase efficiency but what about the service outcomes themselves. If these radical transformation agendas are followed and service outcomes do not improve then this is only a partial transformation of public sector bodies and not for profit bodies service delivery. In my view it is not true transformation because although excessive costs may be being addressed and efficiencies increased - the outcomes for service users can be worse than before.To my mind such a process would not be a successful exposition of a transformation agenda.

 

It is incumbent on us all to ensure that any transformation project addresses all the key elements of transformation and not just the cost and efficiency bits. If the latter is not the case then we will end up with services which are cheap and nasty which might save money in the short term but in the long term might lead to even greater costs for society as a whole.

 

If we are transforming our services and trying to improve service outcomes then we will often require input and help from experienced third parties who will be able to provide the expertise that we may not possess in technical and financial areas. This may not initially come at zero cost and it is therefore important that any social impact analysis is not short termist and does look at the long term impacts of the transformation agenda in terms of an invest to save approach. Energy saving measures will be fairly expensive now but in the future, the costs of not having undertaken them could prove to be prohibitive.

 

So let's ensure that any transformation agenda we engage with actually improves social outcomes and is not just an excuse to save money. If we can demonstrate this to be the case then the buy in to any future transformation projects will be so much higher and we will all benefit from that.

 

SWAPPING EMPLOYMENT RIGHTS FOR EQUITY - A GOOD WAY OF CHANGING MANAGEMENT STRUCTURES?



We will all need to broaden and democratise our management structures - but not at the expense of our employment rights

The need to incentivise employees is critical, now more than ever before, so it was interesting to see George Osbourne's proposals for employees to swap some of their employment rights for an equity share in the organisation they work for. Is this a good idea? Would the former worker end up being sacked but at least retaining some shares in the organisation he used to work for? This needs to be properly considered and thought through.

There will not be much scope to have future pay awards in the public sector and elsewhere but an option to share in the future benefits of an organisation on a risk basis needs to be examined. Such an approach would act as an incentive for employees to try harder and think more deeply about the way they wish their particular organisation to move forward and how they might be able to contribute to that progress. One would only sacrifice a set of rights if one had a good chance of obtaining greater future rights to compensate for the rights one has sacrificed or else it would not be worthwhile.

 

Spreading ownership of an organisation amongst the team of co-workers would have greater incentive effects to generate more wealth and spread that between these new owners of the organisation. Perhaps co-operation is the way forward for groups of individuals who wish to work together to generate a common approach. The year 2012 has been designated the international year of co-operation and the following points are given by Co-operatives UK as the key advantages of co-operation;

 

Allowing communities and groups to take responsibility for their own needs.Advantages are created by allowing groups with a common interest or aspiration to work together.

 

Trusted values and principles. Every co-operative benefits from a commitment to international Co-operative Values and Principles, the blueprint for a successful co-operative that has existed for over 150 years.

 

A commitment to ethics, community and governance means that co-operatives are trusted to provide sensitive services to vulnerable people.

 

Creating value for business and members. Co-operatives create value for their members. When co-operation is the priority, it enables provision for the best possible services for members and allows the advantages of co-operation to shine through.

 

Increased commitment and drive from the members of the workforce are priceless and in a world of restrained resources the move to increase the stake of workers in their organisation is a good way forward in ensuring that organisations can progress and that staff will feel and care for the organisation and its future. Existing organisations are not always in favour of moving in such a radical direction because they are frightened to abandon the top down status quo.There is always a fear of doing something but there is less of a fear of doing nothing. Doing nothing is just as dangerous as doing something -- Doing nothing and not responding to a radically changing environment can be doubly dangerous. Evidently, one must do the "right" thing and move in the right direction.

 

Greater levels of democratisation in the management of services especially those in the public and not for profit sectors will need to be addressed because with the lack of future resources this democratisation will be the only real incentive for the workforce to produce service outputs that will delight service users.

 

New management models will be developed,but please Mr Osbourne, not at the expense of our employment rights

 

DECISIONS DECISIONS -- HOW DO WE MAKE THEM?




Is this how you make your decisions?

We always seem to temper our decisions on policy with what might be acceptable rather than what we see as the right decision. Too often we are worried about what reactions we will generate by  putting forward what we feel is right. Often we are concerned that our approach will not be seen as particularly realistic in the way our organisation currently operates. But is our decision wrong or does the way our current organisation functions need to change to make our decision more acceptable. Our decision may be correct in the macro sense but may be hamstrung in the micro sense because it will not or will be very difficult to deliver, given our own existing organisational circumstances and culture.

 

Decisions need to be made after healthy and vigorous debate. Alfred P  Sloan Jr the legendary CEO of GM  argued that without any disagreements on a particular issue --there is no proper understanding of what that issue really means. Disagreement can provide an alternative to the accepted status quo and any decision made without proper disagreement and consideration of alternative approaches is a huge risk for the organisation. Disagreement is needed to stimulate creative thinking and problem solving.

 

I suppose we have all been there in the meeting where a senior officer of an organisation presents a particular approach that he\she passionately believes in as the way forward. You on the other other hand see the flaws in it in terms of its potential delivery and outcomes. What do you do? Keep quiet and agree? State your case? Offer a muted response?

 

Peter Drucker argues strongly that decisions on issues should always be based on what is right not who is right. This is sometimes very difficult to follow in practice but nevertheless,in the final analysis, it is the correct approach.

 

You must argue for what you believe is right -- Why? Because in the end there will be a compromise within the organisation on most if not all issues under consideration. Compromises will need to be based on the right decisions not the wrong decisions, that is why it is important to argue for what is right in your view,so the likelihood will be that a future compromise will be based upon it.

 

When Peter Drucker was doing some consultancy for Alfred P Sloan, Sloan Responded, " My only instruction to you is to put down what you think is right as you see it .....Don't worry about the reaction or the compromises that need to be made to make your decision work .... Executives in this company are perfectly able to make compromises, but they can't make compromises unless you tell them what "right" is."

 

Compromises from positions will be made however it will be important to identify the compromises that will get you at least half way to the "right" solution and compromises that will get you nowhere near the right solution. The quality of any compromise is nearly as important as initially propagating the "right" solution to a particular problem.

To make an effective decision one has to understand the problem the decision relates to -- i.e. the symptoms and causes of the problem. Decisions frequently address the symptoms of problems but not the root causes of those symptoms.The key data for decision making needs to be analysed although there are times when this may not be totally possible to achieve. In that case, data will need to be prioritised in importance and greater weighting given to more important data which can be used to inform decision making.

The ancient philosophers stated that decisions should not be made unless all of the underlying facts of a situation are known, in reality this is seldom the case - so decision makers need to work with what they have got,especially if decisions need to be made quickly. This is where the quality and priority of information needs to be properly assessed and judgements on it formed,before a final decision is taken.

Oh and one other thing - decisions are not just pronouncements, they need to be translated into actions through action planning and delivery. If they are not then there would have been little point in making the decision in the first place.

 

 

 

THE BAMBISANANI PARTNERSHIP - AN OASIS OF HOPE




Education is the most powerful weapon with which you can change the world -- Nelson Mandela

My son, a student at St.Mary's Catholic Comprehensive School in Menston has just returned from a trip to South Afirca where he worked in one of the most deprived areas of the planet teaching children and coaching sport. The children had so little in terms of material possessions yet they were very positive and very happy striving for success. Some of them walked miles to school to obtain an education they knew would be instrumetal in gettting them out of poverty.St. Mary's work in South Africa began in 2006 when David Geldart, Assistant Headteacher was invited, as part of a Youth Sport Trust and British Council Delegation, to help develop a School Sport Partnership system, based on the UK model that St. Mary's has been so instrumental in developing. The South African system, known as the School Sport Mass Participation Programme, is currently being developed in the eighteen most deprived areas of South Africa. Mr Geldart went on to develop a specific school partnership in one of these areas with Mnyakanya High School in the remote rural and desperately deprived Nkandla region of Kwa Zulu Natal.

 

Mnyakanya School serves a desperately poor community. Rural and remote, the area is ravaged by HIV/Aids, with the official figure of one in three adults infected. Many children are infected and there is a high percentage of Aids orphans. My son and his colleagues visited the Aids orphanage and were moved to tears by what they saw. Many of the children lived under very difficult circumstances had little hope of progress and some wre in an incurable position. At least 20% of children in the area do not go to school because they cannot afford the £7 a year school fees, uniform and stationery. Class sizes are in excess of sixty and the school has little equipment. Unemployment in the area is in excess of 90% and at least 60% of adults are illiterate. The majority of people live in isolated clusters of round, grass roofed dwellings with most having no water or electricity.

 

The development of education in the area is the only hope of breaking this cycle of deprivation and all that goes with it. Mnyakanya School offers an oasis of hope to a generation of young people. Children in the area are desperate to learn and regard education as a privilege. Most children walk at least two hours to and from school each day. Clean water is a boon to them and they believe that with clean water "anything is possible"

 

The Principal at Mnyakanya School, Mr Lucas Dubé, made his first visit outside of South Africa to visit St. Mary’s. Following the visit, Lucas said:-

“This partnership offers the greatest hope to my community of improving the education of young people. It has the capacity to raise both aspirations and awareness. I challenge both school communities to still be working together in one hundred years time. If we achieve this, we will make such a difference to so many peoples’ lives”

 

Bambisanani is the Zulu word for “working hand in hand” and aptly encapsulates the partnership between the two schools. If you wish to find out more about this truly inspirational project please read.

 

Bambisanani: The First Five Years

By David Geldart and Duncan Baines

 

Which was previewed at this year's Ilkley literature festival. This is an excellent example of life changing work of which these young people should be justifiably proud.

 

LOCAL COUNCILS - BECOMING MORE LOVED?



Local Authority Service Delivery models under the spotlight? -  Copyright of the Economist

An excellent article in this week's Economist discusses the status and performance of local authorities over the last 5 or so years and there are some surprising results. British local authorities have achieved something really remarkable. They have maintained their approval ratings with the public even though they have had to implement cuts of 28% over the immediate period.Therefore they must be doing something right and indeed are reforming services to a larger and better degree than central government is. They have been better at outsourcing services and encouraging volunteers than central government has been and that is a praiseworthy achievement. This has also taken place against a failing agenda of top down localism. In May 2012 nine out of 10 cities decided that they did not want an elected mayor. The reforms covering the introduction of Police, Crime Commissioners (PCC's) are fraught with difficulties about who will have ultimate control over policing and what the political factors connected with this reform might entail.It will be interesting to see what the November turnout figures for the PCC elections will be. I don't think they will be too high.

 

Change in service delivery is coming from the bottom up and not the top down and that is how it should be with change in any environment. People must believe that change is necessary and deliverable. Islington council set up a fairness commission which held a series of dialogues with people on how to engender fairer service delivery when money is tight. It has protected free school meals and cut the ratio between its highest and lowest paid staff. This is in effect involving the electorate in making choices about service priorities and explaining how and why these choices need to be made. Other authorities are interested in this approach. Is this a way forward?

 

In West London three Conservative led councils have come together to share some £300m of services. "Tri-borough" is a joint project between the City of Westminster, the London Borough of Hammersmith and Fulham and the Royal Borough of Kensington and Chelsea. The project’s vision is to combine services across specific areas in order to improve lives and make public funds go further. In February 2011, the Chief Executives of the three local authorities published a report entitled ‘Bold Ideas for Challenging Times.’ This set out the plan to share services, combine back office and management costs, and save £33.4m in the process. One of the key points in the proposals was the guarantee that each council would retain its sovereignty to shape shared services to local needs. This would be safeguarded through mandates that set out the specific services that shared teams would deliver across each borough. There was a clear concern that although services would be shared they would still need to adopt a local character in their delivery to service users.

 

Since  June 2011, each council’s children’s service, adult social care and library service has been combined to create a single Tri-borough service. Each of these services is headed by a single Executive Director and a shared management team. Councillors from each council retain responsibility for the way the shared service is provided in their local area. One very important point here is that organisations which transact with the Tri-Boroughs will need to be in a position to adapt their charging policies to the radical new environment. They will be less able to charge 3 times the average old borough rate for the services that are delivered to them. As the Tri-Borough was set up to expect to make savings so there will also be pressure on service providers to the Tri-Borough to rationalise their pricing approaches to support this new arrangement. Everything is not always rosy in these approaches and when Suffolk County Council wanted to turn itself into a virtual authority with little or no direct service delivery, it had to back down following a huge local outcry. The local electorate was not ready to embrace such radical change and the potential up and down sides of such change were not properly explained to them.

 

Lambeth Council is seeking to move towards working at a co-operative level as a co-operative arrangement. Both Lambeth and Islington are moving in very interesting directions as regards service delivery -- not being dictated to by central government and indeed showing it where developments might move forward.

 

An excellent example from Lambeth is where a particular lady set up a very successful project to get young people out of gangs and this convinced the council to move further down the co-operative line. There is now a plan for a youth co-operative to to take on responsibility for youth clubs and playgrounds in the Borough.

 

Central government is getting anxious about poor growth and wants local planning laws by passed in the belief that this action will make a difference. Perhaps the better approach might be to let authorities innovate with service models that will be delivered for the benefit of the community in a spirit of constructive co-operation.

 

In conclusion it is a great achievement for local government to maintain its approval rating with the public in such challenging times. I bet Nick Clegg wishes he could do the same

 

Please view:

http://www.economist.com/node/21563324

http://www.westminster.gov.uk/services/councilgovernmentanddemocracy/tri-borough-working/
 

THE ELITE ALWAYS RULES - BUT IN WHOSE BEST INTERESTS?

Plato - Our Elite should be self sacrificing not self serving

The Greek classical philosopher Plato stated that the elite will always rule in a particular society. The elite being defined as a grouping of people who are the choice part of that society, who indeed dominate the remainder of society in a political and social sense. Gaining admittance to that grouping is not easy and often power is passed between generations of members of that elite. Be it the richest in society, The Chinese Communist Party or indeed the ANC in South Africa  -- all the aforementioned groupings can be described as elites in their respective societies. these elites may come from the right or the left of politics but they exhibit remarkably similar characteristics which can work against a free society.

 

Philip Blond the philosopher argues that the future role of elites will have to be different;

 

"The real politics of the future will be anti-oligarchical - it will require a new right and a new left. For increasingly, from the perspectives of those who are shut out, the elites of authoritarian and democratic states will look remarkably similar. The West used to produce self-sacrificing elites; now it has those who are assiduously self-serving. Too many of our institutions are corrupt, and too many of their leaders rest easy in the falsehood that their interests are ours. A revulsion against oligarchy will soon define both eastern and western states, and it will of necessity draw on new and unexpected resources to shape a new political idealism."

 

The statement that, "Too many of our leaders rest easy in the falsehood that their interests are our interests," does ring true in many instances we can quote. Giving groupings access to the power to provide products and services for the benefit of the whole community and still make a return must be the way forward in many respects.   It does not need to be a focus of excess profit but a fair social return. 

 

Plato imagined a society without the weaknesses of rule by inheritance and the weakness of leadership chosen by the multitude. He believed that his ruling elite had to be free from labour so they could specialise in philosophy. Under his ruling elite, Plato invented a second and third class of citizens. The second class were the warriors, who were to be free from ordinary labours so they could train to become as highly skilled in combat as possible. The third class consisted of labourers. Plato wished his ruler-philosophers to be unconcerned with possessions. He wished that they be interested in harmony and justice only. The best men, he believed, serve society out of devotion rather than for pay. Therefore, he believed, the ruling elite should share rather than compete for possessions. If we do have an elite in society and I believe we do, should they adhere to the ideals of Plato and act in the best interests of society as a whole rather than just for their own grouping? I believe that they should do so.

 

Things can go wrong in the sense that one self serving elite can be replaced by another. The prime example of this is South Africa. The ruling white elite were replaced by a black elite embodied within the ANC which took on the mantle of power. This power should have produced a high degree of change for the country in terms of social advance and the alleviation of poverty but unfortunately it has not achieved what was expected of it. Now South Africa has many of the characteristics of a one party state where a black elite benefit whilst the majority of black people are still mired in poverty. Clearly that was not the intention when Nelson Mandela became president.

 

If the elite do rule us, they should serve society as a whole -- and in any shift of power between elites, one hopes such change means that under a new elite  - the support and service given to society will improve for the good of everyone.

 

 

 

 

 

JOBS THAT DEFEAT COMPETENT PEOPLE.

Great in the 80's - Did they ever leave Rio? 

The business environment is changing so quickly that people need to change with it - but that does not always happen and jobs\positions appear in organisations which defeat people who otherwise have been very competent and who have done very well in their previous roles -- this often happens when an organisation is subject to rapid change or rapid growth.

The growth and change of an organisation can render certain jobs\positions outdated and narrow in terms of what they achieved before. An organisation initially had a largely domestic market selling to domestic consumers. Once its international sales took off -- the job\role of the Head of Marketing and Sales became much more complex and challenging. The job title remained but the job itself became very different and required a much broader base of skills and knowledge. The position was overtaken by events\change and the incumbent person didn't have the knowledge or training to cope as well as they should\could have done. That person was best suited to doing the previous job not the new job they had been thrust into.

In terms of our present position of downsizing and redundancy -- individuals are required to take on portions of other roles (frequently those who have left the organisation) and to do their best to cope. Paradoxically the training support and budgets to help them achieve success are often also reduced producing a double whammy effect on the person who is facing this newly expanded role. Mentoring and support is required but again that is often lacking but should nevertheless be insisted upon.

 

Often these changes take place in jobs and the formal HR arrangements of job descriptions and support processes just do not keep pace and the individual feels himself being engulfed by a torrent of change.

We do need to ensure that the capabilities match the change agenda the organisation is experiencing because without that -- many good people are let go. Many of them have served the organisation well but cannot continue doing what they did yesterday without taking account of today's realities.

It is a difficult challenge we will all have to face.