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Don’t write the U.S. off just yet – How the TIDES of Change model can help assess the future of the world’s largest economy

Don’t write the U.S. off just yet – How the TIDES of Change model can help assess the future of the world’s largest economy

“Many business leaders will realise, soon, that they are underinvesting in North America” says Joel Kurtzman a leading figure in the U.S. on the future of business. Joel founded the Booz & Co magazine Strategy+Business and is also a senior fellow at the Milken Institute, an economic and finance think tank. This is an interesting prediction especially as the prevailing wisdom suggests that companies should be focusing on the emerging BRIC nations. So should you take note of Joel’s prediction or is it the hype of an American consultant longing nostalgically for the return of America’s golden era? If Joel is right however, there will be important strategic implications for businesses, consumer confidence and the future of global economic growth.

At TomorrowToday we specialise in understanding disruptive forces and for over a decade we’ve been making sense of a changing world. Our research on disruptive forces indicates that economic and political power is shifting distinctly East as well as South away from the U.S. This trend, we believe is likely to continue for the next two to three decades until a new equilibrium is reached in the global economy. So on the face of it our research does not support Joel’s prediction. However, this is where it get’s exciting because disruptive forces have an uncanny knack of creeping up and catching business leaders suddenly off guard. To remain vigilant leaders need to seek out the voice of dissent, find the voice that goes against reason because these can often be the weak signal that things are about to change or be disrupted. For example, back in 2005, Raghuram Rajan, a chief economist at the International Monetary Fund, attended the top central bankers’ get together in Jackson Hole, Wyoming, to present a paper on how the financial sector had evolved during Alan Greenspan’s era and gave a presentation that his listeners could never have expected. He argued that increasingly complicated instruments like credit-default swaps and mortgage-backed securities, had made the global financial system a riskier place, not less so as many believed. His presentation at the time represented the voice of dissent, under Greenspan the global financial market had never seemed more stable and Rajan’s audience didn’t take him very seriously. Three years later in 2008, however, his views proved prophetic. Rajan has since been credited with generally predicted the sources of the worst financial collapse since the Great Depression of the 1930s.

So as the global economy navigates to a point of equilibrium, the forces of disruptive change will make the journey somewhat turbulent and if Joel’s prediction represents the voice of dissent, it’s worth considering it in more detail. Using our TIDES of Change model on disruptive forces I’m going to test Joel’s prediction. The TIDES model assesses the impact of five disruptive forces – Technology, Institutional Change, Demographics, Environment & Ethics and Shifting Social Values.

Does Technology support Joel’s prediction?  … Continue Reading

The greatest challenge facing the future of business, requires your attention now.

The greatest challenge facing the future of business, requires your attention now.

Peter Menzel, is an award winning photographer, takes photographs of people posing next to their possessions taken out of their home and piled high on the pavements. The pictures paint a vividly clear picture – we live in a Material World, also the name of his book. You do not need to look at the pictures for long before it becomes clear that around the world, the industrial system has been immensely successful. Our parent’s parents bought into the system, our parents bought into the system and so have we because it has given or promised to give us a lot of cheap stuff. But here is the catch; whilst capitalism has served us enormously well – it has helped reduce property, improved standards of living around the globe, there are a number of perversions and the system  come at an enormous cost: unsustainable levels of public and private debt, excessive consumerism, and, way, too many people who are left behind. As Paul Poleman explains in a recent Mckinsey article: “Any system that prevents large numbers of people from fully participating or excludes them altogether will ultimately be rejected. And that’s what you see happening. People are asking, “What are we doing here?”

The facts of the situation are alarming:

  • we currently use is 1.5 times the world’s resource capacity.
  • Over a billion people still go to bed hungry.
  • The richest 85 people have the same wealth as the bottom 3.5 billion.

None of this is sustainable. If the post industrial capitalist system does not change itself it will be changed through the power of protest. Just because we are living in the 21st Century does not mean that the power of protest will not result in another “French Revolution.” As digitisation and the Internet give consumers enormous abilities to connect and aggregate their voices,  we will see the impact of power being dispersed and the pressure in the system will rise while wealth remains concentrated. Further development and population growth will put a lot more pressure on our planet and more and more people will ask why so few do so well when so many suffer. We are sitting on a powder keg of disruption like no other ever seen in the history of our planet.

Addressing the perversions of capitalism needs to become a strategic priority for all companies. Virginia Rometty, the Chairman of IBM cucintley puts it in her message to shareholders “How will we engage with an emerging global culture, defined not by age or geography, but by people determined to change the practices of business and society?”

I believe this is the single biggest threat facing the world of business today. By 2035, a single person, through a bio-pathegen will have the ability to end it all. But that should not be the motivating principle to find a solution. Capitalism on the whole is a very good system, but it can be made better and in doing so business can make a lot of money and society can prosper. So, I’m on a quest, to change the future of capitalism. It’s a big quest, and ideological one but it is a quest worth fighting for. Let me make this clear, I am a capitalist, it is a system I believe in, but…and this is a big BUT, capitalism needs to change if it is to be the relevant economic system propelling economic growth and prosperity into the future. I fear for society if it does not. But there is good news on the horizon because increasingly a number of hard nose business leaders and successful businesses are positioning themselves for the changes that will redefine capitalism as we know it. We are entering an exciting time and whilst there will be naysayers and people who want to protect the current status-quo I’m optimistic that business leaders will find solutions. Want proof? Here’s a starter-for-ten. Unilever chief executive Paul Polman explains why capitalism must evolve, his company’s efforts to change, and how business leaders are critical to solving intractable problems.

 

 

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What the UK storms can teach leaders about gaining advantage from disruptive forces

What the UK storms can teach leaders about gaining advantage from disruptive forces

We are living in unprecedented times. The storms lashing the UK coast are the worst in living memory and the costs to the economy are in the region of £14b and growing as the weatherman reports two additional storms approaching. The calamitous disruption to business, homes and lives is  painful to see. Out of the chaos however, there are several lessons business leaders can benefit from. The tides of change are lashing the shorelines of businesses around the world (excuse the pun). Disruptive forces can now cripple a business overnight and have devastating and lasting effect. The storms hitting the UK this year whilst not predictable in magnitude, were identifiable as a growing trend. A warming planet has resulted in a wetter, warmer climate in the UK for the past decade. I wonder how many businesses that have been disrupted by the flooding of rail and road networks had plans in place before hand of how to not only deal with these disruptions, but to gain advantage over their competitors. We don’t have the figures to this question, but we can’t imagine many.  

But the signs have been there for the past few years. If you were a business observing and reading the weak signals you would’ve known to plan for a disruption of this nature. We work with business leaders around the world helping them to identify, understand and build competitive advantage out of disruptive forces. Using our TIDES of Change model we get companies and leaders to think about the questions they should be asking on disruptive forces  but are not. T-I-D-E-S stands for Technology, Institutional change, Demographics, Environment & Ethics and Shifting social values. There are other disruptive forces but our research from our Strategic Insights and Futures Lab shows that they are the five biggest forces of disruption.

Environment and Ethics are the most powerful of the five disruptive forces we track and their impact has the potential to disrupt businesses immediately. Yet we often find environment and ethics is the area of least focus by leaders. Take the storm, caused by changes in the global environment. The potency is massive and damage is immediate are you prepared and how can you turn the disruption into an advantage? During the devastating Cumbrian floods of 2009 the bridge in Workington over the river Derwent was swept away. The community in the Seaton and Northside areas of Workington faced a detour of up to 40 miles to just buy basic commodities. Tesco,  a leading food retailer, sprung into action. They had an emergency solution at hand. Advanced planning with Yorkon, a manufacturing company, allowed Tesco to spring into action and within  a week of the bridge being washed away a tempory store had been erectet to help ease some of the problems facing the flood-hit community. You can watch a video of this story on Youtube.

Because of advanced planning and quick action Tesco was able to turn the disruption into an advantage and build massive goodwill with the community. Out of every disruption there are opportunities to do good for society, build goodwill and competitive advantage. Are you having the right conversations about disruptive forces in your business?

Are you asking the right questions and developing the strategies to counter and leverage disruption? If you are not take the opportunity to talk to us we’d love to show you what we know and share our insights.

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Five reasons why addressing the “perversions of capitalism” will give you a competitive advantage

Five reasons why addressing the “perversions of capitalism” will give you a competitive advantage

“The present state of affairs is really a perversion of the proper working of capitalism. It is all wrong to have millionaires before you have ceased to have slums…If we do not find some way of correcting that perversion of capitalism, our society will break down”  said Spedan Lewis, the founder of the John Lewis Partnership, the UK’s largest department store group, during a talk on the BBC in the late 1950’s. These words still echo loudly today. There is much that is positive about capitalism and as Spedan Lewis also noted “Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society.” The industrial revolution changed everything and has brought millions of people out of poverty, delivered education on a mass level and liberated the role of women in society. But there are also perversions that distort the proper workings of capitalism: Perversions like pollution; perversions like the boss who doesn’t respect or treat customers and co-workers well; perversions like soul destroying jobs and working environments; perversions like directors getting paid huge salaries and bonuses while we still have people living in poverty; and, perversions like relentlessly driving suppliers costs down then turning a blind-eye and not caring about the ingredients in your burgers until you get caught out in “the horsemeat scandal”.

Spedan Lewis recognised these perversions and addressed them by creating the John Lewis Partnership (JLP) which he described as a experiment in democratic capitalism. It’s an experiment that has proven hugely successful. Today the John Lewis Partnership is the UK’s most successful retail group.  The Partnership’s model is simple. Workers at JLP  join as Partners from the get go (JLP does not have employees) and success is shared amongst Partners , suppliers and even customers.

The Partnership model represents the roots of a new form of capitalism that Harvard Business School and strategy guru Prof Michael Porter calls Creating Shared Value  (video). The idea of doing business in a manner that benefits society as well as making profits is taking hold and as Spedan Lewis said it’s an idea that “makes work something to live for as well as something to live by. Here may be the new source of working energy of which our country is in such grave need.”

Five reasons why addressing the “perversions of capitalism” will give you a competitive advantage

… Continue Reading

The growing power of protest

The growing power of protest

On the 28th August 1963 civil rights campaigner, Martin Luther King, led thousands of people on a march to America’s capital, Washington DC. There he gave a speech that inspired and paved the way for equal rights and changed the world forever. Fifty years on there are signs that the power of protest is on the rise again with big business firmly in its crosshairs.

The power of protest is a formidable force capable of driving disruption and bringing even the fiercest dictators to their knees. Recent protests in Egypt provide poignant evidence. Of all the disruptive forces we track at TomorrowToday, the power of protest has the greatest potential to interrupt business with immediate and lasting effect.

Governments, activists and consumers now demand that companies increase returns not only for shareholders but also for society as a whole. The current energy debate in the UK this week is testimony to this with TUC General Secretary Frances O’Grady entering the foray saying “consumers want politicians to tackle excess profits and undeserved bonuses”. The performance bar has been raised and the Internet ensures that everyone is watching.

There is good news for future focused leaders. By centering strategies on delivering societal value and solving some of the world’s biggest problems opportunities exist to make a lot of money and there is a new breed of leaders who are showing they can outperform competitors who focus solely on short-term cost cutting and bottom line returns.

We’ve identified three standout companies who focus their strategies on doing good for society and at the same time deliver superior results:

  1. IBM: Building a smarter planet;
  2. Tom Shoes: One for One
  3. John Lewis Partnership: The proper workings of capitalism.

You can read more about how these businesses are building sustainable competitive advantage here

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Keep your hands off my genes

Keep your hands off my genes

And now an entry from the case files of the totally bleeding obvious: Yesterday the Supreme Court of the USA finally agreed – unanimously – that genes cannot be patented. In a stunning example of corporate over reach, a variety of companies involved in genetic research have filed patents not for the processes they use to sequence DNA, or the clever medicines they’ve invented to deal with genetic problems, but rather for the actual genes themselves. As if a corporation could own your actual genetic code (or forbid you to “use” it in some way).

Anyway, whatever they thought they were doing, the Supreme Court yesterday put them back in their box. Good news, yes. But also totally obvious.

Read Common Dreams report on the issue here.

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Leadership: The Right Trap

June 5, 2013 Keith Coats Ethics, Leadership No Comments

There is a trap that leaders should work to avoid. Yet ironically, it is a trap that ensnares many a leader and one that they enter into willingly.

It is the trap of being right.

Being right? Isn’t that what good leaders do – get things right? Well, yes and no.

TrapGetting more things right than wrong is obviously a good thing and something that anyone in leadership would strive to achieve. However, this isn’t the same as being right all the time. The problem is that many in leadership believe that their perspective, their experience, their solution is the right one. When this is the over-riding approach it means that other options automatically are relegated and subjugated to the leader’s ‘right’.

When leaders are ‘right’ (all the time) it usually means that an autocratic, command and control leadership culture prevails. It quickly becomes a toxic context in which others don’t speak up and one in which participative decision-making and innovative solutions are suffocated.  Right means that there can be no room for other considerations; right means that there is no room for discussion and debate; right means that we stop looking around and focus only on what we are told is in front of us and apply only what has been determined.

This is not the context of collaborative and participative environments. Leaders who insist on their ‘right’ usually means that the benefits delivered by diversity get ignored as the wisdom of ‘the many’ is sacrificed for the wisdom of ‘the one’.

There can be no discussion with anyone who believes that they are right. Any discussion is really nothing other than an arm-wrestle around ‘right-wrong’ rather than an authentic exploration to find a new perspective and embrace new learning. There is a Sufi saying that says, ‘beyond the field of right and wrong is a place; I’ll meet you there’. Anyone who has had the misfortune to engage in a ‘discussion’ with a fundamentalist (of any persuasion) will know immediately the futility of a ‘discussion’. The Fundamentalist believes that they are right. They refuse to – or are unable to, put aside ‘their rightness’ to create room for meaningful engagement. Such conversations quickly degenerate into angry exchanges and invariably damaged relationships.

… Continue Reading

Toxic Leadership: Recognising the signs

April 24, 2013 Keith Coats Ethics, Leadership 2 Comments
Toxic Leadership: Recognising the signs

Toxic leadership always ends badly but it doesn’t start that way. Toxic leadership (as is the case with any from of leadership) requires followership and to assume that at the outset the followership knew what they were in for is incorrect. Toxic leadership goes bad in stages and the followership are sucked in over time to the point that they are unable to see the toxicity emerging – or if they do, they often feel powerless to oppose it. They might feel entrapped and that they have too much to lose by speaking up and so end up by doing nothing.

Toxic behaviour cultivates dependency, promotes cronyism and corruption, misuses resources and ignores incompetence. However toxic leadership is often charismatic, has a ‘X-factor’ and stands for something – the righting of a perceived wrong, the meeting of a felt need or the safety derived from togetherness. There are plenty of examples of toxic leadership that span the religious, political and corporate worlds. Think Jim Jones, the religious leader who led his followers to Jonestownthe utopia that was Jonestown in Guyana and which ended with 909 of his followers taking their own lives by drinking poison. Think the fall of Enron, the seventh largest corporation at the time. Enron was the biggest bankruptcy in USA corporate history – a company that took 16 years to build and only 24 days to collapse. 20 000 people lost their jobs (that doesn’t include those who lost their jobs through Arthur Andersen’s demise) and $2 billion of pension funds lost.

Toxic leadership always ends badly, but it doesn’t start that way.

So how do we recognise toxic leadership? What are the traits of toxic leadership that we need to be able to recognise in order to challenge it and prevent it ending as it does?

There are seven traits of toxic leadership that Jean Lipman-Blumen identifies in her book, The Allure of Toxic Leaders that help us recognise that something is not right. The early detection of these traits can make all the difference as to whether or not the full consequences of toxic leadership root and play out.

… Continue Reading

What every business leader can learn from the horsemeat scandal

What every business leader can learn from the horsemeat scandal
The food and retail grocery industry is reeling from the horsemeat scandal, which displays a number of consumer trends and sentiments that can be associated with competitive advantage in the Connection Economy.  The most important one is not that there is horsemeat in burgers but that consumers have been lied to.  As Sean Cosgrove, a local government employee said “I’ve got nothing against horse meat…I think you’re being ambitious if you expect top quality meat in those products anyway.”
Whilst naturally some people may be horrified that there is horsemeat in burgers, the growing sentiment is that consumers are tired of not being treated like adults or being told the truth. There are several lessons that can be learnt:

Lesson One – Values are THE competitive advantage

Values are important. Seems obvious and yet not a week goes by without a new corporate scandal. Every annual financial report is awash with purported commitment to corporate values like: honesty, integrity, trust and teamwork. And, these “hygiene” values, essential for competitiveness, are seen as soft business factors with little time, resources or energy directed at them until the proverbial poop hits the fan! It’s time to put corporate values at the centre of the organization, from corporate culture to strategy, values need to take centre stage.

Lesson Two – Personal values raise the competitive bar 

The corporate values found in annual reports are the bare minimum. They will not deliver competitive advantage. No customer will thank you for being honest or showing integrity, it’s expected – so why do business leaders expect to be showered with praise for listing these values. The bar needs to be raised. More personal or human values make a real difference when incorporated into the fabric that makes business great. Kindness, generosity, fun, family, friendship, challenge, achievement, excitement, acknowledgement etc. are values that raise the bar and deliver sustainable worthy results.

Lesson Three – Focus on removing the perversions of the proper workings of capitalism

When values – personal and corporate become central to everything in business, we remove the perversions of the proper workings of capitalism. Perversions like treating colleagues with disrespect, perversions like polluting the environment, perversions like lying to customers, perversions like squeezing suppliers for unrealistic deals and perversions like mind numbing soul deadening work environments begin to disappear.

Lesson Four – Create value rather than extract value

Seek to create value not the lowest deal. There will always be rouges that seek to cut corners it’s why close strong ties with suppliers is essential. But the more the procurement department, the buying department, legal department work to squeeze suppliers for more ‘value’ the proportion of rouges grow. Desperation leads to desperate actions. Retailers can attempt to pass the buck and blame unscrupulous slaughterhouses and there is already finger pointing from and to the FSA. Take lesson here seek to grow not extract value for all across the value chain. When we look at growing value for suppliers, partners, colleagues and customers we unlock new innovation and growth opportunities.

 

 

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When will they learn that we live in an age of transparency?

When will they learn that we live in an age of transparency?

This is a bit of a nerdy blog post. Or as we say in the UK, I am being an anorack. But I’ll declare that I am a fan of Elon Musk, of Tesla, and a media skeptic (all will become clear). I also believe that we are living in an age of transparency, and not enough people understand the implications of this.

It might just be that you’re the CEO of Yahoo and you think you can put false information on your CV (your name would be Mark Thompson – read his story here). Or you might be a journalist who literally just made up stories for the New York Times (that would make you Jayson Blair). Or you could be any number of politicians who say one thing one day and another thing the next (that might also make you a Fox News commentator). Whatever the issue, in the age of transparency you’re less and less likely to get away with it.

So now to Elon Musk. He is a South African who went to the same school as my brother did (Pretoria Boys High). He made a fortune as one of the founders of PayPal, and has since used his money to do some really cool “boys own” type stuff. He’s the first private individual to successfully launch a space rocket. He’s also started a really cool car company, Tesla, aiming to create high performance electric sports vehicles. He seems to be succeeding.

But the entrenched motor media and car journalists don’t like it, and enjoy trying to discredit him and trash his cars. But Elon is fighting back. His cars have all sorts of logging systems in them, and he ensured they were turned on recently when he gave one of them to a journalist to do a road test. It appears as if this journalist has just flat-out lied about the road test he did – and Elon can prove it.

The latest episode in the story is well reported here – if anything I’ve said so far interests you, I am sure you’ll love reading the whole story.

The lessons: data rules; nerds rule the world now; transparency wins; electric cars are coming; Elon Musk is the man. But mainly: Transparency wins! Be transparent: in your life and your company. You have been warned.

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Global warming deniers need to face the facts (and the heat)

Global warming deniers need to face the facts (and the heat)

One of the key trends that my team and I track is the environment. There is no doubt that changes in our physical world, and our responses to them, are huge causes of disruptive change right now. When I do presentations on the TIDES of change (an acronym we use to talk of the five most disruptive forces of change), I am always a little nervous when I get to the “E” for environment. Especially in America, there is a danger that my audience will discount and dismiss everything else I say if I come out with a position on global warming and climate change that they don’t agree with.

It is a very divisive issue right now. So, I have found a way to hedge my bets a bit – especially in America – giving some credence to the position of the deniers and skeptics, allowing them the possibility that not all of the facts are in, but pointing out to them that governments are forcing through legislation and taxes anyway. So, I say, “I doesn’t really matter what you or I believe, this is an issue we are all facing.”

But I am going to stop this now. The facts ARE in, and the science IS conclusive.

The world is getting warmer, climates are changing, and this is having an impact on all of us. Globally, the ten hottest years on average on record have all been in the past fifteen years. In many countries, including the USA, 2012 was the hottest year ever recorded (previous highs for many countries were in 1998 or 1999). Australia’s climate scientists were forced last week to add an additional colour to the heat map, as they expected a high temperature of 52°C (surpassing the previous high of 50.7°C set in 1960), and a new high for national average maximum (40.3°C) and national average (32.2°C) temperatures.

Other national records around the world are being broken too as extremes of weather become more common. Last year, for example was the second most extreme, as measured by an NOAA index of weather extremes that includes temperature, precipitation, hurricanes and the like. Only 1998 was more variable. See The Economist’s map of extremes here.

… Continue Reading

China and Ethics Matter: Two Bottom Line lessons for Leaders Everywhere

China and Ethics Matter: Two Bottom Line lessons for Leaders Everywhere

Two headlines in the Business Report caught my eye this morning. The first had to do with China’s economic performance.  Later today I am flying to Guangzhou, China for a day’s work with London Business School on the Nestle Leadership Programme. Given TomorrowToday’s extensive work in China and the region, articles on that part of the world always feature prominently on the radar.  And so they should for all leaders serious about a global context and the big picture as the 21st Century will certainly become known as the ‘Chinese century’.

The headline was, ‘Chinese economic growth speeds up’ (by Kevin Yao and Aileen Wang) and it stated: ‘Evidence of a burgeoning recovery in exports, stronger than-expected industrial output and retail sales, together with robust fixed asset investment, all signalled that Beijing’s pro-growth policy mix has gained sufficient traction to underpin a revival without igniting inflationary risks yet’. The challenge China’s leaders face in the face of an economy that is growing as fast as it is will be to ensure economic, political and social stability. This is a view shared by Chris McNally, a political economist and global authority on China. China’s leaders are steering towards a number of economic reforms designed to address various imbalances that exist; imbalances that if not addressed, could lead to social upheaval in the future. China is entering the global economy at its own pace and in its own way and the sheer size and momentum of it economic engine mean that the Western economies cannot afford to ignore what is happening in this part of the world. The Chinese economy depends on a healthy global economy but so too is the global economy dependent on a healthy Chinese economy.

Of course the key to doing business in China is to have a good liver! The social aspect is integral to doing business in China. Most in the West approach business primarily from a contractual point of view but the Chinese regard relationship as equally important. It is referred to as ‘Guanxi capitalism’ and you ignore the relational aspect at your peril in forging economic ties with China.

Bottom line: As a leader you need to keep you eye on what is happening in China. One way or the other China will impact your industry, market and playing field.

… Continue Reading

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Primary Blog contributors

The main contributors to this blog are:

Dr Graeme Codrington, co-founder of TomorrowToday, author, speaker and expert on the changing world of work
Dean van Leeuwen, co-founder and CEO of TomorrowToday UK & Europe, speaker, consultant and Chief Intellectual Adventurer
Keith Coats, co-founder of TomorrowToday South Africa, leadership development guru, speaker and author
Professor Nick Barker, director of the Asia Pacific Leadership Program at the East-West Center in Hawaii, leadership development expert
Markus Kramer, marketing director for Aston Martin and brand building expert
Keith Holdt, Visionary Enabler of business growth and change, currently works for LDC as an investment executive.
Dil Sidhu, Chief External Officer, Manchester Business School; Executive education specialist.
Dawna MacLean, expert on fostering meaningful change and creating authentic experiences through transparent and trusted partnerships.

Click here for a full list of contributors


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