Tuesday, December 20, 2005

Flopsy, Mopsy and Cottontail

China upped its numbers on the growth of its economy today. Including Hong Kong's wealth, it is now on the fourth largest economy.

This is an issue for the UK – it just went down to fifth.

How soon Germany, Japan and .....the USA? What are the checks and balances? As long as the USA can fund its debt.... the debate continues but an economy, a population and a social structure of such huge influence affects us all.

Sir Digby Jones, director general of the CBI, reaction to the news was to call on companies in the UK to see China's growth as an opportunity. "It has always been a matter of when, not if, the Chinese economy will eventually eclipse the UK's in size," he said. "These figures for growth in 2004 highlight just how rapidly China is growing and what an amazing success story it is now becoming."

Opportunity? Yes. Inevitable? no.

Sir Digby, you accepted failure with such acquiescence, it is time you retired. The CBI is a rabbit held in the headlight of competition. It is not a matter of when it is a matter of competitive competence.

So now it is time to do something about it.

Here is a hint on how this can be done by Bradford Johnson, James Manyika, and Lareina Yee in the McKinsey Quarterly Review.

In reporting the latest research, they observe:

  • As more 21st-century companies come to specialize in core activities and outsource the rest, they have greater need for workers who can interact with other companies, their customers, and their suppliers.

  • Thus the traditional organization, where a few top managers coordinate the pyramid below them, is being upended.

  • Raising the productivity of employees whose jobs can't be automated is the next great performance challenge—and the stakes are high.

  • Companies that get it right will build complex talent-based competitive advantages that competitors won’t be able to duplicate easily—if at all.

So,Confederation of Business and Industry, get to work on the new model. Get shot of the inconsequential thinking on Corporate Reporting and put something robust in its place.

Start looking as value in the round instead rigged Balance Sheet, P&L and pretence at 'Stakeholder management'.

To begin with managers have to take a different view of their organisations and how they are run and this is a Public Relations process (by what ever name you want to call it) I don't care what it is called and I accept that, based on the findings of the recent CIPR study, you can be forgiven in believing PR is event and party planning (that is what the report's statistics say).

We have to be focused on creating wealth in both broad terms (tangible and intangible assets – including relationship assets) and on the relationship mechanisms that lever wealth from such assets.

It is no longer enough for people with ideas about using the public relations process to create wealth to call out in the dark. Now is the time to act.

Floppy eared government has to get realistic. It is using pathetic measures to find out how to compete in the real world. To measure the intangible productivity of the country it uses measures of references to academic papers. This is sheer buffoonery. It takes months, even years to get papers published in many disciplines including the social sciences in the UK. It measures the number of patents applied for. It takes years to get a patent accepted and few reflect the capabilities of organisations to create wealth from Intellectual Properties. Indeed, the Treasury compounds this nonsense by allowing patents to be included as assets when really they are costs (it is the application of patents to process and relationships with consumers to lever wealth from patents that is the asset). It measures the proportion of enterprises with co-operation arrangements on technological innovation activities with other enterprises or institutions and yet uses no measure of the effectiveness of relationship creation, sustenance and development. It looks at the proportion of sales accounted for by new or improved products and yet has cotonttail views on how the relationship value is achieved.

With massive increases in student numbers, it hopes that first degrees are going to show that it is increasing the level of qualification of the workforce and yet knows that most students spend 30 hours each week working their way through college instead of studying and that many universities are driven by numbers and not quality of qualification.

The Research Institutions are no less guilty. Research into relationship management does not exist. Even though The Secretary of State says: companies need "successful relationships with a wide range of other stakeholders" because they "are important assets, crucial to stable, long-term performance and shareholder value.” research funding in Public Relations is at best a lettuce leaf hiding the ineffectual progress of academic study and is none existent among PR academics.

Time to get a grip. Time for new thinking and, perhaps time to get really competitive.

Perhaps the new Conservative leader thinks he has solutions. Some are not too sure. One asks if his approach is going to continue to be control freak competitiveness or real and tangible effort to tackle our need to realise value from our skills, our ability to lever wealth.

Flopsy, Mopsy and Cottontail, The CBI, UK Government and Academia.

Picture: The Project Gutenberg EBook of The Tale Of Peter Rabbit, by Beatrix Potter