Doughnut Economics: Seven Ways to Think Like a 21st Century Economist
Because most of us have a very limited grasp of economics, and because we don’t want to appear ignorant, we tend to adopt the conventional doctrines. Swallowing them whole, and assuming that they are as sacrosanct as the laws of nature or mathematics. We find ourselves bandying about terms like market equilibrium, gross domestic product, and rational economic man in an effort to appear worldly wise and sophisticated. Politicians being some of the worst offenders: becoming instant economic ‘experts’ the moment they take office.
Now, along comes a book – Doughnut Economics, by Kate Raworth – that calls into question all of those old economic certainties: revisiting the theories that underpin the accepted dogma, and asking us to reframe our vision of the economy. Raworth, who is an Oxford academic with a background in international development, concludes that economics is broken, and its outdated theories have permitted a world of poverty juxtaposed by extreme wealth. Not only that, it is threatening to bring the world to the brink of ecological disaster through its insistence on continual growth.
Raworth identifies seven modes of thinking that, in her view, will transform the debased 20th century model, making it fit for the 21st. Along the way, she asks us to: revise our belief in mechanical equilibrium, realising that the economy is a far more complex circulatory system influenced by feedback loops; appreciate the domestic economy, and recognise the social underpinnings that are the foundation of an equitable society; identify the environmental restraints that should provide the ecological ceiling for our endeavours; and refocus business onto its social objectives.
For some, perhaps the most challenging leap will be the re-examination, and conceivable abandonment, of GDP as a meaningful measure of economic success, while recognising that continuous striving for growth is destructive. Likening the latter to cancer which inevitably destroys its living host. The time has also come to deny the ‘existence of rational economic man’, by accepting that self interest in not the sole driver of everyday human and economic activity.
Ambitious, radical, and meticulously argued, Doughnut Economics challenges the underpinnings of current dogma and will leave doctrinaire minds spinning. But, I would like to think that Raworth has simply captured the zeitgeist of new wave economic thinking.
Published by Random House Business Books ISBN: 978-1-847-94137-4
Appeared in Association News November 2017
Client Earth are activist lawyers committed to securing a healthy planet: using environmental law to protect oceans, forests, and other habitats as well as all people. A new book which tells the successful story of Client Earth over the last decade since it was founded, was launched in May. Written by founder and CEO, James Thornton and his husband Martin Goodman, the book charts the journey of the non-profit environmental law group from inception to the present day.
Just before the recent election, and following a legal challenge by Client Earth, the UK government was ordered by the High Court to produce new improved plans to show how it is going to comply with legal limits of air pollution in the shortest time possible. This is but one of their successes in holding legislators to account. But also a perfect example of their approach. So, as a Trustee of an environmental charity, you can imagine my sense of anticipation at its publication. And the book does indeed chart the rise of public interest environmental lawyers in the USA since the 1980s, and makes valuable points about NGOs and the law.
Cutting his teeth on the ‘Save the Bay’ campaign, focussed on eliminating the run off of agricultural pesticides and fertilisers in 1983, and moving on to the dumping of heavy metals and chemicals in watercourses by Bethlehem Steel in 1984, some of James Thornton’s early successes concentrated on pollution of rivers and seas. Since then his, and his team’s, work has widened in scope, and its geographical boundaries. In 2007 he moved to England, qualified in British law, and established his first European office. This was shortly followed by offices in Poland, Brussels, Africa, and most recently China. Where he is working with the government to draft law and train lawyers.
The American passages are perhaps the best in the book. But, at risk of being accused of a bad case of ‘not invented here’, the move to Europe comes with the bold assertion that environmental law didn’t exist in the UK until Client Earth’s arrival.
Thornton is absolutely right to say that environmentalists must create a new vision for their efforts. Presenting logical, but doom laden, arguments about the future of the Earth does not work for many citizens. Just as the referendum result in the UK and the election of Donald Trump in the US have both defied logical explanation so, Thornton and Goodman contend, we must correspondingly construct a new ‘brand’ for environmentalism based on hope. Along with this goes the acceptance that, having passed through the historical stages of agricultural then industrial civilisation, we are now entering a new epoch of ecological civilisation.
Personally, I largely agree with the authors’ assertion that enforcement of the law is one solution. I can also empathise with their view – based on my own experience – that some campaigning NGOs see their role as exposing problems. Not in fashioning the solutions. I am also firmly of the belief that it is naïve to believe that something – the ‘techno utopian card’ – will turn up to save us. So the thrust of the book is not at issue.
Where I have a problem is with the book’s style and execution. Alternating chapters between two different authors leads to a disjointed and repetitive reading experience. Thornton’s chapters are clear, concise, and brief. Goodman’s are rambling, plagued by extraneous quoted dialogue, and gushing in their admiration of Thornton.
Jonathan Porritt’s flyleaf endorsement may be correct in saying that ‘more important still are the vision, values, and gritty dedication of an amazing group of lawyers’, but I can’t escape the feeling that this book has something of the Hollywood movie about it. So, can our plucky heroes defeat the forces of evil?!
Published by Scribe Publications 2017 (www.scribepublications.co.uk) UK edition 978 1911 344 087 ©2017 M J Hoare
Is it All Over for Cash?
I make contactless payments just like anybody else, and it always alarms me to hear the person next in line decline their receipt. How on earth do they keep a tally of their spending, stop going overdrawn, and incurring bank charges? Maybe they are so spectacularly wealthy that it’s irrelevant, or they always run an overdraft, or maybe they just don’t care.
New figures from the British Retail Consortium suggest that, 10 years after their introduction in the UK, contactless payment cards have finally won over the British public. They now account for about a third of all card purchases, up from 10% as recently at October 2015. And, for the first time, notes and coins have been evicted from their position as the UK’s number one payment method.
Cards now account for more than half of all retail purchases, according to the BRC. And, in its latest annual payments survey, it claimed that debit, credit and charge cards had “firmly established their place as the dominant payment method in retail”, and were “increasingly displacing cash for lower-value payments”.
So, some adherents to the new doctrine are suggesting that this is the tipping point that signals the beginning of the end for cash? But wait. Cards have accounted for the majority of retail spending by value for years, but 2016 was the first year they also accounted for more than 50% of all transactions. It is also the first time that debit cards have overtaken cash. They now account for 42.6% of all transactions, putting them a fraction ahead of notes and coins, which fell almost five percentage points to 42.3%.
Contactless cards were introduced in the UK in 2007, and were slow to take off; a cautious public gradually accepting the technology in coffee shops and other low value outlets. The initial upper limit of £20 per transaction was increase in 2015 to £30. Subsequently, the technology has spread, and it is now possible to pay bus and tube fares, give charitable donations, and buy drinks at the bar with a flick of the wrist. So, much of the increased use must be down to the availability of the technology as to citizens rejection of cash.
Plus, customers’ psychological barriers have been gradually whittled away. Which is good news for shops! Handing over £20 in notes – and registering the diminishing cash in one’s wallet – is so much harder than flashing the plastic cash. So, if you subscribe to the theory that these cards make it too easy to spend money, one can imagine why retailers are keen to encourage the contactless revolution. Shops also have a vested interest in the demise of cash as it costs them money to transport and deposit it.
On the downside, the Bank of England last month suggested that the popularity of contactless cards was helping to fuel the rapid growth in consumer debt. Going overdrawn may also result in bank charges, further adding to that debt.
So could the UK end up going cash-free? Arguably we’ve been headed in that direction since the repeal on the Truck Acts – legislation that allowed workers to insist on payment in cash – in the 1980s. So it’s had a long gestation in the UK. Now Sweden is in the vanguard, and is expected to become the world’s first truly cashless society, with a study by Stockholm’s KTH Royal Institute of Technology predicting that cash could be history there by 2030.
Notes and coins may be dirty and a nuisance to transport but, in their favour, they are tangible stores of value. Electronic cash – Swedish style – is just a call on the local bank that issued it. What happens when all record of this month’s pay, and your bank account, mysteriously disappear due to a computer error? Who underwrites your money? A note issued by the Bank of England – which is wholly owned by UK government – at least carries a promise to ‘pay the bearer’ the relevant value. So you have some chance of redress.
But never fear, Victoria Cleland, chief cashier and director of notes at the Bank of England, reckons the folding stuff and loose change will be around in the UK for some time yet. “Cash is very much alive and kicking,” she said in a recent speech. The value of Bank of England notes in circulation peaked in the run-up to Christmas 2016, reaching more than £70bn for the first time. So, no need to worry about that stash of notes under the mattress just yet. But maybe you should swap those old tenners for new ‘Jane Austen’ polymer notes!
It Does You Good
The flavour of the month may be data, especially in its ‘big’ form. But are we deluding ourselves into believing that big is always beautiful? Sure, big data identifies trends; helps to better understand and target customers; recognise and optimise business processes; and improve mechanical performance. It also has a role in public health, scientific research, and financial trading.
But, should we show caution when it extends unchallenged into security and law enforcement, or the ‘optimisation’ of cities and countries? It cannot be assumed that all data will ultimately be used for social good. Sometimes projects based on mass data increase inequality, and consequently harm those they were designed to help.
Bigger the Better
In 1907, Charles Darwin’s cousin Sir Francis Galton asked 787 villagers to guess the weight of an ox at a country fair. None of them got the right answer, but when Galton averaged their guesses, he arrived at a near perfect estimate. Beating not only most of the individual guesses but also those of alleged cattle experts. Thus the ‘wisdom of the crowds’ was born.
Groups of people pooling their abilities to demonstrate collective intelligence and average judgement converging on the right solution. It’s a pleasing theory and tempting to apply to all sorts of decision-making processes. Until, that is you realise that the crowd is far from infallible. Good crowd judgement only arises when people’s decisions are independent of one another. Influenced by other’s guesses, there’s more chance that they will drift towards a misplaced bias. In other words groups, when fed with information, tend towards a consensus to the detriment of accuracy. Witness the recent election polling predictions.
Analysing the Detail
Nothing in doing data analysis is neutral. How data is collected, cleaned, stored. What models are constructed, and what questions are asked. All tend towards discrimination.
As Dana Boyd, in her excellent article, ‘Toward Accountability’ asks, “How do we define discrimination? Most people think about unjust and prejudicial treatment based on protected categories. But discrimination as a concept has mathematical and economic roots that are core to data analysis. The practices of data cleaning, clustering data, running statistical correlations, etc. are practices of using information to discern between one set of information and another. They are a form of mathematical discrimination. The big question presented by data practices is: Who gets to choose what is acceptable discrimination? Who gets to choose what values and trade-offs are given priority?”
Even so, making data available to the public must be a good thing – it’s democratizing – right? But what if it’s not? For instance, what happens when big data is used in conjunction with a computer algorithm to predict crime? In theory analysing large amounts of crime data should spot patterns in the way criminals behave. Resources could then be deployed more effectively in the areas of predicted criminal activity. Result!
Or, what happens when parents are encouraged to select their children’s school places on the basis of an education data ‘dashboard’. Benchmarking every aspect of a school’s performance against the mean should tell you everything you need to know to make a rational decision about your child’s future. Simple!
Lastly, how good would it be if, when you applied for a job online, you were swiftly shortlisted for interview on the basis of your merits? Your CV having been analysed against the qualities of those who had previously succeeded in that role. Brilliant!
But wait! Critics of this kind of data analysis raise a number of ethical concerns. They claim predictive policing, for instance, leads to victimisation, and unnecessary stop and searches in areas with high crime rates; displacement of crime elsewhere; gathering of sensitive data, leading to invasions of privacy; and lastly, that it ignores the social, economic and cultural factors that cause crime. Advocates, on the other hand, argue that a variety of policing approaches are necessary; that research has found no evidence of victimisation; and that it makes police decision-making less biased.
Surely no one can argue that giving parents access to school data is a bad thing? But what data? What constitutes a good school? Is it test scores, student makeup, parent ratings, or facilities? Presented with the data, does every parent have the time, language skills, and ability to interrogate the statistics? And, if they do, is everyone equally able to act upon their findings by dint of wealth or mobility?
Oh yes, that job you applied for! Being filtered for interview on the basis your abilities is one thing. But what about your gender, ethnicity, or sickness record? You’ll never know, because you won’t get the chance to explain. Not that anyone would be so crass as to filter on that basis. But subtle clues, like blips in your career timeline or post-code may result in unwarranted inferences. Combine these factors with feed-back loops and machine learning and before you know it you may never work for a large company again.
“Data scientists”, said Mike Loukides, VP of O’Reilly Media, “are involved with gathering data, massaging it into a tractable form, making it tell its story, and presenting that story to others.” So, I remain conflicted on the benefits of big data. It has its uses. But, rather than thoughtlessly surrender ourselves to its machinations – in the belief that the outcome will always serve the interests of humanity – we should remain sceptical, questioning, and downright belligerent. Especially when told that it’s for ‘our own good’. I plan to keep in mind a quote from Ronald Coase, winner of the Nobel Prize in Economics, when he said, “Torture the data, and it will confess to anything.”
Sources / Further Reading:
The jewellery industry has been angst-ridden for most of the current century over the moral, ethical, and environmental damage done by the exploitation of gold and diamonds. Child labour, the blighted lives of miners, the spoil left by extraction, the financing of civil wars, and the buttressing of repressive regimes have each left their own stain on the industry. The Kimberley Process, the Dodd Frank act, OECD Due Diligence, and subsequent legislation, attempted to deal with these concerns, and bring forth order out of chaos. However, the plethora of initiatives in the supply chain remains perplexing for retailers, and those that want to trade ethically.
As CEO of the now defunct National Association of Goldsmiths (NAG) and a founding Director of the Responsible Jewellery Council (RJC), I worked with NGOs and others for over a decade to influence the practices and policies of miners, refineries, processors, wholesalers, retailers, and banks in their efforts to regulate and monitor the movement and provenance of gold and diamonds within the supply chain.
Today, rigorous policies – both imposed and self-policed – are impacting on the tracking of both commodities back to responsible origins. But the work still isn’t complete, and the industry still needs to shore up its claims to social and ethical sourcing with transparency, trace-ability, and communication across the entire supply chain, before retailers can trade with complete confidence in the attribution of their stock. Platinum group metals have also been added to the scope of the RJC, but one of the unsolved problems remains the provenance of coloured gemstones!
Therefore the announcement of the launch of a technical feasibility study to include coloured gemstones into the scope of the RJC should be music to jewellers’ ears. But, past experience of working alongside the Gemmological Association of Great Britain (Gem-A), whose work is the study and identification of gemstones, I am acutely aware how complex a task it is likely to be. Not just because of the range of stones, but because of the fractured supply chain.
Artisanal and small-scale mining (ASM) – labour intensive and often in remote and inaccessible areas – still accounts for the majority of the worldwide supply, raising obstacles to transparency and trace-ability at even the production stage. Compared to diamonds, the supply chain of coloured gemstones is highly complex, making it nearly impossible to trace their trajectory from mine to end-user.
Mined in roughly fifty countries – located mostly in the global south – gemstones pass through numerous hands before being polished, transformed into jewellery and sold in the international retail market. And – unlike diamonds – the coloured gemstone supply chain doesn’t have a history of being governed by a centralised cartel, so opportunities for human rights abuses, environmental damage, and illicit activity, are legion.
So, while the RJC’s intentions are entirely laudable, their desire to plug the remaining gaps admirable, I think we should all recognise that the road ahead will be strewn with moral and ethical boulders, and some will be very difficult to work around!
Contact me on email@example.com for strategy, communications, and public relations consultancy.
For most of the twenty-first century the jewellery industry has agonised over the moral, ethical, and environmental damage done by the exploitation of diamonds. Be that in terms of child labour, the blighted lives of miners, the spoil left by the extraction process, the financing of civil wars, or the propping up of repressive regimes. The Kimberley Process, and subsequent legislation, attempted to bring forth order out of chaos. But in 2006, the Hollywood blockbuster movie ‘Blood Diamond’, starring Leonardo Di Caprio, pricked the conscience of the industry and brought the subject back into public focus. The actor’s name has been linked with low-level anti diamond activism to this day.
Industry insiders don’t need reminding of all the arguments that have ricocheted to and fro ever since. Initiative has piled upon initiative in an attempt to improve the situation – or create a thicker smoke screen – depending on your point of view, and the depth of your cynicism. At the same time the hunt has been on for verification systems that could guarantee the provenance of natural diamonds, or for diamond substitutes that provided glitz without guilt. Cubic Zirconium was a passable diamond simulant, but lacked the cache of the real thing and, whilst man-made synthetic diamonds were theoretically possible, it wasn’t until the barriers came down across Russia that the technology to manufacture them became readily available.
So, imagine the kudos attaching to a company that not only claims to be able to manufacture quantities of large synthetic diamonds relatively quickly and economically, but also secures an investment and an endorsement from Di Caprio! Not only will his money come in handy, his publicity value is enormous! But Diamond Foundry isn’t actually too short of money, having secured the financial backing of six billionaires in making products that they claim are “ethically and morally pure”, and selling them – already set in jewellery – direct to consumers.
Naturally enough, there has been a backlash, with an open letter to Di Caprio, from Bob Bates of JCK Online, questioning the basis of the company’s environmental claims, highlighting the social and economic impact on mining communities in Botswana, South Africa, Namibia, and Sierra Leone and raising fears about the effect of commodification on prices. So, the argument over who benefits most from diamonds – the miners the middle-men or the financiers – and who will suffer most from the proliferation of synthetics rumbles on.
However, regardless of the arguments or judgements about who is morally or ethically right, the underlying theme of this debate is one that we will return to regularly over the next decade. For here is a classic example of a disruptive innovation. One that has the potential to create a new market and value network – disrupt existing ones – and displace established market leaders and alliances. Think Alibaba, Amazon, and Uber!
As we plunge into Industrial Revolution 4.0 it becomes easier to make money than even twenty-five years ago. Setting up and running a mine is expensive and requires a lot of manual workers. A company that makes its money out of a smart app needs less capital, doesn’t incur the same infrastructure costs, and virtually no extra outlay as the number of users rise. In other words, the marginal costs per unit of output tend towards zero. That’s why tech entrepreneurs get very rich very young!
Oxfam recently highlighted that the sixty-two richest billionaires own as much wealth as the poorer half of the world’s population put together. The world is becoming polarised between the ‘haves’ and ‘have-nots’. Against this backdrop, regardless of ethical, or environmental concerns, the initial losers will be those at the bottom of the heap.
What if the ‘direct-to-consumer’ model proliferates – undermining established practice and traditions, atomising existing supply chains, shedding jobs, and vaporising careers? As wealth passes from old style mine owning corporations to billionaire technology pioneers and venture capitalists – concentrating it in fewer hands – who will be the winners and losers? Regardless of the short-term disruption, where are innovations like these taking us, and what will be the effect on society in years to come?
Michael Hoare FIAM
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The jewellery trade press are reporting that a business owner in the U S has completed what is thought to be the first ever drone-delivery undertaken by a jeweller. According to Jewellery Focus:
‘Distinctive Gold Jewelry, of Frankfort in Illinois, delivered a women’s watch to a couple celebrating their anniversary. The business owners say that they have being “dying to do” such a delivery since they first heard of the concept of drones. Drones have become a talking point in retail and consumer circles ever since online shopping giant Amazon said it was trialling the technology….It is not clear whether Distinctive Gold Jewelry intends to roll it out as a standard part of their service offering, but it has nonetheless garnered some attention stateside, with US trade magazine National Jeweler breaking the story.’
So, a PR coupe for Distinctive Gold Jewelry, but what if this neat – even amusing – stunt were to become an everyday occurrence? The crowded streets of our major cities are a far cry from the comfortable little town of Frankfort with its 17,000 inhabitants.
Scale up the delivery of one watch to the kind of volumes that might attract Amazon, and you have a whole different scenario. Imagine the skies of London or Birmingham buzzing with delivery drones? Or worse still, the peaceful horizons of our market towns? Is that really what we want? How much fun will it be when our Sunday afternoons – and maybe nights – are shattered by the infernal buzz of drones passing overhead? How much of a laugh will it be when you’re poleaxed by a parcel falling from the sky, or get a swipe across the head from a twenty kilo projectile, as it bounces off the roof, and breaks a few tiles on the way down? And who will pay for the damage?
So, leaving aside the obvious security concerns, the threats to privacy and safety are just two of the reasons we should think very hard before surrendering to this seductive new technology. But if that time ever does come, I think I’ll be investing in a tin hat and a catapult!
Do you have virtual meetings? By that I don’t mean ones where virtually no-one shows up, but ones where decisions are made by email only. It appears there is a legal distinction between those and electronic meetings. They’re the ones that take place by conference call or video link! It’s a subtle distinction but one that will become ever more important in this digital age.
Setting a date when most of your directors can be in the same place at the one time has always been a pain in the backside for association CEOs. And even when you’ve agreed a date there’s the venue, the travel, and the catering to be thought of. Plus, once you’ve got them together, if you’re foolish enough to give them a glass of wine with their lunch, you can pretty much kiss goodbye to a whole days’ productive time, once a couple of loquacious old bores get into their stride.
So, banishing Directors to the confines of a small screen on the side of your desk sounds pretty attractive. Not least because it has the potential to unlock oodles of time but it can also save a whole pile of money to boot! In the right circumstances virtual meetings can work admirably, but beware, there may be pitfalls.
Thanks to email it’s easy to get agreement to do something between meetings by simply asking committee members to reply signifying their consent. That’s fine, until one or two people don’t agree, raise major objections, or make counter-proposals. Face to face this would get argued through and the majority view would probably prevail. But, if your discussion is solely by email, how – and who – determines whether a decision has been reached and what happens next? Clear ground rules should help.
A policy that requires over 50% of those responding to agree, or a minimum number of objections before something can be stopped, would do the trick. But what next? Wait until a subsequent meeting – virtual or real – to ratify that decision? Not much help if a rapid response is required! And what about keeping records? Electronic? Not much good if they’re only accessible from one person’s inbox! Better to make it a policy that such decisions are reported like Minutes?
For a couple of years I was on the Board of an international body whose Directors were scattered to the four corners of the globe (not logically possible, but you know what I mean!). Getting them together for more than one or two meetings a year would have been prohibitively expensive and massively time-consuming, so most Board meetings were held by teleconference. With the CEO in Australia, the Chairman in America, and Directors in England, South Africa, India etc., we had to meet at odd moments to allow for time differences. Maybe the odd Director answered the phone in their pyjamas (funny place to have a phone), but it worked!
The key was planning, preparation, and participation. The Officers having already made their own deliberations, the Chairman and CEO set out and distributed an advance agenda that progressed in logical sequence; notes and supporting papers were circulated in advance, with all options explained; and all participants expected to state their view clearly, with votes enumerated against the attendee list.
It worked because the group was tight, well-known to each other, committed to attendance, and anxious to make progress. It would have failed if the Chairman had permitted subsequent backtracking on previous decisions, let dominant personalities take over the discussion, or allowed the meeting to stray into subjects that were off beam. The particular skill being to inspire input from those who never normally express an opinion on anything, or wrong-foot those who switched to speakerphone while they nipped off to fetch a coffee. Face to face these same skills would be used to prompt those individuals whose ‘lights are on’ but where there’s ‘nobody home’!
Of course ‘actual’ meetings are better when it’s a large diverse gathering – like an AGM – or when there is a lot of business to cover on numerous issues. Slide decks and Power Point presentations can work in a virtual environment, but when you need 100% impact a live event is always best! But the major downside to virtual meetings is that they severely limit the chances of an after-meeting drink! Not the ‘done thing’ these days I know but, speaking personally, I’ve learned an enormous amount about running trade associations with a glass in my hand!
Reviewing your strategy and communications? Can I help?
Over twenty years’ association management experience.
Michael Hoare FIAM
What does an association CEO actually do? Good question! A combination of politician, ambassador, tactician, and showman you might say. And a small business leader to boot! OK, but what qualities does a good CEO need to succeed? That’s a question that involves a long answer and one which will be unique to each trade or professional association. The Institute of Association Management has produced a list of the 13 key attributes of association management CEOs which is handy for ticking off the bullet points on a job description. But I believe a great CEO has both emotional and analytical skills. And don’t forget the physical aspects of the job too!
The very essence of any membership organisation is communication. Be it oral, written, or via social media, the CEO – especially in a small organisation – is generally the communicator in chief. Engaging, communicating, empathising, should be in their DNA. But don’t mistake this for broadcasting! Communication is a two-way street, with ideas flowing in and out. Thought leader you may be, dictator you are not! Sometimes you’re an agony aunt listening, analysing, and resolving professional and personal issues with board members, officers and staff. And only occasionally will you get to unleash you inner Henry V!
Politician, ambassador, and diplomat are also within the remit of the successful CEO. The ‘conduct of relations between nations by peaceful means’ is how the dictionary puts it. But the ability to communicate and negotiate at all levels with people from different backgrounds and organisations and cultures is probably closer to the mark. So, it goes without saying that you must be a people person, able to connect, and be approachable.
A lot of hot air is expended on the subject of leadership. Quite whether leaders are bred or nurtured isn’t clear. But whichever it is, you won’t go far as an association CEO without this quality. Motivating and managing Boards, volunteers, officers, staff, and members, is an uphill battle unless you have natural leadership qualities. Brushing up your skills can’t hurt, but personally I don’t put much faith in self-help books, mantras, and seven point plans. Leadership is a complex formula that mixes head and heart in different quantities according to the situation. Ticking boxes just isn’t enough!
Entrepreneurship is frequently required to devise and exploit money-making schemes. Unless you are very fortunate there is generally a gap between the income from membership subscriptions and out-goings. In most cases it will be down to you to fill it, and this is where your innate business acumen comes in. The business person in you will always be switched on. Identifying, developing and implementing events, training, publications, sponsorship, and other income generators.
To quote George Orwell’s “Who controls the past controls the future; who controls the present controls the past” or, Winston Churchill’s, “History will be kind to me for I intend to write it”, in the same sentence may be to stretch an analogy to breaking point. But it neatly illustrates what politicians and historians have always known; that control of the written record confers power on the author. So, in the association context, the person who signs off the Minutes, or writes the business-plans, reports, and memoranda, wields considerable authority. If they in turn translate the decisions of the Board and sub-committees into actions, they influence the speed and direction of travel. And if they can also write meaningful articles they control the narrative that influences internal and external observers.
So, armed with the skills of a planner, guiding strategic direction of the association and developing appropriate plans; a project manager, planning, directing and implementing major projects and events; and a lawyer, familiar with company and/or charity law and appropriate regulations, you will be almost fully equipped. But not quite. Because the ability to understand budgeting, accounts and reporting, and have a firm grasp on governance are also essentials in the CEO’s tool kit.
Finally, and not to be underestimated, are the physical and mental resilience needed to withstand a punishing schedule. A thick skin, the capacity to act alone, and brush off occasional assaults on your reasoning, integrity, and goodwill are a must! And a robust constitution is a blessing! Early mornings, late nights, travel – in the UK and abroad – all take a physical toll. As do the demands of ‘socialising’, which may involve excess eating – and other temptations – and maybe even loss of sleep! Add that to the need to always be well turned out, bright-eyed and receptive, and you’ve cracked it!
Reviewing your strategy and communications? Can I help?
Over twenty years’ association management experience.
Michael Hoare FIAM
Association executives will all have experienced difficulties with presidents, chairmen, or directors. They are a mixed bunch and over the years the good, the bad and the ugly come and go. Never-the-less, as professionals you have to get on with them, accept their peculiarities and petty likes and dislikes whilst the serious business of governance goes on.
In my twenty-odd years’ working my way up through membership bodies, trade associations, and charities, I’ve discovered that Boards come in many shapes and sizes. Each adopting a different attitude to the responsibilities they have taken on – sometimes unwittingly. They range from the indolent to the hyperactive, the distant to the micro-managing, and all shades in between. Their attitude to the chief executive and secretariat can also vary wildly.
Some directors see the association as their personal fiefdom, with the staff as serfs to do their bidding; the chief executive’s prime functions – in their view – to ensure the success of the golf day and the quality of wine at the annual dinner. Such attitudes stem from the days when association secretaries ruled; when finding a place on a Board or committee was one way for family firms to distract patriarchs who refused to step aside; when a culture of amateurism prevailed; and directors’ focus was sometimes blurred. In my time I’ve met them all – the commanding, the conniving, the conceited, and the committed – but when it comes down to it there are two distinct types of association Board. One meddles and micro-manages in the mistaken belief that as business people themselves they must be able to do better than their ‘employees’. The other understands their strategic role but accepts that the secretariat are professionals – experts in their field – with the CEO taking operational responsibility on a day-to-day basis. Only the chairman can determine which route they take.
But don’t let’s fool ourselves, chief executives can be a mixed bunch too. Perhaps best described as entrepreneurs, showmen, and diplomats all rolled into one, they have to juggle the often conflicting interests of their members to achieve consensus, and they can be complex characters. Nevertheless the key relationship is that between the chairman and the chief executive, and trouble follows where this fails. As well as a shared commitment to the cause, relationships must be based on mutual respect and trust. They must be frank and open, with problem areas being addressed amenably. Empathy, communication, humility, and self-awareness are the key differentiators.
The two roles must be complementary. The chairman is responsible for leading the business of the Board while the chief executive manages the association’s business. The chairman and the chief executive must be aware of each other’s activities and work together as a team. The duties of the chairman – a non-executive role – arise from their position as the chief elected officer of the association and their responsibility for presiding over its official business and the Board. The chief executive is responsible to the chairman and the Board for directing and promoting the operation and development of the association consistent with its primary objectives. In so doing they exercise executive stewardship over the association’s physical, financial and human resources.
There used to be a joke along the lines of, ‘what’s the similarity between a non-executive director and a shopping trolley?’ Answer: ‘They both have a mind of their own, but you can get more food and drink in a non-executive director!’ It may be an old chestnut, but it illustrates that the fault line between executive and non-executive responsibilities is often where most tension develops. Some secretariats are resentful of the oversight of a largely non-executive Board that they sense doesn’t share their vision or commitment – or jeopardy to their income – or appreciate the skills and professionalism they bring to a difficult job.
Therefore, not-with-standing their fiduciary responsibilities, and duties to members, every Board must remember that the lively-hoods and well-being of all those employed by the association are at stake and the consequences of ignoring this fact can be enormous. Believe me, I’ve been on both sides of the fence, as director, chief executive, trustee, and humble foot-soldier, and I know how morale suffers when internecine warfare sours relations or the Board appears to lose the plot!
Michael Hoare FIAM
Members of The Gemmological Association of Great Britain can log in and find details of the 2015 Council elections on the Gem-A website, including a proxy voting form for those wishing to caste their vote online.
The Gem-A Manifesto by Ronnie Bauer, Kathryn Bonanno, John Bradshaw, Guy Clutterbuck, Michael Hoare, Alan Hodgkinson, Alberto Scarani, and Greg Valerio is available from firstname.lastname@example.org