#Manflu so a day off and time to ponder “Leadership by perception” and then how it applies to the approaching recession.

Learning by listening outside your bubble

I have spent a fair bit of time trying to understand by listening harder to people who voted out of Europe. In my small sample there are 3 camps.

Camp 1: They are very keen that things change at any price. Interestingly that’s politically, but not socially. They were prepared to risk any consequences, at least they say that with hindsight.

Camp 2: They believe the stories they read. Living in the 18th century view of “Great” Britain and with little perspective from the rest of the world at a business level.

Camp 3 specific. Big users of and grateful to the NHS.

None believe themselves racists. That is to say they did not intend to make people whose family’s first home was not in the UK, feel as unwanted as they do feel.

But I don’t know the people who believe an unconnected world owes them something and that their jobs have been taken by “foreigners”, rather than by people who want to study and work harder than they do. They are outside my bubble. So perhaps the xenophobia is coming from politicians appealing to this vote.

Show me the data !

So what does the mass data say rather than the personal sample. Why did people vote out?

This Warwick University study breaks it down by local authority region. It disagrees with my personal findings but then that is the point. http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/305-2016_becker_fetzer_novy.pdf

It demonstrates how blind I am. Educated, living in the affluent south east, working with an international perspective – just how clever was I to miss the way the Britain is today. We are all victims of our own perceptions. More facts please.

Scarily just how many Americans are stewing in their own perceptions of Trump, reassured by a “biased” press, thinking it can’t happen.

This study should redouble concerns over government perspectives & principles in investment & privatisation of education: the biggest factor, not the lying campaign. And concerns of disconnection with the politics of a first past the post system of voting that leaves many disenfranchised.

Fundamentals of your people

The report shows the key determinants of the one off vote are the longest term factors of education and age together with the political choices made about austerity. So what Brexit should make clear is that leadership is required: long term not short term.

The parallel in business is stark. In a recession your key determinant is your people and the choices you make about “austerity” in your business. You have to show leadership.

Not the “polls say so” kind of leadership. Leadership by perception. Leadership by press response, Leadership by fudge and delay. The kind where we say in the morning we’re checking the age of foreigners’ teeth and in the afternoon we say that wouldn’t work. That’s just disgusting thinking spilling out of politicians’ mouths.

We need leadership based on principles that recognise the connected world we live in, have a strong point of view and a passion for something beyond career. Principled leadership.

We see this in business every single day. Short term cost saving of things that are visible on the surface. “No more pencils!” Ignoring the fundamentals that drive real cost. And ignoring the morale sapping effects that drive performance downward beyond any benefit of cost saving.

Ready steady …… recession

As recession approaches, the choices you make about how to deal with it will become stark. Especially if you haven’t prepared.

The Economist Intelligence Unit is reporting “producer input prices rose by an astonishing 7.2%, implying a huge compression in average profit margins—and significant consumer price inflation (or bankruptcies) to come. In the aftermath of the Brexit vote, we were the most pessimistic of the major forecasters. Despite this, things have been going slightly worse than we thought, with the UK prime minister, Theresa May, indicating that she will accept more economic pain to prevent free movement of workers than we had expected. We have stuck with our call that the UK will enter recession next year as both private consumption and investment fall. The squeezing of industrial profits and lower real incomes are two of the channels through which we expect this to happen.”

So what about the note of optimism to finish on? Yes someone stood up and took the fight to the courts to let the MPs get a vote – well done! Oh the irony….

So I’m reduced to the forthcoming recession as a point of optimism. Maybe it will hit fast enough that the press gets on the politicians’ case early enough to affect a March article 50. But, with colours pinned to the Brexit mast, it will need a change of government. But whoops there I go again, living in my own perceptions, thinking it requires a big change or at least a major scandal. The government flip flops daily and we lurched into UKIP policies without an election, so it should be easier than I think to get a volte face in the “Leadership by Perceptions” world.

In any case, we in business, better dust off our recession management skills. In 1990 I saw John Harvey-Jones pass on his hard won advice. I pass it on now.

a) Don’t wait until the waves wash over your ship, batten down the hatches when you see the storm coming. Act in advance of the recession.

b) Work only for money i.e. don’t chase the prices down, don’t work for nothing just to keep staff busy. Cost savings cannot get you out of recession, income can.

c) Cash is king, so don’t work for people who don’t pay or can’t pay.

d) If you are going to cut back, cut deeper than you would wish, so you only cut once. You lose your morale and best staff when they are waiting for the next cut in the night of the long knives.

Good luck and let’s be careful out there.

PS Analysis based on data FYI The report summary is: On 23 June 2016, the British electorate voted to leave the European Union. We analyze vote and turnout shares across 380 local authority areas in the United Kingdom. We find that fundamental characteristics of the voting population were key drivers of the Vote Leave share, in particular their age and education profiles as well as the historical importance of manufacturing employment, low income and high unemployment. Migration was relevant only from Eastern European countries, not from older EU states or non-EU countries. We also find an important role for fiscal cuts being associated with Vote Leave. Our results indicate that modest reductions in fiscal cuts could have swayed the referendum outcome. In contrast, even drastic changes in immigration patterns would probably not have made a difference. We confirm the above findings at the much finer level of wards within cities. Our results cast doubt on the notion that short-term campaigning events had a meaningful influence on the vote

http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/305-2016_becker_fetzer_novy.pdf

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