Tertiary Education Minister Steven Joyce’s recent policy announcements have received a generally positive welcome. Tying an element of institutional funding to students’ course and qualification completion, requiring a reasonable pass rate for continued access to student loans, and rationalising the many redundant or overlapping qualifications; all seem to have gone down well. Even the usual naysayers have been muted in their response.
I find all this both gratifying and somewhat ironic. In 2001/2, the reports of the Tertiary Education Advisory Commission effectively recommended doing the same things. In July 2002, the people named to be the board of the Tertiary Education Commission (including me) reiterated their support for such initiatives. However, some were ruled out of bounds for TEC, eg. student support was deemed to a welfare issue not an education issue. Some we didn’t have the funding mechanism to implement (and for nearly 3 years we weren’t allowed to address that either, even though we rated it the number 1 problem to fix). Some the institutions weren’t ready to concede there were problems - eg. qualification rationalisation and completion rates. Some, like polytechnic governance, were, frankly, just too politically difficult for the then Labour-led government. However, we’ve been jawboning away on this stuff for all of the last decade and, like water on stone, we’ve worn down the obstacles.
Given the name of this weblog - Isambard Kingdom Brunel’s personal motto En Avant or “Get Going” - you’d be right to assume that I have been very frustrated by the time taken for all this. Smart policy development and implementation seemed often to have been trumped by the need to not upset anyone. To be fair, all the ministers I’ve dealt with have had their merits, and we’ve made increasingly faster progress. However, there’s a palpable difference when dealing with confident and capable ministers who understand the big picture and can drive through policy change, despite the naysayers inside and outside government and the bureaucracy. Governments can implement sweeping change quickly if they so chose and have the right people on the job.
There are still some big issues to address, not least being pricing - how much, how it’s presented, and who pays what to whom. Any good marketer knows the importance of price presentation. The new minister has already stated he’s interested in price as an issue, although he acknowledges this might take a little more time to work out. Given the current pace, that shouldn’t be another decade.
Declaration: I am a non-executive board member of the Tertiary Education Commission, and was recently reappointed for a third term.
Elected governments set policy, not government agencies who can advise but ultimately do what they’re told. That’s democracy. Readers may recall that I was a member of the board of New Zealand’s Tertiary Education Commission. As an office holder, my opinions on tertiary education policy could be expressed privately, but not publicly. With my second term about to expire (two terms is the normal maximum) I’d been thinking of writing an opinion article tentatively titled “What I’d do if I was in charge of tertiary education, now I’m not.” It would have been radical and provocative. However, the new government has seen fit to appoint me for a third term. So I am and I can’t!
However I would like to pay tribute to my departing colleagues Kaye Turner and John Blakey, both members of the founding board, and Graeme Fraser, who joined us a year or so after we’d started. This requires a little history. From 1999 until 2002, I was on the board of the NZ Manufacturers Federation and somehow became an advocate for industry’s views on what was wrong with the country’s tertiary education system, critical of the policies of both the existing National government and then the subsequent Labour government. So you can imagine my surprise when, in July 2002 I was asked to accept appointment to the board of a new government agency to manage the funding of all tertiary education in New Zealand. (Lesson - sometimes it’s better to keep your mouth shut!)
The Ministry of Education did most of the policy development in those early days. The new Tertiary Education Commission implemented those policies once the Minister approved them. Some things were very challenging to deal with; for example:
inheriting (with a guarantee of no redundancies) 300 staff who administered one important but relatively small policy and funding stream and less than 50 staff who struggled to administer another 20 times bigger in money and complexity;
officious and sometimes bizarre micro-management from other government agencies;
contradictory policies;
out-of-control funding mechanisms;
dealing with a large, incredibly diverse group of over 700 education providers (public and private), some of whose primary goal seemed to be maximising the money they could get out of government, irrespective of credible educational outcomes.
It was, frankly, a mess.
I remember the first time the nascent commission met one evening in August 2002. With our (at the time) tiny staff, we each presented our take on the situation and what we saw as the big issues. Our combined list of Top Ten Issues has proven a huge task ever since. Getting the political, institutional and operating stars to align before many of them could be addressed took a very long time (and is still a work in progress as I write this). There have been false starts and mistakes made, battles with bureaucracy, mangled communications, litigious education providers (both public and private sector), and a perpetual high-profile political context to everything.
One of the oft-made criticisms of the TEC is that it grew into a huge bureaucracy, Actually, the TEC has never been bigger than the combined size of the various agencies it replaced or absorbed, except when we were finally able to rejig the organisation to fit its purpose while also changing the fundamental design of the funding process. The old system and organisation still needed to work while we built the new one, but was quickly down-sized once we’d got it implemented. There’s an important general message - if you want less bureaucrats, having fewer regulations and simpler policies is a major part of the way forward.
Many things required smarter policy thinking, and over time, the TEC has taken over much of that task - a credit to the quality of the people. There’s still a lot to do and some of those Top Ten Issues are still to be nailed. As Sir Humphrey Appleby might say, some problems require “a very bold and brave minister” to tackle them. Choosing between the lesser of two evils and occasional dead-rat-swallowing are things you have to get used to! However, many things have steadily improved, and the system is starting to work as intended.
When after 3 terms of Labour-led government, a National-led government took over, there were only 3 board members who’d been there from the beginning, all of whose second terms had expired. Our appointments were extended while the new administration settled in, learnt how things worked, and developed its policy direction. It’s gratifying that the administrative machine we’ve built at the TEC has proved more than capable of quickly and relatively easily enabling the new government to make some significant policy changes in the confidence that implementation will be relatively straightforward. That’s again a credit to the commission’s staff, my past and present colleagues on the board, and those officials from other agencies and ministries who supported us.
So I say thank you to Kaye, John and Graeme for your unflagging commitment, support, advice, thoughtful criticism and friendship.
Now, Minister, I have got one or two radical suggestions to make.
Des Dearlove and Stuart Crainer, visiting professors at IE Business School in Madrid and associates at London Business School’s Management Innovation Lab, have published “The Thinkers 50 - 2009“, their biennial ranking of the world’s top business thinkers. Sponsored by The Times and other organisations, their criteria included:
Are the ideas and examples used by the thinker original?
Have the ideas promoted by the thinker been implemented in organizations? And, has the implementation been successful?
How proficient is the thinker at presenting his/her ideas orally?
How proficient is the thinker at presenting his/her ideas in writing?
How committed are the thinker’s disciples to spreading the message and putting it to work?
Do they practice what they preach in their own business?
How international are they in outlook and thinking?
How well researched are their books and presentations?
Have their ideas had an impact on the way people manage or think about management?
The clincher: are they, for better or worse, guru material by your definition and expectation?
Professor CK Prahalad is #1 for the second time in a row, followed by a mix of academics, economists, business writers and business leaders. I must admit that I’ve never heard of some of them before (and I think I’m reasonably well-read) so I’ll leave it for you to decide if everyone’s inclusion (or omission) and ranking are justified.
When I was a kid, “Made in Japan” was a synonym for cheap shoddy knock-offs of Western products; but over time “Made in Japan” came to mean “lifetime quality” and “extras included“. So the sneering changed: “Japanese only copy; they can’t innovate.“ Yet many of today’s smart design and manufacturing processes are modelled on techniques the Japanese developed. Ah, those ideas already existed before the Japanese adopted them, I hear you say. In nascent form, maybe; but every new idea is built on what has gone before. Anyway, the sustained dominance of Japanese firms in manufactured products from consumer electronics to industrial machinery demonstrates a highly innovative environment, not just in processes and product refinement. Much innovation in cars today comes from technologies pioneered in Japan.
I hear similar dismissive language applied to China now. There’s even less basis for such myopia. Both nations had strong education systems and huge desire for economic change. China has a much deeper tradition of engineering and manufacturing. It’s a theme Eric Drexler has touched on in a guest article for McKinsey on innovation:
To become a world-class center of technological innovation, a society must have three basic elements:
• drive—a culture that supports change and hungers for it
• human capital—the personal abilities that make world-class technology possible
• a capacity for mobilization—a society’s ability to pursue ambitious new goals
These basic elements are more fundamental than any current performance metric or economic trend, and they are durable.
China has all these in abundance. I was particularly struck by Drexler’s comment on China’s mobilization capacity:
Drive and human capital are applied through organization, by both entrepreneurs and corporations, as well as national leaders and governments. India has been outstanding in its incapacity for reform and for interfering with entrepreneurship, though this is changing. China, however, has been outstanding in its capacity for learning from experience, radically transforming government policy, and unleashing a hyperentrepreneurial business culture.
As science and technology grow in importance, it becomes increasingly important for leaders to have a good understanding of these disciplines. Among US legislators, though, a background in science and engineering is exceedingly rare. In France, it is common. In Taiwan, many legislators have doctoral degrees in science or engineering. In China, of the nine members of the standing committee of the Politburo (the ruling body, which includes the president, the vice president, and the premier), one recently appointed member has an education in law. Previously, all nine had been trained as engineers.
… Perhaps the most robust indicator of change in the distribution of innovation potential is a change in the distribution of corporate research laboratories. Companies are opening new labs in China at an astounding rate. In software and electronics, NEC, Hitachi, Sony, IBM, and Microsoft all have established R&D centers in China; in pharmaceuticals, Roche, Pfizer, AstraZeneca, Novartis, and Eli Lilly have done so. This list is not exhaustive.
Despite this, many firms (and nations) are myopic about new competition from other countries. Do you think they’re more realistic about competitors in the same region or city as themselves? Sadly, no. Even with familiar competitors, firms kid themselves with smug self-affirming generalisations.
Don’t get freaked out by competitors, local or global; but don’t fool yourself with uninformed complacency. Otherwise, you’re just making your competitor’s job easier.
When you dole out several billion dollars a year in tertiary education funding, it’s easy to become cynical about the constant stream of seemingly self-interested statements from education providers. All those pronouncements on the benefits, societal good and economic potential of more student places, lifetime learning, undirected research and so on (rarely backed up by hard evidence of sustained achievements of those benefits) almost always have an underlying message of “give us more money”.
What stops the cynicism taking over are the educators themselves. We can all remember some truly awful lecturers, but there are many more fantastic ones, driven by what they can achieve as teachers and by what their students can achieve. Last night I had the privilege of seeing the cream of the crop at the annual Tertiary Teaching Excellence Awards in the Banqueting Hall at the Parliament Buildings in Wellington.
In one of the speeches, Bryan Gould (former Vice Chancellor of Waikato University and ex-British politician) told of his unexpected excitement when his PhD. supervisor admitted to not knowing the answer to a thorny question of misrepresentation law. Gould realized that he was now operating on the frontier of knowledge. That struck a chord with me. I had a similar response from my honours thesis supervisor to my need for an algorithmic solution for database search optimisation. What made both teachers so good wasn’t that they knew all the answers - they didn’t; instead they could guide us to discover/invent the answers ourselves.
I won’t get into the pros and cons of performance assessment - rewarding better teachers and institutions (and by implication shifting resources and students away from the weaker ones). It’s a very fraught, complex and politically-charged topic. There’s a lot of argument about what, if anything, is the right answer. But, like the solution to the difficult database search problem, we need to discover/invent one.
Disclosure: I am a non-executive member of the Tertiary Education Commission board. These views are mine and do not necessarily reflect those of the TEC or the government.
Kiwi entrepreneurs - startups and owners of established businesses - might want to be in Auckland for the afternoon of Wednesday 29 July. The ICEHOUSE has asked me to tell you about their free afternoon of seminars, networking and other events aimed at showing you what the ICEHOUSE can do for your business. If you’re not familiar with The ICEHOUSE, it’s a combination of business incubator, management educator and angel investment coordinator, run under the auspices of Auckland University, with support from leading firms and business luminaries.
See The ICEHOUSE in action:
Hear stories from business owners who have experienced the award-winning ICE Bridge Owner Manager programmes and the phenomenal changes it brings
Recent financial, automotive and other sector failures has seen anti-business commentators ascribe the failures of a relatively few business people to all business people. For example, I’ve read and heard some outrageous generalisations about MBA graduates and the universities that produce them, because senior people in recently failed companies often held MBA,:
MBA graduates are idiots or crooks.
MBAs lack ethics and morals.
MBA teachers are complicit because they must encourage this immoral result.
These are vile calumnies. They are akin to saying that all Irish are feckless because a few Irish are feckless; or that because some Muslims are terrorists, one can portray all Muslims as terrorists. Too extreme? You see how you like having your chosen vocation unfairly and aggressively reviled in the media, on the street and in the pub because of the actions of a few.
In reaction, MBA students at Harvard made a public oath:
As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term.I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.
Therefore I promise:
I will act with utmost integrity and pursue my work in an ethical manner.
I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
I will strive to create sustainable economic, social, and environmental prosperity worldwide.
I will be accountable to my peers and they will be accountable to me for living by this oath.
This oath I make freely, and upon my honor.
A very laudable affirmation, I’m sure you’ll all agree. There is nothing wrong with this oath. It’s reflective of values to which business people should (and mostly do) aspire. What’s wrong is the nastiness that compelled the Harvard students to make it.
PS. I don’t have an MBA, I am not a Muslim, but I do have Irish antecedents (the surname’s a bit of a giveaway).
Yesterday, we had New Zealand’s annual government Budget presented in Parliament. I’m not going to comment much on the Budget - politics is not an area I stray into often. I’ll just say that I have a sense of wasting a good crisis. My politics is classic liberalism - economic and social liberalism based on universal individual rights and responsibilities, not the American or British versions which have morphed into woolly-woofter centrist camps. So I’d have gone a lot harder on cutting the state’s activities while setting things up for the long term economic and social well-being of the country, firms and individuals. But that isn’t my focus today. I want to look at entitlements.
It’s a curious term - entitlements - especially when used by a centre-right government. It was used frequently yesterday, particularly by Prime Minister John Key in phrases like “No beneficiary will have their entitlements cut” or words to that effect. You wouldn’t say that the supermarket is “entitled” to your money every week, nor the petrol station, nor the hotel owner if and when you take that annual holiday in Fiji, nor even the charities to which you donate. You make choices on whether or not to spend your money, on what and with whom. But somehow, when a government spends your money for you, the recipients see it as an entitlement.
Every government spending programme - every single one - was initiated at some point by a government deciding that spending this money on that programme was a better idea than spending it on something else, or putting it in the bank, or reducing taxes. Before that decision to spend, there was no “entitlement”. The new recipients are usually intensely grateful - for about a year. Then they start to see the continued uninterrupted and unquestioned supply of that government money as an entitlement, an inalienable right which must be maintained and grown in line with any expansion of the use for which the money was originally supplied. Once a government starts spending on a programme, it’s extremely hard to stop, especially when citizens and institutions (public or private) receive those funds directly. Even if the original need has gone or morphed into some unintended or even dysfunctional application.
As a new non-executive member of a big-spending government agency’s board, I’d frequently ask “Why is the taxpayer’s money being spent on this?” I learnt quickly that, contrary to popular perception, we actually had very little power over what we spent, why and with whom. That was principally decided by the ruling politicians, whose decisions (either logical or appeasing some political constituency) were effectively concreted in place until overturned, if ever, by another set of ruling politicians who had decided the issue was important enough. We could move money at the margin, but the bulk of spending was effectively predetermined under rules set down by Cabinet, and very much seen as an entitlement by the often large and influential organisations that received it. Getting anything significant changed takes years of argument, followed by more years to implement those changes. [Update: see a more positive perspective from me here.]
Let me be clear. Although I’d probably do things very differently, most institutions and the intent for which the money is spent are worthy and legitimate. I also recognise that changes to funding mechanisms are disruptive. But this notion of entitlement is a real problem for us as citizens and taxpayers. It creates an ever-growing burden over generations, it ossifies society’s institutions and mechanisms, and it is a major barrier to improvement and innovation.
PS Having said all that, the Tertiary Education Commission, of which I’m a board member, contributed a very significant portion of the government’s expenditure savings. Although we also cut our operating costs - largely in line with the plan we put in place 3 years ago - the bulk of savings will come from pruning some of my pet hates, such as hobby courses funded as Adult and Community Education, industry compliance training, and various other silly funds of dubious merit. Result!
The President of the European Central Bank, Jean-Claude Trichet, commenting on the economic situation, said “As far as growth is concerned, we’re around the inflection point in the cycle, that’s the sentiment,…” Many took this to mean that the recession had reached a turning point, that it was bottoming out. WRONG! This is how economist and Financial Times blogger Willem Buiter vented his spleen over the mathematical illiteracy of most commentators:
… Trichet did not say that the recession was bottoming out. He said that it had reached an ‘inflection point’… Unlike the gormless arts students, limp-minded lawyers and woolly social scientists that dominate British and American economic policy making, President Trichet actually knows and understands mathematics. An inflection point is not a turning point.
An inflection point is where the shape of a curve (in a graph) changes from concave to convex, or vice versa. Let me put what Trichet said another way. The economy is like an aircraft falling in a terrible dive that’s been getting steeper and steeper. However, the nose has just started to come back up. We’re still in a dive, but from here on, the dive will get shallower and shallower.
That point where the nose started to come back up was an inflection point. Trichet thought he was addressing a technically-literate audience who’d understand his use of the word. Clearly, that was a wrong assumption, and one we probably all make from time to time. A useful reminder, as well a nice line in grumpiness from Professor Buiter.
“How many globally competitive companies do we have? How many more do we need? How do we help them become so?“
Business journalist Rod Oram posed these questions yesterday in a Sunday Star Times column entitled “Fuelling the export high fliers.”
How many do we have?
“… about 350 globally competitive companies, according to analysis by the Icehouse, the entrepreneurship centre at the University of Auckland’s business school. In addition, we have some 400 domestic market companies that are equally competitive, judging by their ability to win business here from foreign rivals. Potentially, many of them could become exporters.“
How many more do we need?
“… to meet our economic goals we need four times as many. And each needs to be two to three times bigger than those 750 typically are today.” [Icehouse chief executive Andy Hamilton]
“… Achieving an additional $35 billion of exports by 2020 will require an additional three Fonterra-scale companies (current exports about $10.5b), or about 500 Rakon-size companies (current exports around $70 million), 150 Pumpkin Patch companies (current exports over $200m), or over 2300 companies the size of 42 Below (current exports around $15m).” [NZ Institute, 2006]
The 2002/3 ICT Industry Task Force, of which I was a member, suggested a goal of building 100 technology-based companies, each achieving $100 million in annual revenues within 10 years. People laughed at us at the time. Clearly we weren’t thinking big enough!
How do we help them become so?
Nearly two years ago, I addressed a similar question: “How do we get more of our companies growing?” This isn’t an NZ-only problem. Go to Australia, Britain, Canada or even states within the USA, and you’ll find people asking the same thing. And for some strange reason, everyone looks to “the government” to come up with the answer.
“… If there was a magic bullet, every government and every CEO would be shooting it. There are some factor conditions which can support business growth…
A good education system which produces a skilled talent pool.
In particular a learning programme which helps entrepreneurs to acquire the skills they need to grow their business.
A supportive investment environment which encourages growth (private equity, stock market, banks, and investors willing to participate in them).
Good infrastructure, transport and communications both within a country and between countries.
A supportive regulatory and tax regime…”
Oram describes some initiatives already in place, notably the excellent Icehouse education programmes for business owners and leaders, and some promising government-sponsored programmes:
“Manufacturing Plus, which helps companies identify and develop strong global niches; Lean Manufacturing, which helps them develop operational excellence; and Better by Design, which helps them apply design disciplines to company structure and culture, product development, brands and other essential ingredients in generating high-value goods and services“.
NZ governments have responded well to the need to develop business skills and know-how. Infrastructure remains a challenge, but is on the funded agenda at last. And there’s yet another initiative on tax. All well and good, but - reiterating my earlier writing - these initiatives will only support, not create growth. The main impetus must come from the individuals who own and/or run potential growth businesses, and that’s essentially about self-confidence, success and the desire to keep growing. Governments can’t do anything about those.
Disclosure: I have been a mentor of Strategia, a “lean business” consultancy which is one of the partners in the government industry programme, and whose founders were my old manufacturing management team at Deltec.
How many companies employ less than 10 people, less than 20, 50, 100, 200, 500, 1000, 5000, etc? Look at most countries’ industry statistics and you’ll see a common pattern. There’s a pyramid - lots of micro-businesses, tapering up through mid-sized businesses to a few large businesses.
Putting aside companies used for administrative purposes and the myriad of small businesses which won’t ever grow, why don’t more companies with good market offers grow larger?
Some market offers have limited appeal.
Some business models simply won’t scale.
Sometimes the business is too risky or unpredictable, so funding growth is difficult (especially now that we’ve seen the downside of risky investment!)
Some owners and managers reach a point where they have achieved what they want - a good income and a solid business. I can’t criticise them for wanting an easier life enjoying the fruits of their earlier risk-taking and hard-work.
But assuming none of those are a factor, what holds growing companies back? In two words - executive skills. Many small and mid-size companies can’t grow because their owners/managers don’t have the skills to build and operate a bigger business. There’s a naiveté in business thinking and an unfortunate tendency to under- or over-bureaucratize. I’ve seen many promising businesses plateau for those reasons, plus one other factor. I have a pet theory - the biggest problem is that many previously-successful small and mid-size business leaders simply don’t know how to manage managers.
10 people = 1 layer of management = you. You call the shots, you know everything, you direct everything.
10-50 people = 2 layers of management = you plus team leaders (say development, sales, fulfilment, business support). You still drive the ship and your team leaders take care of operational detail within your control. The first plateau point - can you manage through team leaders?
50-100 = 3 layers of management = you plus a team of specialist and regional managers plus their team leaders. You’re still the hands-on leader, but you’re likely to be constrained by the skills of your managers and the unsophistication of your business processes.
100 -200 people = still 3 layers of management, but with more highly skilled managers and more complex processes. This is often an inescapable plateau point, maybe with several stops as you re-design your business and your team to handle growth. And you have to achieve unity of purpose and action through intermediaries who have initiative, brains and minds of their own (that’s why they’re in the role).
200-500 people = 4 layers of management, with your executive team capable of developing and driving their divisions strategically and operationally, and indeed of doing your job. Yout businesses model is working, but the business is much more complex and the challenge of achieving unity of purpose and action has gone up another order of magnitude,
After that it starts to get easier - the issues are the same, but you’ve learnt how to deal with them. You’ll continue to be challenged by competitive and economic pressures, multiple lines of business, multinational operations and so on, but you’ll know how to manage managers.
That 200 person barrier seems to be especially challenging. Many companies do well until they reach that scale, but then seem to bounce around at 150-250, never quite breaking out, falling back in tough times, then growing again only to repeat the cycle. Given all the complexity, risk and frustrations of running a bigger business, it’s no wonder many businesses owners decide to stay where they are.
Many parents, teachers and politicians around the world were offended by this simple factual statement. Few would have read political thinker Charles Murray’s statement in full in the context of his controversial yet constructive critique of modern US schooling, but negative reactions to the soundbite version are typical of opinions on relative personal worth. I’d be prepared to make a small wager that, in just about any organisation, the average staff appraisal assessment is some synonym for “above average“.
Despite our reluctance to use the term “average”, we also think that we can make fine judgements on relative value. Appraisal systems attempt to objectify what are mostly subjective opinions, and I’ve seen numerous satisfaction surveys and staff performance systems which ask for scores on a scale of 0 to 7 or even 0 to 10 (especially systems designed collaboratively with staff such as engineers, scientists and IT specialists). Imagine how complex this becomes when you add into the mix an assessment of not only past performance but also future potential to take on greater responsibility.
Yet, as Tim Harford (aka. The Undercover Economist) writes in the Financial Times,
The human brain simply may not be wired up to deal with lots of different levels of value. A series of psychological experiments, many dating back to the 1950s, shows that we cannot distinguish between more than about five degrees of … well, almost anything: sweetness in a solution; saltiness; the pitch of a note; brightness; the intensity of an electric shock; the length of a line; or the pungency of a smell. The details vary, but the level of consistency is surprising.
What to do? Good people management relies on frequent timely two-way feedback and discussion, not just an annual formal sit-down with the boss; but, unless you’re running a very small business, you need some form of staff assessment system to help you manage your talent base, people development programme and remuneration system. How can you capture complex information with a simple process, and achieve clarity of conclusions without “grade creep”?
Did you know that little old New Zealand makes supercars? Allow me to introduce you to the Hulme Can Am. Priced at NZ$750k, it’s basically a road-going two-seater Formula 1 racing car, which grew out of a design project for engineering students at Massey University. I was once sent an investment proposal for this project, which I politely declined. However, they found someone to bankroll the development, and good on them for persevering.
I don’t think I’ll be getting the chequebook out. I’ve already got a nippy little two-seater. However, I can’t wait to see Jeremy Clarkson and The Stig (aka. Ben Collins) test the Hulme on Top Gear.
Many young technology companies do very little to build the leadership skills of their people, relying on recruiting or being acquired to solve their future leadership needs; who can blame them - where’s the payback? In more established businesses and public sector organisations, entry-level technical, commercial and team leadership skills are taught, especially with some governments subsidizing industry training programmes. But what about developing senior management?
Promising managers are often sent to various executive education programmes, although less so in mid-size organisations, despite increasingly valuable and relevant programmes targeted at them. But even in the most committed organisations, if there is no supportive context for the manager to move up to the next level, he or she may struggle to make the shift, and fail. In a podcast available from the London Business School, Doug Ready, Visiting Professor of Organisational Behaviour, discusses the challenges for managers making the move to executive status:
This transition is probably the most difficult for managers to make. The move from running a unit, geography or function to becoming part of a team running an entire group or organisation requires development of new skills and strengths. It requires a change in behaviour and the way you think about the business, which can sometimes mean making difficult decisions about people or projects you have worked closely with.
Exercising much higher levels of initiative, judgement and decision-making; bigger risks; dealing with shades of grey rather than absolutes of black and white; imperfect information; uncomfortable trade-offs; realpolitik; putting the whole enterprise ahead of the interests of their functional unit; initiating, not just implementing, tough decisions such as downsizing or reassigning. The list goes on. No wonder many struggle, or find the prospect so daunting they retreat into risk-aversion, bureaucracy and backside-covering.
The challenges for boards and CEOs (and central government agencies responsible for public sector skills) are to create an executive leadership development environment that will support the long term health of the organisation, and to maintain that through the ups and downs of the business cycle.
Governments, business theorists and business media are obsessed with innovation. Vast sums of money are expended on government-sponsored research. Something’s bound to pay off with a ground-breaking new technology that will increase jobs, wealth and foreign-exchange earnings, isn’t it? However, innovation is only the start of the process. We’ve got plenty of innovation, and we aren’t short of new businesses either. As I wrote last year, the problem is creating better, larger businesses that can foot it internationally (with full overseas operations, not just exporting).
So does the relative decline of America as a technology powerhouse really amount to a threat to its prosperity? Nonsense, insists Amar Bhidé of Columbia Business School. In “The Venturesome Economy”, a provocative new book, he explains why he thinks this gloomy thesis misunderstands innovation in several fundamental ways.
First, he argues that the obsession with the number of doctorates and technical graduates is misplaced because the “high-level” inventions and ideas such boffins come up with travel easily across national borders. Even if China spends a fortune to train more scientists, it cannot prevent America from capitalising on their inventions with better business models.
That points to his next insight, that the commercialisation, diffusion and use of inventions is of more value to companies and societies than the initial bright spark. America’s sophisticated marketing, distribution, sales and customer-service systems have long given it a decisive advantage over rivals, such as Japan in the 1980s, that began to catch up with its technological prowess. …
I’m an enthusiastic encourager of product and service design and development, and I disagree with Bhidéabout the importance of technical graduates, I’ve argued for a shift to a more technology-competent leadership cadre, However, if push comes to shove, I’d rather own a business with a great brand and business model ahead of great products. You can buy innovation:
… as GE’s Mr Immelt likes to say, his firm is not great at invention, but it is outstanding at “turning $50m businesses into billion-dollar businesses”.
While New Zealand’s dairy products giant Fonterra is globally successful in an industry where science and technology are key ingredients, there are probably only about 200 or so serious international businesses across all sectors in .the whole country. As Stuart Corson points out in the September issue of Boardroom (from the NZ Institute of Directors, and not online), selling services based on labour time (however smart) is not going to be a driver of high national economic productivity. Corson argues that New Zealand can learn a lot from Finland, a like-sized sparsely populated country with a strong rural base, and some strong cultural similarities. He’s a former forestry sector researcher who’s worked extensively with the Finns for over 30 years.
Normally, whenever someone suggests Finland as a model for New Zealand, they get a response along the lines of:
Finland is different – it’s got Europe on its doorstep; we’re thousands of kilometres from markets of comparable size and wealth.
Finland struck lucky with Nokia; without it Finland is just another rural economy.
Corson doesn’t buy that. As he points out, there are plenty of countries within and adjacent to Europe which don’t have the Finns’ success, and physical location clearly isn’t a factor in their companies’ global prowess, for example in paper-making equipment. And there are over 3000 companies in the Finns’ ICT sector alone – which can hardly be all down to Nokia.
Corson puts the Finns’ success down to their bent for technology (they produce proportionately twice as many scientists and engineers as most countries in Europe), the preponderance of technologists in company leadership positions, and their appetite for risk and innovation in business investment. Aside from farming and its downstream industries, many NZ businesses could best be described as low entry cost (i.e. easy to get into). There are some very good technology and design-led businesses, but far too few at anything like international scale.
I’ve long held similar views: that the trick is to produce the engineers, technologists, designers and scientists, which means getting kids to want to do science and mathematics at school, and encouraging them to pursue technological tertiary education. You can’t order your teenager to do anything much, and expecting the government to do likewise won’t work either. So NZ needs to create a virtuous cycle:
Rewarding our successful engineers, designers, scientists and technologists - and their teachers - where success means market success, not just academic esteem.
Investing in their continuing development to build and deepen their technical expertise, business skills and leadership ability.
Lauding the success (and earning power) of engineers, scientists, technologists and designers (and the companies that employ them), and getting that message to kids and parents.
Ensuring that the funding mechanisms which support our engineering, technology and design schools (secondary and tertiary) enable rather than hinder their relevance, quality and accessibility.
Encourage people to become engineers, technologists or scientists and they’ll gradually occupy a greater proportion of leadership positions, they’ll be more comfortable with technology-based investment for greater value and productivity, and they’ll create new businesses. Yes, some people and companies will be lost offshore, but will we be worse off? I don’t think so. And for those who worry that I advocate a purely utilitarian view, let me point out that a richer economy can afford more in social and cultural programmes, in infrastructure, healthcare and welfare, if it so chooses.
Disclosure: I am a non-executive member of the board of the Tertiary Education Commission in New Zealand, which administers government funding of universities, polytechnics, etc. and industry training. These views are mine, and not necessarily those of the Commission or the Government, which determines funding mechanisms and priorities.
Qualifications of new undergraduates (higher indicates more stringent entry standards)
Student staff ratio
Services and facilities spending per student
Percentage of students achieving a degree or transferring to other institutions
Percentage of graduates achieving first or upper second class honours degrees
Percentage of graduates in graduate level employment or further study six months after graduation.
These criteria are not universally accepted and are not comprehensive, eg. graduate salaries 2 years after graduation might be a useful indicator, but is harder to compile. Despite that, the Times rankings have achieved a degree of acceptance as one useful indicator of institutional standing, and are eagerly studied by students, parents, academics and bureaucrats.
The Top 10 are:
Oxford
Cambridge
Imperial College
London School of Economics
St Andrews
Warwick
University College London
Durham
York
Bristol
The Times’ league tables have a host of information by subject area, disability, ethnicity, etc.. Although Oxford may top the overall rankings, when it comes to subject area rankings, Cambridge is top in 37 out of 61 individual subjects, whereas Oxford is top in just 5.
One of the least surprising findings is that 3 years after graduating, one third of graduates wish they’d chosen a different course.
I’m afraid my alma mater Brunel has been slipping down the rankings and now sits in the middle at #52. Because of my responsibilities as a board member of New Zealand’s Tertiary Education Commission, I also keep an eye on Sheffield at #22 and Birmingham at #25: by some measures these equate roughly with the best NZ universities. (That’s not an official TEC position, by the way; it is a hotly disputed comparison!)
Having been in the UK for just over a fortnight, I had thought to write a short post on similarities of current issues in Britain and New Zealand. However, Owld Grumbleton, who’s over here as well, has beaten me to it, so here’s his take:
The Labour-led governments are in trouble, after multiple terms in office.
House prices are stalling and predicted to fall, with owners of multiple highly-leveraged rental properties expected to be hardest hit .
The economy is faltering but not expected to go through the floor.
The retirement of the baby boomers is now starting to bite, with major gaps in most technical and managerial professions. Although the current downturn will alleviate the problem, it won’t help the solution as firms skimp on recruiting and developing young talent.
Violent crime, uncouth behaviour and increased alcohol consumption are constant features of news reports and general discussion.
School exam systems are still lambasted on all sides.
People expect lower taxes, but the government is proving stingy with minor reductions in this year’s budget.
Environmental awareness is growing, but government initiatives are often clumsy, inconsequential and fail to address the major issues.
City traffic is a nightmare.
The local wine industry is thriving. (Yes, you read that right.)
OG is more political than me, but it’s hard to dodge the similarities in attitudes to the incumbent governments. I’d add a few more similarities:
There is heaps of cool stuff going on business-wise, if you look for it.
Everyone’s screaming about petrol prices.
The universities want more money (when did they not?)
There’s really good food. wine, beer and cider, and and there’s really appalling food, wine, beer and cider.
There’s increasing talk of protectionism, under the false flag of environmentalism.
The countryside is beautiful.
The cultural life is thriving.
There are great people, nice people, naff people and scary people.
The media tend to paint the picture darker than it really is.
NZ sauvignon blanc and pinot noir rule their wine store/supermarket niches (pinot gris is starting to move up the ranks too).
In a presentation (below) at TED2007, educationalist and tech pioneer Alan Kay brings together two interests of mine, education and technology. I’ve written before about the importance of pre-teens understanding basic mathematics and algebra as a key indicator of general career success and as a prerequisite to increase the likelihood of teenagers engaging with with technical subjects at school. The trick is using tools and learning techniques that kids will find fun - like dropping fruit and bowling balls off buildings, and doing stuff on the computer. Alan shows how 6 year olds can learn about variables, acceleration and gravity, using deceptively simple tools on a $100 OLPC laptop ( from the One Laptop Per Child project - actually US$200, but still every school should be able to have these in every class).
Alan starts slow but the pace picks up once the OLPC appears.
“Those who can — do. Those who can’t — teach.” H.L. Mencken (1880-1956)
It’s an oft-repeated adage, wrongly attributed to everybody from Confucius to GB Shaw. It’s also nonsense.
In conversation over a beer with the CEO of a moderately well-known IT company, we both acknowledged the start we’d received from our early employers, who had run excellent in-house training and development programs. Admittedly, these were very large companies, but today well-structured and cohesive integrated career development programmes seem to have gone from even those firms, replaced by short-term, needs-driven, just-in-time training - still valuable, but lacking a long-term people-investment focus.The most severe case I’ve seen is the demise of the civil service training programmes, but it applies to most businesses, large and small. Partly, it’s short-term cost-saving now made normal; partly, it’s a consequence of the demise of the old long-term employment relationship (driven more by employees than by employers, I’d argue).
I started my career working for a UK-based IT company called ICL (Fujitsu in most markets today). One of the more amazing facets of their training regime (they had over 200 full-time training staff) was the very clear understanding that, if you wanted high office and rapid promotion, you had to do a stint (usually a year) as a trainer, before you could move up This was particularly true of the management and sales streams. In other words, their trainers were their best managers and sales people. It’s an old idea first developed by the military - your best troops and officers are more valuable training others to be like them, than being expended on the front line.
How many organisations today would take their stars out of the line to train the next generation?
Having been in the UK for just over a fortnight, I had thought to write a short post on similarities of current issues in Britain and New Zealand. However,