Riots could have broken out in connection with banking collapses

In October 2008 Great Britain was only a few hours away from a banking collapse, which would have triggered massive riots involving military action.

The two leading banks, Royal Bank of Scotland and HBOS, were only a few hours away from a total collapse, which could have resulted in extensive civil unrest in major British urban areas.

David Livingstone, senior research fellow at Royal Institute for International Affairs in London: “The banking collapses would have forced Government to mobilise massive police and military forces to restore general order and to keep the most vital community functions in operation”.

Tom Kichmaister, research fellow at London School of Economics: “This situation would have resulted in absolute panic, a run on the banks and the population left with no money to buy bread. The costs and consequences for the economy would have been catastrophic”.

A similar scenario with possible involvement of martial law as a consequence of the financial crisis was launched in connection with comments from Rep. (D) Paul Kanjorski (USA) in February 2009.

(check: http://www.uddannelse.urbanblog.dk February 2009).

It may intensively be questioned:

Can the basic structures for the existence of populations and nations be maintained by the forces of free financial markets, which to a great extend are left in the hands of individuals making dispositions influenced by incentive- and bonus packages?

The financial crisis may involve consequences way beyond the traditional geo-economical powers. Nations like China, The Arab Emirates and Russia have demonstrated their increased influence on occidental companies and institutions. Premier Gordon Brown’s expectations concerning Saudi Arabian IMF-support certainly gave thought to the influence from energy and cash flow on the geo-political agenda.

Are we facing the end of the American-European dominance with democracy at stake?

Answers and solutions will be complex, and should involve cooperative actions taken by the international University and Business School community, as stipulated in the coming EQUAL Guidelines on Sustainability:

“There is currently considerable global financial instability, widespread economic decline and unprecedented levels of world debt an poverty. These represent huge global challenges, yet at the same time, the opportunity to re-consider our current financial, economic and social models in relation to business and management practice, education and development. The United Nations’ Globally Responsible Leadership Initiative (GRLI) and the Principles for Responsible Management Education (PRME) should act as key reference points for business schools in relation to these guidelines”.

Povl Tiedemann

October 2009

Response to the Crisis by Vocational Education and Training

Education systems, and Vocational Education and Training (VET) systems in particular, are often in the centre of policy debates at times of economic crises and rising unemployment, as it is a widely held assumption that a well-functioning training system can protect against unemployment, especially among the young.

Periods of economic crisis can, therefore, be an opportunity for countries to examine how well equipped their VET systems are to deal with change and to innovate. This was addressed in the project on Systemic Innovation in VET, recently completed by the OECD Centre for Educational Research and Innovation (CERI), drawing on empirical findings from 14 case studies in innovation in VET in six OECD countries: Australia, Denmark, Germany, Hungary, Mexico and Switzerland.

Two particular issues would need to be addressed:

-While in the current economic climate there might be a general pressure to cut or rein in expenditures, innovation should not be considered an unnecessary expenditure, but rather the essential ingredient that would differentiate resistant VET systems from those hardest hit by the crisis and should thus be protected to the extent possible.

-The ability to use the elements of the innovative process (planning, monitoring, evaluation) as a cost-effective mechanism to guide product and process development could, in the long run, save money.

Check: OECD imhe INFO June 2009 for the full article.

More information about this project can be found at:

http://www.oecd.org/edu/systemicinnovation

Povl Tiedemann

September 2009

Business Schools and history lessons

Dan Muzyka, Dean of the Sauder school in Canada, on the challenges facing management education, the role of business schools and why teaching business history to MBAs might just have averted the economic crisis. Extracts from interview by George Bickerstaffe:

Do you think that the way business schools have taught business and management has any bearing on the current global economic crisis?

One area where I’m not sure that business schools have done a good enough job is in teaching business history. In other academic areas you have to go back and study the great works. You had to understand how the field evolved. It’s in the MBA textbooks in bits and bobs and in a PhD degree you really do have to go back and study these things. But in the average MBA programme we teach students the skills but we give them little if any sense of history.

You know, people say “the current situation is unprecedented”. Well, it’s unprecedented if you just look at the last 25 years. Do you remember 1975? (The beginning of a period of recession in response to rising oil prices.) That was pretty dramatic.

Is the current situation unprecedented compared to the Great Depression – running from the Wall Street crash of 1929 pretty much up to the second world war? Should all this be in our collective memory? I think the answer is probably yes.

So I think it’s important that we do bring in some history so that people realise what has happened before, what was driving it and think about how we can learn from it to today.

Also, we teach risk management as a technical subject but it’s clinical, it’s not integrative. So you might study systemic risk if you’re an economics major but I think we have to go back and look at whether we are teaching risk responsibly in a business context.

So business schools have some responsibility?

I think we are all looking at this is in one way or another. Again, I think it is about teaching risk systematically. Not teaching that properly is one of the big things we have probably done wrong. So I do think we have some responsibility. We have educated these people. We taught them about derivatives and algorithms and the rest of it.

The other side of this is that we should not only teach people these tools but we also need to educate them about their use, particularly with regard to the consequences and larger-scale risks. We are doing this in many areas such as sustainability and the impact of business on the environment. 

That’s been evolving over probably the last decade. It’s now in the curriculum and it’s getting stronger. So we are seeing some sort of impact. But I’m not sure we have done as well on the broader topic of risk.

Check for the full article: http://www.efmd.org/globalfocus

For Danish readers – please check for further readings:

Kronik af Rolf Jensen “ En fremtidsforsker ser tilbage”

Berlingske Nyhedsmagasin nr. 22 – 2009 side 22-23

 

Povl Tiedemann

August 2009

EU university quality initiative – The CHERPA-Network wins European tender to develop multi-dimensional global ranking of universities

The CHERPA*-network has won an open call for tender by the European Commission to develop and test an alternative design for a global ranking of universities. During the next two years, the network will conceptualize and test the feasibility of a multi-dimensional global ranking based on the CHE ranking methodology and on the classification of higher education institutions developed by CHEPS.

In the project, a design for a global ranking of higher education institutions will be developed which avoids the flaws and deficits of existing international rankings and which should provide a valid, fair comparison of institutions. The design will follow the “Berlin Principles on the ranking of higher education institutions” which stress the need to take into account “the linguistic, cultural, economic and historical contexts of the educational systems being ranked”.

The basic approach underlying the project is to compare only institutions which are similar and comparable in terms of their missions and structures. Therefore the project is closely linked to the idea of a European classification (“mapping”) of higher education institutions developed by CHEPS. The feasibility study will include focused rankings on particular aspects of higher education at the institutional level (e.g., internationalization and regional engagement) on the one hand, and two field-based rankings for business and engineering programmes on the other hand.

The field-based rankings will each focus on a particular type of institution and will develop and test a set of indicators appropriate to these institutions. The rankings will be multi-dimensional and will – like the CHE ranking – use a grouping approach rather than simplistic league tables. In contrast to existing global rankings, the design will compare not only the research performance of institutions but will include teaching & learning as well as other aspects of university performance.

The different rankings will be targeted at different stakeholders: They will support decision-making in universities and especially better informed study decisions by students. Rankings that create transparency for prospective students should promote access to higher education.

*:

CHERPA – the Consortium for Higher Education and Research Performance Assessment is a European network of leading institutions in this field, including the CHE – Centre for Higher Education Development, Gütersloh, Germany, and the CHEPS – Centre for Higher Education Policy Studies at the University of Twente, Netherlands.

Check: http://www.che-concept.de 2 June 2009

Povl Tiedemann

July 2009

Further project partners:

Centre for Science and Technology Studies (CWTS) at Leiden University, Netherlands. The research division INCENTIM at the Catholic University of Leuven, Belgium. Observatoire des Sciences et des Techniques (OST), Paris.

The European Federation of National Engineering Associations (FEANI) and the European Foundation for Management Development (EFMD) are also associated with the project.

EFMD Survey on Management Education Participation

EFMD’s Global Deans Survey shows a positive outlook for MBA and Masters programmes, and a slightly improving picture for executive education

For the second time in 2009, EFMD has conducted a survey with its global network of business school deans and directors general to gauge the impact of the crisis on their institutions. A short online survey consisting of 10 questions probing for current as well as expected enrolments in MBA, Masters and executive education programmes was carried out firstly in January and then again in May 2009. EFMD will conduct a further survey in January 2010.

Key Findings

Real-time monitoring of the increase and decrease percentages between January 2009 and June, shows that:

• MBA programmes show a very positive trend, the majority of respondents continue to report an increase in enrolments.
• Other Masters programmes carry on benefitting, with 65% of respondents reporting a continued increase in enrolments.
• For company specific executive education today, the emerging picture is diverse with about one third of respondents reporting no change in enrolments, one third reporting a decrease and one third indicating an increase in enrolments.
• A smaller number – about half –  of the deans report a negative trend in company specific executive education participation.
• A decrease of open executive education enrolments is declared by about the same number of institutions.

 As for the next academic year, survey respondents remain confident and expect a continued and still growing interest in MBA and Masters programmes:

• 61% expect an increase in enrolments for MBA programmes.
• 66% foresee an increase in participation in their Masters programmes.

 Forecasts for executive education translate into:

• 25% of the respondents are expecting no change in the number of participants.
• 49% are expecting enrolments for company specific interventions to increase.
• 40% are reporting an expected increase in open enrolment programmes.

Check:

EFMD Crisis Barometer

Deans and Directors General Survey – 2^nd edition – June 2009

http://www.efmd.org for further details

Povl Tiedemann

July 2009

The Globally Responsible Leadership Initiative -GRLI

The GRLI community, today consisting of approx. 60 companies and business schools / learning institutions from five continents, has issued a call for action as per extracts from statements in Global Focus The EFMD Business Magazine:

The current financial crisis has shown that the ideal of a self-regulated system has led us to failure on a global level, with long tem implications for economic development and human well-being. At the heart of this failure is a lack of both responsibility and leadership.

We need more responsible leadership to implement a more comprehensive model for sustainable development. This requires a profound change in individual mindsets and behaviours as well as in overall corporate value. What is necessary is that both individuals and corporations assume their responsibility towards the common good.

This cultural change and evolution of mindsets should be based on re-visiting three main areas:

A) The raison d´être of the firm – The primary purpose of the firm is to contribute to overall well-being through economic progress. Shareholder value is but one of several measures of performance. Entrepreneurial actions are defined in terms of initiative, dynamism and innovation. We have to come back to the core of the entrepreneurial action, which is creativity in a real world of goods and services, as opposed to a logic of purely financial speculation.

B) Leadership and ethical fitness – Responsible leadership implies the grounding of actions in a system of values that recognises societal interdependence and long-term sustainable development. If the firm wishes to lend meaning to actions, if it wants to give a purpose to economic progress by aligning it to societal progress, ethics are essential to enlighten tough choices and guide behaviour. The main ethical question for our time is to choose what kind of world we want to build together with the immense resources we have at our disposal.

C) Responsible corporate statesmanship – Corporate statesmanship is about the organisation as an active contributor to societal well-being and evolution. The responsible firm accepts an open debate whenever its actions can have major societal consequences. New types of dialogue, which include representatives of civil society and international institutions, need to be added to the discussion with societal partners and governments.

Such an approach must obviously go beyond the national framework. In devising this necessary shift in culture, it is important to keep in mind that we are referring to an on-going inquiry process through dialogue between various stakeholder-actors: the political world – economic actors – social enablers.

Importantly, it also implies a necessary re-thinking of the way business, political and social leaders are educated and trained.

Check www.efmd.org/globalfocus for the full article text and www.grli.org for further documentation.

Povl Tiedemann

May 2009

I M D – World Competitiveness Yearbook 2009 “Stress Test” for tough times…

As member of the input panel for the IMD World Competitiveness Yearbook, Danish Business Economists are granted access to the very first results from the 2009 survey, which for the first time includes a Stress Test of the 57 most developed economies focusing on their ability to recover from the actual economic situation.

Stress Test on Competitiveness 2009:

Denmark finishes in first place in the rankings of the Stress Test, an analysis of which countries are better equipped to fare through the crisis and improve their competitiveness in the near future. In other words, the test is future oriented – it focuses on readiness and resilience in a period of world recession. The succeeding 4 places are taken by Singapore 2^nd, Qatar 3^rd, Norway 4^th, Hong Kong 5^th.

Although the economic forecasts are still weak this year, Denmark finishes first in part because of the strong resilience of business and government, and the long-established stability of its society – combined with low public debt and unemployment rate.

In short, the Stress Test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from the recovery.

It underlines that dimensions such as flexibility on the labour market, trustworthiness of managers and political stability are extremely important to secure readiness for change, which is of key importance for a successful recovery from the actual economic situation.

However, only the good performance of the very large exporters such as the US, Germany, China or Japan will send a credible message to the world that the worst is over – a change that everybody will be able to believe in.

Despite finishing first in the overall World Competitiveness Yearbook rankings, the United States finishes 28^th in the Stress Test, underlining the concern of the market with the depth of the crisis and the time that it will take to solve it.

The UK 34^th, is in a disquieting position, just as France 44^th, Italy 47^th and Spain 50^th stressing how much the recovery in these countries may be hampered by structural rigidities. Finally Russia in 51^st position may not have had enough economic growth to consolidate for coping with a crisis of this magnitude.

For further briefing on above WCY-extracts and additional information, please check:

www.imd.ch/wcy

www.worldcompetitiveness.com/online

Povl Tiedemann

May 2009

NB: In short – The World Competitiveness Scoreboard 2009 results comprises the traditional overall ranking of the 57 economies covered by the World Competitiveness Yearbook. It shows only few movements (compared with 2008) with the US still in first place followed by Hong Kong (3), Singapore (2), Switzerland (4) and Denmark (6) – the numbers in brackets indicate the 2008-placements. All of the Nordic economies have increased or maintained their rankings compared to the US: Denmark improves one rank to 5^th, Sweden moves up 3 places to 6^th, and Finland,  a huge bound from 15^th to 9^th place. Norway maintains its 11^th position.

 

Note:

These are the future-oriented criteria included in the Stress Test:

 

1. Economy Forecasts/Perspectives

Forecast: Real GDP Growth

Forecast: Inflation

Forecast: Unemployment

Forecast: Current account balance

Resilience of the economy

 

2. Government

Management of public finances

Legal and regulatory framework

Adaptability of government policy

Bureaucracy

Government decisions

 

3. Business

Ethical practices

Credibility of managers

Corporate boards

Corporate values

Entrepreneurship

 

4. Society

Risk of political instability

Social cohesion

Flexibility and adaptability

Attitudes toward globalization

Need for economic and social reforms

Chinese Ethics in the West

The emergence of China is challenging Westeners to rethink what we tend to take for granted.

Ethics, or mores arise from, and are part of, social conventions. For example, having two wives at the same time is ethical in Utah, but not in Berlin. Re-marriage is ethical in countries that accept divorce, but not where divorce is seen as wrong – whether it is legal or not.

China has a very strong and long-standing culture. While the Chinese seem to be buying into Western business standards as part of the price of joining the club, do not be fooled by that.

The subtleties of China will allow traditional and Western business ethics to co-exist in the short term. But in the long term, we can expect new standards, which are more accepted across the world.

This is hardly surprising. Ethical standards have always evolved, just as the societies they infuse have evolved. Society and business will change, and ethics with them.

Source:

Extracts from comments in European Business Forum – CEMS,

by Tim Ambler, Senior Fellow at London Business School.

Povl Tiedemann

March 2009

Lifelong Learning Certification – EQUAL Guidelines project initiated

Continued executive education has gained momentum – from short courses offered by various local consultancy agencies – to certificate, diploma and masters degrees launched by high end internationally oriented institutions, business schools and universities – developed, offered and maintained on research basis.

However, compared with the established degree systems, these initiatives are not fully included in the credit and certification system as stipulated in the Bologna initiative.

EFMD and EQUAL has initiated a project to establish a set of Guidelines for these measures as per Extracts from the project process document formulated by the EQUAL Board working group Povl Tiedemann, Danish Business Economists and Stephen Watson, AACSB:

Background to the project
There is now a concern that EQUAL (European Quality Link – under the Auspices of EFMD, Brussels) should take a position on the emerging movement for the establishment of qualifications for lifelong learning for management, where the education is achieved through numerous learning experiences of different duration and academic levels.

Main aim of the project
The purpose of this project is to construct a draft of guidelines for EQUAL in this area, which is informed by the many national and international initiatives for the certification of lifelong learning, and also by an understanding of the form of certification that is likely to be acceptable in the marketplace. The EQUAL Board needs a set of guidelines on this topic that is influential because it meets needs and is consistent with the thinking of policy makers.

Project outputs
The outputs of the project will be (A) a draft EQUAL set of guidelines together with (B) a report justifying those guidelines, and describing the research undertaken to reach them. We hope that the practical production of the reports etc., where necessary, may be carried out by EFMD, Brussels.

Benefits of the project
If EQUAL is to be an influential body, it needs to produce guidelines which will be seen to be appropriate and endorsed by the majority of actors in the management education business. Moreover the certification of lifelong learning in management has not yet been achieved anywhere. EQUAL has the opportunity to establish and support good practice in this new area, thus fulfilling its mission to support the continuing improvement of quality in business and management education, from legislative to operational levels.

The project is on stream and in the hands of Professor Andrew Lock, former Dean at Leeds University with expected completion in October 2009.

Check: www.efmd.org for further EQUAL guidelines and position documents serving as basis for the EQUIS accreditation and quality development system.

Povl Tiedemann
March 2009

Continued Education versus Financial Crisis

GMAT prediction of education initiatives:

According to Dave Wilson, President and CEO of GMAC, 2008 is expected to be a record year for test-takers with an all time high 260,000 test takers world wide.

 

From George Bickerstaffe’s interview with Dave Wilson: “The numbers taking the GMAT tend to be counter-cyclical. They go up when the economy goes down. And we expect 2008 to be a record year for test-takers. And we are forecasting a strong period for applications to MBA and specialist masters programmes through 2009.

 

Basically I think people see spending a year or two in a graduate management programme as a good way to ride out a recession. One of the big costs of these programmes is the opportunity cost of foregone salary and promotion opportunities. If these aren’t so strong then business school is a good place to be. And of course the recession may be over when you graduate.”

 

Check: Global Focus 01 2009 on www.efmd.org for the full article.

 

Postgraduate initiatives in general:

According to Anthea Lipsett, The Guardian: “A dramatic rise in applications for postgraduate degree courses as the recession bites is being reported by universities. Postgraduate course applications traditionally rise in an economic downturn as people look to increase their qualifications in a more competitive employment market, or put off applying for jobs and study as they sit out the recession.”

 

At Manchester University, which has seen a dramatic increase in applications from overseas students to do postgraduate courses, Dr. Tim Westlake, director of student recruitment said: ”Our applications have risen dramatically on this time last year – up 14% from home and EU students, and 34% from international students. Postgraduate taught course applications have soared – with one-year master’s programmes particular popular.”

 

Check: www.deanstalk.net 18 February 2009 for the full article.

 

In Denmark:

The overall picture shows that participation in courses for Graduate Diploma in Business Administration (HD) has grown notably. The participation in MBA, specialist master programmes and continued executive education is maintained on a steady level. Aggregated statistics are not yet available to verify the overall picture.

 

It should be noted, that the actual participation in continued education activities to a certain degree has been decided prior to the current economic turmoil. The precise picture of reaction and relation between continued education and financial crisis cannot be established until we are well inside or past the current crisis situation.

 

However, data from Ph.D. applications in the US show increases dramatically higher than the 3 per cent average annual increase in graduate school applications over the last decade, noted in a 2007 report by the Council of Graduate schools, with reference to a 21 January 2009 release in The Harvard Crimson – thus underlining that the education business is counter-cyclical.

 

Povl Tiedemann

February 2009