Trump and Brexit have done businesses a big favour
It's hard to admit, but Donald Trump and Brexit may have done us a favour. By bringing to a juddering end nearly a decade of denial, these devastating aftershocks of the 2008 financial crash destroy any lingering illusion of a return to business as usual.
In the public mind, it is business as usual and that’s the problem. Shareholder returns have soared, but in real terms the US middle class hasn’t had a pay rise since the 1980s, while the UK ranks with Portugal and Greece as the only OECD countries where the median wage is yet to return to pre-crisis levels.
And employment is shifting from career to job to project to gig. After 40 years, it’s clear that the US-UK management model is unfit for keeping most people in jobs. Full-time work is no longer even a reliable route out of poverty.
In terms of power, US business no longer bestrides the globe unchallenged. The rise of China, India and other Asian economies certainly hasn’t occurred through inferior management.
Capital today resides in Middle Eastern and Chinese sovereign wealth funds. Additionally, manufacturing prowess is shared with Japan, Korea and China; India is the world’s software champion, and Israel the master of innovation. Northern Europe’s social democratic economies rest on foundations of distinctive corporate governance arrangements.
As companies from these rising economies muscle onto the world stage, they develop their own confidence to assert their ways of working, professor Julian Birkinshaw noted at London Business School. Not all of their experiences are transferable, at least in the short term, but all provide lessons to absorb.
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Indians have long been quietly influential in management, both in the academy and in practice. Indians run or are very high up in a striking number of large US tech and other companies (Google, Microsoft, Oracle and Pepsi).
Indians “think in English and act in Indian”, a prominent executive noted, which suggests reasons for India’s success. English thought is reflected in a focus on performance, but it goes with a more holistic view of the importance of employees and their development – Infosys, the global leader in technology services and consulting, for example, made a strategic bet on putting employees first and customers second.
Juggling volatile business conditions, red tape and meagre resources, Indian managers have developed an enviable ability to adapt and improvise almost in real time, summed up in the Hindi term “jugaad” (roughly, “frugal innovation”) – the idea behind CMI’s Management Book of the Year in 2016. Indian managers are adept at devising products and services for demanding consumers of modest means – for example, the Tata Nano car. Finally, drawing on ancient cultural traditions, Indian leaders’ sense of mission and purpose includes societal, as well as material, progress.
So what do emerging alternative management approaches look like? Predictably, they offer a contrast to the shareholder-driven, hierarchically managed, efficiency-obsessed Anglo-Saxon model. They are also more likely to stress continuity and the long view, the collective as opposed to the individual, relationships over transactions, and loyalty over performance.
Like Peter Drucker (“Profit is the cost of survival”), they view profit as a means, not an end.
Caulkin's full report is published in the latest issue of Professional Manager, the official magazine of the Chartered Management Institute. www.managers.org.uk