Tag Archives: Organization

Averting The Death Of Social Democracy

By Neal Lawson – Reformist social democracy has just two problems that result in its crisis. The first is that it’s heading in the wrong direction. The second is that it’s heading in the wrong direction in the wrong way.

If this crisis is to be averted then we need to understand why the ends and means are wrong and establish a different set of goals and ways of achieving them – ones applicable to the tail end of the second decade of the 21st century.

To set out an alternative course and process to get there is not so difficult. Some ideas are offered below. Others are available. What is difficult, and could well be impossible, is the ability of social democrats to truly adapt or transform both their course and their culture. Instead of change, their stock response is to blame the media, poor communications or even the people, and go on doing the same thing and expecting a different outcome.

Even when some recognize the scale of the crisis, they shrug because meaningful change is more difficult to face than the prospect of electoral annihilation. If social democrats can’t or won’t transform themselves then it will be up to others to carry the torch for a society that is more equal, democratic and sustainable and to fight the lurch to the far right.

Let’s start by observing that the crisis is not tactical or cyclical but existential because it is cultural and structural. It can be witnessed most obviously and dramatically through the electoral decline of almost every social democratic party in Europe. The Dutch, French and Greek parties have or have almost been eradicated. The Germans, the Italians and even the Scandinavians and Nordics struggle for life. more>

How a World Order Ends

And What Comes in Its Wake
By Richard Haass -A stable world order is a rare thing. When one does arise, it tends to come after a great convulsion that creates both the conditions and the desire for something new. It requires a stable distribution of power and broad acceptance of the rules that govern the conduct of international relations. It also needs skillful statecraft, since an order is made, not born. And no matter how ripe the starting conditions or strong the initial desire, maintaining it demands creative diplomacy, functioning institutions, and effective action to adjust it when circumstances change and buttress it when challenges come.

Eventually, inevitably, even the best-managed order comes to an end. The balance of power underpinning it becomes imbalanced. The institutions supporting it fail to adapt to new conditions. Some countries fall, and others rise, the result of changing capacities, faltering wills, and growing ambitions. Those responsible for upholding the order make mistakes both in what they choose to do and in what they choose not to do.

But if the end of every order is inevitable, the timing and the manner of its ending are not. Nor is what comes in its wake. Orders tend to expire in a prolonged deterioration rather than a sudden collapse. And just as maintaining the order depends on effective statecraft and effective action, good policy and proactive diplomacy can help determine how that deterioration unfolds and what it brings. Yet for that to happen, something else must come first: recognition that the old order is never coming back and that efforts to resurrect it will be in vain.

As with any ending, acceptance must come before one can move on.

Although the Cold War itself ended long ago, the order it created came apart in a more piecemeal fashion—in part because Western efforts to integrate Russia into the liberal world order achieved little. One sign of the Cold War order’s deterioration was Saddam Hussein’s 1990 invasion of Kuwait, something Moscow likely would have prevented in previous years on the grounds that it was too risky. Although nuclear deterrence still holds, some of the arms control agreements buttressing it have been broken, and others are fraying.

The liberal order is exhibiting its own signs of deterioration. Authoritarianism is on the rise not just in the obvious places, such as China and Russia, but also in the Philippines, Turkey, and eastern Europe. Global trade has grown, but recent rounds of trade talks have ended without agreement, and the World Trade Organization (WTO) has proved unable to deal with today’s most pressing challenges, including nontariff barriers and the theft of intellectual property.

Resentment over the United States’ exploitation of the dollar to impose sanctions is growing, as is concern over the country’s accumulation of debt. more>

Updates from Chicago Booth

How poverty changes your mind-set
Understanding psychology may be key to addressing the problem
By Alice G. Walton – In a 2013 study published in Science, researchers from the University of Warwick, Harvard, Princeton, and the University of British Columbia find that for poor individuals, working through a difficult financial problem produces a cognitive strain that’s equivalent to a 13-point deficit in IQ or a full night’s sleep lost. Similar cognitive deficits were observed in people who were under real-life financial stress. Theirs is one of multiple studies suggesting that poverty can harm cognition.

But it was the fact that cognition seems to change with changing financial conditions that Chicago Booth’s Anuj K. Shah, along with Harvard’s Sendhil Mullainathan and Princeton’s Eldar Shafir, two authors of the Science paper, were interested in getting to the root of.

They suspected that poverty might essentially create a new mind-set—one that shifts what people pay attention to and therefore how they make decisions.

“Some say you really have to understand the broad social structure of being poor, and what people do and don’t have access to,” says Shah. “Others say that poor individuals have different values or preferences. We stepped back and asked: ‘Is there something else going on?’” more>

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Updates from Chicago Booth

Why we’re all impact investors now
By Chana R. Schoenberger – Laurence “Larry” Fink, the founder and CEO of BlackRock, the world’s largest asset manager, which has more than $6 trillion in assets under management, issued an open letter to CEOs this past January—and reportedly sent many of them into a tizzy.

Fink’s letter said society is demanding that companies, public and private, need to “serve a social purpose,” benefiting not just shareholders but also employees, customers, and neighbors. And, he explained, from that point forward, BlackRock would be “eager to participate in discussions about long-term value creation and work to build a better framework for serving all your stakeholders.”

Executives, he wrote, should be able to answer their questions about the company’s actions. For example, what role does the company play in the community? How is it managing its impact on the environment? Is it working to create a diverse workforce?

“The time has come for a new model of shareholder engagement,” he wrote.

For nearly 50 years, many have been guided by the idea, laid out most famously by Milton Friedman, that the most appropriate way to create social change is to give profits to investors, and taxes to the government, and use that money to make an impact. more>

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The Urgency of Strengthening and Redefining HR

By Howard Risher – The problem, as summarized in the report’s Foreword by NAPA President Terry Gerton, is fundamental:

Over time, the alignment between the government’s mission, strategy, and tactics on one hand, and the capacity of its workforce on the other, has fallen further out of sync. The result has been an accumulating series of program failures that have grown into a genuine national crisis.

To call it a national crisis is not hyperbole.

Human capital management leads the 2017 list of GAO’s high-risk areas and workforce management is integral to each of the areas on the list. GAO’s focus was limited to the skills gap. In its report, GAO concluded, “OPM and agencies have not yet demonstrated sustainable progress in closing skills gaps.” It’s been on the high-risk list for 16 years.

The skills gap needs to be seen as the tip of the iceberg. Skills alone cannot produce improved performance. The Office of Personnel Management describes the problem on its website with this formula:

Performance = Capacity x Commitment

According to OPM’s website, “In a work setting, the capacity to perform means having available the competencies [skills], the resources [technology is an essential tool], and the opportunity to complete the job [empowered to make decisions]. If employees are missing these, the work will not get done and the results will not be achieved.” Commitment is synonymous with engagement. more>

How The Republican Leadership Broke The Four Rules Of Crisis Management

By Steve Denning – In its actions over the last ten days, the Republican leadership has jeopardized its goals through its failure to respect the rules of crisis management:

  • Recognize the crisis as a crisis
  • Get out as much information as possible as soon as possible, particularly any negative information
  • Avoid saying anything that has to be withdrawn
  • Avoid doing anything that looks like a cover-up

The first failure of the Republican leadership was the failure to recognize the crisis as a crisis. The Republicans’ first instinct was to to brush aside the accusation as partisan politics and press ahead with a quick vote on Kavanaugh’s nomination. A single accusation from one woman 36 years ago was presented as “a little hiccup.” (Senator Dean Heller)

However, once the identity and professional background of the accuser became known, first to the FBI on September 13, and then to the public on September 16, it became apparent that she deserved to be heard, as Senators Flake and Collins insisted. In effect, if the Republican leadership had pressed ahead, it would have been at risk of not having enough Republican votes for success.

What the Republican leadership hadn’t initially grasped was that this was a real crisis for Kavanaugh’s nomination. It would have been one thing if the accusation was being made by a partisan politician. It was another when it was made by a well-respected professor, with no active record in partisan politics and no particular axe to grind. Coming in the midst of the #MeToo movement, the accusation was bound to be a sensation. more>

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Updates from Chicago Booth – Are profits passé?

Why we’re all impact investors now
By Chana R. Schoenberger – For nearly 50 years, many have been guided by the idea, laid out most famously by Milton Friedman, that the most appropriate way to create social change is to give profits to investors, and taxes to the government, and use that money to make an impact. For just as long, other investors have argued in favor of divesting from companies to make a political or social point—dumping shares of gun manufacturers or fossil fuel companies, for example.

But with the rise of index funds, divesting from individual company stocks has become more difficult, even though there are some funds that try to do this by designing a basket that tracks an index while excluding “sinful” stocks. It can even be counterproductive.

Investing with a social motivation has moved from divesting from certain companies based on values or preferences to a more regular form of seeking alpha, by investors who hope their stakes will generate returns as well as save the world.

Like financial philanthropists trying to affect specific social issues, these investors are often using markets and investing tools to shift behavior and create change. As a result, there are big shifts in thinking about the role of investors, who have had the luxury of worrying primarily about profits. Some prominent managers and investors are advocating for joining other stakeholders to push for change. more>

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Updates from Chicago Booth

Is corporate market power really surging?
By Alex Verkhivker – In economic circles, an argument has gained traction that corporate market power is surging, resulting in skyrocketing markups, a falling labor share, and other negative consequences for consumers and workers. But some researchers are pushing back, emphasizing weaknesses in the argument and urging policy makers to be cautious before taking any actions.

Proponents of the market-power argument often rely on one of two methodologies, one that calculates and compares total revenues and costs at the economy-wide level and another that uses company-level data. University of Minnesota’s Loukas Karabarbounis and Chicago Booth’s Brent Neiman focus on the first of these two, in which the economy is considered a pie that is made of up three slices: the labor share (which goes to workers), the capital share (costs incurred to use factories, equipment, software, etc.), and economic profits. Economic profits are calculated by finding the difference between revenues and costs, including the cost of capital faced by companies to fund their assets used in production. more>

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How To Avoid Strategic Timing Mistakes Like Exxon’s

By George Bradt – The Wall Street Journal suggests Exxon’s once perfect machine is running dry. It got strategic timing wrong, investing too much too soon in capacity-building. It’s yet one more lesson on the critical importance of getting the timing right between implementing revenue-generating programs and building capabilities.

Strategy is about the creation and allocation of resources to the right place in the right way at the right time over time. It’s about choices. It’s about accepting failure as an option and asking “what if?” Most understand that the “right place” where to play choice is every bit as important as the “right way” how to win choice. Many get the “right time over time” choice wrong. This is what has gotten Exxon into trouble.

Moving from your current reality to a new, desired destination requires projects and programs that actually move you in that direction supported by the capabilities needed to deliver those projects and programs.

Here’s the rub. If you focus too much on running the projects and programs (path I) you get ahead of your capabilities and can’t deliver them. If you focus too much on building capabilities (path III) you run out of cash. The art of strategic timing is stepping up your capabilities ahead of program delivery requirements – but not too far ahead. more>

Against metrics: how measuring performance by numbers backfires

BOOK REVIEW

The Tyranny of Metrics, Author: Jerry Z Muller.

By Jerry Z Muller – More and more companies, government agencies, educational institutions and philanthropic organisations are today in the grip of a new phenomenon. I’ve termed it ‘metric fixation’.

The key components of metric fixation are the belief that it is possible – and desirable – to replace professional judgment (acquired through personal experience and talent) with numerical indicators of comparative performance based upon standardized data (metrics); and that the best way to motivate people within these organizations is by attaching rewards and penalties to their measured performance.

The rewards can be monetary, in the form of pay for performance, say, or reputational, in the form of college rankings, hospital ratings, surgical report cards and so on. But the most dramatic negative effect of metric fixation is its propensity to incentivize gaming: that is, encouraging professionals to maximize the metrics in ways that are at odds with the larger purpose of the organization. more>