Posts tagged "Management"

Nov 08
Business Management

The role of business

In October 21st’s Schumpeter column The Economist reminded us that businesses are not charities. This is clearly something that both the society and businesses forget way too often. As a result, businesses tend to over-compensate by getting involved in charity work, which is none of their business. Individuals, on the other hand, expect businesses to donate large sums of money and/or get involved in many CSR projects.

However, there’s another way: a situation where businesses stick to value generation as part of their core activities and only get involved in CSR projects that exploit their core competences.

Half a century ago Drucker argued that inherently businesses add value to the society by taking raw resources and turning them into goods and services. The benefits to the society are obvious - jobs, goods, innovation, individual development, etc. Look around - everything you see around you was created by businesses (unless you happen to be in a Communist state). However, many still seem to cling to the profit-centric view of the world. This view is especially prevalent in post-Soviet countries, where the concept of “value for the society” is not yet understood or practiced.

Profit, as Drucker suggested, is only a test. Businesses able to turn profit show that they are adding value to the society, whereas business that are incurring losses should be discontinued. On the contrary, the profit-centric view of the world dates back to 1776 when Adam Smith published his Wealth Of Nations:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

(Smith, 1776, Book 1 Ch. 2)

Such world view is very convenient for the ones who practice it. It’s tough, it’s macho, it’s measurable and it’s desirable. Even in Aston Business School which claims to be ethics and sustainability focused, some lecturers present the profit-centric view and only talk about sustainability, ethics & society as something on the side. Something optional. The situation where everyone takes care of themselves and the invisible hand magically takes care of the big picture is very convenient for all actors involved. No need for consideration of wider effects of one’s profit-seeking actions and no need to rely on the unmeasurable. 

However, according to research by New Zealand’s Institute of Policy Studies (pdf), it looks like the profit-seeking world view is not the most economically desirable. By being more ethical businesses and societies would be better off.

By better understanding their role in the society & being more ethical (instead of narrowly focused on the bottom line), businesses could also earn higher profits and deliver higher value to the society. Consider the case of DHL. Their core strength is logistical networks and logistical know-how. Arguably, DHL knows best how to deliver an item from A to B in the cheapest and quickest possible way. Instead of donating money to charities or getting involved in many business-unrelated CSR projects, DHL uses & further develops its core strengths while helping the less well off. DHL offers their logistical know-how to non-profits and partners with the UN to deliver emergency aid. These activities utilize DHL’s core competences and further develop them.

All in all, businesses should not forget that their activities add value to the society (provided they are ethical and sustainable). Where possible, they should get involved in CSR projects which rely on their core strengths instead of just donating cash to charities. The society, on the other hand, should recognise the value of businesses instead of pressuring them to donate money.

At the end of the day, businesses perform best when they focus on their core activities: outsourcing most non-core business functions and at the same time sustaining a large in-house CSR effort does not seem to make much sense.


Nov 10
Quotes Management

Blaming “politics” for problems faced was a naive and convenient way to dodge unpleasant but unavoidable aspects of working with other people.
Scott Berkun in ‘The Art of Project Management’

(Source: amazon.co.uk)


Nov 29
Women Management Business

The gender balance

Reading Prahalad’s ‘The Fortune at the Bottom of the Pyramid’ I was struck as to how most case study business initiatives exclusively relied on women. From Self Help Groups in India to their equivalents in South America. Women seem to be much more able when it comes to family finance, long-term vision and entrepreneurship.

Women are central to the entire development process. They are also at the vanguard of social transformation.

CK Prahalad

Management research shows that diverse boards with equal number of women tend to take less risky decisions and are more long-term focused. Yet only 18% of companies are actively monitoring gender diversity. In some countries women are not able to work at all. When during a conference in Saudi Arabia Bill Gates was asked how can Saudi Arabia become the cradle of innovation, he replied that it cannot happen because Saudi Arabia is utilizing only 50% of its workforce.

On the other hand, a study indicates that women jealousy in the workplace can be counter productive. Imbalance, artificial hierarchies, structures and control mechanisms is something traditional macho management is notorious for. Clearly a balance needs to be struck. Nature has given us guidelines, we just need to pay attention.

What are your views?


Jan 21
8
Quotes Management Drucker

Peter Drucker has tried for 60 years to take the capital out of capitalism. He discusses economic life in terms of values, integrity, character, knowledge, vision, responsibility, self-control, social integration, teamwork, community competence, social responsibility, the quality of life, self-fulfilment, leadership dignity, meaning—but rarely money.
Jack Beatty

(Source: economist.com)


Jan 25
Quotes Motivation Management

If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.
Antoine de Saint-Exupery