Bath Business and Society

Research, analysis and comment on the role of business in society from Bath's School of Management

Tagged: higher education

Careers in sustainable business - the Two Loops theory

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📥  Business and society, Education, Employers

 

As September approaches, our current Masters students look ahead to starting their careers and a new cohort begin their studies in Sustainability and Management.  Many of them will be considering whether and how they can make an impact on society and industry. In this piece, current MSc students Sanum Jain and Elliot Johnston use the Two Loops theory to consider where their work and fresh ideas can have the most impact and instigate the most change.

 

What is the Two Loops theory? 

The Two Loops theory, developed by the Berkana Institute, is all about change within our social and economic systems. According to the theory, socio-economic activity can be split into two ‘loops’. The first loop is the ‘incumbent loop’ - which represents the status quo, the way things have ‘successfully’ operated for decades. The second is the ‘disruptive loop’ which represents progressive change and alternative ways of doing business or operating in society.

The theory states that as the incumbent loop reaches its peak in output, ‘disruptors’ start considering more efficient and socially progressive ways of operating. Breakaway individuals look to invest in these ideas, taking intellectual and financial capital out of the first loop and starting to build up the second ‘disruptive loop’. The best way to visualise this is as two waves. As the incumbent wave crests and reaches peak economic output, the disruptive wave starts to build in its shadow.

 

 

Change in the energy industry

The concept of waves of progressive change is particularly relevant to sustainable development. Let’s use the energy sector, specifically fossil fuels and inefficient energy grid systems, as our representation for the first loop. We would argue that we currently sit on the downward curve of the first wave. While non-renewable fossil fuels are still our main source of energy, the threat they pose to our planet is increasingly recognised. At the peak of the coal, oil, and gas industries, pioneers began to experiment with alternatives - nuclear, wind, solar - beginning the disruptive second loop.

The viability of these new technologies has increased and before long the renewable energy industry - or the disruptive loop - will usurp the fossil fuel industry in terms of output. This threat to incumbent firms is already being felt. Large oil companies are making huge investments in renewables in a bid to survive society’s shift away from fossil fuels, as exemplified by Total’s acquisition of SunPower. Such acquisitions are an example of corporate movements beyond traditional CSR, which tends to focus on mitigation of the negative impacts ‘business as usual’. These forays into the disruptive renewable energy industry are representative of what incumbent firms need to do to stay relevant.

 

What does this mean for sustainability

The Two Loops theory does not only work on an economic, practical level.  We believe it should be seen as a representation of a prevailing narrative within business and society.

Seen through the lens of the Two Loops theory, incumbent firms own the concept of sustainability, but they approach it from an institutionalised position. Most firms engage in philanthropic activities for the sake of reputation gains and slowly adhere to the pressures of stakeholders to implement responsible business measures.

We could identify the second loop, which intends to represent an alternative, disruptive vision of how the world could be, as a developing system of innovative, mission-driven organisations and social entrepreneurs whose goal is to solve problems, bring change and benefit society.

Unlike the energy sector, the social endeavours of businesses are at an earlier stage of development, but change is coming. We have seen organisations emerge who represent a shift in the status quo.

Divine Chocolate, for example, is proving that employee owned cooperatives can shift a company’s focus towards a more positive impact for its stakeholders. We have also seen the introduction of Community Interest Companies (CICs), businesses with primarily social objectives whose surpluses are reinvested in the business or in the community, rather than distributed to shareholders. CICs help to protect the mission of smaller disruptive organisations and prevent any dilution of the integrity of the second loop.

 

Creating change in the workplace

What might this theory mean for us, as young people preparing to enter the workplace? Understanding and appreciating the potential for industries to work differently is something that will be key in instigating further change. Thinking about what these changes might look like could provide us with a different path as we start to navigate our professional journeys.

In the context of the Two Loops theory, we may have only considered the option of working for firms that make up incumbent loops. It is very easy to assume these firms will continue to operate in the way they always have, and during the early steps of our careers, maintaining the first loop may seem like the sensible option.

But, as the next wave of business professionals, we believe that it is imperative to look ahead at the future of careers, our industries, and society. We will have the opportunity to contribute to strategy, operational, and CSR efforts within the companies we work for. We will have the chance to act as change agents within these firms. This might lead us or those around us to head out and act as pioneers in new firms that start the next disruptive loop, or we may stick around to help the incumbent loop move closer towards the disruptive loop before it fades into insignificance,

We don’t know if the journey towards a truly sustainable world lies in this next disruptive loop, or the one after that. What we believe though, is that if progress is going to be made we should be using our education and newfound skills to take a risk and invest our careers into nurturing an alternative, progressive, disruptive system.

Image by Daniel Parks

 

 

Public reasoning and the public intellectual

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📥  Brexit, Business and society, Education, Uncategorised

 

In our post-truth times, we are in need, more than ever, of public intellectuals. Sadly, we recently lost one of our own most spirited and courageous free thinkers in the business and society field, Malcolm McIntosh, a Senior Visiting Fellow at the School of Management. Malcolm passed away on 7th June 2017 after a long battle with cancer. In this extract from his forthcoming book, In Search of the Good Society, he speaks of the need for elites such as academics and other experts to reengage meaningfully with society in order to address the world's most pressing social and environmental problems. We shall greatly miss not having Malcolm with us on that journey, but his words shall remain a touchstone. 

We have challenges that must be considered carefully and tackled with quiet and earnest intent: reforming the global financial system to bring it back within our control; developing economies that nurture, rather that destroy our natural capital; managing the development of biotechnology such that it provides solutions, and does not create problems; keeping control of AI, such that, as with the development of writing and printing, we know where we are going and have some control; and, turning our media tech companies into responsible publishers so that they are subject to the sort of social controls that govern our print media and daily libel and slander laws. If democracy is to work, and be more of a viable option for the 50% who don’t currently have it, it must be based on what Edmund Burke, and more recently Amartya Sen, call ‘public reasoning’. Burke said that ‘the only thing necessary for the triumph of evil is for good men to do nothing’ - and in this time fake news and ‘alternative facts’.

This requires the empowerment of what Pierre Bourdieu, and more recently Edward Said, call ‘the public intellectual’ who through clear public engagement restore the role of the expert and dispel the propagandists that populated the Nazi regime and drive the Trump administration and the Brexiteers. Those who voted nihilistically against those they thought to be the elite, who were the elite, must be engaged so that they can see the wholeness of society, both locally and globally, or we are doomed. Rather than coasting on our laurels we must reengage with everyone, everywhere. We must win the argument with reason.

This ‘high-opportunity, high-risk’ society is open to everyone, but also only those who have access to education and free information. As Antony Giddens says: ‘knowledge and innovation always cut both ways’. The future does not lie with nativism or isolationism. Indeed such moves defy the tide of history, the interdependent nature of all our lives, what we now know about the science of the planet, and what Karl Jung called our collective unconscious which holds the soul of humanity. At the heart of the good society should be an understanding of what Jung called instinct, for these aspects are central to what it means to be human: hunger, sexuality, activity, reflection, and creativity. And I count both art and science as forms of creativity.

Globalisation, like trade and capitalism its bedfellows, is not dead, it just needs reforming. This is not a binary, it has to be nuanced. A balance must be found on a global basis to forge what Sen calls a ‘democratic global state’ through public reasoning. The forces of financialisation, social media and consumption are out of control and have formed a model of AI such that we are beholden to their algorithmic vicissitudes. As Angus Deaton, 2016 Nobel prize winning economist, has said: ‘I don’t think globalisation is anywhere near the threat that robots are . . . globalisation for me seems to be not first-order harm and I find it very hard not to think about the billion people who have been pulled out of poverty as a result’. Deaton and his wife Anne Case have explained through enormously useful and detailed megadata trawling both the Brexit and the Trump votes: the ruling elites have been completely out of touch with white working class people. For instance, Deaton and Case highlighted the fact that the only demographic group to decline over the last fifteen years in America, because of ‘deaths of despair’, were white, poorly educated, working class men.

This is the same group that in the UK and the US have not only seen zero social mobility, but where the bottom 10% have gone backwards – they are poorer now than they were before. In the US they are now in the same position as the African-American population have always been. Just as it took the Babbage Report in the village of Haworth in Yorkshire a hundred years ago to highlight the appalling toll of poor sewage and the need for clean water so this may be a time for the elites, that’s you and me, to take a look at what really matters for everyone – at the top and the bottom of society. China and parts of Africa continue to pull people up over the poverty line, while the UK, the USA and India continue to oppress working people. Japan and most of Scandinavia have virtually eliminated extreme poverty, while parts of Europe, such as the UK, seem to lack empathy for those who suffer most. In the UK this group voted for Brexit, and in the USA for Trump. In both cases fear and ignorance triumphed. The answer is not xenophobia led by elitists (Trump and the Brexit leadership - Gove, Johnson and Farage – all of whom are rich with elite backgrounds). And the groups that voted for Trump and Brexit shot themselves in the foot, like turkeys voting for Thanksgiving and Christmas.

It is not too late. All the statistics prove that globally we have made good progress over the last seventy years and we will look back and see that 2016 was a moment to take a deep breath and ask what went wrong, and then move forward again. The megalomaniacs, the greedy, those lacking in empathy and many corporate interests will always try to take over, but just as meerkats and bonobos run on cooperation so the best of humanity has been when we collaborate and cooperate. We must work for a feminised future not an avaricious masculine past. The future is liberal, collective and progressive but it requires us not to walk past on the other side or hide in a dark room listening to Beethoven with our headphones on until the world blows over. Art may be the best way forward, for it is through artistic expression in different dimensions that we can see the world afresh.

 

This is an excerpt from In Search of the Good Society by Malcolm McIntosh, which will be published by Routledge on 26th October 2017.

 

Higher education as a global commodity

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📥  Education, Policy

 

Rajani Naidoo is Professor and Director of the University of Bath's International Centre for Higher Education Management, and recently organised a conference in South Africa to explore higher education's contribution to inclusive development. In this piece, she reflects on the commodification of higher education and the implications for the sector in emerging economies.

In the past, powerful organisations such as the World Bank promoted the view that investment in higher education in emerging economies offered low returns. There is now widespread agreement that quality higher education is essential for emerging economies to escape their peripheral status in the global economy. However, burgeoning demand, a lack of financial and academic resources and brain drain prevent poorer countries from developing strong higher education systems. In this context the provision of degrees by foreign universities could have much to offer. But what are the benefits and the pitfalls when universities from rich countries offer degrees in poorer countries?

Universities in high income countries have previously operated under a model that was distinct from business. However, this is changing. Government funding has been reduced and the belief that universities should be independent from corporate and political interests has been challenged. The social and cultural mission of higher education has been eclipsed by the demand for it to contribute in a more direct way to each country’s competitive edge in the global economy. Universities have thus become more like businesses, and they seek to increase revenue by transforming degrees into global commodities.

A growing number of public and private non-profit universities have joined for-profit conglomerates in exploiting new market opportunities in low income countries. At the same time, rapidly growing economies such as China have developed new higher education relationships with the developing world. There have been a number of benefits. Foreign universities have helped meet demand for higher education where there is little domestic capacity. They have opened up the possibility of degree level study to sectors of the population such as particular ethnic groups, or women, who might otherwise be excluded by their governments. They have also been more responsive in linking courses to changing labour market needs.

Numerous examples exist of reputable foreign institutions working in partnership with universities in emerging economies to meet national goals for transformation. An example of this is the University of Bath School of Management partnership with Nelson Mandela Metropolitan University in South Africa. Leaders from South Africa’s universities come together to study for a professional doctorate with the aim of contributing to the positive transformation of  the country’s higher education system.

But there are also dangers. Universities that are financially squeezed may protect provision in their home countries whilst viewing developing countries as mass markets for lower cost learning. The reduction of costs may be achieved by focusing on scale rather than quality. There may be a large reliance on learning resources which simply provide information in an attempt to ‘teacher proof’ delivery. This becomes important when less qualified, less experienced, and thus cheaper faculty are used. Rather than using a variety of feedback mechanisms to help students learn in a developmental way, there may be too much reliance on easy-to-assess computerised multiple choice tests. There is little investment in academic resources such as libraries.

When motivated by profit, foreign universities are more likely to offer programmes in disciplines which generate revenue at the expense of disciplines that are expensive or difficult to teach. This draws students away from studying these subjects at indigenous universities, who as a result lose the income from popular courses that they need to cross-subsidise expensive subjects such as Medicine and Engineering. This may in turn lead to a shortage of graduates in key strategic areas that are essential for a country’s economic and social development.

In a marketised higher education environment, there is little interest in research degrees. Masters and Diploma programmes based on coursework hold the promise of economies of scale. These courses are often similar to undergraduate courses and do not contribute to training new generations of indigenous researchers.

Such dangers impact on all countries but these are particularly risky in countries which have undergone social transformation and where democratic dispensations may be fragile. So how can developing countries capitalise on the benefits of foreign universities while protecting themselves from the most corrosive forms of commodification?

Robust regulation is required to protect students from unscrupulous providers and assure quality. It is ironic that developing countries are urged to create unregulated markets in higher education while rich countries maintain strong protectionist mechanisms in their own countries. At the same time, regulation should not stifle innovation but should be flexible and fleet of foot to assess different types of institutions. Foreign universities could be steered through incentives so that rather than merely competing on price and prestige, universities compete to meet developmental goals. In addition, decisions can be made regarding which aspects of higher education should be publicly funded and protected and which can be opened to the market.

Above all, policy makers should desist from implementing competition as a solution to all the problems facing higher education. We need joined-up policy to foster a combination of collaboration, competition and differentiation between domestic, foreign and private providers in order to create a system from which everyone benefits.

 

Image by Aaron Hawkins