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Showing posts with label London Business School. Show all posts
Showing posts with label London Business School. Show all posts

Saturday 14 April 2012

The state as market

THE more I study the Indian and Chinese growth models, the more I realise that the current debate over the state versus the market is a false dichotomy.

Both the state and the market are social institutions that are not independent of each other. Indeed, they are inseparable, interactive and interdependent.

Human development or evolution is a complex interaction or feedback between the two. In Small is beautiful author EF Schumacher's view, “Maybe what we really need is not either-or but the-one-and-the-other-at-the-same-time”.

India and China could not have become global powerhouses of growth, without the leading role of the state in planning for development. But those states that have worked with markets have succeeded better than those that worked against markets.

London Business School Prof John Kay defines the market as a relatively transparent, self-organised, incentive-matching mechanism for the exchange of goods and services, usually in monetary terms.

In plain language, the market helps to match willing buyer, willing seller under certain rules of the game to determine market price. The market clears when it functions properly, but market failure happens when the market is imbalanced.

Kay reminds us that capitalism is less about ownership than “its competitive advantages its systems of organisation, its reputation with suppliers and customers, its capacity for innovation”.

Because of globalisation and technological change, we are living in a situation of change within change, as if the national state is not in total control of our destinies. Because of the global economy, state policies such as monetary, exchange rate and trade, cannot be independent of what is happening globally.

No man, no company, no state is an island. Globalisation has changed the rules of the game irreversibly.
Why is the state so much bigger and more powerful than before?

In the 19th century, most governments were not larger than 15% of GDP. By 1960, the size of governments in OECD countries had doubled to 30% of GDP. Today, the average has increased further to 40% of GDP.

The state has grown because there has been demand for more and more state services, but there is also concern that bureaucracies tend to grow to perpetuate itself.

I find it useful to think about the state as a market-like institution for exchange of power (in non-monetary terms). Power comes from social delegation the people give the power to the state to protect them and to fairly enforce social rules and laws. Hence, the “state as market” has the same dilemmas as the market information asymmetry and the principal-agent problem.

In large countries like India and China, there are many levels of government central, provincial, city, town, village and rural governments, each with their own departments and even enterprises. Most citizens find it difficult and confusing to deal with complex bureaucratic power. The Peruvian economist Hernando de Soto was one of the first to point out that rural poverty exists, because the poor's property rights are not protected adequately and their transaction costs are extremely high because of complex government.

In other words, markets are efficient and stable when the state is efficient and stable. It is not surprising from recent experience that financial crises are results of governance failures. As the European debt crisis amply demonstrates, financial markets cannot clear when the fiscal condition of the state is on shaky grounds, and there is no mechanism to make fast, simple, clear decisions.

Finding the right balance between state and market is the real challenge in all economies today. As 20th century British philosopher Bertrand Russell reminded us, “people do not always remember that politics, economics and social organisation generally belong in the realm of means, not ends”.

Today's demands on the state to provide stability, growth and social equity are complex, because recent dominance of free market ideology has ended up with serious problems of wealth and income disparities and environmental degradation.

Realising that large states with geopolitically significant human and ecological footprints cannot consume like the United States or Europe on a per capita basis, China and India are embarking on ambitious 12th five-year plans to change their growth models to become more environmentally sustainable economies with greater social inclusiveness.

But large economies with many layers of government struggle between centralisation and decentralisation of people, resources and power.

For systems to be stable and sustainable, they have to be adaptable to complex forces of change from internal and external shocks.

To maintain integrity, there are complex trade-offs between winners and losers in each society. Such rules and bargains are difficult when the causes and effects of losses are unclear (such as crisis) and when vested interests resist change for fear of losing what they have. Vested interests are often unwilling to change because they value present gains far more than uncertain futures. Politics is the compromise of contending interests.

The belief that markets are always right assumes that markets always balance. The market cannot balance when the state cannot balance the contending interests. The main reason for the advanced country debt crisis is because their consumption has happened today by postponing the costs to future generations.

This raises a fundamental problem. Whichever way you term it, central bank quantitative easing is ultimately state intervention.

The rise in Spanish bond yields, despite ECB long-term refinancing operations, suggest that the markets are saying there are limits to the growing euro public debt.

At the same time, global financial markets are watching carefully whether inflation in China and India will rekindle global inflation.

In other words, the anchor of global financial stability rests on state debt stability. The state cannot escape being priced by the market.

  THINK ASIANBy ANDREW SHENG - Andrew Sheng is president of the Fung Global Institute.

Friday 26 August 2011

What Determines a Company's Performance? Shape of the CEO's Face! All a matter of how wide your head is!





What Determines a Company's Performance? Shape of the CEO's Face!

ScienceDaily (Aug. 25, 2011) — Believe it or not, one thing that predicts how well a CEO's company performs is -- the width of the CEO's face! CEOs with wider faces have better-performing companies than CEOs with long faces. That's the conclusion of a new study which will be published in an upcoming issue of Psychological Science, a journal of the Association for Psychological Science.
The Milwaukee-Downer "Quad" NRHP on ...Image via Wikipedia

Elaine M. Wong at the University of Wisconsin-Milwaukee and her colleagues study how top work. But they have to do it in indirect ways. "CEOs and don't typically have time to talk with researchers or take batteries of tests," she says. "Our research has primarily been at a distance." They've analyzed the content of letters to shareholders and looked at things like how a CEO's educational or personal background affects how well his or her company does. Wong and her colleagues, Margaret E. Ormiston of London Business School and Michael P. Haselhuhn of UWM, wanted to look at another aspect of CEOs – their faces.



Looking at faces isn't as crazy as it might sound. Several studies have shown that the ratio of face width to face height is correlated with aggression. Hockey players with wider faces spend more time in the penalty box for fighting. Men with higher facial width are seen as less trustworthy and they feel more powerful.

"Most of these are seen as negative things, but power can have some positive effects," Wong says. People who feel powerful tend to look at the big picture rather than focusing on small details and are also better at staying on task. She and her colleagues thought that feeling of power might also be correlated with a company's financial performance.

Wong and her colleagues based their analyses on photos of 55 male CEOs of publicly-traded Fortune 500 organizations. They only used men because this relationship between face shape and behavior has only been found to apply to men; it's thought to have something to do with testosterone levels. They also gathered information on the companies' financial performance and analyzed letters to get a sense of the kind of thinking that goes on at those companies.

CEOs with a wider face, relative to the face's height, had much better firm financial performance than CEOs who had narrower faces. "In our sample, the CEOs with the higher facial ratios actually achieved significantly greater firm than CEOs with the lower facial ratios," Wong says.

Don't run out and invest in wide-faced CEOs' companies, though. Wong and her colleagues also found that the way the top management team thinks, as reflected in their writings, can get in the way of this effect. Teams that take a simplistic view of the world, in which everything is black and white, are thought to be more deferential to authority; in these companies, the CEO's face shape is more important. It's less important in companies where the top managers see the world more in shades of gray.

Provided by Association for Psychological Science (news : web)

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Post-Jobs Apple: New research shows Cook will do fine

Performance as CEO all a matter of how wide your head is


Forget about your Ivy League/Oxbridge/Harvard business school education, your connections or how many millions in personal funds you can plough into the business: the one thing you really need as a CEO is a big face, at least according to a new study to be published in journal Psychological Science.

Elaine M Wong of the University of Wisconsin-Milwaukee and her colleagues analysed photos of 55 male CEOs of publicly-traded Fortune 500 organisations and found that chiefs with a wider face, relative to face height, had much better firm financial performance that those with narrower faces. (And if you're wondering why this only applies to male CEOs, it is because the whole fat-face thing only works with men – apparently it has something to do with testosterone levels.)

According to Wong and her team, launching this study wasn't completely out of left field, because previous studies had shown big-featured guys were more prone to aggression, seen as less trustworthy and felt more powerful – and they thought these attributes could be a winning combination for CEOs.

steve jobs
Good ratios: Rory Read,
CEO of AMD

"Most of these are seen as negative things, but power can have some positive effects," she said.

Obviously, the Reg couldn't help a little completely unscientific application of these conclusions considering the two new CEOs in the techie stable: Tim Cook at Apple and Rory Read at AMD.

AMD is looking good with Read, since although he's not really got a big face, he hasn't really got a very long face either, so the width-height ratio is probably good.

But Cook is definitely sporting some height there and with those slimly-defined cheekbones, could Apple be in trouble? But no wait, he's practically Jobs' face twin, they're both rocking that lengthy angular look, and Jobs seemed to do OK. Could it be that the concept is not infallible?

steve_jobs_and_tim_cook comparison pics from apple tv and university youtube vid still
Steve jobs (left) and Tim Cook. Separated at birth?

Well, actually, it could. Wong's team found that the way top management felt could interfere with the effect of the head honcho's huge countenance. Teams that took a simplistic view of the world, in which everything is black and white, are thought to be more deferential to authority, so the CEO's face-shape-mojo worked. Big heads are less important in companies where the top managers see the world in shades of grey. ®

Monday 1 August 2011

Going global – a new breed of executive MBA






Matt Symonds 

BY Matt Symonds

The world’s top full-time MBA programs have enjoyed several years of rising applicant numbers, fuelled by the struggling economy and strong international demand, notably from Asia. But with an improving global jobs market, many schools are now seeing a fall in full-time MBA applications. However, what may be bad news for one part of the business school portfolio, is likely to be good news for another.

With no need to sacrifice your job, the Executive MBA is looking like a sound investment for seasoned managers with an eye on a place in the C-suite. The most recent survey conducted by the Executive MBA Council reported a 3 per cent increase in enquiries on the previous year. Despite one or two notable exceptions (the Harvard Business School and Stanford GSB are yet to offer an EMBA course) it appears that schools around the world have been taking note, and placing international expansion and global business practice at the top of the executive agenda.

Trium, a Global Executive MBA programme run jointly by NYU-Stern school, HEC Paris and the London School of Economics, is celebrating its tenth anniversary by adding a second cohort in 2012. “We are now expanding this program because both the need and the value of having a global perspective have increased in the intervening decade,” explains Bernard Ramanantsoa, Dean of HEC Paris. “The program integrates international economic, political and social policy into the business curriculum, which are aspects often neglected in traditional business curricula yet are widely accepted as critical to successful global business.”

More companies are also turning to business schools to help develop managers who can lead teams in a global business environment, and consider programs such as OneMBA, a partnership of five leading schools on four continents, as part of their institutional training platform. For Craig James, a Global Controls Advisor at ExxonMobil, the Global Management and Leadership course on the OneMBA program, helped strengthen his cultural awareness, and enabled him to more effectively manage global work teams.  “I took what I learned on the weekends and applied it on Monday mornings.  My OneMBA global study team was a mirror image of my global team at work.”



Another benefit of the modular delivery format favored by the new wave of executive MBA programs is that distance from the campus is no longer an issue. The University of Cambridge’s Judge Business School recently launched its own EMBA and is already welcoming students from far beyond its UK location. The program brings students together once a month, supported by a virtual learning platform, and has meant that students in the first class include a VP from the Walt Disney Company, who makes the monthly commute from Los Angeles.

At first glance therefore it may appear that the global learning initiative has been seized by European schools. Spanish school IESE has recently announced a new EMBA programme based in Sao Paulo, to help develop executives across Latin America. The London Business School now offers it’s Global EMBA in both London and Dubai, as well as a joint programme with the Columbia Business School and Hong Kong University, while rival school INSEAD has further expanded its global footprint, adding an Abu Dhabi campus to existing EMBA options in Fontainebleau and Singapore. In addition to Trium, French Grande Ecole, HEC Paris offers no less than five locations for their executive MBA, in Paris, Beijing, Shanghai, St. Petersburg and Doha in Qatar. The school ensures that all participants follow the same core curriculum and receive the same fundamental content, regardless of where they enrol. Pierre Dussauge, academic director of the EMBA, says the benefit of this is clear. “Our aim is to build a strong participant network across all five locations. If a participant is based in France, but completes a module in China, Russia or Qatar, he or she will be able to build a network of peers around the world.”

But US business schools are determined not to be left behind. The Darden school at the University of Virginia launches its GEMBA in August this year with a clear aim to bring students to the five key markets they feel will figure most prominently in shaping business in the coming century: China, India, Brazil, the US and Europe. Maureen Wellen, Assistant Dean of the Global EMBA Programme at Darden confirms that the program was driven by clear demand from the market, “We asked a lot of people around the world and there was definitely an appetite for the school’s expertise globally – especially from people who were unable to come to Darden for the two-year residential program. Also, it’s clear that students in both the US and abroad want to attain a level of global literacy that most traditional programs simply cannot offer.”

The school’s dean, Bob Bruner, adds to this sentiment. He recently chaired a report by the AACSB accrediting body entitled The Globalisation of Management Education, which suggested that the trend for global programmes is only going to continue on an upward curve. He says, “Business schools have been slow to react to the growing importance executives place on international experience. The rate of globalisation is only going to increase and it will be a disruptive force for which many more managers need to prepare.”

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