Stress - a challenge to 'management' ... and the 'economy'

Whilst some arbitrarily debate whether recovery is already on its way (e.g. based on outdated & flawed GDP measures) ... and others debate what more Quantatitive Easing actually means ... real insights about our 'economy', and some of the additional challenges/chasms ahead, slip out ... almost unnoticed !

With Government debt continuing to grow, with more businesses collapsing and with tax revenues falling rapidly, it doesn't take a rocket scientist to work out that the day of reckoning is not far away. The current Government have simply chosen to defer it - i.e. until after the general election next year - so they can avoid any blame and pass the problem onto someone else (Trust, Honor, Responsibility, Respect - I think not!)

After the general election, the delayed/stored up reality check will hit (like a tsunami), with unprecedented tax hikes and the slashing of public sector jobs (in a desperate attempt to balance the books). Unemployment will continue to rise and the systematic spiral of failure will continue to grow. Unions leaders are already predicting this and are preparing for battle - blaming politicians policies (and bankers greed) for the mess the UK economy is in.

Enough to cause a 'double-dip' recession? The unions certainly think so and so do I. What's more, what they've been referring to so far is arguably just the tip of the iceberg ... so let me explain ... and refer to more insightful news stories published today too ...

Outdated leadership and management practices (19th/20th century), demonstrated by most UK leaders/managers today (including politicians, civil servants etc), primarily focus upon extrinsic motivation, self interest & personal gain ... with managers in offices (remote from the work) making all the decisions, telling people what to do and driving them to hit arbitrary targets in order to get a bonus ... rather than going to the front line, listening to customers/staff and supporting front-line staff in their quest to continually improve how value can be provided to customers (nb this is what 21st century leadership and management practice is all about - take a look at my book for instance) ...

The former systematically generates frustration and stress, for customers and front line staff alike. It also drives people to manipulate 'the system' in order to meet their targets & goals; deflecting people away from the real purpose of the enterprise (i.e. to create value for customers) which destroys teamwork, morale, and the future of the enterprise too. Such practices have also been shown to systematically generate between 40-90% waste in terms of both time and resources as well - i.e. traditional enterprises spend most of their time (and resources) wasting time, effort and money, for their customers ... whilst stressing them out in the process too ...

... and a traditional manager's response to this ... "it's just the way work is" ... and "let's send everyone on a 'stress management' course - to help them to process stress" (and to also reduce the risk of being sued!) ...

The problem with the traditional management statements above is that they are both wrong - and flawed. 21st century management practices do not involve helping people to 'process stress' - they focus on systematically 'eliminating stress'! ... so there is no need for stress management courses at all ... (i.e. such courses are a 'cost of failure', and they do not reduce the risk of leaders/managers being sued either).

Enterprises applying 21st century leadership and management practices do not just transform the performance of the enterprise, they transform the lives of people - forever, and for the better. Most enterprises applying such practices quickly transform their capability (e.g. improvements of between 40-1000%) and change out of all recognition. Staff moral is positively transformed and stress is systematically reduced. People are naturally motivated to innovate, to add value and to help others. They are also more than capable of finding new ways to improve current products/services and to find new products/services that would allow even more value to be created too (given the opportunity). All they need is clear direction, as well as trustworthy leaders & managers who support them on the front line, who listen, learn, and help them to systematically improve how value is provided. Again not rocket science - just rarely practiced in traditional enterprises.

Stress, and the impact of stress, on people is heavily responsible for the 'eighth waste' in 21st century management practice ('untapped talent') - as it destroys people's desire/ability to contribute, to be creative or to think rationally (e.g. take a look at Ch. 8 of my book). It also impacts on people's overall well-being, as well as the well-being of those around them ... which impacts on communities/nations as a whole too (NB hence it's inclusion in the 'BUTS' test).

The National Institute for Health and Clinical Excellence (NICE) today said the cost of work related mental illness was £28bn - a quarter of the UK's total sick bill, and it also made clear that the stress created as a result of bad management/managers was the single biggest cause of problem. The 'economic loss' of stress goes way beyond the £28bn referred to here too ... this is literally just the tip of the iceberg.

Those leaders who believe stress management courses will 'protect them' from 'being sued' are I'm afraid also sadly wrong ... as 'ignorance' is 'not bliss' (or a defence - nb landmark cases are already occurring - but are mostly settled out of court to avoid publicity). The writing is on the wall now that 21st century leaders & managers have demonstrated the capability/outcomes created from applying 21st century practices ... which highlight the way forward, as well as the fundamental flaws in traditional practices ...

21st century leadership/management practice and examples will no doubt be used in evidence against those continuing to apply outdated traditional 19th/20th century practices ... and as millions of law suits start to get filed, yet more traditional private enterprises will go bankrupt ... and yet more taxpayers money will be diverted away from providing front line services (to pay for millions of out-of-court settlements) ... joining all the taxpayers money already being diverted to service Government debt, as well as the colossal (and unfunded) civil service pension liability ...

Double dip, absolutely ... a 'triple dip', and a 'quadruple dip' to follow, very likely too I'm afraid ... unless current leaders/managers change course dramatically, and quickly ...

The UK could successfully turn itself around (nb Singapore did it), but it will require very different political leaders to the ones we have now ... and things are going to have to get much worse before the level of Ignoromics reduces sufficiently for Poweromics to be effectively challenged ...

Referred to in Stephanie Flanders blog "Is Britain growing yet"? (post 64).

Economists - new clothes or no clothes?

Stephanie Flanders today posted on a blog entitled the 'economist's new clothes'. Whilst starting a little debate, it choose to refer to the 'latest spin', rather than address the revolution in 'economics' we are likely to see. Hence adding the post (75) below:

IMHO traditional 'economics' is 'too narrow' in scope and also 'out-of-date'. It has also 'failed' hard-working people and is now effectively 'dead'.

But attempts to improve it, change it or widen it, will always be resisted. Dr W Edwards Deming, a creative outsider and a real 'leader', uncovered the "System of Profound Knowledge" and referred to the need for a "New Economics" (over 20 years ago) ... but, when terms are so out of date new words/definitions are needed, and for that reason, and for those interested, I am continuing his work ... using the definitions below:

* Leanomics = People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect.

* Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.

* Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed.

It is worth noting virtually everything fundamentally centres around 'people' and the 'values' they uphold. It is also worth noting that Ignoromics is what allows Poweromics to flourish, and in my view this summarises the current (and widened) definition of 'economics' that prevails today.

Why not take a look at what 'leaders' everywhere are doing (e.g. your boss, company, service provider, government, politicians, media ...) and look at how many people understand this and/or prepared to do something about it ... I think you'll find its small ... albeit steadily growing (helped by the internet, and recent activities of banks/MP's etc).

IMHO the battle of the future is really one of values, and given the above definitions, can be simply summarised as ...

Leanomics v Poweromics & Ignoromics

For those interested I hope this is helpful ... and I would certainly recommend the work of Dr. W. Edwards Deming ( as well as http://poweromics.blogspot.com ) as a good starting point for looking into this further ... people are still amazed (and learning) how profound his insight actually was ... e.g. he told us far more about the future of economics than Richard Thaler in his lectures and book (I went to one of his lectures in London around the time of release of Nudge). I think you'll find people are still flocking to the latest incremental ideas, not more revolutionary ideas, yet only the economies moving rapidly to the latter will survive and prosper e.g. Singapore's turn-around - http://poweromics.blogspot.com/2009/10/asking-questions-doing-things.html

Whether people like it or not, the clock is ticking away and time is rapidly running out for most economies.

... I also added the following post referring to a previous bloggers (post 74) comments ...

"... Sheer self-interest or FUJIA !! So long the steerers can gain relative to the rest, they will carry on being motivated !! It doesn't matter what the price of beans is, if someone has more beans than someone else, he is relatively wealthier !! ... It's all relative, as Einstein was alleged to have said !! :-) ..."

I couldn't agree more - one of the main drivers of "poor moral values, self-interest and greed" (see post 75) is ENVY ... which drives/motivates people to want more than someone else, particularly those they compare themselves with, hence the term 'keeping up with the Jones's' - it's not absolute wealth that bothers most people, but relative wealth to those they continually compare themselves with, which drives poor moral values, self-interest and greed.

IMHO only a return of 'fundamental values' (e.g. trust, honor, responsibility, respect) will turn around 'economies' in a sustainable way now, and time is on no-one's side.

Asking questions ... Doing things differently

In a recent Stephanomics blog, entitled 'Why them and not us?', a fellow blogger referred to Singapore, and Lee Kuan Yew, when he was Prime Minister of Singapore, describing 'their education institutions as producing highly "talented" but unquestioning "sheep", even amongst their PhDs !!

Since he, himself, and his wife are both empire Scholarship students to Cambridge, they were trained to question rather than meekly accept "perceived" wisdom. It was his questioning of the then status quo that led him to take Singapore from one of the most corrupt, totally resourceless (except for its people) little island nation into one of the "Tiger" economies of Asia and a prominent player on the world stage.

On the way, he challenged to twin "holiest of beliefs" that "bureaucracy had to be corrupt and bloated" in order to work !! Singapore now has a lean and mean bureaucracy that is uncorrupted (or else :-)) and that is also one of the most efficient in the world !!

The greatest tool of any "thinking" person is to test the truth of anything and not accept on blind faith !! All else is merely liturgy and regurgitation of teachings !! ...'

IMHO this comment provided a unique ray of sunshine (amongst the dark & heavy clouds of confusion), so I decided to respond to it by adding ... 'a great post, highlighting the success created by those nations who question and challenge the status quo, as well as the actions of bloated, centralised and corrupt 'command and control' government.

Your post points out how Lean government is the future and it also shows how successful nations are already going down this path. I spoke to the Singapore Minister for Information a few years ago about this, and he re-enforced their strategy to embrace modern technology in order to connect with their people and to help them go down this path.

The only thing I would challenge in your article is your statement 'lean and mean' ... as whilst they are arguably starting to apply 'lean', 'lean' is not 'mean' (except to those leaders/managers who want to stay well away from the front line and prefer to tell people what to do, instead of going to the front line, asking questions and helping them to improve the way things work). 'Lean and mean' may be a catchy catch phrase used by the media, but a true 'lean philsophy' is actually quite the reverse (hence the reason for the first chapter of my book 'what is lean?') ... as it's all about people, value and values, and bringing about a continuous improvement process that involves everyone, where leaders and managers support people and help people in the process of continuously improving how value is provided (cf not trusting them and telling them what to do), founded on fundamental values such as trust, honor, responsibility and respect.

Singapore is starting to do this, and at the prestigious ITU Telecom World conference in Hong Kong back in 2006, the head of strategy of the ITU agreed it was a great idea but pointed out that he couldn't see it happening in the UK. With the mindset, corruption, and misuse of power shown by the UK government he was definitely right, and until this changes in the UK we are heading for the scrap heap*, and will look in awe and wonder at the success other nations will achieve. Traditional economics is dead and traditional politics is about to die (i.e. Poweromics). In successful nations of the future a new form of politics (Lean government) and economics (Leanomics) is already starting to emerge, based on a robust set of values, including trust, honor, responsibility and respect (http://poweromics.blogspot.com/2009/06/leanomics-v-poweromics-ignoromics_01.html) ... just as Dr W. Edwards Deming predicted over 20 years ago.

Whilst some nations prefer to ignore it, others are starting to talk about it, and some are already doing it ... and guess which one of these applies to the UK?

David Clift

Author of 'Lean World' and a Future 500 Leader

* none of the current parties/leaders are likely to do this either - take a look at http://renegadeeconomist.com/blog/big-questions-hot-handle.html and my subsequent post to see why.'