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What coronavirus teaches about business

Tue, 31st Mar 2020

When the Global Peter Drucker Forum chose ‘business ecosystems’ as its theme for last November’s conference, it was met by some gentle scoffing. Bit airy-fairy? More fad than substance? Was ecosystem management even a thing?
Well, now we know. The coronavirus is not only a thing; manging its ecology and ecosystem is the biggest test of management, and leadership – which just happens to be the Drucker Forum theme for 2020 – the world has recently seen: greater than 9/11 and the 2008 financial crash, a matter of literal life and death for many thousands of people, and financial life or death for thousands, perhaps millions more.
Given this, it’s at first sight odd that political leaders have conspicuously not been beating a path to the doors of leadership and crisis-management ‘experts’ in business schools or large companies for their advice on facing down the virus. After all, business websites and blogs teem with strategies for managing in a world of volatility, uncertainty, complexity and ambiguity, or VUCA, as the military call it. And did I dream that Google and/or Facebook once boasted of being able to use information they had sucked out of their users to predict the spread of disease?
Yet at a second glance, the shunning of conventional management is understandable – the dirty secret is that it has significantly contributed to the weakness of the current global response. All too willingly coopted into the neoliberal economic consensus by the appeal to self interest in the 1970s, management has been the Trojan Horse that released a strain of free-market dogma into the economic and political mainstream that we’re all suffering from now. One of the side-effects is the willful self-fragilisation of some of our biggest corporations. 
Thus the big US airlines that are now seeking a $58bn bailout have over the last decade spent roughly the same amount to buy back their own shares to the exclusive benefit of their own executives and stockholders. Boeing, the epitome of the ‘downsize and distribute’ approach to capital allocation, having donated $43bn to shareholders through buybacks between 2013 and 2019, now wants $60bn to prop up aviation-industry supply lines. Even mainstream commentators, such as the FT’s excellent Rana Foroohar, are suggesting that this time round it cannot be simply a case of socialising such firms’ losses – the price of a public bailout should include equity participation and ban on buybacks and executive bonuses until the debt is repaid – not to mention improvements for customers and employees. 
Fragilisation is not confined to companies. The same ideological emphasis on markets and self-interest is a factor in the opioid crisis, the tax minimisation strategies of Big Tech that have seriously diminished the resources of national governments for any kind of public spending, and more insidiously so undermined the instruments and confidence of the administrative state that its ability to intervene is now desperately compromised. Together with the retreating state, the systematic application of competition and markets to the public sector has given us a decade of austerity reflected in the parlous states of US and UK safety nets, making the medium-term social and – irony – financial toll of COVID-19 much greater than it should have been. Is it fanciful to suggest that Johnson and Trump’s fanatical faith in laissez faire and small government is behind their naive exceptionalism and hands-off initial response to the coronavirus?
Lenin once remarked that ‘there are decades when nothing happens. And there are weeks when decades happen’. Decades are happening now, and one of the things that is collapsing before our eyes is the edifice of neo-liberal economic theory, whose equations are simply swept away by a pandemic that operates on a plane of rude physicality governed by medical and ecological laws. A similar thing is happening to management. In the context of a wider business ecosystem that is itself nested in the wider systems of the economy, society and the natural environment, the idea of a company as a standalone maximisation engine is an aberration. In an ecology, something that maximises itself is a cancer to be feared. Instead, the purpose of business is to play its part in optimising the whole, which means investing in the jobs and salaries without which the wheels of capitalism seize up – as is graphically illustrated by a coronavirus that keeps people at home and shuts economies down. 
It became quickly clear in November’s Drucker Forum sessions that managing in ecosystems was as different as quantum to Newtonian physics. Previous certainties – indeed, the very idea of certainty – suddenly become suspect. Standard leadership strategies or lists of personal qualities are useless when everything is shifting around you. In a world where nothing is certain, leadership no longer makes any sense as an abstract ‘thing’, separate from what is being done. It is situational or nothing. 
In those circumstances, what do you use as a guiderail when leading followers on a course that is as likely to be wrong as right? Again, coronavirus gives the clue. Consider luxury purveyor LVMH using perfume lines to turn out hand sanitisers; or Dyson designing ventilators rather than vacuum cleaners; ex-footballers turning over their hotel free to NHS staff; Amazon about to deliver testing kits; CEOs such as Danny Meyer of the Hospitality Group cutting executive salaries and foregoing his own to avoid laying off low-paid employees; engineering professors, PhDs and F1 racing teams around the UK collaborating on basic ventilator designs and breathing aids; and a staggering 750,000 individuals volunteering to help the beleaguered NHS. The list goes on.
Altruism, yes. But another way of describing it is people and companies self-organising to redirect their resources to solving problems that matter. It’s an ecosystem responding creatively and cooperatively to threat. Note the lengths people will go to when offered a good job to do. As Warren Bennis once put it: ‘Problem-solving is the task we evolved for – it gives us as much pleasure as sex’. 
Although they have largely forgotten it, solving problems is what companies evolved for, too. For economists Eric Beinhocker and Nick Hanauer, ‘the accumulation of solutions to human problems’ is a better measure of progress and prosperity than GDP. It is access to more of those solutions – air-conditioning, the world’s information on a smartphone, a cure for COVID-19 – that is for its citizens the real difference between living in an advanced economy and a poorer one. In a functioning capitalist ecosystem, business creates solutions that benefit humanity, while also employing and paying people such that they can take advantage of those solutions for themselves.
In turn, that defines what leadership looks like in the VUCA world, wherever the volatility or uncertainty comes from: acting fast to deploy resources where they can contribute most to optimising the system of which they are part. In Peter Drucker’s famous distinction, that is doing the right thing, which is leadership, as opposed to management, which is doing things right. COVID-19 could hardly have pointed the way ahead more clearly.

 

 

 

 


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User comments

Andy Lippok :: 31st Mar 20
Thanks for a super insight again. I'd offer one more thing into this and reflect on to what extent people and leaders are using or more likely not using Dave Snowden's Cynefin Framework which offers a far better method for approaching the problems - actually much more chaotic than a mere problem - we now have. Question is now to what extent the system will revert to what went before!
Donal Carroll :: 1st Apr 20
Wow! Great energy, drive purpose-fuel. Shd be the lockdown am workout for traditionalists who can't see the face for the facemask. Make more of it-podcasts, Zoom club, collaboratns? When nurses /doctors eventually sue Gov for protective supplies they sought and were denied 3 yrs ago (it's coming) this work will be their manifesto. 'WE not Me builds better socielties'. Keep going D
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