AIM, Australian Institute of Management, British East India Company, business, Executive bonus, GFC, KPI, Larry Cata Backer, Management, Pauline Hanson, Penn State, Trump, Trump University
The word ‘business’ seems ubiquitous. We have ‘show’ business the ‘music’ business, agri-business, actual business and so on. But what do we really mean by business? I recall having a bit of a stoush with the head of Queensland’s Australian Institute of Management (AIM) when I said it needed to concentrate less on business and focus more on management. It took them a few years to understand the difference. Management is the tools you use to make your business happen. Often times though, and this is especially true of entrepreneurs and so called ‘self-made-men’, there is little observable good management practice in the way they run their companies. They are suspicious of executives who do not have their own capital (‘skin’) in the game. They often run the business through force of personality and layer family around them primarily out if issues of trust. Sound familiar?
The public seem to laud such individuals, especially when they make pronouncements in areas in which they hold no greater gravitas than the ordinary person in the street. The business person’s foray into politics rankles with me because they have no greater knowledge most times than anyone else but seem to think they know better. The fact is their solutions are often proposed for the benefit of their interests and not the general good. That’s why lobbyists have grown exponentially. Everyone seems to have a vested interest they want pushed and secured. The implication of the business person waffling about politics is that, given a chance, they could do much better because ‘hey’ politicians have never run a business. I’ve even heard it from people who have said the good thing about Pauline Hanson is the fact that she was a successful business woman. I think that’s a bit of a long bow to say that running a fish and chip shop gives someone an insight into running a country. I would say running a fish and chip shop equips you to …well … run a fish and chip shop.
Politicians, generally in opposition but sometimes in power, especially when trying to ‘sell’ some cuts in spending, will dumb down government referencing the household budget and the need to make sure that they can balance the books. This is apparently meant to appeal to some demographic or other who will think that they are, at last, being understood by the political elite. To my mind running a country is nothing like running a business. I’ve run businesses for some 25 years and I’ve never run a country. I’m not sure if I suddenly became PM of Australia I could hit the ground running drawing on my many years of experience. I guess two things I have learnt from the world of management though, is that you need to know where you are not strong and know who to ask to find out what you need to know. Actually that is great advice for Trump. Not sure he will follow it. Experts scaffold politicians; it’s a safety net that ensures that hopefully the best policy at the time comes to the fore. Trump’s dismissal of the expertise and conclusions of his intelligence advisers because he knows how difficult it is to trace a hacker in the business world, doesn’t bode well for him seeking advice to make up for his lack of expertise in the world of politics or economics for that matter. The cadre of business people he is surrounding himself with are of equal concern; many of them in that elite coterie of ‘self-made-men’.
So are the world of politics and business actually that different? Quite often the lines are blurred and increasingly big corporations are acting as quasi political states. In fact historically the lines were really blurred. The British East India Company for example had its own army which was the reason it came to rule large parts of India. Larry Cata Backer of Penn State Law wrote in 2011 that transnational corporations are at the centre of extraordinary and complex governance systems that are developing outside the state and international public organisations and beyond the conventionally legitimising framework of the forms of domestic or international law. Such frameworks one can safely assume are to make it easier for the company to do business and provide benefit to their shareholders. So business is blurring the lines from corporate to geo-political governance.
But I would argue there are elements to running a business that cannot match the complexity of running a State. For one I cannot recall any fish and chip shop (well in Australia at least) that has its own defence force. Nor one where they provide the means by which the road which carry the cars of their customers are funded directly by the shop owner. I don’t recall them creating a network of foreign embassies or trade offices in a range of countries (although that might be good to get cheap Basa off the Vietnamese). The fact is you don’t need to think too long, or too hard to come up with a huge list of things business doesn’t do. Trump University does not mean Trump educates America. Hanson for one did not have a school attached to her Ipswich fish and chip shop. A first aid room at my company does equate to running a national health system.
Business nowadays increasingly focuses on short-term gain in order to maximise the remuneration of the senior executives. Those companies that are publicly listed will go ‘hell for leather’ to try and maximise returns for shareholders. On some occasions they will even borrow to pay dividends. Actually that does sound like government! Share market performance is often a KPI that is linked to bonuses, plus where bonuses are paid in shares it’s good to have a buoyant share price right?
In government we should be looking at the much longer term to provide a boost in prosperity for all, not just one segment of the population. Governments require significant data capture and modelling and analysis especially in the realm of economics. Governments are held to account in a way that oftentimes companies aren’t. You hear of politicians being unceremoniously dumped from office much more frequently than you hear of a businessman going to jail. In fact I think the sum total of business people who did ‘time’ for their role in the GFC was two. This needs fact checking though as it could be half that!
The stakes are high in government. You have the lives of millions in your hands. You can’t just do what you can in business when it ‘goes south’ by winding the company up (and the workers with it), having secured your own fortune along the way with no collateral damage to yourself through a web of trusts and arms-length company structures (a number based in the Cayman Islands). I’d much rather see politicians using the principles of management to run the State and not use the often blunt tools of business to carve out a name for themselves. We wait with baited breath to see what Trump does with running his country rather than his company. We all hope he does well because his success is very much our business.