Most economists agree that the worst of this financial meltdown is now behind us. Unemployment is at a 25-year high, it’s true, but at least the pace of lay-offs has slowed. If there was a doubt before, it seems safe to conclude that we’re going to make it through this mess. There will be enormous social costs. People have lost their livelihoods and their life savings. Seniors have seen their retirement nest eggs disappear; young people have seen their employment hopes vanish. But we’re going to make it.
The question is, what, if anything will we learn from this disaster? Already economists are subjecting their field to a long overdo critical review. In their thoughtful book, “Animal Spirits,” George Akerlof and Robert Shiller, suggest that economics has left out the human factor–the emotional components that drive economic behavior. Alan Greenspan has publicly acknowledged that his mental model of the economy clearly did not match reality. It seems clear that we’ll soon see new regulations put in place, new oversight and legislation designed to change the way the public sector referees the behavior of the private sector in economic matters.

But what if the problem isn’t economics? What if the problem is a business problem–a failure of management and an absence of leadership? Shouldn’t business and business schools be looking at their practices and precepts with the same critical eye as the economics profession? I recently wrote a book called Rules of Thumb a collection of 52 life lessons. I think three of them can help propel the thinking on these issues in the right direction.

Years ago, when America’s competitiveness appeared to be failing, two legendary HBS professors, Bill Abernathy and Bob Hayes, challenged business schools and business leaders to take a hard look at themselves. “Managing Our Way to Economic Decline”" became a must-read text. Isn’t it time for another such review?

What is the business of business school?  An what is the purpose of businss?

At least once per decade for the last 30 years we’ve seen American business go seriously off the rails. The reengineering fad, Mike Milken and junk bonds, the savings and loan crisis, the dotcom boom and bust, the Long Term Capital Management panic–only a partial, abbreviated history of business disasters–suggest that something systemic is wrong with the way business goes about business. An individual with this track record of crises would be a candidate for an intervention, a time out in a recovery center, and life-long participation in the 12-step program of their choice. Something is wrong–and it’s time to face it.

Business schools teach finance and strategy, marketing and HR, IT and operations management. Those are the courses of a trade school, not the developmental curriculum of a profession.

The first question business schools should teach their students to ask is my Rule #3: Ask the last question first. The last question is, what’s the point of the exercise? Jack Welch famously said it was to maximize shareholder value–a terrible answer in retrospect. Peter Drucker famously said it was to make and keep a customer. What is the answer that fits our situation in 2009, and beyond? Today, business schools need to teach students to ask the last question first–or risk taking their company down the old dead-end path.

The next piece of the curriculum has to be Rule #23: Keep two lists, one that holds what gets you up in the morning and one for what keeps you up at night. Managers and leaders have got to know themselves before they know their businesses. They’ve got to have passion for their work and concern for their world. Otherwise they’re just punching the time clock and risking everyone’s future.

Finally I’d teach Rule #4: Don’t implement solutions. Prevent problems. Everything that will be put in place as a clean up to the mess we’re in now won’t be enough if we keep creating new disasters. We need a new generation of business leaders who anticipate problems and prevent them from happening. It’s smarter, cheaper, and more effective than the every-ten-year clean up we’ve become accustomed to.

Every one of these three rules has two things in common. First, they cut across all the disciplines of traditional business school. They are ways of seeing the world, ways of making sense of everyday business realities. They teach a way of thinking and a way of synthesizing the world of work that every crisis–and every opportunity–shows us we need. And second, they are about people, not about business. They are about the human side of enterprise. They carry the message that work is personal. That each individual has a contribution to make and a decision to weigh. That we have to decide not only what we will do in business, but even more important, how and why we will do business the way we do it in the first place.

It’s time for new course-ware in the business of doing business.

Tell the truth:

We all have an impulse to tell people what they want to hear.  Wise executives tell everyone the same unvarnished story.  Once you develop a reputation for straight talk, people will return the favour.

Encourage people to speak truth to power:

It’s extraordinarily difficult for people lower in a hierarchy to tell higher-ups unpalatable truths – but that’s what the higher-ups need to know, because often their employees have access to information about problems that they don’t.  Create conditions for people to be courageous.

Reward contrarians:

Your company won’t innovate successfully if you don’t learn to recognise, the challenge, your own assumptions.  Find colleagues who can help you do that.  Promote the best of them.  Thank them all.

Practice having unpleasant conversations:

The best leaders learn how to deliver bad news kindly so that people don’t get unncecessarily hurt.  That is not easy – so find a safe place to practice.

Diversify your sources of information:

Everyone’s biased.  Make sure you communicate regularly to different groups of employees, customers, competitors, so that your own understanding is nuanced and multifaceted.

Admit your mistakes:

This gives everyone around you perimission to do the same.

Build organisational support for transparency:

Start with protection for whistle-blowers, but don’t stop there. Hire people because they created a culture of candor elsewhere (not because they can outcompete their peers).

Set information free:

Most organisations default to keeping information confidential when it might be strategic or private.  Default, instead, to sharing information – unless there’s a clear reason not to.

- James O’Toole (Distinguished Professor of Business Ethics at the University of Denver) and Warren Bennis (University Professor at the University of Southern California)

“Companies that enjoy enduring success have a core purpose and core values that remain fixed while their strategies and practices endlessly adapt to a changing world. The rare ability to balance continuity and change – requiring a consciously practiced discipline – is closely linked to the ability to develop a vision. Vision provides guidance about what to preserve and what to change. A new prescriptive framework adds clarity and rigor to the vague and fuzzy vision concepts at large today. Managers who master a discovery process to identify core ideology can link their vision statements to the fundamental dynamic that motivates truly visionary companies – that is, the dynamic of preserving the core and stimulating progress.”  – James Collins and Jerry Porras.

Joanna Lumley realised that Gordon Brown was a reader, and once she had given him the information in a format that he liked, she got a result, “Being a man of figures, he was able to look at it, and this has speeded up”.

http://link.brightcove.com/services/player/bcpid1184614595?bctid=23945421001

“Paint is charged with a positive electric current, and the cars with a negative current, all to ensure that paint is sucked from the robot onto the body of the car, thus minimising paint wastage.”

More than 140 million Americans currently have discretion over health insurance purchases, representing a total of $785 billion in premiums or premium equivalents. Yet most are unable to revisit their current insurance status. A combination of economic anxiety, confusing insurance products, and inadequate distribution is leading to consumer paralysis. Moreover, our research suggests that millions would fail to make rational economic choices even if they understood their options better. Unlike employers that purchase health insurance for their workers, consumers approach this issue by factoring in much more than expense management.

More specifically, consumers’ purchasing decisions are often emotionally based, as they are seeking peace of mind in their choices.

Source: Healthcare Payor and Provider Practice

To arrange a meeting with Marketing Statements, please contact Jenny Patterson on 07957 473 270/020 983 3984 or jenny.patterson@marketingstatements.com

Nancy Cruickshank, Executive Director of Digital Development for Telegraph Media Group writes in the May edition of Revolution Magazine.

Great ideas can come from anyone and anywhere in a business (see our film at http://marketingstatements.com/about) which is why we form a task-force, made up of a cross section of people involved in an organisation, who lead and drive the transformation effort.

To arrange a meeting with Marketing Statements, please contact Jenny Patterson on 07957 473 270/020 8983 3984 or jenny.patterson@marketingstatements.com