The Concept of Fiscal Policy by Jolito Ortizo Padilla

Managing the economy is a complex task. The annual budget, which is the most important statement of fiscal policy , is eagerly awaited and attracts much media attention as the overall outcome is a very clear indicator of the state of the economy.In this statement , the Finance Minister outlines the government's spending and taxation plans for the year ahead.The direction taken in the budget should give a clear indication of the government's macroeconomic priorities.

In principal, there are three types of budget:

1. Budget Deficit -in this situation, projected government spending exceeds projected revenue from many forms of taxation.This is where the government sees the need to reflate the economy by increasing aggregate demand. Normally this is in response to a situation where there is a need to expand the economy in order to create more jobs and income.
2. Budget Surplus- in contrast ,this describes a budget where government revenue from taxation exceeds the projected expenditure by the government on social protection, health, care, education , transport and so on. Here the government has identified a need to deflate has identified a need to deflate the economy by cutting back aggregate demand.This is normally in response to a situation where the rate of inflation in the economy is higher than the government feels to be appropriate. It could also be in response to a deteriorating deficit in the balance of trade.
3. Balance Budget- as its name suggests, this is a neutral situation where projected revenue and government spending are equal. Within the budget though there is likely to be some re-allocation of taxation and expenditure.

As seen in the different types of budget, a government can deliberately alter tax rates and levels of government spending to influence economic activity.This is referred to as discretionary fiscal policy and can be used to influence aggregate demand. If a government wants to raise aggregate demand it will increase its spending or cut tax rates.Keynesians favor raising government spending because they believe this will have a bigger multiplier effect.This is because the rise in government spending,especially if it is on welfare payments, is most likely to benefit the poor who have a high marginal propensity to consume. In contrast, a cut in a tax rates may benefit mostly the rich who tend to have a low marginal propensity to consume.

A government can also allow automatic stabilizers to influence economic activity. These are forms of government spending and taxation which change, without deliberate government action to offset fluctuations in GDP. For example,during a recession government spending on unemployment benefits automatically rises because there are more unemployed people. Tax revenue from income tax and indirect taxes will in contrast fall automatically as incomes and expenditure decline.

Fiscal policy may also be employed to affect aggregate supply by changing incentives facing firms and individuals.In recent years , governments throughout the world have increasingly been using fiscal policy in this way to improve the competitiveness of their economies.

For fiscal policy to be effective it is important that the government can accurtaely estimate the impact that changes in government spending and taxation will have on economy. To do this they have a good idea of the value of the multiplier and an awareness of the possible side effects of policy measures. If governments underestimates the value of the multiplier , it may inject too much extra spending and thereby generate inflation and balance of payments problems. Fiscal policy instruments may also have undesirable effects. For example,a government may raise more tax in order to reduce aggregate demand. However , this may also have a disincentive effects and so reduce aggregate supply. This is true of progression taxation such as with income tax where rates increase as the level of earnings increases. Indirect taxes such as sales taxes and excise duties are regressive since they have to be paid at the same rate irrespective of income.

Some instruments of fiscal policy also suffers from significant time lags. Whilst changes in indirect taxes are relatively easy to effect, alterations in direct taxes and government spending take longer to implement and to work through the economy.

It can be difficult to raise taxation and lower government spending because of the political unpopularity of such measures and because of, in the case of government spending, the long term nature of some forms of government spending.For example, once a decision has been announced that the pay of government employees will be increased it would be difficult to reverse it and will commit the government to higher spending for some time.




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The Art of Delegation by Jolito Ortizo Padilla

Introducing our new Logo for the year 20013-2014

                             
Delegation is not an easy task.It involves behavioural as well as organizational and economic considerations,and it is subject to number of possible abuses. Effective delegation is a social skill. It requires a clear understanding of people- perception ,reliance on other people, confidence and trust and courage. It is important that the manager knows what to delegate , when and whom. Matters of policy and disciplinary power, for example, usually rest with the manager and cannot legitimately be delegated. Delegation is a matter of judgment and involves the question of discretion.

Delegation is also a matter of confidence and trust- both in subordinates and the manager's own performance and system of delegation. In allowing freedom of action to subordinates within agreed terms of reference and the limits of authority, managers must accept the accept that  subordinates may undertake delegated activities in a different manner from themselves. This is at the basis of the true nature of delegation. However , learning to put trust in other people is one of the most difficult aspects of successful delegation for many managers.

Delegation involves subordinates making decisions. For example , as Guirdham points out: "A strict separation of manager and subordinate roles sends the message to workers that they are only responsible for what they are specifically told to do. Managers who neglect to, or cannot delegate are failing to develop the human resources for which they have responsibility.

Mistakes will inevitably occur and the subordinate will need to be supported by the manager, and protected against unwarranted criticism. The acceptance of ultimate responsibility highlights the educational aspect of the manager's job. The manager should view mistakes as part of the subordinates training and learning experience, and an opportunity for further development. "Even if mistakes occur, good managers are judged as much by their ability to manage them as by their successes".

Notwithstanding any other consideration. the extent and nature of delegation will ultimately be affected by the nature of of individual characteristics. The ages, ability , training , attitude , motivation and character of the subordinates concerned will, in practice , be major determinants of delegation. An example,is where a strong and  forceful personality overcomes the lack of formal delegation. An example is where a strong and forceful personality overcomes the lack of formal delegation; or where an inadequate manager is supported by a more competent subordinate who effectively acts as the manager. Failure to delegate successfully to a more knowledgeable subordinate may mean that the subordinate emerges as an informal leader and this could have a possible adverse consequences,and for the organization. Another example, and potential difficulty, is when a manager is persuaded to delegate increased responsibility to persons in staff relationship who may have little authority in their own right but are anxious to enhance their power within the organization.

The concept of ultimate responsibility gives rise to the need for effective management control over the actions and decisions of subordinate staff. Whatever the extent of their delegated authority and responsibility, subordinates remain accountable to the manager who should , and hopefully would , wish to be kept informed of their actions and decisions.Subordinates must account to the manager for the discharge of the responsibility they have been given. The manager will therefore need to keep open the lines of delegation and to have an upward flow of communication. The manager will need to be kept informed of the relevance and quality of decisions made by subordinates. The concept of accountability is therefore an important principle of management. The manager remains accountable to a superior not just for the work carried out personally but also for the total operation of the department/ section.This is essential in order to maintain effective coordination and control , and to maintain the chain of command.

The manager must remain in control.The manager must be on the lookout for subordinates who are concerned with personal empire building than with meeting stated organizational objectives and prevent a strong personality exceeding the limits of formal delegation.We have said that delegation creates a special manager -subordinate relationship and this involves both the giving of trust and retention of control. Control is, therefore, an integral part of the system of delegation. However, control should not be so close as to inhibit the effective operation or benefits of delegation.

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Mobile Phone Manners by Jolito Ortizo Padilla

Since in parts of the developed world almost everyone has a mobile phone and copes with the ever increasing range of facilities and services with very little difficulty, I shall limit my remarks to suggesting ways in which we can all make the best use of mobile without inconveniencing others ( or indeed endangering life and limb!).

• Never use a mobile while driving a car-there is a considerable evidence that even with a hands-free system the distraction , both physical and mental , caused by operating the phone causes accidents.

•  Always switch your mobile off when in a cinema, theatre or social gathering.

•   Always switch your mobile off when in a hospital , surgery or in a plane.People do not seem to realize that the mobile interferes with essential equipment and electronic systems, and again there is increasing evidence that several plane crashes have been caused by interference to flight control systems.

• Consider those around you. As Jolito Ortizo Padilla of GA Consultancy commented,"At its most basic level, all rudeness is selfishness.With mobile phones this most commonly takes the form of thinking that you are moving around in an impenetrable bubble".

• If you must keep the mobile on in public place or on a bus or train, turn the ring tone down or preferably switch it to vibrate rather than ring.

• Similarly, don't text with your keypad tone set or loud, or pass time by going through your entire ring tone collections.

• Don't shout. Why is it that people seem to assume that their words are not being transmitted with the aid of microphone? And even at normal volume , be aware that people can overhear you. Use discretion when discussing personal or sensitive business facts or conversations on public transport or in a public place.Otherwise, at best you could appear very foolish and at worst you may be betraying secret company information.

• Don't pay too much attention to your mobile, especially on a date or in the company of others. Accepting calls or spending the entire time with your eyes fixed on your mobile as you read or send yet another text message is extremely rude.

• And finally, take care when using your mobile phone in the street to remember to look where you are going! And if you are using a hands-free system in the street be aware that passers-by when catching sight of you apparently talking to yourself may draw conclusions!

 

GDP and Happiness by Jolito Ortizo Padilla

Traditional economics states that the fundamental economic problem occurs because human wants are infinite but resources are only finite. Economic growth helps this problem because it allows more human wants to be satisfied. Economic growth leads to rising living standards and, by implication, greater happiness.

Economists have long recognized that the quantity of goods that consumers can buy is only one part of the measurement of the standard of living. Factors such as the social and cultural environment and political freedom contribute to the standard of living.However,there is an implicit assumption that GDP remains one of the most important components of economic welfare.

Economists using psychological surveys, though, presents a more complex picture. Using surveys from across the world (cross sectional surveys), they have found happiness and income are positively related at low levels of income but higher levels of income are not associated with increases in happiness. The idea that increases in GDP do not lead to increases in happiness is called Easterlin Paradox, after Richard Easterlin, an economist, who identified this problem in 1974 research paper.Using Southeast Asia survey data  suggests that life satisfaction in the Southeast Asia has actually declined since 2000 despite a more than 70 percent rise in GDP. All the survey evidence for the USA and Japan also concluded that there has been no increase in happiness in those countries over the last 12 years.

The conclusion from research is that an increase in consumption of material goods will improve well-being when basic needs are not being met, such as adequate food and shelter. But once these needs are being met, then increasing the quantity of goods consumed makes no difference to well-being. Having a new LCD television, or a new car doesn't increase your well-being in the long run.

There is a number of factors which have been identified which contribute to happiness from survey evidence.

• Relationships- Friends and family have a very important role to play in happiness. In 2010 research paper, the economist Nattavudh Powdthavee gave estimates of the monetary value of different types of relationships.Meeting friends and relatives just once or twice a month had a monetary value of $31000 per year per capita. This should be compared with average real annual household income per capita of $9800. Talking to neighbors most days was worth $40800. Being married was worth $68400. On the other hand , being divorced lead to a negative monetary value of $21600 per year. It is possible to dispute the exact size of the figures. However, the casual observer can see that individual placed a high value on relationships. Friendship are prized. Partners in marriage give up well paid jobs for the sake of their marriage. Most divorced people seek to remarry.The high point of consumerism in today's world , Christmas , is one where people give gifts to each other and spend time together as families. Being alone, cut off from friends, family and even casual day to day encounters, is associated with low esteem, depression and mental illness.

• Work- work provides income and satisfaction .However, research also shows that aspects of work depress happiness. Long commuting journeys, tight work deadlines, lack of control over how a job is done and housework have all shown up in surveys as being negative correlated to happiness and well being. Overall, the survey evidence suggests that workers in high income countries would be happier if they had lower incomes but more leisure time. As for unemployment, in the same survey was calculated to have a negative happiness value of $66400 per year.

• Health- Having good health has a very high monetary value in terms of happiness. The valuation put on excellent health is $303000 per year. Surveys suggest that health and happiness are correlated. Countries with above average incidence in high blood pressure are those with the lowest happiness scores. Good psychological health leads to happiness.Mental ill health has a large negative impacts on happiness. There is some evidence that mental health problems in rich countries have been increasing over time, possibly due to the increasing fragmentation of society and increased stress in the workplace.

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The Economics of Happiness - The first of the series by Jolito Ortizo Padilla

"Solidarity and Economics"- Bahrain's Road To Progress and Happiness

One branch of this new type of economics is called the Economics of Happiness or Happiness Economics.One of the most often quoted comments about economics is that it is a dismal science. This came from Thomas Carlyle writing in 1849; " Not a gay science ", I should say ,like some we have heard of, no a dreary, desolate and, indeed, quite abject and distressing one; what we might call, by way of eminence, the dismal science." Thomas Carlyle was a famous writer and social commentator of the time. He was contrasting some of the negative predictions of economics of his age with a "gay science" which at the time referred to "life enhancing knowledge".

Jeremy Bentham was a philosopher who put forward the theory of utilitarianism.This stated that human being should act in a way that would cause "the greatest happiness of the greatest number". This was a philosophy which should guide the individual : should I spend $500 on a holiday for myself or should I use it to pay for the tuition fees of my child at university? It was also a philosophy which could guide government policy: should the government increase taxes on high income on high income earners to pay extra spending on health care stay the same?

An assumption of utilitarianism is that happiness can be measured in the same way that the weight of a loaf of bread can be measured. If happiness cannot be measured, then individuals, governments and other decision makers cannot make the calculations necessary to ensure "the greatest happiness of the greatest number". The whole theory then becomes useless as a basis for decision making. Following Bentham's death,the consensus view in neo-classical economics came to be that happiness could not be measured. Economics could say nothing about the happiness or value that one individual puts on consuming a good or taking a job compared to another individual.

Another criticism of utilitarianism was that happiness is not the only the only goal in life. There are many other goals that human beings might have. They might prefer to be rich and famous rather than happy. Their goal might be to uphold the honor of the family. Status, power, possessions, control and sex are other possibilities.People's goal differ from culture to culture and it is is arguably too simplistic to reduce everything to happiness.

The economics of happiness refutes these problems and argues that happiness can indeed be measured and that happiness should be seen as the most important goal of individuals whatever their culture.

• Surveys can validly be used to ask people about the extent to which they are happy. With a survey large enough to be statistically valid , survey results produce reliable evidence about states of happiness and satisfaction. Such survey methods have been used in psychology for decades.They are backed up by neuroscience. During the 1990's,it was discovered that happiness was associated with measurable electrical activity in the brain. This could be picked up by MRI scans. So it is possible to tell physiologically whether or not someone is telling the truth when they say they are happy.
• Looking across cultures, philosophies and religions, and using evidence form sociological and psychological studies, it is clear that happiness is a goal of human beings. It is true that happiness might be given different names such as well-being, satisfaction, fulfilment or utility. But for the economics of happiness , these different names are all pointing to the same goal. Happiness can then be argued to be the same important goal. If asked,"why do I want to be wealthy or powerful?", most people would say "because it leads to happiness".Wealth, power or status are not ends in themselves. They are stepping stones to happiness.Think too of the reverse questions: "Is the goal of life to unhappy?" Or "Does it matter that people are unhappy?"Few people would argue that they wanted to be unhappy and that it didn't matter whether their relatives and friends and other people were happy or not.

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Boredom in Business by Jolito Ortizo Padilla

There was a debate on boredom in business! That launched GA Consultancy on our shared interest that the best businesses to succeed would be those whose core characteristics were creativity, social responsibility, energetically ethical, supreme in service, with a robust reputation for respect for all their staff, suppliers and stakeholders.They would never be boring, but rather daring to be different and exceeding expectations.

Padilla mentioned that the best would have "mentoring programmes" . In these newcomers are paired with more experienced people, to obtain best practice and advice as they advance. Mentoring inspires individual to improve their learning so that they meet, even exceed,their potential, performance, philosophy and personality. Many of the world's most successful people have benefited from having a mentor. Today, mentors provides their expertise to less experienced individuals to help them advance their careers, enhance their education, and build their networks. Whenever I have met those in charge of creditable companies,leaders in organisations who are revered and respected and respected , they have all had a mentor. I mention this because their businesses also have a superior competence and consistency.

They exude excellence -creating the culture- being right first time, on time, every time, exceeding customers' expectations.They believe instinctively there is always a good cause for treating all customers as number one. This is especially so when, all too often, new technology gives ways of avoiding the cost/benefit pressures to deal with only the most "important" customers. Top organisations realise that every customer is potentially their most important customer.

As an example, take the world renowned charity Oxfam.Oxfam works towards putting an end to poverty worldwide and believes poverty is not inevitable, it is inevitable, it is an injustice that can be tackled.Some years ago Oxfam received a legacy "out of the blue". They had never heard of the person who gave it. They checked with her family why she had given to them.They found that some time before , the woman had been shopping in an Oxam shop. She had a nasty turn on the stairs and the volunteers looked after her, made her tea, and wouldn't let her go until they were sure she was OK. Called her a taxi .. and then thought no more... it was just looking after their customers.One cup of tea... a six figure gift. You never know who you're being nice to!

Excellent organisations do this indistinctly. They mentor,manage  and motivate daily , in a manner essential to a charismatic culture in a competitive environment. This is especially so when their brand /product/service is under threat, or its reputation requires restoring. Thinking from the customer's perspective saves corporate money. Always viewing service from the outside in, improves the bottom line. Successful organisations all have innovative and inspiring climates. Their corporate culture-characteristic consistency of process, personality and performance-impacts the bottom line. Think of the companies you do repeat business with; they believe success need not be incompatible with a genuine improvement in the quality of life for all stakeholders.

Recently I asked  random sample form all walks of life which was their top UK retailer, and why? 90% said John Lewis, and also their flagship , Waitrose. John Lewis employees are Partners,or co-owners of the business. As such they are ambitious in their policies, the way they work and do business. As a Partnership the firm recognises that the management of social, ethical and environmental issues involves everyone. They believe that their long term future id best served by respecting the interests of all stakeholders: staff, suppliers, customers and the wider community. They are actively looking for opportunities to improve the environment and to contribute to the well being of the communities in which they trade.

John Lewis has seven business principles: purpose, power,profit, members, customers, business and relationships. These align perfectly with current thinking on corporate social responsibility (CSR). The board set out their responsibilities in terms of community investment protection , responsible sourcing, fair trading, workplace dignity, diversity and equality.

Building a corporate culture based on these principles ensures CSR issues are embedded in the way they run the business.They believe this culture ensures " we deal with our customers , suppliers and all stakeholders with integrity and respect; this is at the heart of out commercial success".

Today, this business brand has a CSR reputation covering all areas from animal testing to additives , carrier bags to climate change, product to packaging perfection , recycling to responsible resourcing. This is their brand and behavior. As such, they are trusted by consumers and customers- internal and external -recognised today as leaders in CSR, valuing the trust their customers have placed in them over the years especially as a result of taking a stand on issues that matter. As a responsible retailer, they believe it is important to communicate clearly what these issues are, how they impact their business and the position they take. They use every medium to do this with customers, communities, employees, environmentalists, suppliers and stakeholders.You seldom get a second chance to impress -with this operation there is no need to-their reputation precedes them.

Take another organisation with a product some may disagree with. However,their philantrophy and wide ethical expenditure ensures that they are admired; customers prefer to do business with them rather than alternatives. Ladbrokes plc. is a world-leader in the betting and gaming market. They take up to 10 million bets each week and over $14billion in stakes each year across Europe and Asia.They have a robust "Responsible Business" behavior,from the boardroom to their betting shops which, according to their CEO , " is not only central to our license to operate; it also fully supports our strategy for growth."

Professional and punters know the Ladbrokes brand is internationally synonymous with integrity and fair play, upholding best practice industry standards. This provides added assurance for their customers and employees. The company believes in social investment and encourages employees to become active members of their local communities. Today the Ladbrokes brand betting shops is at the heart of the communities where they operate; there are daily stories about their shops which are committed to supporting local people. They encourage healthier and safer places to live and work , as well as fund raise for community causes.

Profit is too often proffered as the only measure by which businesses judge their success. Too often the pursuit of wealth -some would say, given 2012 events, global greed - has been deemed the dominant motivation of management. Some senior executives are seen to be constantly in pursuit of wealth at the expense of consumers and communities.As shown in the examples above, the creation of wealth is not the only valid business objective, albeit a vital and valuable one. Old beliefs are being challenged-2013 onwards will see societies , and conditions governing them, changing rapidly. In business there can be profit in building goodwill -enlightened enterprises and entrepreneurs know this: it is common sense. Sadly enough, common sense is not so common.

A final example,: global telecoms is a competitive market place, I call this the "stupid bills" story, which shows that approaching issues from the customer's perspective affects the bottom-line and can save money. Over recent years the telecoms market has opened up with some companies losing many customers. A particular telecoms giant chases them , even for $1! However many customers are in credit, I know people who have continued to receive this organization's multi page credit statements , for as little as 25 cents, for years -hardly a way of persuading people to come back.

This way of doing business suggests a wasteful company which never thinks of the customer. Just think: one person assigned to cleaning up this mess would save costs and gain brownie points. Try being creative, innovative; what if those customers got ONE letter saying " You're in credit but you've left us. We're going to give your 25 cents to Charity , unless you send us the enclosed saying you want it back". Ninety five percent would not respond and the company would gain goodwill , and save money as well as planet's paper! How many more cases like this are there? Think like a customer, behave with benevolence from the boardroom-then you can succeed in business and still get to heaven.

 

The Management Gurus by Jolito Ortizo Padilla

The most unlikely people can become management gurus,such as academics ,are already in position.Others, because of their job,say as head of a big business,are respected for their achievements,for what they preach in public about managing, or what they may written in articles or books. Our selection of gurus includes all categories,but more important is,what can we learn from them? Alfred Sloan was probably the founding father of modern industrial management systems. He became a very rich person; sufficiently so to endow a school of management named after him at M.I.T. Philip Kotler my mentor in marketing is again an originator; he didn't invent marketing , but he has codified it into a serious discipline which we can study and profit from it. Michael Porter is a kind of management deity , making pronouncements, often dense and difficult to understand , but acute and relevant. W. Edward Deming was an unassuming census clerk with a fascination for statistics. He transformed the industry of an entire country with his ideas on quality, so that Japan became a pre-eminent industrial power. Gary Hamel stirs up controversy, and thus makes people think. Finally Laurence Peter (and colleague Raymond Hull) wrote a book which took a sly at management , and came up with an uncomfortable truth. Although not really fitting into any of our guru categories. Peter has made us look at the way our organization (or is not) working. That is a great guru.

ALFRED SLOAN
The business of business is business

Alfred Sloan was the most original CEO and organizational thinker of the 20th century. He was also clever enough to set his record down in a book that has become a management classic: My Years with General Motors. Sloan became President of GM; it was there that his reputation was made. He recognised the company in a way that became a template for virtually every corporate entity for the rest of the century. He divided the company into separate autonomous divisions that were subject only to financial and policy controls from a small central staff.

The result of this "federal decentralization" were enduring and dramatic. Sloan also introduced systematic strategic planning procedures for the company divisions, the first CEO over to do such a thin. He was President of the company from 1923 to 1956, over 30 years with his hand effectively on the helm of one of the largest companies in the world. However he was known as "Silent Sloan" to the company's worker because he preferred to run the business from behind the scenes. His management style is well illustrated by his famous summing up the end of GM Senior executive meeting: "Gentlemen, I take it we are in complete agreement on the decision here", he stated , and everyone nodded their heads in agreement. "Then ," he went on, "I propose we postpone further discussion of this matter until the next meeting to give ourselves time to develop disagreement, and perhaps gain some understanding of what the decision is all about."

PHILIP KOTLER
Marketing is an art of finding clever ways to dispose of what you make. Marketing is the art of creating genuine customer value. It is the art of helping your customers become better off.

His book , Marketing Management, is a classic textbook;it applies rigorous analysis and mathematical methodology to the practiced of marketing. Its influence has been monumental.Kotler was primarily responsible for lifting marketing out of disrepute in which it had once been held. He changed it from being part of sales to being a recognized strategic function in its own right. Kotler sees marketing as being about the exchange of values between two parties; a social activity , not just a business one. He coined the term " social marketing ", defined as " the systematic application of marketing to achieve specific behavioral goals for a social good".

Kotler sees marketing as something that evolves over time; at first focused on transactional marketing , but now with much more attention to relationship marketing. This is the idea of customer loyalty as the means to build a whole series of sales out of a single transaction.

MICHAEL PORTER
The Essence of Strategy is choosing what not to do.

Michael Porter has been criticised for his willingness to boil his thoughts down into a series of bullet points, each of them with a plodding unmemorable title. Nevertheless, Porter effectively redefined the way that businessmen think about competition. This was largely by introducing the language and concepts of economics into corporate strategy. He began by simplifying the notion of competitive advantage and then created a new framework for companies to think about how to achieve it. This has led him to another field of interest; clustering the extent to which industries of old and new stay geographically close to each other.Porter maintains that businesses do well economically because of this clustering of specialized skills and industries. This , through dynamic competition between them, produces superior products and processes.

Recently, Porter has started to write about corporate social responsibility , applying his thinking about competition to social issues.

W. EDWARDS DEMING
I think I was the only man in Japan in 1950 who believed my prediction -that within five years , manufacturers the world over would be screaming for protection (from Japanese imports).It took four years.

After the Second World War , Deming went to Japan to advise on a census that was taking place there. He stayed on to advise Japanese businessmen how to inject quality into manufacturing industry. At the time, Japan was notorious for the poor quality goods that it produced. By the late 1970s Japan was producing quality stuff.

Behind the Japanese quality miracle was W. Edwards Deming who had begun to teach middle managers about quality. Deming's approach involved demonstrating that all business processes are vulnerable to a loss of quality through statistical variation. Management, he argued , was responsible for 85 percent of that variation . Reduce the variation; increase the quality , was the foundation of his advice.

Deming's method for bringing this about was built on what became known as quality circle. These circles consisted of groups of workers who sought to improve the processes that they were responsible for, in four stages. First, the planning of how to do it, then the implementation of that plan. Then, workers would check variances from anticipated outcomes and take any corrective action that was necessary.

Over a number of years he came to distill his advice for managers into "14 points", which ranged from quality related items such as "cease dependence on mass inspection. Build quality into the product from the start", to more human issues such as remove barriers to pride workmanship".

GARY HAMEL
Strategy didn't start with Igor Ansoff neither did it star with Machiavelli. It did not even start with Sun Tzu. Strategy is as old as human conflict.

Gary Hamel brought a new focus to the subject of corporate strategy, building his reputation with the idea of core competencies. "Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies", they are the things that an organization does exceptionally well.

Hamel took corporate strategy away from the precision of traditional planning. Strategic innovation, he said , will be the main source of competitive advantage in the future. Traditional strategic planning , he argued , is not strategic ; rather it is a calendar driven ritual about plans and planning. Great strategies come from challenging the status -quo.In his recent book he argues: "Like the combustion engine , it's a technology that has largely stopped evolving and that's not good."  What then does the future management hold? Hamel doesn't say "My goal in writing this book was not to predict the future of management , but help invent it, he wrote. Useful things to bear in mind , he suggested , are the need for companies to have purpose  to seek out ideas from the fringes, and to embrace the democratising power of the Internet.

LAURENCE PETER
In a hierarchy, every employee tends to rise to his level of incompetence.

Not many management gurus have their name adopted for a principle, especially when they are not really a guru at all . The Peter Principle first appeared on the cover of the book of the same name;it has since become part of the English Language.

The book was an instant hit. Peter's corollary stated:"In time , every post tends to be occupied by an employee who is incompetent to carry out its duties". One reviewer wrote at the time. "There is a chilling touch of truth behind the whole thing." Industrial organizations realized that it applied to many of them. Most hierarchies know the outstanding finance director who is promoted to be an outstandingly disastrous CEO. Taken to extremes , the Peter Principle is a deeply depressing idea. It means that all employees who are not already hopeless at their job are merely in transit to a desk where they will be. Peter's solution to this "philosophy of despair" was to recommend "creative incompetence" . Anyone can avoid disastrous promotion by creating " the impression that you have already reached your level of incompetence. Creative incompetence will achieve the best results if you choose an area of incompetence which does not directly hinder you in carrying out the main duties of your present position."While looking round your office , you may find yourself wondering who is practicing creative incompetence.