Educators’ dilemma: is neoclassical economics consistent with the laws of physics?

As educators, our most important task is to help prepare our students to lead successful professional and personal lives, for the next 40+ years, until 2060 and well beyond. While much is unknown on this time scale, we now do understand the big picture, including fundamental human needs, as well as the material basis for satisfying them, especially around biodiversity and energy – the previous blog “Reflections on 2018: complexity, messiness, progress” provides a few illustrations.

So, while we cannot provide recipes valid for half a century, we certainly can help our students develop a way of thinking, even a worldview, which will prepare them for the challenges they will face.

This means first and foremost understanding human society and the economy in “real”, biophysical terms, including the underlying energy and material flows.

We could start with biophysical economics, a school of economics based on biological and physical resources, with a strong focus on energy, especially around food production, new energy sourcing, and the concept of EROI (energy return on (energy) invested). Biophysical economics has a long history, starting in the 1920s with Frederick Soddy (building on 19th-century insights, especially the laws of thermodynamics), with major contributions by Nicholas Georgescu-Roegen in the 1970s, and more recently by Charles A. S. Hall, Cutler Cleveland, and Robert Costanza. The Encyclopedia of Earth provides an excellent overview.

So far, this work has remained outside of mainstream economics. There are many reasons, including a much higher complexity of looking at underlying material and energy flows instead of money, and the fact that most leading practitioners, including all listed above, are not economists. It requires a fundamentally cross-discipline approach. At the same time, this is a big opportunity for teachers of other disciplines beyond economics to help expand learners’ perspective. I sincerely hope this gives rise to many fundamental reflections.

Biophysical economics is closely related to ecological economics, but differs in its focus on energy and entropy, compared to the latter’s focus on ecosystem services. Both are forms of strong sustainability, as opposed to environmental economics and similar approaches, which complement neoclassical economics with pricing externalities, but regard all forms of capital as interchangeable (for example, human misery or polluted water is OK, as long as sufficient economic value is created). Biophysical economics not at all related to econophysics, which applies methods (originally developed in physics) around stochastic processes and nonlinear dynamics to classical economics – to simplify market economics worldview, physics tools.

Notwithstanding its sophisticated mathematical toolbox, neoclassical economics considers itself (and is) a social science, focusing on markets and human behavior, mainly of consumers and managers. In the classical view, scarcity leads to higher prices, spurring technological innovation and substitution, allowing the economy to continue growing (forever).

Let me illustrate this disconnect with a few examples:

  • Absurd energy-related decisions: producing bioethanol (a biofuel) requires oil, and for every 100 joules (J) of oil, around 80 J of bioethanol are produced – a net energy loss of 20%, in addition to pollution, biodiversity loss, human labor, etc. In real terms, this makes absolutely no sense; with subsidies, in our distorted financial system, it might be profitable.
  • New energy sources: our growth society requires constant discovery of new energy with an EROI (energy return on invested) >11 (Fizaine and Court, 2016, “Energy expenditure, economic growth, and the minimum EROI of society”). Historically, oil had an EROI over 100, current oil sources are around 17 and falling; solar panels typically have an EROI of 4-8. There are currently no known new energy sources, broadly scalable in the coming decades, with the required EROI to maintain our growth economy.

revisiting the limits to growthSource: Hall and Day, 2009, “Revisiting the Limits to Growth After Peak Oil”

  • Decoupling economic growth from energy use is unfortunately not happening. In fact, due to the rebound effect, energy efficiency often leads to an absolute increase in energy demand. For example, our consumption of energy for lighting has increased about 100’000 times over 300 years, or about 10’000 times per capita, in spite of an extraordinary increase in efficiency. The consumption of light itself increased a billion times.

All models are oversimplified and wrong; some are however useful. Unfortunately, the neoclassical economics model has outlived its usefulness. Consequently, many economists, managers, and political leaders make dangerous decisions not understanding the physical limits, or at least the practical limits to substitutability, scaling and deployment. The reason I believe the biophysical economics model will be much more useful is that it starts with the most fundamental constraints of all life: energy and entropy.

To answer the question in the title: with the notable exception of limits to material and energy consumption growth, neoclassical economics mostly stays within the laws of physics (without necessarily paying much attention to them), sadly ignoring the biosphere it depends on. Just as bad, it completely ignores human well-being beyond the idealized, rational, by now discredited “homo oeconomicus”. As such, it is no longer serving the society it is part of.

The way forward: while we know what we need to do, we don’t quite know how to get there in the relatively short time available, in a world of soon-to-be severely constrained energy and degrading-but-still-functioning ecosystem services.

As educators, we’ll succeed if we equip our students to experiment as (social) entrepreneurs and find effective solutions to human and environmental issues. Just as importantly, our students should feel empowered to shape the reality they live in, take proactive steps towards changing the rules of the game, vote and engage in politics, and serve as role models in their communities. Some of their projects could become the seeds of future human prosperity. Helping learners move beyond neoclassical economics will be a necessary first step. A deep awareness of the biophysical reality might be a good place to start. This is our challenge for all teachers and learners, in every discipline.

Sascha_NICK Author: Sascha Nick, BSL Professor

Reflecting on 2018: complexity, messiness, progress

December is an excellent time to reflect on the year, and 2018 requires more reflection than most. Wherever one looks, 2018 was messy, from politics (consider, for very different reasons, Brexit endgame, “gilets jaunes”, or Korean denuclearization) to how we deal with major issues: picture 30’000 COP24 delegates in Katowice, surrounded by coal mines and coal dust, struggling to put in practice the good intentions of the 2015 Paris Agreement.

2018 was a year of extraordinary progress of knowledgeTo illustrate:

In February, Steven Pinker set the tone with his well-researched book “Enlightenment Now: The Case for Reason, Science, Humanism, and Progress”, demonstrating the spectacular improvement of human wellbeing on 15 dimensions, including health, safety, and happiness, using data to dispel common myths.

This was followed by one of the most important scientific publications ever, the IPCC 1.5°C report. For the first time, we know exactly what to do to limit warming to avoid the worst consequences (simplified: reduce CO2 emissions by 58% by 2030, replant forests).

 

Report October 2018

Source: IPCC 1.5°C Report, October 2018

Scientists from the University of Leeds scaled these limits to a per capita level in their paper “A good life for all within planetary boundaries” (Phosphorus 890 g, Nitrogen 8.9 kg, material footprint 7.2 t). They introduced a new indicator eHANPP (embodied human appropriation of net primary production), representing biomass harvested or killed for human use, with a suggested limit of 2.62 t per person per year.

Why don’t we act as needed? Knowing exactly what to do is only a first step, but it’s not very useful if we don’t act. So, we need to ask, why are most of what we do “business as usual”? Why do we keep collectively creating outcomes most of us don’t want, like environmental destruction, broken communities, lack of trust, financial crises, millions of refugees, malnutrition, or obesity? This includes individual, company and government action, often pulling in the same (wrong) direction.

Part of the answer lies in the way our socio-economic system has evolved, with its stocks, flows, buffers, positive and negative feedback loops, rules, parameters etc. A simplified example: debt payments require growth, which requires cheap energy, meaning burning fossil fuels, leading to pollution and many other problems.

A bigger part, however, is probably linked to the way we think about the economy: as an independent system, following its own mechanistic rules (remember supply and demand curves from Econ101), separate from the environment and partly detached from society. At its core is money, as a benchmark, behavior driver, store of value, in addition to being a means of exchange.

Without this cultural baggage, an independent observer would see a still beautiful planet with a threatened biosphere; closed material flows but open energy flows powered by the sun; a dominant, individually smart but collectively stupid species obsessed with power and money; a highly complex human society and civilization as a subset of the biosphere; an economy as a subset of society and sub-subset of the biosphere, completely dependent on ecosystem services it is busy undermining.

Outlook: Looking back as far as our data will allow, with Steven Pinker’s help, suggests hope. The progress of knowledge in 2018 reinforces this hope, in spite of the rising complexity of today’s issues. The next blog will examine how we as educators can contribute.

Sascha_NICKAuthor: Sascha Nick, BSL Professor

A successful entrepreneur: our alumnus Lorenzo Wiskerke

Lorenzo WiskerkeLorenzo Wiskerke completed his BBA at Business School Lausanne in 2006 and his MBA one year later. His sister Chayenne also did her BBA at BSL in 2010, and then joined Columbia University in New York to obtain her Master’s degree.

Lorenzo and Chayenne are members of a well-known family in the Netherlands, active in the onions’ business since 1933. The company was founded by Jacob Wiskerke, their great-grandfather, and is currently run by Chayenne.

An entrepreneurial spirit is obviously in the DNA of this family.

When Lorenzo was studying at BSL and his wife Loris Vitry-Trapman at Ecole Hôtelière de Lausanne, they identified a gap in Switzerland’s food supply: high quality, fresh fish at an affordable price.

That is the reason why, in 2012, Lorenzo started his own company Royal Fish: http://www.royalfish.ch/pages/fr/accueil.php

At the beginning, the company, based in Aclens (VD), imported fish directly from Dutch fishers, but now it also has suppliers in France, Scotland, Ireland, Norway, Italy and Spain, each one specialized in one kind of fish.

The big asset of Royal Fish is the supply chain they were able to put in place. Just in time is the characteristic of it, guaranteeing the freshness of this highly perishable product. Concretely, the fish is delivered six times a week from Monday to Saturday, and customers can order fish until 5 p.m. for the next day!

The company mainly works with restaurants, hospitals, schools and catering companies such as Eldora.

It is rapidly growing (30 % annual growth rate last year), and currently employs eight people. It expects a turnover of 5’000’000 Swiss Francs for 2018.

If you want to hear Lorenzo talking about his studies at BSL and about this endeavor, you can use the following link:

https://soundcloud.com/business-school-lausanne/voices-of-bsl-podcast-lorenzo

BSL is particularly pride to count such successful entrepreneurs among its alumni.

Congratulations to Lorenzo and his wife, and our best wishes for a bright future!

Author: Philippe Du Pasquier, President of the Board

An exotic Internship between BSL & Sumba Hospitality Foundation

In 2017, Business School Lausanne (BSL) and Sumba Hospitality Foundation (SHF) in Indonesia co-created an Internship program tailor-made for BSL students called Sustainable Development Internship.

You may wonder, what is Sumba? And what do they do? So, let us share a brief presentation of this Foundation. SHF offers a vocational training in hospitality for Sumbanese underprivileged youth. The holistic education program provides students with general courses and enables them to graduate in Culinary, Food & Beverage Service, Housekeeping or Front office. To allow the students to apply and train their skills, SHF has opened ten luxury guest pavilions, a SPA as well as a restaurant & bar to the public. Education, environmental awareness and sustainability are the three most important principles of the foundation. It is in the belief of the foundation that tourism can be a positive force in poverty-stricken regions particularly when its community is involved in the process. The goal of the foundation is to assist in providing viable employment to Sumba’s young inhabitants and break the cycle of poverty while also protecting the environment and their culture.

A large part of the campus is dedicated to the growth and maintenance of a sustainable, organic farm, created with the precepts of the burgeoning field of permaculture in mind. Produce from the land are used in the restaurant and the students are taught current farming methods with guidelines to better cultivate their land. SHF aims to raise the students’ awareness of their environment. The school is powered entirely by solar energy allowing SHF to be completely off the grid and re-uses wastewater for irrigation.

One of our BSL students on Sumba Island, Morgan Manin, is doing his internship as part of his Capstone Project (Master of International Business); I took the opportunity to ask him via email for a preliminary description of his internship, to share with our community.

BSL internship

“Reading about SHF on the website and social media made me choose it to do my internship, as my values match perfectly with the foundation’s values and I believe that I will be learning a lot during my Sustainable Development Internship. After the first week, I have identified areas where I could be helpful and learn, which I can summarize with three main tasks and responsibilities. The first one is to analyze the financials at SHF and therefore create a budget for each department meaning the actual school, the administration, the hotel, sustainability and the F&B, including an indication of Capex by departments. I will also guide the SHF finance team towards greater transparency and define cost improvement initiatives.

The second main responsibility I have is to create a Triple Bottom Line Reporting (TBL). TBL is a progressive mode of reporting and seems suited to the SHF. Sustainability centric practices are deeply entrenched in the DNA of the SHF business model. Environmental and social responsibility sit at the core of daily practices and this alongside the true cost of these operationalized initiatives must be reported. I will then gather information to facilitate understanding around the social, environmental and economic practices of SHF. I will conduct research into TBL, using these understandings and research knowledge, with the aim to create a presentation that highlights sound reasoning and justifies or rejects TBL as a means of reporting at SHF. If TBL is found to be preferred mode of reporting, the presentation will include a step-by-step guide detailing a prescribed pathway toward the implementation of TBL reporting at SHF, and then create the strategy that details how to implement TBL as the reporting mechanism for SHF. In the event that SHF management decides to implement TBL as their primary mode of reporting, I will then begin the process of implementation.

To finish, I will be the IT ‘go-to’ person for the team, helping everyone out on Excel, Word, etc.

I will also consider improved ways of using IT for communication for the SHF team.

Before I arrived here, it was planned that I would have to formulate a business plan to be shared with others wanting to duplicate the model of the SHF. I will, therefore, formulate a business plan, constructed in such a way that it has the capacity to facilitate like-minded operators wanting to duplicate the SHF model.

In addition to my primary tasks and responsibilities, I will have ad-hoc tasks set by the Executive Director, I will take care of the students during their study hours and exams as well as shepherding them at night and being in charge of sport activities for the students; also, I will monitor Community English classes for young Sumbanese children living in the neighborhood.

I strongly believe that I will learn so much through this experience, being in a different environment, living in this community, having multiple tasks matching with what I have learned at BSL, and matching the BSL values”.

Morgan, we are all proud of you, we wish you a great experience and let’s see if we can come visit you at some point on that amazing island!

Dani-Linkedin-300x300Author: Daniele Ticli, BSL Head of Careers and External Affairs

Five steps to make Company Value Statements work

A friend of mine said recently to me:

“I never understood why companies publish value statements. I cannot imagine that this has any effect.”

If I look at many corporate values statements I have to admit that he is right: empty word bubbles on glossy paper, that present an organization that does not exist in reality. Cliché values like teamwork and integrity are overused and are not get specified what they really mean for that given company. In consequence values statements like this cannot create any emotional appeal. And finally, very often nothing happens in the company after the value statement is published. It stays a dead piece of paper with no link to real-life behavior.

What a pity! What a waste of time and energy! I think this situation can be explained by the fact that companies tend to underestimate the complexity of managing values in a credible way and overestimate the power of publishing policies and written statements.

There are tons of studies that show that companies with a strong values-based culture are more successful because connecting your people to a purpose that goes beyond the profit motive is extremely powerful and motivating. Humans want to be part of something that is bigger than themselves, where they can have impact, appreciation and pursue common positive goals. Values can be like wings that lift us to do amazing things together.

So what do you need to do to avoid the 4 apocalyptic riders of bad value statements?

The 4 apocalyptic  riders of value statements:

  • Too general
  • Not authentic
  • No emotional appeal
  • No link to behavior

1. Make values specific to your company

The first step towards a values statement that works is putting extra effort into the choice and wording of values in order to develop values that are specific for the respective company.

Instead of simply picking the usual suspects of over-used values like the above (excellence, integrity, and communication) or the equally commonplace client orientation, teamwork or trust, you need to find out what really defines the culture of your organization. Choosing client orientation, teamwork and trust is the lazy way out. Nobody can be against them. All companies need client orientation, teamwork, and trust because without them they would soon be out of business.

You need to do some more heavy thinking and find out how exactly e.g. do you serve your customers. How do you do it differently than your competition? What is unique about a clients’ experience with you?

A good example of specific values comes from Ikea. Their values are: Humbleness and willpower, leadership by example, daring to be different, togetherness and enthusiasm, cost consciousness, constant desire for renewal and accept and delegate responsibility. They have defined values that really fit their culture and could not be used by almost any other company.

2. Only authentic values are credible

The second step towards good value statements is ensuring that they are authentic. This is best achieved by developing them in a combination of a top-down and bottom-up approach. This helps to avoid the common pitfall of coming up with a list of unauthentic and unrealistic values that reflect the wishful thinking of top- management. In fact, it is often hard for the people at the top to know what the culture and climate of the rest of the company look like. In general things tend to look rosier from the top.

Does that mean you should start with a couple of employee focus groups to come up with your new company values? That depends on your situation and your corporate culture. The danger of starting with a bottom-up development is the fact that you create expectations with coworkers that might get disappointed by the top management.

When I work with clients on value statements I usually like to start with a first input from the top management that is then specified and modified by a series of bottom-up workshops. In these workshops, we discuss questions like:

“What do this values really mean to us?”

“Could we do without this value?”

“What are positive stories about this value?”

“What do we still need to do to realize this value?”

With the material from these workshops, it is much easier to come up with a first draft for a value statement that is both authentic and specific. In addition, you gain employee buy-in from the very beginning.

3. Aim for the hearts

The third step toward good and credible value statements is making them emotionally appealing. The Bavarian Bank Sparda is a thought-provoking example of how to do this in a courageous and unusual way. Unlike most companies, they did not initiate their values management process with a top-down process but with a focus on the individual coworker. The banks visionary and charismatic CEO, Helmut Lind, Sparda wanted to change the bank by shifting everybody’s attention to the strengths of every coworker.

On a voluntary basis, coworkers filled out an online questionnaire and participated in workshops that helped them identify their natural talents. This created an enormous emotional traction, credibility, and trust because suddenly the men and women in the bank felt seen in their own special characteristical strengths. A deep desire that every human has. It also became much easier to appreciate diversity, because the value of difference was made transparent in the workshops.

I am deeply impressed by this approach that really starts with the people in the company. On the basis of this appreciative process that emphasized the different strength of coworkers the next step was to look for agreement and unity: What should be the values that we all could agree to for our company?

Helmut Lind had the courage to give up his leadership control and put his trust into the collective intelligence of his people by giving them all a say in the development of the banks value statement. The fact that an amazing number of 74% of all coworkers volunteered to participate in the process, shows the high level of engagement the strength-focus process had created.

The values that were the result of this process were robust, credible and emotionally appealing. They were strong enough to enable the bank to decide not to invest in e.g. in risky speculations into currencies or food because it contradicted their value of justice and sustainability. A contested strategy before the financial crises of 2008, a wise decision afterward. And while the banking sector, in general, did not do very well after 2008, Sparda Bank continued to be successful.

4. Link values to behavior

The fourth step towards a successful value statement is making a systematical and constant link to behavior and the management’s relentlessly communication about the values.  We find a positive example of the constant implementation and communication of company values at the hotel chain Ritz-Carlton.
Their 12 service values all start with “I” which expresses personal responsibility and they are all very action oriented and specific for the hospitality business:

Service Values: I Am Proud To Be Ritz-Carlton

  1. I build strong relationships and create Ritz-Carlton guests for life.
  2. I am always responsive to the expressed and unexpressed wishes and needs of our guests.
  3. I am empowered to create unique, memorable and personal experiences for our guests.
  4. I understand my role in achieving the Key Success Factors, embracing Community Footprints and creating The Ritz-Carlton Mystique.
  5. I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
  6. I own and immediately resolve guest problems.
  7. I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
  8. I have the opportunity to continuously learn and grow.
  9. I am involved in the planning of the work that affects me.
  10. I am proud of my professional appearance, language and behavior.
  11. I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.
  12. I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.

Source: http://www.ritzcarlton.com/en/about/gold-standards

But their implementation and communication effort does not stop here: already when recruiting new employees the values fit is tested. Once hired every new employee gets trained on these values for two days and has to present them by heart in front of their colleagues. In order to integrate the service values in the day-to-day work every morning in every Ritz-Carlton Hotel around the world, a 15-minute work meeting takes place: the round-up. During this meeting the priorities of the day get communicated, the service values get discussed and positive “wow” stories of exceptional examples of customer service are shared. This is the Ritz-Carlton way of using the emotional power of storytelling.

They also go one important step further: They empower their employees to deliver great service by granting every employee a discretionary spending of $2,000 (per incident) to satisfy a customer.

Sounds a bit extreme? Maybe… But Ritz-Carlton seems to be very successful with this highly structured approach for creating a values-oriented corporate culture: Employee turnover is at a very low – 18% versus the industry average of 158%.

5. Leaders must relentlessly communicate and implement values

The fifth and final step towards an effective value statement is making everybody – and especially leaders – accountable for the consistent implementation and communication of values.  The main responsibility for making a values statement fly, lies with managers, of course.

An inspiring example comes again from the CEO of Sparda Bank, Helmut Lind (yes, I admit it, I am a fan….). Since one of the company values is mindfulness, he is giving mindfulness seminars to his coworkers on 24 days every year! A great example of how you can continuously show your coworkers that you are serious about your company values.

Unfortunately, often the leadership of a company comes up with some fancy words and then expect that somehow magically their coworkers will adopt these values and use them as a guideline for their behavior, while top managers hide in the shadow. This is a very efficient way to quickly lose coworkers buy-in into the company values.

Somehow leaders seem to forget too easily that they are under constant observation by their coworkers. If their coworkers do not see that their managers fully embrace the companies values, role-model them continuously, talk about them frequently and convincingly, everybody will forget about the values and follow the cues that the leaders’ actual behavior shows them.

As always also in value management actions speak louder than words. You cannot expect that your coworkers will embrace the value of reliability if you are e.g. notoriously late for meetings.

Furthermore, leaders need to step in if their coworkers disregard company values.  If one of your company values is “Appreciation” and you have a manager who constantly mistreats his coworkers you have to take action, even if this abusive manager happens to be economically successful or a friend of your boss. But holding others accountable for company values and role-modeling them should not only be done by managers but by everyone in the organization.

Summary

In conclusion, even though value statements at the first glance seem to belong in the soft, fluffy and everybody-knows-how-do-it category of management tools, they require in fact rigorous thinking, honest soul-searching, and consistent implementation and communication.

Everybody can come up with a list of nice sounding company values. But if a value statement is not specific to the companies culture, business model and strategy the value statement will not create positive effects like orientation and motivation for employees.

If value statements are not authentic, they will not be credible and create more harm than good. At best, they will be quickly forgotten.

If company values are not emotionally appealing they will not win peoples’ hearts – which actually is the core aim of a value statement.

If company values are not constantly communicated and linked to behavior, nobody will take them seriously.

If managers are not shining examples of living and enforcing the company values, nobody else will do so.

So, yes, you should absolutely have company values and if done correctly your company will profit enormously from such a process, but you have to know that you will open a Pandora’s box if you do not do it with care, conviction, and authenticity.

Related links:

https://culture-officer.fr/5332

https://www.userlike.com/de/blog/unternehmenswerte

https://rctom.hbs.org/submission/the-ritz-carlton-ladies-and-gentlemen-serving-ladies-and-gentlemen/

https://enorm-magazin.de/ein-banker-geht-aufs-ganze

https://www.ecogood.org/de/gemeinwohl-bilanz/unternehmen/portrats-sparda-bank-muenchen-eg/

Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo, BSL Professor

Learning Design for Millennials Measuring learning: are final exams relics of the past?

One of my father’s recurring nightmares is sitting a geometry exam. He has told me about it several times. I also have similar nightmares, very recently I dreamed the final exams period had started and I was not ready. Even when I woke up later, I could still feel the tension in my body! The gap between my father, myself and my students spans across four generations. I believe there are certain aspects of the educational system that have been taken as given for long, we neither question them nor try to change them. Final exams are one of them. “The thought of a final exam still gives me and my father nightmares, and I have not seen many students who are fond of the idea, neither have I seen a teacher who is keen on correcting exam papers, so how come they are still around?” I thought to myself a few years ago. I had always been reflecting on the effectiveness of final exams as a means of evaluation and finally decided not to give final exams anymore in the courses I teach. “But, how do you manage to measure learning and grade the students?” you may wonder.

I will give you a very recent example. This fall, I taught a course on Systems Thinking at Business School Lausanne, where the students did not have to take a final exam. Instead, they collectively created a blog that summarized and synthesized the most important lessons they had learned from taking the course. You can find their blog here https://bit.ly/2K0KRen.

BSL students

40% of the students’ grade came from the work they did on the blog and every single one of them received the maximum grade here. I will now outline here why I was convinced they all deserved it.

They spent much more time on creating the blog than they would have spent on preparing for the final exam. I asked them to create an activity log that captured what everyone did and how much time they spent doing it. As this was a publicly shared document and everyone including myself had access to it, there was no chance of free riding. The moment someone claimed they have completed a task, but was, in fact, incomplete or was done by someone else, others would have reacted to it. Towards the end of their work, we collectively decided it would not be necessary to keep track of activities as everyone thought the contributions were equal.

A friend of mine who was part of a rowing team, once told me that a competition was approaching and her team had to prepare for it. The team met at 5 a.m. every other day for six months. “There was no way to stay in bed and ignore the alarm. My other seven team members would be there waiting for me,” she said. Perhaps, this was something every member of the team was thinking and it was difficult for all of them to get up regularly at that early hour for such a long time, but the team spirit made them get up on those mornings and put in that effort. She later said that they won the championship that year and she regarded this as one of her best experiences. A similar situation happened in the case of my young bloggers. Almost all my 17 students met outside class hours, sometimes on days, they did not have any courses at Business School. They did not want to disappoint their friends. They all managed to put in the effort. At the end of the day, some ended up doing more than others, but those who did less did much more than they would have otherwise done, had they been faced with a final exam.

Teaching is the best way to learn. I made it clear that the blog should be written for those who were completely new to systems thinking, with no technical background. Achieving this meant that learning the course content became a secondary challenge. As a guitar player, once I heard a valuable advice that if I am not able to play a part, I should try playing something that is a bit more complicated, even if I keep on failing at it. After a while when I go back to the original challenge, much to my surprise, it is not a challenge anymore. The same thing happened with my students. There are so many ways that the way they presented the content in their blog can be improved, but here the blog was not an end, it was a means, a transitional object, and a vehicle for learning the course materials.

In their journey to create the blog, they developed various soft skills, such as working in teams, writing, creating short tutorials, project management, etc. Based on my experience, I have realized that the best way of designing for learning soft skills is as a by-product and in an emergent way. Such skills are not best transferred in a direct and intentional fashion. They should emerge as a result of carrying out other tasks. In addition, my course was the first occasion for many of these students to meet. The blog they created provided an opportunity for them to get to know one another and made them closer as classmates. Their collective effort resulted in the creation of cohesion among them as a class. It made the whole class a very well-functioning, self-organizing team.

In retrospect, there was no better way I could have directed them towards learning and internalizing systems thinking concepts than having them create the blog. There were a few technicalities involved in how this happened.
– I gave them the choice between creating the blog and doing the final exam. I could clearly see that anything that exempts them from doing the final exam would be a joy for them. In other words, in their view, nothing can be worse than a final exam and avoiding final exam served as a good incentive for them to create the blog.
– I told them that we can skip the final exam only if they do a great job with the blog. I even told them that their work will be evaluated by how many readers they can attract to the blog.
– I followed their progress on a continuous basis, tracked the changes they made and met with them outside course hours to give them feedback to improve their work. I wanted them to feel that what they are doing is important to me.
– Another acceptance condition I put forth was that everyone should know all the contents of the blogs since it would not make sense if an author is not aware of the contents of what he/she has created.

My final question for all learners and learning designers: are final exams relics of the past? What other components of the current educational system can be replaced, modified or improved?

Stay tuned for the next blogs in this series and Keep on Learning!

Learning Design for Millennials is a blog series capturing Arash’s experience as a learner and an educator.

Profile Pic_ArashAuthor: Dr. Arash Golnam, BSL Professor

 

Four Reasons why Corporate Value Statements don’t work

« Excellence », « integrity » and « communication » These seem to be the most popular buzzwords in corporate value statements.

I roll my eyes as soon as I see these values anywhere. Why? I will give you four reasons why they make me nervous:

1. One size does not fit all

First of all, values like excellence, integrity, and communication are way too generic. They could be adopted by any organization. Who would be against excellence, integrity, and communication? But are they really specific for the company and its culture or business model? Probably not! Excellence can mean many things to different people. It certainly makes a difference what we mean by excellence whether you are working in a bank or a hospital.
Integrity? It means that you always stick to your moral principles no matter what the benefit might be if you break the rules. This value, too, needs a lot of definition and soul searching before a group of people like a company can agree what it really means to them: When is a gift a bribe? How do we deal with confidential information?  Can I be friends with a supplier? Etc.

Pic Blog Corporate Values prt1 Yes, way too often value statement are empty word bubbles! Please avoid that. Photo by rawpixel on Unsplash 

 

2. The true colors are always shining through

Second, often companies succumb to the temptation to choose values that sound appealing but are too far away from their corporate reality and somehow hoping that the simple act of proclaiming that value it will become a reality in the organization. For example, when companies put “communication” in their value chart they wish to express with this value, which is not even a value but an activity, that they want everyone in the organization to cooperate effectively and openly with as little political power play as possible. Wishful thinking in many cases!  Of course, the people in the company know this and react with cynicism.

You cannot declare that your company cherishes collaboration, open communication, and teamwork when in reality your corporate culture is driven by fierce internal competition, politics and monetary incentives only. What we need is an inside-out approach. You have to do your internal cultural homework before you go into the world and brag about what a wonderful company you think you are.

Values statement will never work, if they are only the icing on the cake, they have to be the very foundation of a corporate culture. Within the icing-on-the-cake approach, the top management comes together and agrees on some fancy sounding words that are then communicated to the lower ranks. This does not work. It is like putting on makeup without washing your face. Or like learning some moves and gestures to appear more self-assured without doing the hard internal work of personal development.

France Telecom had to learn this the hard way in 2008, when they got hit by a series of over 30 employee suicides: victims stabbed themselves in the middle of company meetings, jumped out of the window at work and left goodbye letters that clearly stated that they killed themselves because of the pressures and fears at work. At that time France Telecom was in a difficult transition from a state-owned company to a player in the highly competitive and dynamic international telcom market and could not fire employees with a public servant status. Therefore, CEO Didier Lombard had introduced a merciless shake-out project that aimed at demoralizing employees in order to make them leave the company “voluntarily”.  As a reaction to the suicide series, Lombard said that this “fashion” of suicide should stop and that the media coverage created an effect of contagion. The waves of public outrage went high, Lombard had to leave and is still today on trial for harassment. Of course, at the same time, France Telecom had a value statement that said that the well-being of their employees was very important to them.

It is clear that after a disaster like that it will be very, very hard to ever make coworkers believe in the beautiful words of a value statement again. This is one point that is often ignored when companies initiate a value management project: If you screw it up, credibility is lost for a very long time, if not forever. At the same time, it is true that values can and should be aspirational. You can use values as part of a change program. But if you do that you have to make clear that you know that you are not quite there yet and prove that you have measures like training, organizational redesign or new performance standards in place to get there.

3. No Emotional appeal

Third, if values are too generic and unrealistic they do not create any genuine emotional response or connection for the men and women in a company who know the true colors of their organization all too well.  Of course, client orientation is important, but this is not a value that would deeply resonate with the hearts of employees. This is nothing that makes people get out of bed in the morning and go to work with joy and anticipation.

How can you make corporate values emotionally appealing? Not easy, but it helps to always start with a motivating overall purpose of the company that goes beyond the profit motive. Humans always yearn for meaning in their life. As philosopher and Holocaust survivor Viktor Fraenkel famously put it: “Life is never made unbearable by circumstances, but only by lack of meaning and purpose.”

This human desire for meaning is nicely illustrated by Harish Manwani’s (COO of Unilever) TED talk in which he tells the story of his first day at the company where his boss asked him why he was there. Manwani answered: “To sell lots of soap!” and his boss said: “No, to change peoples lives!”, because the original purpose of Unilever was to improve hygiene in order to help prevent contagious diseases. Clearly changing peoples lives is more emotionally appealing than selling lots of soap, right?

4. No link to everyday behavior

Forth, very often values statements are not linked to behavior. They get developed, glossy brochures rolled out, employees (maybe) read them, laugh bitterly because they are so unrealistic and cheesy and then they forget them because nothing happens that would link these values with the behavior of managers and employees. The mere proclamation of value buzz words will never, never, never influence people’s behavior. How people in an organization actually behave is the ultimate proof to the value pudding. Without this link to behavior, a value statement loses all credibility and disappoints all expectations that unavoidably come up when a company opens the value Pandora’s box.

And by the way, these three values, excellence, integrity, and communication were the corporate values of Enron. And we all know how this ended: In jail, bankruptcy, and shattered hopes. Somehow Enron had managed to win prizes for their value statement, but it definitely did not keep their top management from cooking the books and inciting their employees to cut-throat business behavior with the help of an inhumane incentive system.

In a nutshell, ever so often value statements do not go beyond orgies of humanistic prose in shiny brochures that nobody can take seriously. In extreme cases, they are a more or less random collection of buzzwords sound like this hilarious song by Weird Al: https://www.youtube.com/watch?v=GyV_UG60dD4

On the other side, of course, values are important for companies in our highly volatile, complex and ambiguous times. Old-school management that works with order and command is too rigid for this new fast-moving world. The younger generation of corporate coworkers is looking for more freedom, more fun, more autonomy and more purpose in their jobs. Here a corporate culture that is driven by values and a purpose that goes beyond simple profit maximization creates a positive appeal for future coworkers, higher levels of motivation with current coworkers and a more inspiring and more flexible way of decision making. Ideally, instead of applying rigid rulebooks, controls and processes, coworkers decide on the basis of common values.

So how can you come up with a value statement that will actually have these positive effects instead of creating cynicism and ridicule?

Stay tuned for my next blog post and on the five steps to make the value statements work.

Prof.-Bettina-PalazzoAuthor: Dr. Bettina Palazzo, BSL Professor

How business – and the world – benefit from intrapreneurship

intrapreneurship

Image credit: Emily reider on unsplash

I recently co-designed and co-facilitated an MBA elective on the subject of ESG (Environmental and Social Governance) and Sustainable Investing at Business School Lausanne.

Teaching an elective to MBA students at BSL was a great opportunity. And to be honest, initially I was not at ease, as it was completely out of my comfort zone. But I ended up doing it – and I totally loved it!

The point is that this experience made me realize (again!) that as an entrepreneur (and freelance-on-a-mission as I like to define myself at the moment), stepping out of your comfort zone and nurture your positive mindset are essential if you want to change the world for good.

This is also true within companies: if you want to change the status quo, stepping up, daring to be visible and stepping out of your comfort zone are skills to be developed.

Why is intrapreneurship key for companies – and the world?

According to the Intrapreneurship Institute, there are 3 enduring benefits of intrapreneurship within organizations: new products and services, growing employee satisfaction and market share increase.

Letting employees experiment and “train” their intrapreneurial mindsets and skills, letting them “fail often and fast” (as we say in the start-up world) are key for agility, adapting to increasing VUCA environments and thus, long term business success.

During the MBA elective, we pushed students out of their comfort zones, “sparking” their entre- and intrapreneurial mindset through a hackathon: learning and applying new tools and frameworks in a short period of time and pitching a project “for good” with positive social or environmental impact to (fictional) potential investors or board of directors.

A call to action for business

Let your employees “train” their intrapreneurial mindset and skillset for a positive impact initiative they care about! It will not only motivate them to follow through if it’s a cause they truly care about, it will also enable them to train these skills so that they can use them in their daily jobs. A win-win for people, planet and profit!

marena eirichAuthor: Marena Eirich is a CSR consultant and creator of teams4purpose, a program that helps organizations activate positive impact from within. She is a graduate of the Diploma in Sustainable Business from BSL and HSG.

A tribute to Kofi Annan, former UN Secretary-general

Kofi Annan

I was saddened this weekend when I heard on the Swiss TV about the death of Kofi Annan, who died on Saturday, August 18, 2018 in Bern, Switzerland at the age of 80.

Born in 1938 in Kumasi, Ghana, Kofi Annan started his UN career at the World Health Organization in Geneva at the age of 24. He moved rapidly within the international organization and became deputy director of UNHCR. He was elected Secretary-General of the United Nations in 1997.

In his opening speech as UN Secretary-General, Kofi Annan spoke about his agenda and already mentioned fighting poverty and AIDS as well as addressing global warming as priorities for the United Nations.

During his mandate, his life-long commitment to peace was recognized worldwide when he was co-recipient of the Nobel Peace Prize with the UN in 2001.

He left his position at the UN in 2006, but continued working with the same energy for the enhancement of peace through his engagement with the Elders, a group of former diplomats founded by Nelson Mandela, whose members regularly meet and plan discreet interventions in world conflicts.  In 2013, he succeeded Archbishop Desmond Tutu as Chairman of this group. The list of members, including BSL Doctor H.C. Mary Robinson, can be found following this link: https://theelders.org/

The intense collaboration of these people and their close friendship is reflected in the words of Gro Harlem Brundtland, former Prime Minister of Norway and Deputy Chair of The Elders:

“We are devastated at the loss of our dear friend and fellow Elder. Kofi was a strong and inspiring presence to us all, and The Elders would not be where it is today without his leadership. Throughout his life, Kofi worked unceasingly to improve the lives of millions of people around the world. While we mourn his passing today, we resolve as Elders to continue to uphold his values and legacy into the future”.

There are now numerous obituaries and tributes in newspapers, websites, etc. all justifiably insisting on Kofi Annan’s crucial role for a better world.

I don’t intend here to cite all his achievements, which would be incredibly difficult,  I prefer to develop reflections related to three points: the launch of the UN Global Compact, the Kofi Annan Business Schools Foundation (https://www.kabsf.org/) and the strong links of Kofi Annan with our country, Switzerland.

UN Global Compact

Personally, I was very impressed by the fact that Kofi Annan, then secretary-general of the UN, launched the UN Global Compact. Kofi Annan announced it at the World Economic Forum on 31 January 1999, and the Global Compact was officially launched at the UN Headquarters in New York on 26 July 2000.

It was truly visionary, in particular for someone who dedicated his career to diplomacy and was used to dealing with governments, to understand the crucial role that companies of all sizes from SMEs to big multinational corporations should play in the development of a better world.

Mr. Annan asked corporate leaders to commit publicly to Ten Principles in the areas of human rights, labor, the environment and anti-corruption, encouraging businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

The UN Global Compact is now the world’s largest corporate sustainability initiative with 13’000 corporate participants in over 170 countries. It supports the broader UN goals, such as the Sustainable Development Goals (SDGs).

Joining the UN Global Compact in 2006 and taking part in the activities of the Swiss network was a first step in the sustainability journey of BSL.

The Kofi Annan Business Schools Foundation

The aim of this Foundation, a part of the larger Kofi Annan Foundation, is clearly explained on their website: “The idea behind the Foundation is to facilitate access to Masters and MBA education at leading business schools for those from Least Developed Countries. The aim is to provide opportunity for talented and motivated individuals from these countries, who do not belong to a privileged class and lack sufficient financial means to graduate with a degree from an international business school. Upon return to their home countries (a condition of the Fellowship), the Fellows are expected to contribute to the strengthening of entrepreneurial capacity and the fostering of a stable market economy as an effective catalyst for their country’s development, job creation and poverty alleviation”.

 What is very interesting in my opinion in this statement is the snowball effect it implies. If the scholarships help talented students to reach their goals, by coming back to their home country these educated people can contribute to the development of Least Developed Countries.

BSL sponsored a few students from African countries over the past years.

The links of Kofi Annan with Switzerland

In 2006, Kofi Annan was awarded the “Prix de la Fondation pour Genève”. In his speech as the recipient of the prize, Mr. Annan reminded us of a few facts: He was a student at the “Institut Universitaire des Hautes Etudes Internationales” in the early 60s and started his UN career at the WHO whose headquarters are in Geneva. He also met his second wife, Nane Lagergren, in Geneva.

In his speech he also mentioned that no other city in the world counts as many international organizations and institutions.

When he left the UN in 2006, Kofi Annan chose to settle in Geneva.

Among the Swiss personalities who made public declarations after Kofi Annan’s death, I would like to mention Jean Ziegler, who was a student at IUHEI at the same time than Kofi Annan and remained a friend of his. Jean Ziegler was chosen by him as the Special Rapporteur on the Right to Food in 2000.

Dr. Joseph DeissDr. Joseph Deiss at BSL, when he was President of UN General Assembly (2010)

I would also like to mention Joseph Deiss, a former President of the Swiss Confederation and another Dr. H.C. of BSL. Joseph Deiss insists in an interview published in Geneva based newspaper Le Temps on how welcoming Kofi Annan was towards Switzerland and how he alleviated his hesitations to ask the Swiss population if they wanted to join the UN. Dr. Deiss also believes that Kofi Annan increased the confidence of his compatriots in the organization. In fact, the adhesion to the UN had been rejected by 75 % of the Swiss population in 1986, but in 2002, it was accepted by 54 % of the population and by 12 cantons against 11.

If Switzerland was only the 190th country to join the UN, it was the first one to do it as the consequence of a popular vote.

We, the BSL Community, are truly and deeply saddened by this news. Our heartfelt condolences go out to all his family and friends. This world will never forget your significant impact and we are all honored and blessed to have been alive during the time you brought such significant change, which touched the lives of so many. We thank you from the bottom of our hearts, and may your soul rest in peace.

 

 Author: Philippe Du Pasquier, President of the Board

Keeping the student spirit up!

We meet with BSL professor Erdal Atukeren, who’s telling us about his journey into continuing education.

Can you tell us a little bit about yourself, what is your background?

I am Turkish by birth and Swiss by marriage. I studied Economics & Business Administration (B.A.), and Econometrics (M.A.) in Turkey. Then, I went to Canada and completed a Master’s degree and a Ph.D. in Economics at the University of Ottawa. I came to Switzerland in 1995 and worked at the UBS in emerging markets research and credit risk management areas. Afterwards, I joined the ETH in Zurich and worked there for more than 13 years in economic research, mostly focusing on macroeconomic modeling and forecasting and doing third-party projects. Currently, I teach at BSL and other business schools. I am research-oriented and I have published a good number of articles in academic journals. I serve as an Editorial Board member in International Journal of Sustainable Economy, Journal of International Trade and Economic Development, and Investment Management and Financial Innovations. I am also serving as Guest Editor at the Journal of Risk and Financial Management (Special Issue on Macroeconomic Forecasting) and at the Resources journal (Special Issue on Global Economic Development, Resources and Environment).

What do you teach at BSL, and how long have you been part of our faculty?

I started teaching at BSL in Fall 2010 with the MIB Economics for Business course. Afterwards, I taught BBA courses and later on Master’s courses as well. I currently teach Business Mathematics & Calculus, Business Statistics, and Sustainable Business Strategy at the BBA level. At the Master’s level, I teach the Economics for Business, Risk Management, and the Sustainable Economy courses. In the past, I taught the BBA Operations Management and the MSIF Quantitative Methods I courses as well.

What do you enjoy most about teaching?

I like to see when students start a course with little or no knowledge in some subjects and how it changes overtime. Sometimes, the students think they know a topic; but upon systematic thinking about the concepts, questioning how they are operationalized, and scrutinizing the assumptions they are based on, they see that it is not an easy task. If they are confused about what they think they knew before, I am happy. This is also important for being innovative and developing the thinking-outside-the-box skills. The class environment at BSL is very multicultural. I like to see how students from different cultures and backgrounds tackle an issue and also work together to generate diverse ideas.

How did you get to start up studies again? And what did it bring you?

I live in Zurich. I come to the BSL by train for my classes. Depending on the term, I travel a lot between Zurich and Renens. I read a lot on my trips but I was thinking about using my time more productively and do my readings on a more systematic basis. Four years ago, with these thoughts in mind, I enrolled in a distance education program in Sociology offered by Anadolu University in Turkey. Anadolu University has a Western European Office in Köln – Germany, which coordinates their distance education programs offered in Europe. I’ve now graduated with a B.A in Sociology. Sociology provides a broader perspective into the issues we are facing today. It gives a more holistic perspective – going beyond the narrow lenses of other disciplines.

What is the one piece of advice you would give to a graduating student?

Congratulations! Keep learning, keep the student spirit up. We are always students.