Shifting Towards a Leadership Economy

04/13/2015 03:37 pm ET | Updated Jun 12, 2015

As we enter the General Election campaign in the United Kingdom, the parties argue over public spending and rebalancing the economy. Those on the left tend to assume that every extra pound of public spending adds to the social good; those on the right assume that every reduced tax or regulation on business adds to wealth creation.

Yet there is a huge dimension that they all miss. How well are our public and private sector organizations managed? An astonishing account published just over a year ago, The Blunders of our Governments, by Ivor Crewe and Anthony King, chronicled how poor project management and inadequate training in UK government programs has cost the UK taxpayer hundreds of billions of pounds in the past couple of decades.

In the private sector, we know that productivity and employee engagement in the UK are well below the highest for the industrialized world. Last year's Parliamentary report on Management 2020: Leadership to Unlock Long-Term Growth, summarized this evidence, and called for wholesale improvements in the calibre of senior and middle managers right across the economy.

Poor management is not an accident, nor is it inevitable. It's the by-product of a slowness to modernize the way management is taught. There is now a huge amount of accumulated knowledge not just on the importance of enlightened leadership and management -- but also how to go about it in practice. The research highlights how our conventional business model is hopelessly antiquated. It centres around concepts of specialist departments, a strict hierarchy, over-reliance on a quarterly statement of accounting profit, and people referred to as 'human resources'.

This is totally unsuited for a world of environmental pressures, technological innovation, globalization of trade and for handling the talents and aspirations of the millennial generation. As one of the leading management thinkers Gary Hamel noted a few years ago, the dominant principles of 'modern' management were established by a tiny coterie of thinkers born before the end of the US civil war in 1865. He concluded: 'Equipping organizations to tackle the future [requires] a management revolution no less momentous than the one that spawned modern industry.' [1]

A reformed approach to corporate management extends far beyond just improved productivity and employee engagement. It lies at the heart of ensuring a sustainable approach to economic and social development.

My own research points to the conclusion that we need not just improved quality of management but a transformed culture and attitude: away from the utilitarian 'just get it done' approach, to one that empowers people to serve the customer.

This is a pragmatic approach, not a utopian one. We know how it can be done. Over the past two decades, a wealth of research-based knowledge has been built up that shows how an enlightened approach to leadership and management has a transformative effect on customer service, and helps businesses become more innovative, helping to create wealth in the private sector, or produce better services at the same budget in the public sector.

My research indicates that reform should observe the following key principles -- overseeing a shift:
• From a controlling mindset to an empowering one,
• From setting rules to establishing principles,
• From issuing instructions to creating teams,
• From overseeing transactions to building alliances,
• From a focus on short-term profits to serving all stakeholders.

This radical approach implies a fundamental change in mindset and leadership behaviour, not just new policies and objectives. The exciting dimension is that this change is already happening. It is not always obvious, because the more successful enterprising firms do not attract the same media attention as the scandals and other spectacular failures.

The intellectual basis of this reformed approach to management is now well established. Much of my research in recent years, demonstrated in the book The Management Shift [2] has been focused on making it practically applicable.

Sadly, the momentous power of transformed leadership is an issue neglected by the country's leaders. The evidence base is so strong, however, that it must surely be only a matter of time before the enlightened few become the mainstream and we have better-run corporations and government departments, more innovation and wealth creation - and less poverty and debt.


1. Gary Hamel, Moon Shots for Management, Harvard Business Review, February 2009
2. Vlatka Hlupic, The Management Shift: How to Harness the Power of People and Transform Your Organization for Sustainable Success, Palgrave Macmillan: Basingstoke, 2014.