Tag Archives: Economics

Risky Business by Jamie MacAlister

This book, written by a teacher at Hult International Business School and Ashridge Executive Education, seeks to identify how senior executives should develop a corporate strategy to deal with risk. So far, so worthy.

The first problem is to embrace what constitutes a corporate strategy. While the purpose of companies is pretty clear (to increase shareholder wealth), how to go about this is less so. For small businesses and many not so small businesses it is simple – sell more stuff to more customers, ideally at an increased margin. Achieving this can be very demanding, but that is the realm of tactics not strategy. Larger businesses, probably dealing with multiple products in multiple markets, must decide whether to invest and, if so, where. That decision is broadly called strategy and that is where this book is aimed.

The second thread, risk, is intended to be part of this. Clearly corporations that take a long time to develop strategy face the problem of the market places moving during their consideration of options, rendering the underlying assumptions questionable. Overlaid upon this are the risks of singular events, be they catastrophes, emergence of new technologies or loss of key contracts which again can dramatically alter the market.

Unfortunately for the reader the book never really pins down definitions of either. Instead it cites the hoary old chestnuts of Apple (Steve Jobs is a saint according to some business gurus), Proctor and Gamble (a company so large that it can borrow cheaper than most governments, and as such far from typical of the companies that most will work in), the inevitable bit of Sun Tzu and Clausewitz (taken out of context) and Napoleon.

To this the author adds a trite classification of business leaders into “tigers” or “elephants.” He goes on to develop a psychometric classification process that is as rich in catch phrases and jargon as it is devoid of insight, unless you consider sentences like “Good strategy means being choiceful about taking risk – its about taking the right risk” as anything more than a badly written statement of the obvious. (No, “choiceful” is not a word in my spell checker or any dictionary that I can find). And so it goes on. And on. And on.

The text is peppered with quotes from other business authors (many of them also from Ashbridge) which lead the author to also develop a theory of Creative Juxtaposition, whatever that means. Almost all the case studies I had read before, in more depth and with better explanatory context. Jargon aside, there is nothing new in this book, as the author actually admits in the penultimate paragraph. The cobbling together of other people’s ideas is neither compelling, necessary nor instructive. If this book is representative of Ashbridge – and that seems to be the intent – then it’s a spectacular own goal.

On the ARRSE site (where this review first appeared – it is reposted here with their kind permission) i had to rate it 1/5 as ARRSE has no facility for giving a rating lower than that.  On this blog there is no such problem.  It scores a big fat zero.

Newsnight Induced Depression (or Fury)

I suspect that I am not the only member of Monday’s Newsnight audience to be profoundly depressed at the prospect of five more months of the irritating, cliché and sound bite riven drivel that passes for political coverage in the UK.

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A Conversation With Ed Milliband

Apparently Ed Milliband wants to have four million conversations before the general election? I’m not sure that there are that many people who want to talk to him. Nor do I think it likely that he and I will meet, but if we did here is what I would say.

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Book Review: The Why Axis by Uri Gneezy and John List

There is an old joke about economics being accounting for the numerically challenged. Like many such jokes it contains a germ of truth in as much as that economics is largely theoretical and vague whereas accounting is very practical and precise. While accounting focusses on measuring the financial performance of individuals and companies, economics is more academic and encompasses a broader view of the world, seeking to identify relationships between activity and outputs. Many UK politicians have a grounding in economics. One of the main challenges of economics is (in another old joke) that if you ask two economists to solve a problem they will come up with at least three answers. This is not helpful for those trying to formulate policy, nor for the members of their societies.

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