Month: May 2018

Driving social impact with a Cass MBA– here’s to embracing the ‘unconventional’

‘Don’t be intimidated by conventional ideas.’

Those were the words of our Course Director at our Cass Business School Executive MBA induction dinner.

There’s one conventional idea that I’ve found particularly hard to swallow: the primary purpose of business is to make profit.

Sometimes this narrative is explicit and direct, and sometimes it’s more subtle or nuanced. But it’s lurking. So it’s promising to see Cass starting to take steps to bring it into the limelight for some critical reflection.

Of course profit is essential for business sustainability. Businesses require capital to grow. Raising capital requires investors and investors require returns. That puts investors (and the profit needed to deliver the required rate of return) in the driving seat.  So yes, profit is essential for business sustainability. But profit no matter what?

The problem is not profit per se. The problem is profit as an end in itself, and the bigger problem is the pursuit of profit with disregard for the impact it has in reinforcing our social challenges and systems of inequality (or ‘negative externalities’ in economic terms).

The issue is how profit is made and how profit is used.

I’m not talking about isolated instances of Corporate Social Responsibility (CSR), ‘ethical duties’, greenwashing or developing morally conscious branding campaigns to appeal to millennials (while in the background the fundamental nature of the core business continues to have negative impacts on society). I’m not talking about being pressured to respond to a heightened awareness in popular culture of environmental and social issues in order to attract staff and customers (and therefore make more profit). I’m talking about building social purpose into the heart of business: elevating social goals to a strategic level, from ‘bolt on’ to ‘built in’.

This is of course already reflected in an array of existing business models in the ‘fourth sector’ like social enterprises, benefit corporations, community businesses, cooperatives and models of community ownership, which are growing in the UK and around the world. These alternative structures are part of the vision of a ‘social economy’, and there are forms of both debt and equity finance cropping up to support them, like social investment and community shares.

The problem is, these alternative models upset the neoliberal, capitalist apple cart that our current economic system is based on.

As our economics textbook put it: the ‘clear risk’ in governments becoming shareholders of banks following the financial crisis is that they could direct banks to prioritise social objectives over commercial ones. How outrageous!

Critical theory would have us ask: why are things the way they are, and whose interest does that serve?

Traditionally the corporate sector is paid enormous executive salaries and bonuses to deliver profits to shareholders, which works as a beautiful self-reinforcing cycle allowing the wealthy at the top to become wealthier.

Meanwhile, 14.3 million people live in poverty* in this country– that’s 22 per cent or one in five.

One. In. Five.

Sixty per cent of those people are in in-work poverty (they remain in poverty even while working). Is it just me that finds that profoundly shocking and completely unacceptable? Never mind the housing crisis, the environmental crisis … this list goes on. These aren’t faceless ‘negative externalities’. They are real people. Real lives.

Most people start with government and the welfare system as the solution to social challenges, but while there are many opportunities for change in Westminster, the government only controls around 40 per cent of GDP. The rest is in the hands of business, and it’s our interactions with business that dominate our day to day experience.

There are positive signs of a shift in conventional thinking. Blackrock’s recent letter called ‘A Sense of Purpose’ said that ‘companies must benefit all of their stakeholders, including the communities in which they operate’. In a similar vein, Deloitte’s 2018 Global Human Capital Trends survey showed that businesses are no longer measured solely on their financial performance but on the support they give to the communities in which they operate and their impact on society as a whole.

There is indeed much businesses can do to realign spending priorities away from bonuses and dividends to shareholders already firmly within the 1 per cent. For example they could: increase wages for their lowest paid staff, reduce prices so more people can afford their services, offer apprenticeships, cap the wages and bonuses of executives, procure from social businesses in supply chains, abolish zero hour contracts, and create affordable childcare for working parents.

Of course none of those suggestions come without complex trade-offs, but many of these options can generate a win-win. Take Michael Porter’s concept of shared value, where, for example, supporting marginalised communities to produce coffee beans on fair wages generates a sustainable and affordable supply chain for a coffee company while lifting a whole community out of poverty.

Two of my classmates recently asked me for ideas on how they could support charities, specifically disadvantaged children, and it got me thinking about we can do at Cass as students and faculty.

One of the reasons I applied for the MBA was to bring the principles of good business into the third sector and share them with the network of 600 community businesses we support at Locality.

Because the third sector has an unfortunate ‘conventional idea’ of its own – that business is greedy, uncaring and often corrupt. I’ve heard many a snide comment about ‘people in suits’, some of which were very justified and others which were simply a regurgitation of an accepted narrative without reflection. There is work to do to change the perception of business from a self-interested vehicle for free market capitalism to an agent for change.

But importantly, the education process can also work in reverse. We need to bring the social principles from the third sector into the world of business.

Because there are indeed things that business can learn from the third sector. Doing good and doing business can in fact be intrinsically interlinked. It doesn’t have to be either/or, it can be both/and.

What would happen if we removed the separation between ‘business’ and ‘not-for-profit’ and explored the grey space in between? As the Director of the Community Shares Company said: ‘the economy is not simply made up of charities and hard-nosed capitalists’.

The ‘social sector’ doesn’t have to exist in some kind of parallel universe far away from the world of business with the only bridge being CSR initiatives. CSR (done genuinely and well) is great, but there’s no net benefit in a business giving a cash hand-out to a food bank when it doesn’t pay its staff the London Living Wage; or a bunch of corporate volunteers from a bank going to paint a fence when the interest rates they’re charging on the charity’s loan means the charity can’t afford to hire a painter; or a confectionery company that sponsors a children’s charity when it’s core products increase childhood obesity.

In fact, this only reinforces and embeds the structural causes of our social challenges. It also keeps the third sector small – Dan Pallotta’s Ted Talk sums this up well.

The business models that foreground social impact need to be discussed and explored not just in third sector echo chambers, but in business schools. Not only to create new start-ups, but to adapt and transform current business models to build in genuine social purpose and explore what responsible business looks like in practice – to improve people’s lives and make profit.

(Needless to say I was thrilled to see a whole lecture dedicated to social business in our corporate strategy module!)

As MBA students, we can ask why things are the way they are, what can be changed, and how this can be done.

Rather than abdicating responsibility for business’ contribution to social challenges Milton Freedman style, or seeing the solution as a hand-out to charity, we can look inside our businesses to create more fundamental change.

We can challenge the conventional idea that profit is an end in itself. We can grapple with the complexities of realigning business models to include social outcomes. Then we can get to work in changing our own organisations to start giving business a genuinely deserved reputation as an agent for positive change.

Cheers to that!

*Living in poverty is defined as having ‘relative low income’, that is, people living in households with income below 60 per cent of the median in that year, after housing costs.

Tara Anderson
Executive MBA (2019)

 

Vietnam International Consultancy Week: where theory meets practice

Having arrived in Hanoi via Hong Kong at 8.30pm the group set out to see Hanoi in its evening glory.  The cacophony of sounds greeted us – the call of street vendors and music from bars to the chatter of crowds drifted over us. A barmy breeze carried the scents of food and smog that arises from densely populated cities – it was the moment to savour the city.

We are here for International Consultancy Week – a highlight of the MBA curriculum.  The aim is to give students an opportunity to consolidate what they’ve learnt from blocks one and two and apply this to a real-world setting, but in a completely different context – political, economic and cultural.  We would be working with one company on a business challenge for one week, and present our recommendations at the end. 

This process begins a few weeks earlier when we are asked to choose from a list of companies and the proposed scope of work.  For me, it was an opportunity to stretch myself and identify an area that I am not familiar with to get some real experience in. 

My top pick was Bao Viet – the number one insurance company in Vietnam with 25 per cent of the life and non-life market.  This was Bao Viet’s first engagement with Cass and the business challenge was to develop a marketing strategy to enable the company to maximise a new online sales channel to generate growth and revenues.

I was pleased to secure my first choice and felt it lent itself to helping me achieve some personal objectives to apply my learning in both a new context and different industry.

As new groups formed based on the choices the cohort had made, we moved to quickly ensure that we were positioned to prepare ahead of us leaving for Vietnam. Working full-time and managing family commitments does make it a challenge to coordinate and ensure that group meetings take place; this is especially the case as the International Consultancy Week comes quite quickly after the block two exams and we have other modules sandwiched in between. 

However, the group was able to meet remotely a couple times to prepare and we were also very fortunate that we could reach out to our main contact at Bao Viet – Tam and our ‘on the ground’ contact, Chris. Speaking to Tam helped us refine and agree a scope before we went to Vietnam and speaking to Chris helped us understand the culture and expectations and ways of doing business in Vietnam.

I would certainly encourage future cohorts to do the same if there is the time as it will stand you in good stead.

The individuals we were working with at Bao Viet were excellent and while we had a translator, Phoung, to help us, we were fortunate not to require her translation skills as much as some of the other groups required. Nonetheless, we considered Phoung an additional member of the team from whom we sought advice that helped us position our presentation effectively with our client.

On our first day, we focused on getting to know our client and ensuring that the scope was clear.  There were high expectations from our client and we were both excited and a little anxious about this.  Simultaneously, we were figuring out how to work as a group and get a sense of each other.  While we know each other, most of us hadn’t worked with each other before but there wasn’t time to go through a process of storming to form! 

It was five intensive days of getting to grips with the problem, splitting into smaller groups to conduct primary and secondary research to respond to key questions and then come up with a credible set of proposals to present on the Friday afternoon.

The experience was quite unlike anything I have been through before due to the different context, but also insightful about how to identify and draw on individual and team strengths.

For example, following some discussion, we all agreed to be involved in the presentation. Of course, there were momentary speed bumps, but this is part of understanding how to work with different personalities. We worked very well as a team and I believe this was down in part to some of our earlier preparations.

Other areas of learning, included how to make a positive impact early and ensuring that we made a good impression so that we had some currency to draw upon when we needed help from our clients. 

With our excellent Bao Viet colleagues, Phoung and Professor Cliff Oswick

As a group we were keen to ensure that we provided an insightful and useful product for our client and Bao Viet was keen and interested in our recommendations. In some respect we were able to validate some of their early thinking on how to progress this project and we were able to provide some ideas that they hadn’t considered yet. 

None of us were insurance specialists, but the MBA equips you with the necessary principles, theories and frameworks that enables you to consider and resolve problems.

Radhika Narasinkan
Executive MBA (2019)

 

I climbed the highest peak in Indochina to test my leadership skills

The leadership expedition following the International Consultancy Week is part of a Cass MBA programme initiative to develop an explorer mindset – one that encourages students to respond to changing business environments.

These principles alone intrigued me and I was keen to experience this learning outside of the typical ‘office environment’ where the rules are relatively familiar even if there is change.  The adventurer in me was certainly up for putting myself in an unfamiliar situation.

Mount Fansipan is the highest mountain in Vietnam and the Indochina peninsula, located in the Hoang Lien Son mountain range.  As you make the climb – and if you are in any state to enjoy it – the views are incredible; the climb is well worth the effort just for this.

Amazing Views

The expedition is segmented into two: a day trek in SaPa, climbing through rice paddy fields; followed by a climb to the summit of Mount Fansipan.  Our expedition leader, Fernando Yáñez, made us organise ourselves, so that we all had the opportunity to lead during the trek.  With 11 in the group, it was a shared leadership endeavour and particularly pertinent when operating in an unfamiliar environment.

My opportunity to lead came on the first day of trekking up Mount Fansipan.  As a complete trekking novice and urbanite, the experience was enlightening and stretching, both mentally and physically. It is amazing how far the journey can take you physically and mentally in three days.

For all us there were different lessons and it is fantastic how one experience can add different dimensions to our individual and team learning.  Some of my key learnings from this experience, which could translate into any business environment are as follows:

  1. Communicating with others was fundamental to motivate, keeping spirits up so that the next step is not impossible to take.  In these times, humour and fun were integral to maintaining morale.  Instructing and sharing information to ensure team progress and decisions provided confidence and belief that we would make it!
  2. Being decisive was key in some of the situations we were in.  This isn’t just because we were empowered due to the position we were given, but required an actual willingness to take on the risk of decision making with the information we had.  In a situation where there is shared leadership, it was important to minimise debate, forget about egos and make decisions best for the group.
  3. Teamwork – it goes without saying that being a leader you are also part of a team and recognising the strengths that others bring.  As the leader, it is fundamental to ensure you are drawing on these individual strengths so the team is positioned to do the best it can.

A bit of courage and great team work

Empowering others to take on responsibility and roles became important to share the workload.  With the guidance of our expedition leader, we came to realise how little data and information we had to begin with and we needed to find a way of tracking progress such as pace and time, organise sufficient breaks on that basis and discuss these with the guide to make effective decisions.  By allocating roles that helped us collate this information, we were able to achieve this.

Courage and humility underpin it all.  There will be times as a leader we will not know enough about the terrain in front of us and there will be moments of self-doubt.  Our companies could undergo a merger or acquisition, have a new or unknown CEO at the helm or be going into a major efficiency drive.

The best that we can do is accept this situation quickly and adapt so that we can help our teams and individuals around us. With integrity and honesty, we can share what we do know and with humility to accept our limitations in such situations, asking for the help that we need to be better leaders.

And of course, there is nothing more satisfying than knowing that with your team you have managed to achieve your goals.

Making it to the Summit

 

Radhika Narasinkan
Executive MBA (2019)

 

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