Philip was an invited speaker at the London meeting on 23rd May, organized by Human Potential Accounting, to mark the launch of the Human Capital Handbook, to which he and Neela contributed a chapter. Some soundbites:
“We gathered a lot of evidence for enlightened leadership … but we also tried to look at some of the reasons why bad or exploitative leadership has been so fashionable in the past two decades.”
“Short-termism is just one of the baleful consequences of the failed business model.”
“Low pay benefits no one.”

Human Capital Handbook is available at: http://tinyurl.com/mskud2d

Other presentations, including the keynote talk by Raj Thamotheram, are available here: http://hpa-group.com/resources/videos

If the full story of the western economic crisis of the early 21st century ever comes to be written, a puzzle for future historians will be that business schools have been teaching an approach that is extraordinarily narrow and illogical, guided by ancient measurement systems, and warped by political myths.

For the full blog, click here.

For the Strategic Management Linked-in group, click here.

In The Independent, a report that use of food banks in the UK has shot up. Inventor Jaron Lanier, in a report that led to a lively discussion on the Radical Shift Linked-in group, noted how social media and other consumer firms are using Big Data to manipulate consumers. Simon Caulkin, spot on as usual, relates how corporations have been captured by the neo-liberal cult of only caring about shareholders, focusing on the short-term, and enriching a few.

The tacit assumption is that extreme inequality and asymmetric information helps the corporation. Over the longer term, especially, this is not consistently true. As discussed repeatedly on this blog, low pay does not maximize profits – this is a cynical myth supported by right-wing and left-wing economics. We have known since at least the 1930s and the Hawthorne experiments, that the way in which you treat workers is the single most important element in enhancing performance and the customer experience. The more ethical employers are also some of the most successful.

We have highly advanced electronic communications yet continue to neglect human communication. We think data is the hard stuff and relationships are the soft stuff. Corporations, keen to apply 21^st Century Big Data, have yet to apply management research from the early 20^th Century. Some progress.

Now to the glimmer of hope. In Simon Caulkin’s piece, there was a report of a radically different vision of capitalism, one in which all of society stands to benefit. The head of McKinsey, no less, Dominic Barton said that capitalism had 10-30 years to reform itself. The business schools must follow suit. It’s challenging but not impossible. There are highly enlightened practices emerging from many supermarkets and consumer multinationals, especially on sustainability. You can read some examples in New Normal Radical Shift.

• Full version of the blog here.

It was rather gratifying to hear eminent speakers make similar points to mine in almost the same way; having arrived independently at similar conclusions. Raj Thamotheram, keynote speaker and founder of the Network for Sustainable Financial Markets, said there is a problem with the ‘meta-narrative’ we tell ourselves about business and management:

‘We don’t just have a reporting or a metrics problem; we have a fundamental problem with the meta-narrative; the story we tell about business … is badly broken. We need to fix technical problems, but trying to do that within the current narratives will fail.’

This mirrors my own frustration with initiatives on human capital, in which efforts are made to insert a feature of ‘the human contribution’ into a framework designed by the financial accounts. What’s needed is a conceptual shift that recognizes that the company consists of people; that employees aren’t just one of the assets; rather we are the core asset, who create all the others.

Simon Caulkin, contributor to The Observer and Financial Times, criticised the business media for failing to challenge the assumptions behind the way in which businesses have been run, with their excessive focus on short-term profit maximization. We address the theme in New Normal Radical Shift. An excerpt reads:

Coverage of business and management is superficial and inadequate. It is confined to financial reporting – which the media wrongly assume is the same as the business result – and the occasional scandal like BP in the Gulf of Mexico. It is like only covering politics when there is a disaster or a budget, and not bothering with leadership selection, policy commitments, manifesto promises or conferences. (Chapter 6, sub-heading: ‘The political class: a problem’ page 91 of the hardback version).

Special mention should go also to Ann Graham, contributor to Strategy+Business, who helped put the whole thing together. See her profile of Tata here.

Coming just a week after our successful seminar to mark the book launch, and setting up of our Linked-In group Radical Shift, I hope that this is the start of a constructive conversation and some positive change.

• New Normal, Radical Shift is now available via Amazon.

Last September I attended a conference where the guy from Coca Cola responsible for making the supply chain sustainable commented that people keep asking him how you can do that and still be profitable. ‘I get asked that a lot,’ he said.

Just last month I was interviewing a brilliant academic on human capital analysis, Haig Nalbantian, still has to make the case to take people management seriously and strategically. He still gets presented with managers – from big companies – wanting to minimize the wage bill: base a business strategy on what the accounts say – a 500-year-old information technology that omits most of the important matters. He has to explain that cost is a dynamic determined by how people perform.

For decades, there has been evidence that engaged employees help create more successful enterprises, but the dominant forms of organization, reporting, prioritizing and workplace conditions have been – and often still are – designed to crush engagement.

New Normal, Radical Shift is more than just another book about leadership and the evidence base for good leadership. There are thousands of them, many of them with bigger research budgets than ours. But they nearly all suffer from one omission: they don’t address the reasons for the popularity of bad leadership. They don’t critique the case for disengagement and environmental waste; a case that unfortunately is continually being made, often sub-consciously, and indirectly from political and economic theory. So we have sought to do just that.

It is assumed low pay maximizes margins. It doesn’t, but many people still believe this, deep down. Low pay should be as unacceptable as drink-driving. It serves no social or economic or commercial purpose. But for as long as people believe that it maximizes profit margins, it’s going to be around, and legislation is a very inferior way of tackling this problem.

What we’re saying in New Normal, Radical Shift is that we could get rid of pollution, CO2 emissions, environmental waste, low pay and horrid working conditions both while and by creating successful, profitable businesses. The best companies already do it.

We have the evidence and the track record for this better way of working. We have the intelligence. We have the technology. We just don’t have the ideology. And ideology matters. We are what we believe.

Following the discussion, we decided to meet again; to disseminate ideas, and to keep some momentum going. First step is to launch a Linked-in group. It’s called Radical Shift and the link is here.

There are, however, two major obstacles to spreading this amazing and enlightening example. One is right-wing politics. The other is left-wing politics.

The ideas from neo-liberals in the past half a century form a major contributory factor, with their absurd notions of people as ‘human resources’, or ‘cost units’. Outsourcing decisions have been based on the notion that it’s rational to transfer a service across the world to where the wage rates are x per cent lower. This is simplistic and risky from a pure business point of view, never mind the ethics.

Left-wing politicians, instead of challenging the exploitative neo-liberal business model, lend ideological backing. The recent fire in a clothing factory in Bangladesh was proof, left-wing bloggers thundered, that ‘capitalism’ puts profits ahead of welfare and safety. The fact that you can make more profits by treating workers well is something that the reactionary forces of the left and the right want to keep hidden from us.

As we describe in New Normal, Radical Shift, Marks & Spencer actually improved their margins when they moved to a living wage policy in Bangladesh.

For full blog, click here.

For Neela’s blog on this subject, click here.

There are many books that demonstrate the benefits of enlightened leadership, engaged employees and environmental protection. New Normal, Radical Shift is different, however. As well as charting the evidence that demonstrates the effectiveness of strong leadership, it questions the habits that undermine good practice. The authors explore the beliefs that have encouraged many to believe the opposite: that exploiting the workers and the environment maximizes corporate profits. They chronicle the damage that such cynical beliefs have brought, and discuss their origins in political theories, forming the momentous conclusion that the ‘left-right’ way of viewing economics and society is profoundly flawed.

Neela Bettridge says: ‘The most effective business leaders understand that the modern corporation has high levels of inter-dependence and requires correspondingly high levels of cooperation. This is an inescapable reality, not a “nice-to-have” extra. In my coaching work, I encourage individuals to become emotionally, spiritually and analytically intelligent. This book explains the context and the commercial relevance for such disciplines.’

Philip Whiteley says: ‘For decades, working as a business journalist, the priorities of management fads have struck me as illogical and damaging. In particular, the tendency to overlook the importance of employee relations, despite its fundamental importance to how the organization functions, is a major weakness. I’m delighted to partner with Neela to put together a comprehensive book that seeks to rectify this and other weaknesses.’

For more information on launch activities, please contact Neela on kate@neelabettridge.com or Philip at phil@whiteleywords.com

Neela will be blogging at her revamped website.

There is a tendency in economics to link data points together – the primary indicator being changes to Gross Domestic Product (GDP) – and then overlay these on a transport metaphor. Nautical ones are common. So if GDP ‘growth’ is less than expected, we are ‘facing head winds’, or ‘heading for the rocks’. If things pick up, suddenly we’re in a spacecraft! We have ‘escape velocity’!

There is insufficient analysis of what is really going on. To begin with, GDP is not even a useful indicator. It tells us nothing about business performance. Rising GDP can reflect sustainable growth in trade and development of highly networked ‘clusters’ of businesses, or it could simply be the development of an unsustainable credit boom. Or it could be a mixture.

The daily reality is that an economy is not on a journey and GDP does not measure progress. The economy does not follow laws of motion; indeed it is not governed by laws at all. Fiscal and monetary policies are not the only ones with influence because the economy does not consist of money, it consists of people.

For the full version of the blog, click here.

Pre-publication reviews have been overwhelmingly enthusiastic in the run-up to the launch. Diane Coyle, Director of Enlightenment Economics, author of The Economics of Enough and Vice-Chair of the BBC Trust, said: ‘It would be easy to conclude that today’s economic problems – inequality or the financial or environmental crisis – are too complex and intractable for any individual to tackle. Neela Bettridge and Philip Whiteley will convince you that everyone involved in corporate leadership must and can take personal responsibility. This book will set business leaders on the path toward addressing these profoundly important questions.’

Jim Neal, leading Democrat politician, founder and chair of the Agema Group and candidate for the US Senate in 2008, declared: ‘Bettridge and Whiteley present a compelling indictment of conventional measures used to gauge leadership performance in public and private enterprises … George Bernard Shaw aptly described the thesis of New Normal, Radical Shift when he wrote that all progress depends upon the unreasonable man. Bettridge and Whiteley dare to be unreasonable in offering a prescription for avoiding the recurring lessons of accounting scandals and asset bubbles of the 21st century by adoption of leadership assessments more in sync with today’s dynamic global economic and political climate.’

Amazon links:

UK – http://tinyurl.com/atfhy29

US: – http://tinyurl.com/bxdjsok

•  New Normal, Radical Shift was featured in an article published Sunday 6 January on the popular Speaker’s Chair website, a non-aligned political online newspaper. http://www.speakerschair.com/youre-doing-it-all-wrong-politicians-we-need-a-radical-shift/

National Government debts keep rising, economic development is faltering, zombie banks keep their toxic assets hidden by opaque accounting, while skills and business development and leadership continue to be neglected. Old normal politics makes the biggest subjects taboo.

Deregulated markets, instead of creating the efficient markets that were expected, have created destabilising credit bubbles that inevitably burst. This is the cause of what is called ‘austerity’: it’s not a policy choice, it is a by-product of collectively living beyond our means. The ‘growth’ that we pretended we had was based partly on money that we never really had. Governments made this worse by making use of easy credit to spend on programmes to keep their electorates happy. So centre-left governments, in Washington, Paris and London, have not counter-balanced the hated markets, but rather encouraged them.

Click here for the full article and policy ideas on Philip Whiteley’s blog.