World Economic Recovery – One Step At a Time

Not surprisingly, given the precarious state of the world economy, there has been much speculation as to how the recovery might happen. I say speculation advisedly. There is no economist or market analyst alive and working today who was around during the Great Depression. So everything is putative. Quants are looking for graphs to outline their predictions. The early discussions were around whether there would be a’ V’ or ‘U’ shaped recovery. Such descriptions given our times are too glib and lack the necessary granularity to be helpful. Next up, smart economists posited that the recovery would be more like the Nike swoosh. That had me thinking how the logo of the various training shoes might give us a sense and predictor of how the world economy will recover. Here’s my attempt to provide shape and colour to these discussions.

Adidas

Adidas is a German sports clothing mega corporation and arch rival of Nike. Its logo suggests there will be 3 key phases in the recovery starting slow but building momentum. All up quite positive. The three distinct phases might indicate a slow emergence and maybe suggest 2nd and 3rd wave of the virus. Slightly concerning that the growth trend leans backwards!

Mizuno

Founded in Osaka in 1906 this Japanese company is renowned for its sports equipment and apparel. Their logo suggests a bit of a fudge. There is a Nike suggestive swhoosh which indicates a reasonably long slow recovery, but a cautionary note is thrown in for good measure with a scenario showing a bloodbath decline, followed by an equally ‘heady’ recovery. Mizuno are covering all bases here – clearly a committee involved!

Under Armour

Under Armour is a Baltimore based global sports, footwear and casual apparel manufacturer. New kid on the block, maybe they don’t have the resources of more established companies because it looks like only two people got involved with their modelling. A positive and negative mindset (or left foot – right foot) pairing I would suggest. Big U is a commonly held economic view but alarmingly another scenario is also offered – a big inverted U. My advice; buy now and sell before the second crash based on this scenario.

Reebok

Reebok was founded in my old neck of the woods, Bolton in England in 1958. Like their football team, their economic outlook is a mixed bag. Two clearly think the economy is on the up but, as is often the case, the rapidity of this recovery is moot. The bleak third option is typical of many groups…there is often ‘that guy’ who dissents and wants their dissension mentioned in the minutes.

Nike

Nike provides us with the new global consensus of what the recovery might look like. It’s straightforward, reasoned and well communicated. That’s typical Nike..it’s the Jacinda Ardern of  the predictions. Whether it comes to pass is still not certain…just like Ardern’s re-election! Let’s hope it’s not her last dance.

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Another Japanese company this time one founded in 1977. The Japanese economy has been doing it tough for quite a few years so it’s not surprising that they predict a pretty rapid recovery, but then a reversion back to their ‘old normal’ of a stagnant economy.

Diadora

Italian based sports clothing and accessory manufacturer founded in the 1940s, Diadora don’t give us much guidance. In their view it might go up, it might go down. Could have been written by a pundit in a horse racing form guide. A good each-way bet. At least they can never be entirely wrong.

Umbro

Manchester based Umbro was founded in 1924. I take back what I said- this company was around before the big crash so we should pay a little more attention to what their logo tells us. It looks like it’s a circular future of sustained growth, correction, deep fall then recovery. If trading on the share market has been anything to go by of late the Umbro effect explains exactly what has occurred.

Kappa

Kappa was founded in Turin in 1978. Is this helpful for mapping our way forward? Economic crisis, what crisis? Lets just get naked and take our minds off it. That’s where the smart money should go.

Stay fit!

Colourful Lives in the Age of Black and White Movies

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I wanted to write something in recognition of International Women’s Day. It’s problematic. As more people get on board feminists have, I think rightly, called into question whether it’s become a sort of Mothers’ Day equivalent. My credentials are intact – I’ve been in this space as long as I’ve been in management. This time around I thought I would hark back to the golden days of Hollywood. Strange backward glance you may think given the excesses and underlying misogyny of Hollywood is only just now being called out. Well, maybe not, as Malcolm Gladwell might say.

With Weinstein now convicted there is a sense of relief, but no belief that such issues won’t emerge again or that others who have misused their power won’t now be brought to light. In Thus Spoke Zarathustra Nietzsche wrote “wherever I found man, I found the will to power”. The abuse of power is not the persevere of men, but is disproportionately prosecuted by them. In more recent times female actors have felt more empowered to come forward, despite the fear their careers may be impacted. But what of the days when the studios, headed by powerful men, reigned supreme? It’s often called the golden age of Hollywood and remembered through those stunning black and white photos of stars and starlets.

It’s easy to imagine, armed with the knowledge of what Weinstein perpetrated (and he was nowhere near as powerful as those studio bosses and elite directors), that female actors of that era were subjected to pretty significant harassment and abuse of power. To say that power relationships were asymmetric then would be an understatement. That is perhaps why two women, in particular, stand out for me. I want to spend a little time outlining why they have my utmost admiration and have done so for many years.

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Olivia de Havilland photographed on 23 April 2018 by Laura Stevens for Variety Magazine at the Pavillon de la Reine in Paris, France

My first and favourite is Olivia De Havilland. I’ve mentioned her previously in other blogs. She is an amazing woman by any standards. Still alive at the grand old age of 103 and living in Paris, she was a Hollywood superstar. She is most famous for playing Melanie Hamilton in Gone With the Wind turning down, as legend has it, the lead that went to Vivien Leigh and along with it an Oscar. My first real encounter with her was in the early 1970s while staying at my grandparents and watching a movie one afternoon in black and white (no colour TV then but the movie was black and white anyway). We grew up, deliberately I’m told, without a TV so anything on the box fascinated me. This movie, in particular, held me spellbound with the gritty scenes and the challenging subject matter. It was Anatole Litvak’s (director) The Snake Pit. Cinema has never had an easy relationship with mental health and the scenes of a woman’s descent into insanity were harrowing. De Havilland played the part of Virginia Cunningham who finds herself in an insane asylum with no recollection of how she got there. The usual Hollywood fairy floss this was not. I was deeply impacted by it and perhaps explains why I am still to this day so interested in issues of mental health. De Havilland was mesmerising in the part. A true actor in the finest sense.

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Earlier than that in 1939 de Havilland co-starred in Gone With the Wind. De Havilland thought that having starred in such a picture she would get improved billing and act in more serious work. You really were ‘owned’ by the studios in those days. Objecting to the lightweight movies that she was required to participate in following her critical and box-office success, she refused to act in several and received her first of many suspensions by the studio. De Havilland was tied to Warner Brothers for seven years. Glad to be out of their clutches at the end of that period she found that Warner Brothers had extended her contract by 6 months to make up for her suspensions. Others, most notably Bette Davis, had tried and failed to challenge this in the courts. That did not deter de Havilland. In November 1943 the Superior Court in California found in de Havilland’s favour when she decided to take on Warner Brothers. The ruling is considered one of the most significant and far-reaching legal rulings in Hollywood reducing the power of the studios and extending greater creative freedom to performers. The ruling is to this day known as the De Havilland law.

Warner Brothers, of course, did not take this lying down and a letter written by them to all the major studios meant de Havilland could not find work for the next two years. De Havilland had the last laugh in this battle when securing a two year deal with Paramount Pictures. Her amazing acting in Mitchell Leisen’s To Each His Own rightly secured her the best actress Oscar in 1946.

The Snake Pit was released in 1948 with de Havilland producing perhaps her most challenging movie performance. She deliberately lost weight to portray the gaunt appearance she felt necessary to do her character justice. Commonplace now, unheard off then. She consulted regularly with psychiatrists and visited Camarillo State Mental Hospital to research her role and observe patients. Her efforts were rewarded with an Oscar nomination and other international awards. In 1949 she starred in The Heiress which Paramount secured the rights to after de Havilland saw the play on Broadway and persuaded the studio she would be perfect in the role. Obviously she was, securing her second Oscar for best actress. She also turned down the role of Blanche in A Streetcar Named Desire…if only!

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In the 1960s and beyond de Havilland was plagued by what remains an issue for many female actors today; securing good parts. She transferred to the small screen in her later career, a medium she was not enamored of, and retired in the late 1980s. I could go on about her awards from the US, UK and France and her political involvement including being called before the House Un-American Activities Committee (McCarthy) but I have to leave space for my next legend!

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Next up is Hedy Lamarr, once known as the most beautiful woman in the world. Her face was the inspiration for Disney’s Snow White. Put the two together and the likeness is extraordinary. She was born in Austria and her early acting career was in Czechoslovakia where she made the controversial 1933 movie Ecstasy which is renowned for being the first non-pornographic movie to portray sexual intercourse and female orgasm. Of Jewish descent and married against the wishes of her parents to a fascist-leaning munitions manufacturer, she eventually fled from her extremely controlling husband.  Making her way to London via Paris, she happens upon Louis B Mayer, head of MGM, who offers her a movie contract in Hollywood. Thus begins her time in Tinseltown making a number of movies. Legend has it that in her first US-released film when her face first appeared on screen the audience gasped!

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Quite possibly this ‘beauty’ limited her options and she was constantly offered parts that emphasised her physical attributes with few lines and little artistic stretch. The highlight of her acting career was Samson and Delilah in 1950 directed by Hollywood giant Cecil B DeMille. This was the highest grossing release of the year winning her critical acclaim as the leading lady. This aside she was not at ease with her celebrity status and found her acting parts boring. It was this reason that had her looking for other roles. She helped sell war bonds during WWII using her celebrity and beauty despite wanting to join he National Inventors Council which had been recently established to bring novel ideas forward to help hasten the end of the war. Unfulfilled she turned to hand to inventing!

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On learning that naval radio-controlled torpedoes during the war could be jammed and set off course she put her mind to a solution. Engaging her friend composer and pianist George Antheil she created a frequency hopping system immune to jamming. Patented in 1942 it was ignored by the authorities as it came from outside the military. There’s more than a hint too that its shunning was because of the gender of the inventor. In 1962, staring down the barrel of the Cuban missile crisis, all US Navy ships had the device installed. Women’s liberation was kicking in!

Her legacy outside of her film career is still with us today. The streamlining on planes was her idea from observing birds in nature. Next time you are connecting via Bluetooth, or indeed communicating via secure wi-fi or other means you have Hedy Lamarr in significant measure to thanks for that. Next time you reach for GPS to find out how to get somewhere you should thank  Hedy Lamarr. While other starlets of her day were out socializing on their time off set, Hedy was in her trailer inventing things. In 1990, ten years before she passed, Hedy Lamarr, who lived the last portion of her life as a recluse, commented :

“The brains of people are more interesting than the looks I think.”

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If this was the underlying preoccupation of Hollywood then the #metoo movement would have been redundant. It’s tempting nowadays to think of our current times as being much more complex, volatile and uncertain than days gone by. We live we are told in a VUCA age. Things seem more cut and dry back then, more straightforward, more monochrome. As this blog shows though, true colour lies beneath the outer veneer of black and white! Happy International Women’s Day everyone.

Kaufland – Sunk by the Cost of Their Fallacy?

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Kaufland, the German hypermarket juggernaut, recently pulled out of the Australian market to concentrate on other markets where it felt it would get a better return on its investment. They left without firing a shot. That is they never actually got around to selling anything. The money lost that they had already sunk? Estimates vary, but the costs sunk in Australia by Schwarz Gruppe, the Kaufland parent company, are thought to range between $435m and $550m. From a job loss perspective, it amounts to over 200.

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You could hear the collective sigh of relief from Coles and Woolworths at the news and their share prices lifted considerably as a result. Aldi would have felt relief too. In the Kaufland stable is Lidl, which is Aldi by another name. Only difference? Special Buys Thursday and Sunday! Now that would have been real competition. Imagine the Board room in Germany making the decision to pull out. All that due diligence that said ‘let’s do it’, all the analysis around the non-competitive Australian supermarket market, the money already invested and an important but often overlooked aspect of such decision-making, the ego and reputations of those who originally pushed for the project. That’s why it’s such a fascinating case study of corporate decision making and the psychology of decision-making in general.

Let’s analyse the rationale for Kaufland making the decision to enter the Australian market in the first place. If you want to grow your business then ultimately you need new markets. FMCG has high barriers to entry and establishing supply chains and supplier arrangements is complex. Getting the quality and cost equation right is essential as this is what the customer is seeking. They will have looked around the world for markets ripe for some additional competition. Despite what they said about now ‘concentrating on growth opportunities in Europe’ (I don’t think there are many) there was real potential in Australia. Here’s why the Australian market is attractive despite the tyranny of distance issues around supply chains. There is a duopoly (Coles and Woolworths) meaning there is space for other competitors. As the ACCC noted in their objection to the TPG-Vodafone merger, adding a third like-for-like player into a duopoly does not change pricing or innovation they just split the market between them. Competition comes when the new player brings a different offering and doesn’t compete on a like basis. Kaufland would not have competed as a Cole or Woolworths doppelganger.

Kaufland was offering, probably for the first time, grocery shopping as an experience. Australians who happen to do grocery shopping outside of Australia (even in New Zealand) are amazed at how much better that experience is compared to our domestic offering. Because competition here is so weak there is no need to spend money on fit-out and ambience. Close shelving, unattractively displayed product with awful lighting is the Australian way. Let’s get you in there, your wallet opened and out again. It feels more like a 2 or 3 sitting cheap restaurant rather than high-end degustation which is more the Kaufland model. A model that we now won’t experience.

So what were the Board thinking pulling the rug from under our feet? Were they stupid in the first place? Maybe so… we’ll never know. What they did do was act fast. What they didn’t do was suffer from the sunk cost fallacy phenomenon. From a behavioural economics perspective this is defined as when an individual or company continues a behavior or endeavor as a result of previously invested resources. This fallacy, which is related to loss aversion based on past inputs can also be viewed as a bias resulting from ongoing commitment. It’s the old ‘we committed to this endeavor so let’s double down on our efforts to make it work’ thinking process. We have after all spent so much money on it already. It’s a human foible to be sure, but one that investors require highly remunerated board directors to avoid to protect long-term value. They don’t always get that right. In fact it’s probably the exception rather than the rule.

While the sunk cost fallacy creates a strong pull in favour of the status quo, it is often running parallel with other decision biases that when experienced together makes it very difficult to take the brave and decisive decision. The first of these is the confirmation bias. You made the decision to attack the Australian market so when this is questioned you look for information supporting this decision and reject the data that undermines it. This is reinforced by anchoring. When you made your mind up first time around you really committed to it like an anchor. It takes a lot to shift your position. We’re often told to trust our initial judgment and instincts. Now you’re getting data which said we should pull out and hell we haven’t even sold a single item…don’t think so! Not on my watch…we can turn it around…just a little more money in the marketing budget…improved supply chains…better suppliers. Next thing you know you’ve been in for five years and still no profit!

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Let’s look at what would have been the competition for Kaufland; Coles and Woolworths. Would they have the board room nous and sophistication to see off the new rival? A good place to look for evidence either way is to determine whether they have had their own sunk costs fallacy pivot points and how they each reacted to those. And as it turns out both have had similar moments. So how did they fare? Well each mirrored the mistake of their rival (I’m saying rival rather than competition advisedly as two players in the market rarely compete in the truest sense). Let’s take Woolworths first up. They launched the Masters ‘big box’ hardware business to take on Bunnings,  part of the stable of rival Wesfarmers. It was pretty obvious to me and many others that it was doomed from the get-go but they plowed on anyway with the full energy and focus of a lemming heading for the cliff’s edge. Where Kaufland pulled out of the headlong surge and managed to walk away, Woolworths plunged over with vigor. Do you see a Masters around today? Well perhaps, as some of the abandoned retail warehouses may remain un-let. It’s a dead brand though with egg over the face of the directors and egg in the wallets of the investors. A better case of the sunk cost fallacy you’d be hard pressed to find….

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…that is until you look at Wesfarmers who owned Coles outright at the time. Clearly buoyant from seeing off their rival Woolworths, they embarked on the crazy plan to compete with their lookalike in the UK, B&Q, by, and you cannot make this up, buying the UK equivalent of Masters (Homebase). What were they thinking? Well I don’t think they were, at least not uncluttered from bias. Here the Board clearly had, at some juncture, a sunk cost fallacy decision point and pushed on. I think their concurrent biases were the gamblers fallacy which is expecting past events to influence the future. They had been able to take Bunnings from the relative obscurity of Western Australia and crush its rivals in the east and become pretty much a monopoly. Surely they could do it again? They won once they surely will win again kind of thinking. They also probably suffered from over-confidence bias. They were placing a lot of faith in their own knowledge and opinions. They clearly had an unrealistic view of their own ability to make investment decisions on behalf of the shareholders. The rest is history. Wesfarmers pulled out of the UK, tail between its legs after dismal sales figures. Just like Woolworths they plouwed on even when the writing was on the wall.

That’s why what Kaufland did is so remarkable. It’s not easy to bail out when you have so much invested, financially, reputationally, personally and psychologically. Kauf in German means ‘purchase’ so Kaufland means ‘purchase land’. And boy did they in Australia; a mouth watering $20m buying the old Bunnings site in Burleigh on the Gold Coast in 2018 being just one example. Despite this, when they couldn’t make the business stack for whatever reasons (and there’s plenty of speculation about this), they put all bias aside and withdrew. It’s brave, canny and staggering in equal measure. Oh that our Australian companies, in whom we trust our retirement superannuation, had leadership metal like this!

Blue Poles Apart

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Outside of the arts community, the death of James Mollison on the 19th of January this year probably went unnoticed. “James Mollison?” I might hear you say. Well as it turns out Mr Mollison was quite a remarkable individual. He was a secondary school teacher from Victoria with an interest in the arts. More on him later.

1972 was the beginning of the ‘heady’ reign of the Gough Whitlam government, with ended with a bang in 1975. 1973, his second year in the seat, was a remarkable one for many reasons. The Vietnam War ended, oil rose by 200%, Roe V Wade was ruled upon by the US Supreme Court, the UK joined the EEC, there was the Yom Kippur war in the Middle East among many other news-worthy events. It was also the year of Blue Poles.

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Blue Poles is a painting by Jackson Pollock which he painted in 1952. The excellent piece in The Conversation in 2015 is a good place to start to get an art critic perspective on the work. Suffice to say it is now considered a mammoth work by a mammoth artist. As the photo above shows it is a mass of seemingly random colours splattered on in layers with eight diagonal deep blue lines signifying the poles. In its day this was a polarising (no pun intended) work of art as was the majority of the artistic output of Pollock. The phrase ‘my four year old could have painted that’ was often used when the likes of Pollock, Rothko et al were discussed. Loved and loathed in equal measure Blue Poles resides in the National Gallery of Australia.

Gough Whitlam personally signed off on the purchase early in his Prime Ministership and famously hand wrote on the approval letter to release the purchase price to the public. He was a wily politician knowing that the price would leak anyway. Releasing the price at the same time as the announcement meant there was no shame and no hiding. Compare that with today’s Prime Minister whose Department of Prime Minister and Cabinet would not confirm where he was on holiday (Hawaii) as the bush fires took hold.

As might be expected there was a bit of a furor as the public lined up to see Australia’s new purchase. It cost the princely sum of $1.3m. There were lots of vox pops at the time with people saying it was a huge waste of money and how many hip operations or new school teachers could be paid for with those funds instead. The usual stuff. There was a fairly broad consensus that it was a ridiculous amount of money to pay for a country that could ill afford it.

And whose insane and ill-considered idea was it to buy this work of ‘so called’ art? None other than the secondary school teacher James Mollison! Remarkably Mollison worked his way up to eventually becoming the Director of the National Gallery of Australia. He was described by his successor as:

“of almost legendary stature [and] had single-handedly built a great and comprehensive collection from the ground up; indeed he had presided over the collection for more than twenty years with great flair, and over the institution for seven years—it was in the truest sense, his Gallery, his professional achievement.”

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Blue Poles wasn’t the only standout work he purchased. He is well known in art circles for the purchase of De Kooning’s Woman V, and securing Sidney Nolan’s Ned Kelly series. The Gallery now has one of the best collections of Australian art. It’s no exaggeration to say that Mollison had a significant stewardship over the cultural maturation of Australian society, where previously it was felt that if you wanted ‘culture’ you had to go abroad e.g. Germaine Greer, Robert Hughes, Clive James etc.

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On hearing of Mollison’s passing I mused what would have happened had social media been around in 1973 when the Blue Poles purchase was made. Based on my observation of the vitriol that seems to engulf the web and twittersphere etc., I’m thinking the reaction would have been a lot harsher. Listening to and seeing the contemporary responses in 1973 the opinions were less ingrained, less visceral, less politically charged and polarised. People seemed less willing to take the event and extrapolate it up into an ‘us and them’ proposition, or a reflection of the government of the day. In short, people seemed kinder and more forgiving in their responses, even if they were completely at odds with the purchase.

A lot of the criticism centred around the amount paid. If art’s not your bag then perhaps another prism to judge the purchase in retrospect,and the contribution of Mollison, is through the eyes of an economic rationalist. In today’s dollars that’s the equivalent of paying possibly $7m. I’m pretty sure that competing interests nowadays would kick up the proverbial shit storm if we paid that for a single work given the crises facing rural communities etc. Facebook, Twitter et al would go into melt-down. The anti-intellectual, anti-arts lobby would come out all guns blazing. Blue Poles would surely not pass the ‘pub test’, although some might argue it’s easier to like after 10 pints!

So I did some homework. Blue Poles has a current estimated value of $350m. Take $7m in today’s dollars and compare it to $350m. “Not bad” as the ‘posh’ lady on the Trivago advert would say. I then calculated that if we had put the $1.3m in the stock market what that would be worth today. Guess what, the ASX200 doesn’t even come close to $350m!  Mollison knew about art appreciation and he also knew about appreciating value. Who knows what the real value is beyond its sale price in terms of tourism and the confidence the Australian community has in having a vibrant arts and performance culture?

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Putting value aside for a moment, is it any good? It doesn’t tour much and that’s understandable given its size. In 1998 the work was included in a Pollock retrospective at the Museum of Modern Art in New York. It dominated the show according to critics at the time. Featured as the last work in the final room critics said it ended the show “not with a whimper, but a bang”. There were calls for it to be re-purchased and Americans questioned why such an important piece of cultural history was allowed to be acquired by a foreign government in the first place. Mollison clearly demonstrated 20:20 vision when it came to a fine eye for art.

We live in an uncertain world today and it’s easy to think that it is more complex and controversial than days gone by. Looking back, 1973 in particular, would suggest otherwise. What has changed, I think, is greater polarisation of our views, less willingness to see the other perspective and less kindness in the way we broadcast these views to the world. Sadly in today’s world we seem many poles apart on issues. In 1973 we were merely Blue Poles apart! Vale James Mollison – a man of vision and courage.

The Leaning Tables of PISA

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When the PISA league table of international educational standards was released I braced myself for some pretty hysterical responses and I wasn’t disappointed. Once again Australia, who believes it should be competing at the top of the league, noticed its position decline. There was all sorts of wailing and gnashing of teeth. Often the first reaction when shit hits the fan is to look for a culprit. Never a good example when a government does this as they set the bar for the rest of the community. Surely the best reaction is to pause and look more closely? Only after a reasoned assessment of the facts and getting input from interested parties should a relevant action plan (with measurable milestones) be put in place. Least that’s what we do in the business world…and after all isn’t it for this very business world that we want top of the table students?

I’ve been pondering how China (in all its extended form e.g. Hong Kong, Taipei) and Estonia have managed to climb to the top of the educational league. One thought that popped into my head was the internet speed of the top performing countries. This theory held good for Singapore, clearly, with their legendary speed but came crashing down when Estonia only managed a poor 44th place on the global table of fixed broadband speed. Australia came in at a miserly 64th in terms of Mbps. Maybe it has to do with diet or age when children first start to be educated? I even refreshed myself with Outliers the great read by Malcolm Gladwell. Still none the wiser, I put the blog aside for a while!

Then I got to thinking. Does it really matter where we are on the PISA list if it doesn’t deliver what we really need as a society and nation – a happy and contented community. The WASP view of life, while still an undercurrent running through society (especially the owners of capital), has much less of a sway in terms of public policy and establishment of societal norms nowadays. The rise of the happiness and well-being movement is testament to this shift. I put this down to the greater affluence of the middle classes, which in the Western world, has expanded immeasurably. And guess what – we are none the happier for all that extra stuff we get to buy! There are some things that some people get to realise as they get older and wealthier and that is they get wiser as well. It’s a wisdom borne of experience. Invariably that experience teaches us that wealth is not correlated to happiness and even if it was it wouldn’t be dose dependent.

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Next step on what had now become a quest, was researching global happiness tables. Surprise surprise! There appears to be no direct correlation whatsoever between being a happy nation and the level of educational attainment. The first point of commonality is Finland topping out the happiness league, with an educational system ranked 7th. The Scandinavians dominate the happiness table with Denmark, Norway and Iceland claiming the next top slots. Sweden, perhaps mourning the demise of Abba, come in at a creditable 7th. In the educational stakes most of them are lower than us. Where might Australia be languishing then in the happiness stakes given our parlous educational system (16th place)? Actually on happiness we score a pretty robust 11th out of 156. If we were to aspire to be another country, I bet that a public poll would opt for the likes of those Nordic countries rather than China, Estonia, South Korea or Poland.

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No-one could accuse the Nordic bloc as being industrially backward either. But let’s consider the really big league in world commerce. Surely their economies rely on a smart source of labour and that’s why they are faring so well. Once again, I’m confounded to find Germany, arguably the world’s most advanced economy, ranks at 20 on the PISA table. Japan, similarly industrialised, ranks 15th. Switzerland, land of lush meadows, skiing, banks and great wealth – where I think we all secretly want to live – ranks 28th on the PISA scale. Go figure! It features in 6th place on the happiness scale.

In my opinion Australia would be well advised to spend our time trying to implement policies to get us higher on the happiness league table than the educational one. That’s not to say that we rank lowly in either. What policies should we be implementing to improve this position? Sadly the Government seems to want to place the emphasis on education. While more could be spent, I’m not sure that just getting us better at maths and reading (when it’s boiled down that’s what PISA measures) will actually take us anywhere meaningful. Time and again we are reminded by those who have a clear eye to jobs of the future (who are these soothsayers?) that we need creativity and soft skills. Our hellbent focus on STEM is not likely to deliver without us taking a broader brush to our curriculum. I’ve heard for calls recently to narrow the curriculum when, as a non-educationalist (but an employer who gets these cookie-cut kids when they leave school or uni), I need the problem-solving, creativity, soft skills, diplomacy and high EQ. A narrow curriculum is not capable of delivering these requirements.

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So it surprised me immensely when, within a few weeks of the PISA results being published, I learned that the Federal Department for the Arts was being folded into another large Department (Transport). While a precious few might find mathematical problem solving the highlight of their leisure time, they are far outweighed by those who enjoy a cultural experience like a concert, show, art gallery visit or trip to the cinema. It is the arts that distinguish us from being mere fodder for the production of goods. Even industrialists at the beginning of the industrial revolution got that. Case in point; Port Sunlight in  the UK where the enlightened Lever family created a village where they housed all their workers from management to the shop floor. Guess what they put into their village? A library and art gallery. In fact the Lady Lever Art Gallery is an amazing small gallery with one of the best collection of Pre-Raphaelite paintings you could hope to see. Yup even the uneducated working class like their art!

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Australia’s economy relies quite heavily on tourism. In 2017 tourism contributed $49.7 bn to the GDP. Now I’d hazard a guess not tourists have come solely to visit our science museums! Many though will partake in our cultural offerings. The more culturally interested and literate we become the more likely we are to be happier. Along the way we might find also that our overall IQ increases too. It’s no surprise that those countries featuring high in the happiness scales have lashings of cultural offerings.

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So where does this leave us? Let’s not beat ourselves up, go blaming teachers, funding levels, Gonski, lack of Gonski etc. Let’s focus instead on the metrics that are important to us. Hubris too often drives our thinking when we get ranked lower than we think we should. That’s wasted effort. Let’s spend our time and energy making us a happier place. If that means tweaking some aspects on the educational system by teaching more mindfulness etc. then so be it. Let’s leave league table obsession for the other great cultural aspect of Australian Society – sport. At least sport has its own Ministry that’s been left intact. Would it have been any other way?

Y’Ellen at People You Don’t Like

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Not that long ago Ellen posted on social media a short clip of her monologue from her TV show about the concept of being friends or friendly with people whose views are not your own. She was specifically responding to being ‘called out’ for chatting and joking with ex POTUS George W at a sporting event. Her clip, which went viral, garnered likes and loathes aplenty on social media. It’s been a pretty well- trodden path so you might wonder why I’m sticking my toe in? I want to approach the issue from one of the workplace.

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Photograph: Kyrre Lien / The Guardian

The unique contribution that the internet, and social media more exactly, has made has been the access to connections and links to celebrities and influencers (yes they are different). Before the web we had friends, acquaintances and fellow workers.  Those outside of this sphere were pretty much unknown to us so their views, ideologies and perspectives were neither visible to us nor could we care. We had no point of connection. Everything about this equation has changed. Ironically, by the magic of algorithm, while our total number of peer to peer connections has increased exponentially, the breadth of these relationships has shrunk almost in an inverse proportion. It’s called the echo chamber and it’s a widely acknowledged phenomenon.

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Perhaps now the only place where you might get a clash of views and ideologies in person is in the workplace where people come into direct contact with the purveyor of opposing views. This could be in the lunchroom, at the water cooler or the smokers’ ‘den’. Strangely this last group seem more aligned than most. Perhaps the common bond of smoking, where the whole world’s ‘agin’ you, overrides other schisms that might separate them?

I’m not aware that the polarization we see online is manifesting itself to anywhere near the same degree in the workplace. I would posit that this is due to the fact that we engage fellow workers in the flesh. Our interaction with them involves all our senses and our conscious and sub conscious mind. We know more about them on most occasions than just their political beliefs, or where they stand on say a woman’s right to choose, or the extinction marches. We know about their children, or aged parents, their birthdays, their hopes and their aspirations. We know where they went on holiday; we know where they want to go on holiday.  In other words, we form a more rounded and nuanced view of them than just their views on a particular subject that may be existential to me, but of much lesser import to them. Online that fact alone may make you bristle, but in the flesh we get to see a more holistic picture.

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We probably know more intimate details of fellow workers now than in the workplace of years ago. Perhaps occasioned by the social media culture of sharing, I think there is a greater willingness by people to put their perspectives on display in the workplace. This is partly occasioned by the workplace as well, reference Qantas support for same sex marriage or Rugby Australia’s support for diversity. On social media the clash of perspectives, beliefs and ideologies manifests itself all too often in a toxicity that at the very least burns bridges. Up the other end of the spectrum you get ‘unfriended’ or worse still trolled. I’ve read where grown-ups have ‘unfriended’ people they have known since early school years because a scant review of their social media has suggested some misalignment of beliefs. The irony here is that on occasions this must have been not long after searching out that old classmate or early boyfriend/girlfriend and re-establishing contact. Seems a lot of wasted energy!

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One of the best ways to ensure that the echo chamber approach doesn’t adversely permeate the workplace is to create trust. Trust is an essential element of the internet. We have needed to suspend our natural suspicion to make large swathes of the internet work. We have moved pretty comfortably from buying clothing or other items in a bricks and mortar store where generally, due to geographical proximity, we can go back and demand our money back, to a cloud-based store where we seem to have few means to get redress if things are not to our satisfaction. Try finding a contact phone number on a website nowadays. And yet internet shopping is increasing year by year. Trust therefore has become an essential element in allowing this to happen. As Rachel Botsman explains, trust is the basis upon which the share economy rests. You allow strangers to stay at your house when you are not there based on a rating system that shows you how dependable they are. Similarly, you buy goods from people you’ve never seen – eBay – based on the ratings system of other buyers. So the internet is capable of having transactional relationships that work very well without the layer of ideology to get in the way. All you need to know is that both parties in the equation are safe, reliable and responsible and have been able to demonstrate this on a number of previous occasions. Sales might be quite different though if in your selling profile you had to answer a quick ‘fast five’ on where you stand on a range of social issues.

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In the world of work trust is established in a much more sophisticated way. We don’t have a third party star rating to guide us, we have our own sets of beliefs, experience, biases and ideologies to assist with that. We also have structures of acceptable behavior in the form of policies and procedures and we have the underlying culture of the organization, most often set by the leadership. Brene Brown outlines seven elements of trust in her book Dare to Lead. These are worth repeating here:

Boundaries -You respect my boundaries and when you’re not clear about what’s okay and what’s not okay, you ask. You’re willing to say no.

Reliability – You do what you say you’ll do. At work, this means staying aware of your competencies and limitations so you don’t over promise and are able to deliver on commitments and balance competing priorities.

Vault – You don’t share information or experiences that are not yours to share. I need to know my confidences are kept, and that you’re not sharing with me any information about other people that should be kept confidential.

Integrity – You choose courage over comfort. You choose what is right over what is fun, fast, or easy. And you choose to practice your values rather than simply professing them.

Nonjudgment – I can ask for what I need and you can ask for what you need. We can talk about how we feel without judgment.

Generosity – You extend the most generous interpretation possible to the intentions, words and actions of others.

These sound lofty, but elements of all these need to be in place to make the world of work actually…work! Imagine if the same set of principles could be amplified into the dealing of people on the social media. If we are to de-polarise the world we need to bring more understanding, compassion, kindness and forgiveness to our interactions on social media. If we could, the impact would be amazing. It all starts with what Ellen said in her monologue. Being nice is more than just being nice to people you like. And YES it is possible to be friends with people whose views you don’t necessarily share. If we could just stretch to this, as Ellen is want to say on her show, ‘Everyone gets a prize!’

 

Is raeling Against Your Employer a Good Idea?

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There’s been an awful lot written of late about Israel Folau and his right to express his views versus the rights of the employer. A recent case lost in the High Court by Michaela Banerji, who under the pseudonym “LaLegale”, lambasted the policies of her employer, while not directly comparable, will have certainly have given Folau’s legal team pause for thought. Still they’re going to get paid no matter what thanks to a highly publicized not so successful crowd-funding campaign and a subsequent white knight or perhaps more appropriately named ‘angel’ backer in the form of the Australian Christian Lobby. I’ve held off commenting because jumping in too quick can be polarizing and I think we need more reasoned approaches where nuance can prevail rather than a flight to opposing ideology.

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First up the thorny question of religion in the workplace. We live in a predominantly secular-governed country that is majority Christian but a whole heap of other religions are represented in the multi racial society in which we live. The more culturally progressive (or those with high cultural quotients) employers embrace diversity and it’s pretty common in this cohort for this to be reflected in the workplace. Take us for instance;  we have a prayer room for Muslim staff and visitors. We host the annual Holi festival for the Guajarati community of Brisbane which an ancient Hindu festival. Perhaps it’s this that riles the Christians [open disclosure I was raised a Catholic] – that the progressives embrace this cultural diversity and yet Christianity doesn’t get the same heft put behind it?

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I’d like to think that good employers create a culture of acceptance and this includes acceptance of differing views. Recently this has been put to the test up and down the country with marriage equality, euthanasia and the de-criminalisation of abortion all potential heated water cooler conversations. And there’s no less suitable place to get into hot water than at the water cooler! Management’s role in all this is to create a culture where expressed views, no matter where they sit on the spectrum across these issues, are conducted in a mindful and respectful way.

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This is particularly true given how harmful words can be. There is immense power in words and we should never underestimate this. The poorly constructed sentence at a performance review can wreak havoc. A rashly typed email responding to a perceived unreasonable comment can do similar damage. So when Israel Folau made his injudicious comments about the fate of a range of ‘sinners’ who don’t repent, this was always going to cause upset. To my mind the upset is warranted by those particularly singled out and this is primarily those struggling with their sexuality. This struggle exists at home and at work – there is no miraculous hermetically sealed barrier between the two. Gay people have to come out at least twice – once at home and once at work.  Where I feel less sympathy is for those outraged on behalf of the affected (the progressives) or for the attack on free speech (the conservatives). This ‘war of words’ is fueled by the moral and I think confected outrage by both groups who delight in the polarization of their polemic. It’s strangely like answering the referee back. As every Australian kid knows, complaining at the referee never gets the decision reversed. The same is true of outraged arguments for either side of this debate. No-one is likely to jump ship to the other camp based on the diatribe of the opposing party – especially since it’s normally presented in such a salty fashion.

So how does the leadership in an organisation bring some semblance of balance and order when increasingly we are being told that organisations need to ‘live and breathe’ their values and that recruiting millennials is contingent upon ‘standing for something’?  I think there is a way and that is by explaining the absolute and unalienable right of management (or ownership) within an organization to set the culture. Culture is both espoused (the way we want to do things around here) and given meaning (the way we actually do things around here). It is management’s right to do both and to ensure they align. We can choose to leave or remain but at the very least we should never work against the culture as expressed in the workplace. Subtlety this doesn’t mean we can’t speak out if we find it clashes with our own views.

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So in the case of Rugby Australia they have quite clearly stated their culture as being a diverse and inclusive organization. What Israel Folau did is try to undermine this by speaking out with his views that run contrary to this. Where I think Rugby Australia missed a trick is that they should have stated quite categorically after the first infraction, when Folau was apparently put on notice about future social media postings, that they as employer would reserve the right to speak in defense of their culture.  For each posting by Folau should have come a reasoned re-articulation of the values and culture of what diversity and inclusivity actually means, as a riposte through an err.. repost.

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It’s a bit more complex than this of course, because Folau is (or was) a role model to many young people, especially in the Pacifika community. Rugby Australia is also custodian of a sporting code steeped in history that is desperate to maintain ‘market share’ in a country overrun almost by sporting codes for Mums and Dad to enroll their daughters and sons into. With this in mind then, getting on social media and other platforms would have been an appropriate vehicle to say ‘hey this player has the right to his views but we don’t agree.’ Then they could have come out and said how such views can be made without causing undue offence – a tall task I know. But as I said earlier, words can cause great harm which means things worded differently can cause less harm if crafted. The damning to ‘hell’ of the unrepentant is not a shining example of wordsmithing let’s be honest! What Folau needed was someone to help him express (temper) his views in a way that didn’t cause the fallout that followed.

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Where I think Folau was at his most vulnerable, in a mindful social media re-balance (pushback) by Rugby Australia, was his actual interpretation of the Bible. Surely there are some Christians within the broader rugby community (it’s played in lots of Catholic Schools – I went to one) who could have fielded (pun intended) Rugby Australia with some scriptural quotes that could have shown the Folau statements for what they were…heartless and ill-founded. The concept here is one of discernment – one that could have shown Rugby Australia in a good light and thereby Folau in a bad one. Matthew 7:1 (judge not lest you be judged) is a prime example and I would certainly have led with this. The irony of the statement made by Folau is that those who he believes might end up in hell for un-repented behavior, might be his bedfellows given judging is something the bible forbids. Love, actually (not the movie), is the proper motivation for not judging and for deploying good judgment and the failure to love his fellow man (or woman) is where Folau came unstuck and where his scholarly interpretation of biblical quotations started to unravel. In fact, this area alone could have been a rich seam to mine to show that the Rugby Australia culture is very much aligned to the fundamental beliefs of many of its members.

It’s a shame that Folau lost his place in both the Wallabies and NSW Warratahs squads over this. No-one wants to see someone lose their job. He has – perhaps guided by others – decided that he will pursue the financially beleaguered Rugby Australia through the courts to get compensation for unfair dismissal on the basis of his right to freedom of speech. I’ve also read where he wants back into the Wallabies and Warratahs to keep playing. My approach would have been to keep him there but not play him if his alignment was out of whack. Teams are successful when they gel as players so those who can’t adopt the team ethos are more than likely to de-select themselves. And that’s fair. The fellow players see to this themselves. That’s culture being lived.

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Should Falou be successful then Rugby Australia will be in all sorts of strife and one can’t but hope that the’ thugs game played by gentlemen’ can survive this. If Rugby Australia wins then there will be a backlash and a diminution of freedom of speech which might be used as a smokescreen to justify other erosions of our freedoms, especially press freedom and the rights of whistleblowers. If they do win Israel Folau is morally obliged to ‘forgive and forget’. Whatever happens, Israel Folau is not at risk of being a pauper, but Rugby Australia is. Perhaps if they do lose they can at least salve their wounds knowing that it is ‘harder for a wealthy man to get into heaven than a camel to pass through the eye of a needle’ (Mark 10:24). Knowing this, Izzy may well be hanging out with the outcasts for eternity anyway. My bible knowledge has faded a bit over the years, but excuse me, didn’t Jesus hang out with the outcasts when he was here on earth? I reckon he may well have played rugby too! Let’s hope this gets resolved without too much more rancour. After all we have a World Cup to win!

Time to Press (Club) Home the Truth

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We live in complicated times. Donald Trump, ostensibly the leader of the free world (and somewhere implied in that moniker is the concept to some extent of moral leader) has made an art out of the half-truth, distortion and out and out lie. Boris Johnson, his UK analogue is cut from a similar cloth. He’s just become the new occupant of number 10 Downing Street.

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Holding aloft a smoked kipper recently, to rail against the petty and burdensome regulations imposed by the EU he declared that an unshackled Great Britain would be able to avoid such bureaucratic nonsense when it wrestled back sovereignty from Brussels. Ever fluid with the truth, it took fact checkers a nano second to discover that the very regulations that were the basis of Boris’ confected outrage were, in fact, imposed by the UK government without any involvement of the EU. Never one to be overly burdened with the concept of truth he has shamelessly pushed on with his public pronouncements without feeling the need to make any correction. Such untruths might seem, on the face of it, no ‘biggie’ but reflecting on the Brexit vote many floating voters were persuaded by the fact that the NHS was, according to the Brexiteers,  likely to face an attack from the EU. That lie was exposed after the referendum and as we now know, too late in the day to save the country from the three years of stagnation that has occurred since. Even little half-truths and distortions can erode at our ability to root our right from wrong. As Gandhi said “truth never damages a cause that is just”. An untruth on the other hand is highly corrosive.

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From a neuroscience perspective we are hard-wired to accept truth and sometimes hold onto a belief even when we find out subsequently that we were not told the truth in the first place. An experiment by Tali Sharot and Micha Edlson of University College London proved this point. They got a group of volunteers together and fed them misinformation. They then called them back and ‘fessed up’ as it were. What was perhaps surprising in this study was the fact that around half the time even when knowing they were fed misinformation, the volunteers continued believing the first false information they were fed. There are a couple of explanations for this. The most obvious and perhaps crudest is that fact that first impressions are lasting impressions. The more sophisticated explanation is that neuroscience has shown that if the amygdala (i.e. our emotional centre) is aroused with the first lot of misinformation it is much harder to actually change the mind of a person when the truth is finally revealed.

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Boris, Kipper in hand, and the undermining of the NHS were both examples designed to arouse emotions. The NHS is such a dramatic case in point as it has consistently been voted the most trusted of the UK’s public services in surveys. Clearly those putting together the election campaign were across the neuroscience. Put like that the presentation of lies and distortions sprinkled like confetti by Trump and Johnson are sinister in a Machiavellian way.  Trump’s recent, highly calculated, tirade against the ‘Squad’ is another stark example. A chorus of ‘send them back’ at a recent Trump rally were clearly not perturbed by the awkward truth that three of the four protagonists were indeed born in the good ole USA.

But should we be surprised by the verisimilitude of truth in the stead of actual truth? Trump and Johnson didn’t invent this stuff. They had good forebears. Tony Blair massaged the truth of weapons of mass destruction to take the UK to war in the Middle East. He did a good job of it too. I had the ‘privilege’ of actually being in the Press Gallery of the House of Commons to observe him debate joining forces with George W, despite having already declared war. He convinced me! Across the pond Donald Rumsfeld introduced into the modern lexicon the notion of ‘known knowns and unknown knowns’ etc. which, as Richard Cohen of the Washington Post observed, was a way of frog marching us into ‘a semantic quagmire in which there is no such thing as truth’.

So the truth matters. It’s not only getting eroded in politics though. In business the exposure of malady at the Banking Royal Commission revealed a deep fissure in the culture of companies where lies and the promotion of deliberately adverse recommendations to customers have been a common feature. These have all been done in the interests of the corporation. There weren’t the ‘ratbags’ you see every night of the week on ‘A Current Affair’ ripping off old grannies. These were publicly listed companies, the bedrock of our superannuation funds with finely manicured value statements.

Corporate mistruth is pernicious. Failure to advise the market of vital information, or misrepresenting your accounts like presenting short-term debt as long term debt on the balance sheet are all too common examples and lies that have dire consequences for the unenlightened – normally mum and dad shareholders. Corporations don’t live in isolation. They reflect society as a whole. Even our nightly television is littered with distortion and half-truth. No wonder there is a culture of disbelief and willingness to be scant with the truth. Trailers for reality TV shows are littered with distortion. This may seem like a long bow connection between the ‘sins’ of Trump and Johnson but the slippery slope has to start somewhere.

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How often are we shown a snippet to tease us into watching a show segment only to find out that the editing created a certain predicted tension that doesn’t eventuate, or if it does, is far less dramatic than telegraphed. If I had a dollar for every time ‘The Voice’ judges, for example, were about to go into total meltdown I wouldn’t be so badly under-superannuated. How often are we led to believe that there is spontaneity only to find out the whole thing was scripted?

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Take under-siege celebrity chef and Master Chef presenter George Calombaris. His failure to pay the appropriate entitlement to his workers (by the staggering sum of around $8m) would indicate that he is perhaps not as up front as he should be. Watching his cooking performance last Sunday night based on a role reversal where contestants became judges and vice versa, he and fellow Judges were given a ‘mystery box’ and had to cook something inventive in 60 minutes. Now I’m no cook but a record turntable isn’t a staple cooking utensil, at least not in the establishments I frequent. George, confronted by a range of ingredients he had to whisk up on spec, without prior knowledge, duly produced the record turntable from beneath his bench where, supposedly one would store their blender. This was all in the aid of producing  a spiral pattern with his ganache, or was it his jus, or whatever you call that sort of tangy swirl on the plate. Not in the same league as short paying your staff, or using racial slurs to incite divisions in society, I’ll warrant, but at what point does manipulation of the truth start to become an issue?

Much more malleable minds than mine are being exposed to untruths, lies, distortions, exaggerations and we just accept it now as the way things are done on TV. We have a duty to protect the innocent and the truth as well. It’s time we started to press (club) home the truth in society, politics, corporations and, yes, even reality tv for all our sakes.

Ardern’s Leadership Given a Sporting Chance

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Something remarkable has been seen to happen in the world of management and leadership. It’s called New Zealand. I’m biased – I’m also a Kiwi. That said I can, I think, look at NZ in a dispassionate way not having lived or worked there since the 1990s. Much of my time has been spent in the northern hemisphere where things are done quite differently and more recently in Australia, where on the face of its things are similar, but on deeper scrutiny aren’t really.

In the wake of the terrible Christchurch mosque killings we have seen wave after wave of leadership on the big and small scale. Prime Minister Ardern’s role as leader and comforter to the nation is vital and how well she has stepped up to the plate. The three main NZ telcos (Spark, Vodafone and 2Degrees) open letter to the CEOs of Facebook, Twitter and Google is another fine example. Then there are the smaller, but in some ways more poignant, demonstrations of leadership within the community where schools have broken into a spontaneous hakas. The all-conquering Crusaders, the undisputed most successful franchise in Super Rugby history have decided to review their brand name. The list goes on.

Adversity often brings out the best in people, but this tends to be at the level of compassion. This event appears to be bringing forth both the right amount of compassion AND great leadership. Why then has such great leadership bubbled to the surface? What is it about the green unspoiled environment of NZ that seems to provide such clarity of thinking in times when clear leadership is necessary? Why does, Aotearoa, the ‘land of the long white cloud’ produce great leaders?

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Not convinced that they do? In recent days President Recep Tayyip Erdogan of Turkey has demonstrated his own style of poor Leadership with his inflammatory comments about sending NZ’ers and Australians back in a box from the ANZAC ceremonies in the Dardanelles. Not surprisingly, given there are important elections due in Turkey, he is playing to his base with his hyperventilated comments. Because he didn’t limit his comments to one country, we get a rare opportunity to see how two world leaders respond to a common jibe.

Bigger brother, Australia, through Prime Minister Scott Morrison issues a robust rebuke indicating that without a withdrawal and apology for the outrageous comments then there would be further consequences. The suggestion is a recall of ambassadors and asking the Ambassador of Turkey to leave. Good chest pumping stuff at a diplomatic level! Just what Erdogan wants. He’d love that so he could say “look they killed Muslims and now they kick Turkey’s ambassador out”. As he has a tight grip on media in Turkey it’s a message he can pretty much control for his own people.

NZ a much smaller brother, or should we say sister, has sent its Foreign Minister Winston Peters directly to Istanbul for face to face talks. Erdogan would respect that; two bull-headed men plainly talking behind closed doors.  The difference is in touch and diplomacy. Such differences stem from a different perspective on leadership. While NZ arguably has a more genuine case for being upset at the Erdogan comments, because the bloodshed of the Mosque attack happened on their shores, they have nevertheless taken a less sabre-rattling approach.  Better leadership all round.

So, having made the case what might be the reason for this surfeit of leadership skills? While it’s tempting to say it’s the crystal-clear rivers and lakes and un-spoilt wilderness, clearly this isn’t the underlying cause. I think it’s because NZ as a small country has had long-term exposure to a number of really inspiring leaders and this role-modelling has rubbed off on the population at large. Given sporting heroes are an easily accessible role model for sports-crazy young men and women, its fortunate that Kiwis have had such a great run of those that have excelled and done so with a real humility and dignity over the years.

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Reflecting on leadership I often think of the example of Edmund Hillary. He was the first to scale Everest but never revealed who got there first – him or his sherpa, Tenzing Norgay. He even refused to have his photo taken on the summit! That’s a story that every NZ’er of my generation, and probably since, has imprinted in their marrow. He then went on to other feats of daring-do and spent a lifetime helping the people of Nepal. Humility – a cornerstone of good leadership.

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I also recall John Walker, the athlete who won a 1500m gold medal at the 1976 Montreal Olympics and broke the world mile and 1500m records on a number of occasions. He kept running for years, even when his age meant he could no longer win. He just ran for the pure love of it. Perseverance – a cornerstone of good leadership.

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Peter Blake was a world-renowned yachtie and someone who inspired the nation through his round the world maxi races and America’s Cup leadership.  He inspired a generation of sports persons through the removal of hierarchy and the ability to instill a single sense of focus. He was tragically killed defending his crew when pirates boarded his yacht off the coast of Brazil in 2001. Selflessness – a cornerstone of leadership.

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Richie McCaw, possibly the greatest All Black to play the game (which means the best player ever) continues to inspire those who follow in his footsteps. He played through pain from injuries and battled the emotional ‘scars’ of losing a World Cup final. His preparation was meticulous and his ability to inspire without compare. Leading by example – a cornerstone of good leadership.

So Jacinda is an inheritor of a fine leadership tradition. She has the strong leadership gene that is engrained in NZ’ers, especially Maori. There is a word in Maori called ‘mana’ that has no easy English translation. As a Kiwi when you see someone with ‘mana’ you just know it. Mana to me is ‘leadership in motion’ and Jacinda Ardern has it in abundance. Now it’s time for young NZ’ers to learn from her example as the baton shifts to the next generation. Given we live in this age of the 24 hour news cycle, assisted by the connectedness of the internet, the whole world now gets to see an emerging great leader in motion, inspiring well beyond the shores of the shaky isles!

Flying in the Face of Hayne

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By all accounts there were some very smart people involved in the Hayne Financial Services Royal Commission. Now that it’s over and the final report has been in the public domain for some time, I can take a more reflective look at the Commission’s work and some of the fallout. It strikes me Royal Commission’s are strange beasts. They are overwhelmingly led by lawyers and are conducted in a manner that has a very legalistic and adversarial framework. Most often they are looking into matters that reflect systemic organizational or cultural issues that are failures of management and leadership. It would follow, I would have thought, therefore that while a solid legal foundation might be needed by the commissioner/s, the most essential skill set is management and leadership (and here I’m speaking of leadership of a company). This is seldom the case and proved true of the Royal Commission chaired by Justice Hayne.

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So that had me thinking – what were the qualifications of the main belligerents? What made them uniquely qualified to sit in judgement of others? Let’s start at the top with Justice Kenneth Hayne. He’s an ex-University of Melbourne double major Arts and Law and did a Bachelor of Civil Law at Oxford. Topping that off he is a Rhodes Scholar. Then there was the stellar performance by his counsel assisting, the inimitable Rowena Orr QC. She’s endowed with a Bachelor of Economics and Hons Law Degree and a MPhil in Criminology.

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Then let’s take a quick peek at some of the ‘defendants’. First off Dr Ken Henry, then Chair of NAB, with an economics degree from UNSW and a PhD in economics from University of Canterbury. He was Treasury Secretary for 10 years most importantly steering Australia through the GFC. Another is David Gonski, Chair of ANZ, who began life as a lawyer at Freehills becoming the youngest ever partner at the age of 25. He is equipped with a Bachelor of Commerce and a Bachelor of Law (winning the University Medal no less) both from UNSW.

What’s striking for me in this is that both sides – the Commission and those being grilled – both appear to have a yawning gap in the very skill area in which they are defending their position, or proffering their criticism. How can this be? I’d never knowingly fly in an aircraft where the person at the controls was not a qualified and experienced pilot.  I’d be willing to guess it has to do with hubris. To become a lawyer you need a great academic result in school that will set you above the less gifted, academically speaking, in what still is (despite increased use of A-i) a highly sought after and hotly competitive area of study. Very few lawyers seem to go on to study management through an MBA or other lifelong learning. Believe me economics and commerce are not a straight proxy for management. They are, off the bat, ill-equipped to speak on matters of management and leadership without bootstrapping some academic qualifications in the field of management.

The fact that the banks and other financial institutions got into trouble, I would argue, is because of lack of management expertise in the first place. Creating highly perverse outcomes from incentive schemes aimed at playing on greed and individualistic reward, was always likely to end badly. The schizophrenia between the advertising of the banks and their actual  behavior must have had many of their non-bonus earning staff shaking their heads in disbelief. The skill of management is about creating growth AND compliance and getting everyone ACTUALLY delivering against agreed values, not just nodding towards them at successive Board meetings. Skills as a Director, which really should be re-phrased as ‘experience’ as a Director, are no proxy for management, nor is it any indication as to how a company might be run.

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I noted during the Royal Commission that the professional organization that represents managers and leaders, the peak body as it were, made the case for all senior execs in the finance sector to become Chartered Managers. This is the latest offering from the Institute of Managers and Leaders ANZ and to my mind should be a prerequisite for anyone looking to lead a company as part of the executive. How many take up the offer remains to be seen. You wouldn’t have your Chief Financial Officer without a professional accountancy qualification CA or CPA etc. so why would we expect companies to be run by someone without professional management qualifications?

So, what were the implications for us as consumers from this lack of managerial skills, experience and qualifications? Well, as already noted, consumers have been ‘dudded’ for some time by financial institutions. But at the Commission itself this lack of depth in management means the recommendations are unlikely to create a coherent plan for a re-structure that can create order out of the apparent paradox of serving the customer and the shareholder. Hayne hasn’t sorted this out. There was also a lost opportunity in addressing a long-existing flaw where the executive and Board lines get blurred. I have been of the belief for a long time that you can be on a Board, or in the executive, but you cannot simultaneously do both. If I was Hayne I would have banished the Managing Director position once and for all. How can the management be held to account if the chief officer of management, the CEO, also sits as one among equals on the Board of Directors in the role of Managing Director?

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Hayne did collect some ‘scalps’ though, so you might think that the consumer at least had some sense of justice. But let’s look at who went. Ken Henry, saviour of the country from the GFC had a mere 3 years as Chair of NAB and much less time as Chair than his counterpart, Gonski, at ANZ. Henry’s gone and Gonski remains in place. This is as a direct result of Hayne and critical comments in his report based on the tone of the ‘cross examination’ during the Commission’s hearings. Had Hayne had more management expertise to draw upon, I suspect he might have understood the emotional intelligence (EI) issues at play and realized that his assessment of Henry was coloured partly by his performance style.

You could be forgiven for thinking that Hayne might have even had the fleeting thought of ‘how dare he’ a mere economist speaking like that to a lawyer! We will never know. What we do know is that those who are familiar with Henry say that when involved in such circumstances he gets very defensive. This, it can be argued, was also a fault of Henry’s own lack of EI. Henry, though, was only responsible for his performance, while Hayne was sitting in judgement where the bar is set higher (excusing the pun). I hypothesize that a Chartered Manager sitting in Hayne’s Chair would have had a better handle on EI and things might have worked differently for Henry and not at the detriment to the findings either. Gonski, a wily performer with more time in the corporate world, made a small target and came through the Commission pretty much unscathed. Was NAB that much worse than the ANZ…I’m not so convinced?

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So I’m advocating for the corporate world to embrace the Institute of Managers and Leaders Chartered Management qualification. I’m suggesting that there be no dual roles as executive and Director for the same person on the same Board. I’m calling for a genuine focus on the customer and concern for the well-being of the workforce. All these things genuine managers do as part of their day jobs. I’m also calling for a more reasoned approach next time the Government decides to call a Royal Commission. By all means have a commissioner with some knowledge of the law so things can go well procedurally, but let’s have some people with genuine credentialed management qualifications and experience. After all if management is the core of the issue, managers need to sort the issues out. If both your pilots fall prey to food poisoning on your next flight, you are unlikely to hear a call out over the PA system asking for someone with experience in Torts!