Inspire – issue 11

INSPIRE LOUGHBOROUGH UNIVERSITY SCHOOL OF BUSINESS AND ECONOMICS BI-ANNUAL MAGAZINE ISSUE 11

COVER STORY:

ANALYSING HR: WHY COMPANIES SHOULD INVEST IN ‘PEOPLE ANALYTICS’

Professors Llewellyn and Milne discuss the Brexit vote PG14 The Centre for Productivity and Performance is launched PG18 Coopetition: The new word in business PG24

Editor: Ondine Barry Assistant Editor: Jessica Jackson

LOUGHBOROUGH UNIVERSITY

INSPIRE

SCHOOL OF BUSINESS AND ECONOMICS

WELCOME It is a pleasure to welcome you to the eleventh edition of Inspire, the magazine of the School of Business and Economics at Loughborough University. At the time of writing for the previous edition, and following the departure of Professor Angus Laing in the summer of last year, I was Acting Dean of the School. At the end of February I was invited to take on the role of Dean on a permanent basis; an invitation that I was pleased to accept.

As incoming Dean I am working with the Senior Management Team to ensure that the School continues to build on the firm foundation left by my predecessor. In line with University strategy, we are particularly focussing on raising standards and aspirations across all of our activities, including undergraduate, postgraduate and postexperience education, and in the research that is performed by the staff in the School.

As such, our efforts in the short- to mediumterm are concentrated on the quality of every one of our activities rather than an expansion in their quantity.

The recognition of the School’s strength is perhaps most tangibly noted in our position in undergraduate league tables. Most of our programmes appear in the top 10 in the UK in the recent Complete University Guide and Guardian league tables. We also had a strong set of feedback from this year’s National Student Survey, reaffirming the excellence of our teaching. Talking of the Guardian league table, the University overall was ranked 4th in the UK behind only Cambridge, Oxford and St. Andrews; an outstanding achievement.

One very tangible outcome of the School’s development and positioning has been a significant increase in applications for entry to our programmes. Indeed, applications for the new academic year stand at roughly double this time last year for both undergraduate and postgraduate programmes. This, in itself, is a significant achievement, but one that also presents us with some challenges in managing the demand for our courses.

TRANSFORMING PRACTICE, INSPIRING WINNERS

On a national scale, the Government has recently published its higher education White Paper – ‘Success as a Knowledge Economy.’

A key element of the paper relates to higher education market reform, especially opening up the ‘market’ to new and smaller providers.

Of course, market reform not only implies market entry, but also the potential for higher education institutions to exit the market as well. I should add that, whilst some current providers may feel threatened by such a possibility, this is not something that is greatly exercising our minds at Loughborough.

There are a number of reforms around the management of higher education funding for teaching and research, not the least of which is the introduction of the Teaching Excellence Framework (TEF). In addition to the TEF and the continuing Research Excellence Framework (REF), there will undoubtedly be changes taking place in the medium- to long-term due to the outcome of the recent EU referendum. Given the quality of research and the educational experience at Loughborough, the University and the School of Business and Economics expect to perform well in the teaching and research assessments. But we will not be complaisant. We will continue to strive to raise standards and aspirations, including continuous improvement of the learning experience.

At present, the full implications of the UK’s withdrawal from the EU on the higher education sector are unclear. Loughborough University and the School of Business and Economics have many strong links across the EU and, of course, many members of staff and students from other EU countries.

As the implications of the exit from the EU become clearer we will be working to ensure the continued development of the School and University as a global higher education institution.

I hope you enjoy the range of articles and features in this issue of Inspire. They provide a valuable snapshot of topical work that is going on inside and outside the School. There are also items of news, profiles of some of our new members of staff and an interview with one of our 4th year International Business students.

Sincerely yours,

Stewart Robinson Dean, SBE Loughborough University 03

LOUGHBOROUGH UNIVERSITY

NEWS

Banks and universities working together

Silence Speaks charity event

The Centre for Post-Crisis Finance, alongside the Centre for Professional Work and Society, hosted a two-day conference on banking focused on how the sector has changed in the eight years since the global financial crisis, and how to promote higher standards of behaviour within the sector.

The conference was supported by the Bank of England and the Chartered Bankers Institute, and brought researchers and practitioners working on banking ethics and culture together with some of the UK’s largest banks with the aim to improve the understanding and responses made to banking crises.

Organised by Professor Milne in the SBE, the keynote speaker was Professor Ed Kane of Boston College’s Carroll School of Management, USA. His speech was entitled ‘Ethics Versus Ethos in US and UK Megabanking’.

Kane is a founding member of the Shadow Financial Regulatory Committee and he consults for the World Bank and is a senior fellow in the Federal Deposit Insurance Corporation’s Centre for Financial Research.

The conference is aiming to be the start of many such important collaborations between the banking sector and universities.

Mark Hepworth

On 16 June, SBE hosted a ‘Silence Speaks’ Day to raise money and awareness for the Motor Neurone Disease Association. The event was held in support of Professor Mark Hepworth who was diagnosed with the disease in 2015: “I realised something was wrong when I was laughing more than was warranted by the occasion and my speech started to slur. After many tests I was diagnosed with MND. For me, the disease has been quite rapid, and now I find it difficult to walk, talk, eat and drink. The hardest part is not being able to communicate as my speech has really deteriorated, so I now have to use a portable white board. My mind is as good as ever, but my body isn’t. I’ve made the most of my time by visiting Africa, Japan and parts of Europe.”

Throughout the day staff were encouraged to get involved in any way they could. A silent cake sale was held and staff took part in an e-silence which involved not answering emails for either an allotted period of time or the whole day.

Overall the event was a huge success, and SBE raised over £1,500 for the cause.

Read about Mark’s research on page 32

Julie Holland

A focus on entrepreneurship At the beginning of May, the SBE hosted an MBA conference focused on entrepreneurship. Current students and alumni of the programme were invited to attend this one-day conference with guest speakers Stuart Miller,

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Founder and CEO of Bybox, and Gail Emms, European, Olympic and All England championship-winning badminton player.

The conference looked at entrepreneurship and understanding what

makes organisations and individuals entrepreneurial. The event was organised by Julie Holland, Director of the Glendonbrook Centre for Enterprise Development within the SBE.

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New unique skills training for service organisations SOMS (Service Operating Model Skills) is a new framework designed by experts at the SBE to help specify the skills required for organisations and individuals to effectively design, implement and maintain operating models.

Dr Nicola Bateman and Rosamund Chester Buxton, both members of the Centre for Service Management, developed SOMS based on their research within the CSM in response to requests from coaches and facilitators in the service sector who implement and manage operating models.

An operating model is the design of key elements of a business operation that makes it possible to deliver both the business strategy and service proposition. It provides an architecture and framework for business operations – giving core stability for effectiveness and efficiency with the required flexibility in key areas.

SOMS supports organisations that deliver management training by auditing their material against the framework; these accredited organisations can then award their own SOMS certificates to clients and staff. The first organisation to

be accredited and deliver SOMS training is the OEE which has since gone on to train the Royal Bank of Scotland. SOMSaccredited organisations have their training material, delivery and assessments audited and are registered with SOMS for two years. After two years the accreditation needs to be renewed.

Nicola’s current research focuses on operational effectiveness and the use of visual tools in operational environments.

Most recently, Nicola and former-SBE colleague Zoe Radnor, now Dean of the School of Management, University of Leicester, published their book Public Service Operations Management: A Research Handbook. The book focuses on developing the research agenda and understanding of public service operations management whilst drawing on a range of theory and frameworks.

Customer experience Demand and capacity management Performance management and improvement Process context

People capability

Delivery process design

Strategy governance and leadership

Nicola Bateman

Nicola said: “The Centre for Service Management at Loughborough University developed the SOMS framework because there was a clear need for organisations to be able to train and accredit their people to design, implement and maintain operating models to an approved structure.

“The framework we have developed takes into account insight from leading thinkers in the field and provides a uniquely holistic approach to designing service operations.

“I am delighted that OEE Consulting is the first organisation to be successfully audited to train and accredit clients to both Foundation and Practitioner levels. The training and framework has been developed from a significant amount of theory and practical experience, and we expect this approach to become industry best practice.”

Professor Montibeller awarded the Society for Risk Analysis Best Paper Prize

Read Gilberto’s profile on page 30

The prize is given to papers that have made the most significant impacts to the theory or practice of risk analysis.

decision and risk analytic modelling.

It also covers the de-biasing strategies employed by decision analysts to improve such judgments.

The paper (‘Cognitive and Motivational Biases in Decision and Risk Analysis’) was co-authored with Professor Detlof von Winterfeldt (University of Southern California, USA) and provides a comprehensive analysis of the biases that affect experts and decision makers whenever judgments are elicited using

“These models are being extensively used to support policy making and business decisions worldwide,” says Gilberto, “underpinning the importance of making sure that the judgments represented are unbiased and thus improve the quality of the decision and risk analysis.”

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LOUGHBOROUGH UNIVERSITY

NEWS

Winter 2015 Graduation On 14 December SBE held its Winter Graduation Reception in Fusion Bar on campus. It was a lovely celebration of student achievements with drinks, canapés and awards presentations.

We look forward to the Summer Graduation Reception being held in the Netball Centre shortly after the Graduation Ceremony on Wednesday, 13 July.

For those of you graduating this summer, we look forward to celebrating with you!

IM and IS research in the spotlight In January, CIM hosted its 2nd International Data and Information Management Conference with the theme of ‘Exploring our digital shadow’.

The two-day event was sponsored by CILIP (Chartered Institute of Library and Information Professionals) and attracted attendees from a wide range of universities both here and abroad.

Day one focused on early career researchers and involved a number of workshops including ‘Writing Journal and Conference Papers’ and ‘Managing the Early Stages of your Academic Career’.

The closing keynote speech demonstrated the prominence of technology with a live Skype call to Christine Borgman from the University of California, LA, who spoke on ‘Dataverse in the Universe of Data’.

The keynote speech was given by SBE Visiting Academic Neil Stansfield who is Head of the Knowledge, Innovations and Futures Enterprise with the Defence Science and Technology Laboratory. His talk, entitled ‘Warfare in the Information Age: The Digital Transformation of Defence Operations in the 21st Century,’ argued for an enhanced capacity in information and computational science, as well as in the social sciences, to support UK defence and security.

The conference ended with the presentations of ‘Best 5-minute Madness Presentation’, ‘Best Poster Presentation’ and ‘Best Paper’. PhD student Frances Ryan from Edinburgh Napier University, won both the ‘Best Paper’ award and ‘Best 5-minute Madness Presentation’.

Day two focused on invited and contributed research papers and posters. The winner of the ‘Best Poster Presentation’ was Iris Buunk, a doctoral student from Edinburgh Napier University.

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Crispin Coombs and Tom Jackson (CIM)

— “Attending the IDIMC 2016 conference afforded unique networking and learning opportunities with various academics and practitioners within the field of information management. It has left me with useful insights and collaborative opportunities that will enhance my research.”

— Kayode Odusanya

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Award-winning training at the SBE The bespoke Masters programme developed by the Executive Education team in the SBE, in partnership with the Building Societies Association (BSA), won the ‘Best Training Initiative’ in the 2016 Association Excellence Awards.

The Postgraduate Leadership and Management programme is aimed specifically at customerowned financial services firms (ie, building societies and credit unions).

Bo Edvardsson

Colloquium attracts global service management experts On 28 January, the Centre for Service Management hosted its Inaugural Doctoral Colloquium. More than 80 doctoral researchers and academics from across the globe attended this one-day conference focusing on developing research in the service and information management sector.

The event was the first of its kind within the SBE and was focused on doctoral researchers in the service area, with activities throughout the day such as research and poster presentations, academic and professional workshops, keynote speakers and networking. One of the keynote speakers, Professor Bo Edvardsson from CTF, Karlstad University in Sweden, is one of the world’s leading experts in product development in the service management area.

Professor Edvardsson had some advice to students embarking on their doctoral research: “I would advise that you pick a topic that you’re really interested in and have a passion for, but which also has potential. Many areas are already widely researched.

Service quality for instance is still relatively untouched, but there are a lot of new challenges. And then finally, to try and partner up with someone who knows how to publish and do research.”

The event was sponsored by CSM and organised by SBE doctoral researchers Higor Dos-Reis-Leite and Rachel Fuller, both members of CSM.

— “The collaborative approach shown by the SBE’s Executive Education team means that we have all the intellectual rigour and content you would expect in any Leadership and Management MSc, but with debate, insight and information about the customer-ownership model woven in. We see this programme as an essential part of future talent development in our sector.”

— Robin Fieth BSA Chief Executive

— “The BSA MSc winning the Best Training Initiative Award is a real confirmation of the hard work and creativity the Executive Education team have put into this unique programme. We are proud to support mutual organisations, partnering with building societies across the UK, big and small, to help grow leadership and management skills and talent identification.”

— Vicki Unwin Business Development Manager SBE

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LOUGHBOROUGH UNIVERSITY

NEWS

Celebrating excellence at the Dean’s Annual Awards Dinner The fourth SBE Dean’s Awards Dinner was held on 28 February with over 100 attendees, in recognition of and to celebrate the outstanding contributions and excellence achieved by the School’s staff, students and alumni.

The evening was compered by Professor Jim Saker, and the engaging keynote speech, ‘Carpe Diem – How did I get here?’, was given by the Chief Executive of the Building Societies Association, Robin Fieth.

This year’s Distinguished Alumni Awards went to: • Tony Denunzio, Non-Executive Chairman of Pets At Home Plc • Ian Shepherdson, Chief Economist of Pantheon Macroeconomics; and • Sarah Branquinho, Corporate Communications and External Affairs Director at World Duty Free.

Awards were presented to staff that had gone above and beyond in their roles.

This year’s winners were: • Professor Mark Freeman Researcher of the Year • Dr Chris Wilson Teacher of the Year • Dr Dan Sage Early Career Researcher of the Year • Dr Luke Garrod Early Career Teacher of the Year • Dr Belinda Dewsnap Outstanding Contribution • Malika Lawrance Outstanding Contribution • Jo Higham Outstanding Contribution • Professor L. Alberto Franco Impact on Practice • Professor Gilberto Montibeller Impact on Practice

‘Turning Fans into Marketers’ Audi Masterclass The Centre for Automotive Management at the SBE hosted a Masterclass sponsored by Audi in May. The Masterclass was led by Josh Robinson from Synergy Sponsorship, one of the leading UK sports marketing agencies. This is the second Masterclass led by Josh, the first being ‘Turning Customers into Fans’.

Following on from this, in the latest Masterclass he examined how businesses and brands can use these customers and ‘fans’ as marketers and advocates for their organisation.

The Masterclass was attended by current students and graduates from the programmes delivered by the Centre for Automotive Management.

Josh Robinson

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Awards were also presented to a group of outstanding students: for Student Excellence (Jennifer Mathieson and Alexander Brown); Student Enterprise (Sahil Jhamb); Student Employability (Ella Vega); Doctoral Researcher of the Year (Naomi Kelly and Josh Morton) and MBA student of the year (Michael Vaughan).

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Retirement news After many years of service we say a sad farewell to three beloved staff members…

Ruth King:

Dave Coates:

Lin Fitzgerald:

After qualifying as a chartered accountant with Deloitte Haskins & Sells, and a short period as Chief Finance Officer at Trent Polytechnic, Ruth joined the thenDepartment of Management Studies as a Lecturer in Accounting and Financial Management in August 1989. Ruth has taught undergraduate, postgraduate and executive education courses and for many years was Programme Director of the School’s flagship Accounting and Financial Management degree. She is passionately supportive of the School’s unique position as a provider of excellent business education with its clear embedding of theory in practice.

After graduation, Dave’s first jobs were in computer departments, and he still has fond memories of the days when computers filled huge rooms rather than a corner of the desk. Dave then taught at Plymouth Polytechnic before joining the Department of Management Studies as a Lecturer in September 1989.

Lin Fitzgerald has contributed a huge amount to the School of Business and Economics. She is also very highly regarded in the wider academic community, and the esteem in which she is held in professional accounting circles is evident from her membership of CIMA Council (the Chartered Institute of Management Accountants’ governing body) and its Research Board.

Ruth said: “My time at Loughborough University has been immensely rewarding, and I feel privileged to have “made a difference” to so many students over the years. The special moments are those when someone who has struggled to get to grips with some difficult concepts finally says, ‘Now I get it!’ There is no doubt that things in higher education are changing – but change is inevitable.

The School of Business and Economics is stronger than ever, and I will follow its future development with interest.”

As well as courses in statistics, Dave has taught logistics to undergraduates, operations management to MSc students and soft problem-solving skills to executive education students.

For many years Dave was Programme Director for the Management Sciences degree programme before spending four years as Director of Undergraduate Programmes. In the later role, Dave also oversaw the integration of the Information Management and Business degree into the portfolio of undergraduate programmes. Dave is proud of the place that the placement year holds in the undergraduate Business degree programmes.

Dave has a passion for helping undergraduate students become the best that they can be, and he hopes that the commitment to students continues to be at the heart of the SBE’s degree programmes – and that many future generations of students similarly look back with pride at their time at Loughborough and their support by the School.

— “Ruth leaves behind her a hugely successful legacy of stewardship of the AFM programme over many years. We will all miss Ruth’s wisdom, professionalism and experience and, most of all, her ‘down-to-earth’ practical advice.”

— “Dave has been the soul of the undergraduate programmes for many years. His care for students and his calm management of our successful Business programmes have been instrumental in our continued claim to excellence. Dave’s presence at so many graduation ceremonies over the years remains a clear symbol of his commitment to the most important people in the School – our students.”

— “Lin has been a brilliant mentor to me, and my career would not have progressed in the way it has without her advice and support. We have worked together on numerous projects, and her vision and insight have made a huge difference to the School. Lin has been instrumental in developments on all fronts – the teaching of accounting and financial management, our research agenda and the operational aspects of the School more generally. I am really glad to have had the opportunity to work with Lin.”

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LOUGHBOROUGH UNIVERSITY

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ANALYSING HR:

WHY COMPANIES SHOULD INVEST IN ‘PEOPLE ANALYTICS’

By Andy Charlwood

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LOUGHBOROUGH UNIVERSITY

tu rn ov er

— “HR professionals need to develop an analytical mindset.”

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According to the Chartered Institute for Personnel and Development (CIPD) analytics is a ‘must-have’ capability for the HR profession, a tool for creating value from people and a pathway to broadening the strategic influence of the HR function. Despite this hype, the evidence so far is that HR as a profession is failing to grasp the potential of HR analytics. SBE’s Andy Charlwood asks why this is, and what might be done about it.

Analytics has become a key issue in the HR world, because increasing amounts of data about the people organisations employ is being held on human resources information systems (HRIS). Potentially, this data could be combined with data about finance and operations to model the impact that people-related factors have on organisational performance. The results could then be used to make better data-driven decisions about HR and staffing strategy.

For example, Maersk Drilling were able to identify the critical role of leadership in their off-shore drilling teams; managers who received more positive evaluations from their employees managed teams with lower levels of turnover and absenteeism, which resulted in bettertrained teams who operated their drilling rigs more efficiently with fewer accidents and maintenance time. The analysis led Maersk to focus more attention on selection, training and development of their key middle managerial talent. Maersk also used analytics to identify a large ROI on their graduate training programme for technical specialists, and expanded the programme as a result.

Despite the potential these examples point to, few organisations have made much progress in developing Maersk’s level of HR analytics capabilities. Over the last 12 months, I have been talking to HR and analytics professionals to try to get a better understanding of why this is. I have identified two key reasons. First, there is a lack of understanding of analytical thinking on the part of the HR profession. Second, this lack of understanding is being compounded by the HR analytics industry, which is focused on offering complex products for data management, storage and reporting, which consume large amounts of money and time to develop, without offering the capabilities to perform more than simple strategic analyses.

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You don’t need fancy or expensive software or data warehouses to get started on HR analytics; an Excel spreadsheet will do. However, in many organisations, HR analytics is seen as something that will happen once the data warehouse has been built. Even after this happens, progress to the sort of analytics that asks the big strategic questions about people and performance has been limited. Management information and business intelligence professionals who operate the data warehouses do not necessarily have the skills or mindset to move from data management, organisation and reporting to strategic analytics of the sort practised by Maersk, and they typically have other priorities, servicing other areas of the business.

This matters, because if HR professionals don’t know and understand their data the credibility that data brings will reside with finance and operations management functions instead.

Unless the HR profession wises up to both the potentials and pitfalls, the development of analytics will further embed finance and operations perspectives on people management at boardroom level in ways that will restrict the strategic influence of the HR profession.

It may also damage the quality of working life and employee wellbeing, without delivering competitive advantage for organisations.

MIT Professor Zeynep Ton has shown how the introduction of enterprise resource planning software led to many large retailers cutting back on their in-store workforces to save costs. This increased insecurity and in-work poverty for many workers. However, the cost-cutting failed to have the desired effect, because sales fell too as customer service declined.

What can HR do to grasp the opportunities that analytics offers while avoiding the threat of marginalisation that it brings? First, HR professionals need to develop an analytical mindset. What are the key business issues that people management factors are likely to play a crucial role in? Is turnover making it hard for the business to grow? Would the business benefit from offering more training in response to skill shortages? Is there unexplained variation in the performance of different business units that might be down to people? Once the problem has been defined, it is easier to start mobilising resources to use data to address the problem.

The next step is to build an analytical model. This simply means going through a process of trying

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to think of the causal factors that underlie the problem being addressed. Then it is possible to identify the data needed to operationalise the model and answer the question.

After this process of model building, HR professionals need to get to grips with the more mundane issues of data management and governance. Does the data do a good enough job of measuring the thing it is supposed to measure? If it doesn’t, what changes need to be made to data governance to ensure that information is carefully recorded in the future?

What data from other parts of the organisation are needed to add to the HR data to do the analysis? Will the owners of this data cooperate?

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The next problem is one of analytical skills and capabilities. Most organisations do not have people with expertise in the statistical software packages, like R and Stata, necessary for more advanced strategic analysis. Collaborations with academics may be one route to acquiring this expertise, contracting in commercial research companies may be another.

I am currently engaged developing collaborations around HR analytics with a hospital and a care home provider, to see if we can use their data to answer questions about the relationship between staffing and care quality, which are of both academic and practical interest.

If you want to know more about how HR analytics might work in your organisation, perhaps with a view to collaborating, please get in touch; I am always interested in learning more about how organisations are developing and utilising HR data.

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Andy Charlwood is Professor of Human Resources Management and Organisational Behaviour and can be reached on a.charlwood@lboro.ac.uk

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LOUGHBOROUGH UNIVERSITY

PROFESSORS LLEWELLYN AND MILNE ON THE EU REFERENDUM

Two of the SBE’s most lauded and experienced economists, Professor David T Llewellyn and Professor Alistair Milne, were invited to contribute opinion pieces on the Brexit vote for this issue of Inspire. Whilst there will be other opinions about the vote and its implications – both short- and long-term – there can be no doubt that Milne and Llewellyn have significant financial insight into the future of Britain and its relationship with the EU. 14

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BRITAIN HAS DECIDED… OR HAS IT?

By David T Llewellyn The referendum result, if taken forward, will have momentous implications in several areas: the growth potential of the economy; trade relationships and volumes; inward foreign direct investment; the issue of sovereignty; and the future evolution of the EU. It could also lead to the break-up of the UK if, as is widely expected, it leads to a second Scottish referendum.

One of the weaknesses of the campaign, is that voters were invited to make judgements without knowing what the alternatives would be. My judgement is that, when some of the risks, uncertainties and implications become clear, some who voted for Brexit will have second thoughts.

This momentous decision followed one of the most dishonest political campaigns I can ever recall. Both sides in the debate peddled myths, misrepresentations, deliberate untruths, and created the impression in some areas of certainty which by their nature are extremely uncertain.

Both sides were guilty of peddling false prospectuses about membership and non-membership.

In time, we will learn more about the consequences of the vote. My judgement is that some of the claims of the Brexit campaign will be tested to destruction.

Firstly, the impact on net immigration will be quite small not the least because France will cancel the Treaty of Touquet. Secondly, the gain to national sovereignty will prove to be largely illusory for reasons outlined in my SBE blog post: ‘Ten Myths in the Brexit Debate’. Thirdly, there will be little impact on regulation within the UK as the extent to which the EU imposes unwanted regulation on the UK is grossly exaggerated: most UK regulation is ‘home grown’.

Fourthly, trade negotiations with the EU and the rest of the world are likely to be more difficult, more protracted and less beneficial than the Brexit campaign argued.

In particular, our former EU partners are likely to take a hard line because they will be determined to avoid appearing to allow a country to be excluded from membership whilst at the same time keeping the advantages of access to the single market.

The avoidance of a contagion effect will be a powerful motive for our negotiating partners.

There is also an important technical issue to consider. There are two stages in any exit negotiations: (1) the formal process of exiting, and (2) negotiations regarding the post-exit regime. The former is relatively straightforward and could easily be completed within the stipulated two-year period. The second (negotiating post-exit trade deals with the EU) will be complex, protracted and fraught. Although the UK would like the two stages to begin and be settled simultaneously, some EU members will argue for the second stage to begin only after the first stage has been completed.

Any time lapse between the two stages would imply disadvantageous World Trade Organisation trading rules.

A fifth problem is that, for reasons outlined in my blog, it is unlikely that there will be any substantial net dividend from ceasing to make payments to the EU budget.

Perhaps the main post-exit reality check will emerge with respect to trade deals with the EU. There is an ironic trade-off between access to the single market and the requirements that the EU will impose as a quid pro quo. In my judgment, excluding ourselves from the EU single market (the largest trading bloc in the world) would be very costly. But any arrangement to maintain access would (as in the case of Norway and others) require the UK to adhere to EU regulations, make payments to the EU budget and accept free movement of labour. But these are precisely what most Brexiteers voted to avoid! Furthermore, the UK would be subject to EU regulations but without any influence on their formulation.

In which case, what would have been achieved by exiting?

An intriguing question is whether the Brexit vote is final or whether there might be widespread calls for a second referendum (or a different decision). In the past, referenda by Ireland and Denmark have been subsequently reversed. It is not inconceivable that circumstances might emerge and calls made for a review of the referendum decision. First, over a fairly short period the likely costs of Brexit could become more apparent. Second,

some of the more extravagant claims in favour of exit could be revealed as false.

Third, if there were to be a second Scottish referendum, the break-up of the Union might be an implication of the Brexit vote that many supporters would find a step too far. Finally, conditions attached to any deals with the EU might also be considered unacceptable without the UK having a say in how the EU evolves. In many ways, a review after the terms of exit are known would make for a more rational decision.

There is another possibility. In practice, Parliament has to agree the terms of any settlement with the EU. It could be that, with a large majority of MPs against Brexit, Parliament might vote down any settlement arrangement that did not involve continued access to the single market. The vote was against the EU not the European Economic Area. If Parliament were to insist on such access, the implication would be that the UK (even on exit) would be required to make budgetary payments to the EU, accept free movement of labour and be subject to EU regulations without having any influence on them. But these are precisely the three major planks of the original Brexit debate.

If this were to emerge, the judgment might be made that it would be better to remain inside the EU and have an influence on its future evolution.

Let us remember, referenda are only advisory and have no constitutional authority. Nothing is yet a done deal.

David T Llewellyn is Professor of Money and Banking and can be reached on d.t.llewellyn@lboro.ac.uk 15

LOUGHBOROUGH UNIVERSITY

By Alistair Milne

THE EU REFERENDUM:

WHY THE UK WILL STILL BE A MEMBER OF THE EU SEVEN YEARS FROM NOW

The leave victory in the EU referendum of 23 June comes as quite a shock. Even though the polls were predicting that the race would be close, and the emotional appeals of the leave campaigners were striking an obvious chord with many voters up and down the country, we are not prepared for actually leaving the EU. This is the shock of the unknown. No one on either side of the campaign has paid any attention to detail.

So what will the UK leaving the EU mean in practical terms? If we are honest, we have to admit that nobody really knows quite how this will work out. Now, amidst considerable political uncertainty, the UK government must negotiate with 27 partners and other interested parties in an untested process. The truth seems to be that like any other contested divorce, it will be protracted and messy, the outcome is unclear and the only winners will be the lawyers.

A book could be written about the possible outcomes. My hunch though is that we are going to still be EU members for quite a few years yet.

Why so? The first thing to recognise is that there is no option of simply walking away from the EU’s trade arrangements and starting afresh using ‘World Trade Organisation’ processes to carve out trade deals with all the major countries of the world – the US, China, Japan, Korea, India, the rest of Asia as well as Africa and Latin America. Why not you say? That is what Michael Gove kept repeating during campaigning, that we will simply exit the single market and

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work out our own trade deals around the world to our own best advantage.

Michael Gove did not know what he was talking about, or at least did not acknowledge that this is not a sensible route to reorganising our trade arrangements. The problem is that any new trade agreement involves winners and losers. Of course, when two countries make an agreement to lower or remove tariffs on each other’s products, then both countries benefit, but the detail of negotiation requires careful examination of thousands of different goods or services and taking into account the impact of a deal on individual industries, some of whom may have considerable political influence.

Deals can be done, but they involve immensely detailed argument, lots of give and take, and highly skilled and professional negotiators in order to get the best possible deal for both sides.

An example of the kind of deals that might be struck: we will accept low tariff entry for your steel, in return for a reduced levy on your imports of our Scottish whisky. It would be easy enough for the UK to offer other countries low tariff access to our markets, but if that is without the quidpro-quo of low tariff access for our own products then there is a very high cost to pay in terms of loss of UK jobs.

For this reason, WTO trade negotiations typically take many years, five or even ten, to complete. Also, our trading partners have limited capacity to negotiate, especially if they are already involved

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— “Without the quid-pro-quo of low tariff access for our own products there is a very high cost to pay in terms of loss of UK jobs.”

—

in negotiations with the fast-growing economies of Asia. It is possible to reach agreement relatively quickly, but only by giving up on most demands for tariff reduction from the other side. A quick exit will give us control over immigration, but the damage to our economy will be so great that we will likely not have so many immigrants wanting to come and live in the UK anyway.

There is therefore no alternative except, for the foreseeable future, to remain within the framework of EU law and EU arrangements and only gradually and carefully departing from them. Hence the recent revelation from Boris Johnson that the UK extricating itself from the EU “will not come in any great rush”. We remain a part of the EU, and thus benefit from trading arrangements both with the EU and the rest of the world, until such time, two, three or four years from now, when the new arrangements are fully worked out.

Making these arrangements, however, will also be an immensely complicated process. There will be two parallel sets of negotiations going on at once. The first, which will be triggered by the UK initiating the so-called article 50 process, has a time limit of two years (unless there is a unanimous agreement on extension). This process, which involves negotiations with all 27 remaining EU members, is about terminating all the existing arrangements that exist between the UK and the EU. What about financial contributions to various EU projects taking place in the UK? What financial claim does the UK have on various EU assets? What transitional arrangements might be put in place to ease the shift to the long-term arrangements.

Then, alongside article 50, we will have separate negotiations about the longterm trade and other arrangements that will govern our relationship with Europe, involving not just the EU-27 but the additional four EFTA states (Norway, Switzerland, Iceland and Lichtenstein). These negotiations too will be exceptionally complicated. The route of least resistance will be simply to agree something very close to what is currently enjoyed by Switzerland and Norway: full access to the single market with in return an acceptance of the fundamental principle of free movement of people. This, though, would be the worst of all worlds. Consider for example the concern over possible Turkish membership of the EU: we would lose our right to veto Turkish membership of the EU but we would be forced to accept Turkish migration when and if Turkey were to become EU members. This will not be politically acceptable in the UK. There seem to be two other routes – but both are extremely difficult to negotiate and will require years of hard work before agreement can be secured.

The first would be an agreement at pan-European level to limit the free movement of people, possibly for EFTA countries or possibly across all of the EEA (EFTA + EU = EEA). The second would be to negotiate a sui generis agreement with the UK, giving us some, more limited, access to the single market (for example, shutting out our financial services to protect the EFTA from our most competitive sector) in return for limiting the free movement of people. But this latter option, while superficially attractive, then runs into WTO problems, because by shunning the option of EFTA membership, all our existing WTO arrangements fall into abeyance. In either case we will

also have to negotiate from scratch our contributions to, and benefits from, various EU programs such as research and development funding.

What we can be certain about is that there will be no quick initiation of the article 50 process – because that sets a two-year limit on completion of the other, much more difficult, task of renegotiating the new long-term arrangements with the EU (and once there is a time limit we will have to give up all our negotiating powers and end up with a terrible deal for the UK).

My own judgement is that it will take upwards of five years to negotiate the new long-term arrangements, and then (if we still want to leave) we will initiate the article 50 process, and finally we leave the EU and are no longer subject to its rules and regulations and the free movement of people: by 2023 or later.

Yet again, the only winners are the lawyers.

Alistair Milne is Professor of Financial Economics and Director of the Centre for Post-crisis Finance. Alistair can be reached on a.k.l.milne@lboro.ac.uk

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LOUGHBOROUGH UNIVERSITY

NEW RESEARCH CENTRE

CENTRE FOR PRODUCTIVITY AND PERFORMANCE

DECONSTRUCTING EFFICIENCY: CENTRE FOR PRODUCTIVITY AND PERFORMANCE

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The Centre for Productivity and Performance (CPP) is the latest specialist research centre to be established at the School. It brings together researchers from three different subject areas: management science, operational research and economics in order to create a stimulating, unique and shared environment wherein academics working in the fields of productivity and performance can come together to create potent synergies.

Co-Directors: • Professor David Saal • Professor Victor Podinovski

Members: • Dr Nikos Argyris • Professor L. Alberto Franco • Professor Monica Giulietti • Dr Anthony Glass • Dr Karligash Glass • Professor Baibing Li • Professor Gilberto Montibeller • Professor Robin Sickles • Emeritus Professor Tom Weyman-Jones The CPP’s research agenda focuses on the development of new rigorous methodologies that aim to assist decision and policy makers in evaluating and improving the performance of private firms and public sector organisations. It will therefore be well placed to research

and advise sectors such as health, education, energy and water, where policy makers must incentivise decision makers to improve performance.

The Centre’s membership also embodies further capabilities with regard to understanding how the complex interactions between consumers, firms and regulators affect performance and outcomes.

In particular, research could consider how market regulation and market competition affect productivity and how the balancing of multiple objectives by firms and consumers could affect market performance.

Following in the internationally established mainstream of research on productivity and performance, the CPP includes researchers working on parametric, nonparametric and related methodologies for

The Centre for Productivity and Performance (CPP) and the School of Business and Economics of Loughborough University, UK, are organising the XV European Workshop on Efficiency and Productivity Analysis (EWEPA) in London, on June 12-15 2017.

EWEPA is a major biennial conference on the topics of productivity, efficiency and performance analysis. We expect a very large number of participants to attend, from a wide international community. Presentations are invited on the theory and application of production economics, econometrics, statistics, management science and operational research to various problems in the areas of productivity and efficiency. All popular techniques and methodologies will be represented, including stochastic frontier analysis, data envelopment analysis, bootstrapping approaches, and many more.

assessing the productivity, efficiency and performance of organisations, namely stochastic frontier analysis and data envelopment analysis.

Furthermore, the Centre will conduct impactful research using economics and management science methodologies, such as decision, cost-benefit and risk analysis. Thus, tying productivity and performance analysis together, to provide better support for managers and policy makers in their allocation of scarce resources for driving organisational performance improvements. This is particularly challenging when decision makers are dealing with multiple conflicting objectives (eg, economic versus social), and in the presence of uncertainties, such as those created by competitive forces and regulatory pressures.

THE ORGANISING COMMITTEE Victor Podinovski, David Saal, Robin Sickles, Anthony Glass, Karligash Glass (Kenjegalieva) The official conference website www.ewepa.org will be functional by Autumn 2016 and will include details for abstract submission and registration. Please check our website for regular updates. In the meantime, please forward any queries to our contact person, Dr Anthony Glass at a.j.glass@lboro.ac.uk.

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LOUGHBOROUGH UNIVERSITY

NEW RESEARCH CENTRE

CENTRE FOR PRODUCTIVITY AND PERFORMANCE

— “It’s not just about minimising cost and risk; you also have to look at value and benefit.”

—

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CPP CO-DIRECTOR: David Saal, Professor of Microeconomics

Professor David Saal is a fairly new member of the SBE, hailing originally from the US and more recently from Aston Business School where he was Deputy Director of the Aston Centre for Critical Infrastructure & Services (ACCIS).

A Professor of Microeconomics here at the SBE, David is currently head of the School’s Economics discipline group and externally a Research Professor at the German Institute for Economic Research at DIW in Berlin.

David’s expertise is in the area of performance measurement and he is deeply interested in the question: ‘How do you measure performance?’

“Companies see the research and the various performance indicators and determinants,” he says, “and they then need to decide: ‘How do we balance our decisions?’ It’s not black and white and often involves linking theoretical information to performance or accounting.”

One thing that is immediately apparent when you speak with David is how much he cares about the environment and the impact that decisions have on future generations: “It’s not just about minimising cost and risk; you have to also look at value and benefit – on an organisational and societal level. You have competing objectives – which of course means you’ll have competing outcomes.”

David studied for his PhD at Rutgers University in the US (“I’m a Joisee boy!” he stresses), and his doctoral thesis was on the impact of defence spending on the productivity growth of the American manufacturing industry. This linked directly to efficiency and performance, and he soon discovered his interest in the area and a passion for the link between government policy and performance.

“I wasn’t happy just crunching numbers as an economics student,” he says, “I wanted to take it farther and apply them to issues that mattered, and where the previous results did not make intuitive sense. It turned out that the previous analysis of the impact of defense spending

on productivity growth, which said there was no productivity spilllovers, was wrong, because you needed to look at the very micro level to find the once small effects that have resulted in the technologies that our economy is now based on.

“So that got me started,” he says, “and after moving to England, I did similar work looking at Apartheid-era defense spending on South African productivity, before joining Aston Business School in 1999, where I began to focus on the interface between public policy, privatisation, regulation and firm performance.”

In the following 15 years at Aston, David established himself with energy and particularly water sector-based research working with OFGEM, OFWAT and other regulators, on issues such as measuring efficiency of regulated companies and the interface between industry cost structures and the feasibility and benefits of introducing competition.

He is particularly passionate about the application of profit decomposition techniques, which allow a detailed analysis of how regulatory decisions influence not only productivity but also profitability and consumer outcomes.

After a solid career at Aston, making an international name for himself in productivity and performance and its application to regulatory issues, David made the move to Loughborough University to join (now Emeritus) Professor Tom Weyman-Jones, a world-recognised expert in efficiency and productivity analysis.

Since joining the SBE, David has been instrumental in shaping the Economics group and also the School’s research team in the area of efficiency and productivity measurement. He helped bring Professor Victor Podinovski to the School (read Victor’s profile on page 22) and, together with colleagues Dr Anthony Glass and Dr Karligash Glass who at the time were members of the Efficiency and Productivity Analysis research interest group (EPARIG), spearheaded turning the RIG into the latest of the School’s prestigious research centres: the Centre for Productivity and Performance.

Because the CPP is interdisciplinary, additional members of the Centre include

Professors L. Albert Franco and Gilberto Montibeller and Dr Nikolaos (Nikos) Argyris, who are in the Management Science and Operational Management (MSOM) discipline group, and Professor Monica Giulietti (who also recently joined the School as a Professor of Microeconomics – read about Monica’s research in the last issue of Inspire (‘A Fount of Energy’).

“Alberto, Gilberto and Nikos,” explains David, “look at outcomes like environment and consumer welfare – their tools are focused on decision making and analysis and resource allocation. Very important aspects. Monica brings her wealth of work on consumer behaviour in the energy sector – customers switching providers (or not, as is more the case) – and industrial organisation. In addition, Monica and I work on competition, another key aspect influencing firm and industry performance.

“And finally, Victor and I focus on performance measurement and its application, using rigorous, quantitative tools to assess the performance of organisations and to inform their efforts to improve (Victor develops the tools and I look at how you apply them).”

The Centre is aiming to bring together the best of the EPA-RIG with the MSOM discipline group – one of the leading groups worldwide concerned with behavioural operations research. As a whole, the CPP is unique in its three foci with the overall objective to inform policy and improve the experience of both consumers and organisations.

Read about the CPP on the preceding pages.

David Saal is Professor of Microeconomics, Head of the Economics discipline group and Co-Director of the Centre for Productivity and Performance.

David can be reached on d.s.saal@lboro.ac.uk

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LOUGHBOROUGH UNIVERSITY

NEW RESEARCH CENTRE

CENTRE FOR PRODUCTIVITY AND PERFORMANCE

CPP CO-DIRECTOR: Victor Podinovski, Professor of Operational Research

Professor Victor Podinovski is new to the SBE, having moved from Warwick Business School last year to join the Management Science and Operations Management discipline group.

Originally from Russia, Victor obtained his PhD from the department of Applied Mathematics of the top-ranked Moscow State University where he went on to become an Assistant Professor in Operational Research. He left to join WBS in 1996 and, having progressed to Professor in 2011, was there until 2015 when he was recruited by the School of Business and Economics.

Although Victor’s field of research was originally decision analysis, upon joining WBS he became more interested in the technically close but conceptually different area of efficiency and productivity analysis of organisations. His growing involvement in the area of nonparametric efficiency estimation (known as data envelopment analysis, or DEA for short) was supported by a group of renowned academics, including Professors R. Dyson and E. Thanassoulis, working in this field at WBS at that time.

Victor’s work on efficiency is shaped by his mathematical background. Many researchers in this field are interested in practical applications of the DEA methodology. However, Victor is more interested in developing instruments for such applied work. These instruments are mathematical models that can be solved using computers. For example, any application of DEA is based on a model of the production process, or technology, of a particular industry such as banking or agriculture.

“Often,” says Victor, “the standard DEA models and approaches are too generic in nature and do not take into account

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additional specific information we may have about the production process. Much of my work is devoted to developing improved methods that allow such information to be utilised, leading to a better-informed model.

“I very much enjoy logic and rigour,” explains Victor, “and my work in methodologies, which is based on optimisation techniques, crosses sectors and industries.” His research can be quite technical and complicated, but Victor, who comes across as very patient and methodical himself, explains that he often will get a “Eureka! moment, a sparkle when a problem takes shape and its solution suddenly becomes clear, and all it takes from this moment is to write it down on paper”.

Victor’s work has been published in leading journals, including Operations Research and European Journal of Operational Research.

For many years, Victor has also served on editorial boards of different journals.

He is currently a Co-Editor of Journal of Productivity Analysis and an Associate Editor of Omega.

Upon arriving at the SBE, Victor has joined the existing members of staff who work in the area of productivity analysis. Together with Professor David Saal, he became CoDirector of the new Centre for Productivity and Performance (CPP).

The CPP is aiming to become the leading centre of research for the areas of productivity and performance. The Centre will be unique in that its core productivity and efficiency research agenda also incorporates adjacent areas of economics, such as industrial organisation, and management science, such as decision and risk analysis.

“These research streams coming together will combine a great deal of research excellence at the School into one centre.”

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PhD Students Victor is keen on attracting high-calibre doctoral students to study at the SBE in the field of productivity and efficiency of organisations.

Perspective students will enjoy the multidimensional research environment of the CPP, and have the opportunity to gain access to the global community working on important practical topics of efficiency and performance.

Victor Podinovski is Professor of Operational Research, Co-Director of the Centre for Productivity and Performance and can be reached on v.podinovski@lboro.ac.uk

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LOUGHBOROUGH UNIVERSITY

COOPETITION:

MAXIMISING PERFORMANCE Today’s friend, tomorrow’s enemy. In a networked economy, companies’ roles and relationships are changing rapidly.

The traditional business concept of ‘winner takes all’ is fading, and a new perspective that companies need to cooperate and compete simultaneously has emerged and helped many businesses in maximising their performance.

by Jinqiu Cai with Paul Hughes, Anne Souchon and Kalanit Efrat

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— “The rules of competing have changed in the last two decades because of globalisation, networking and advancements in technology.”

—

To fully understand coopetition, the idea of complementors needs to be clarified first. Complementors are the players whose products/services make your offerings more attractive to customers.

Complementors are not necessarily companies from other industries but can also be your competitors. Competitors often possess their own unique resources and capabilities, which can be shared or exchanged in cooperation. For example, UPS collaborated with DHL to use their logistics channels to Asian countries because UPS’s business clients often required this service while UPS lacked established logistics channels in that region. Therefore, they have to cooperate to keep clients.

With the mindset that competitors can also be complementors, ask yourself these questions: • Who are my competitors?

• What are their strengths and weaknesses?

• Can any of my competitors become my complementors and vice versa?

• Can I establish beneficial relationships with these companies?

Sleeping with the enemy The rules of competing have changed in the last two decades because of globalisation, networking and advancements in technology. Researchers have found about half of all cooperative agreements are with competitors now. So, what motivates coopetition?

Competitive Threats from New Entrants In 2014, Goldman Sachs and JPMorgan created a new trading platform for US corporate bonds. Banks are facing threats from the emergence of FinTech companies: these software houses are developing solutions that are reducing spreads, bringing transparency and therefore putting pressure of fee compression on existing companies.

Competition has forced traditional banks to team up and bring out their own technology to keep existing business and customers from moving away.

Market Drivers In highly competitive markets, competitors sometimes form clusters to share information and resources. Each player in the cluster becomes more competitive than if isolated. For instance, Citibank was the first bank to introduce ATMs in 1977.

When other US banks launched their own networked ATMs, they wanted Citibank to join their network so that everyone’s ATM cards were more valuable (akin to the Link system in the UK). Citibank initially rejected this offer, which cost Citibank significant market share despite eventually relenting.

Cost Reduction Manufacturers cooperate with competitors in procurement of raw materials to bargain down prices from suppliers.

Wineries from the same region share marketing costs and hold trade shows to promote the excellence of their area,

achieve critical mass, and promote wines in their area to journalists and clients. Pharmaceutical companies also share costs on researching new medicines because such costs are particularly high.

Sharing R&D costs reduces risk and enables them to react to market needs faster.

Limited Resources Lack of resources is particularly common among small-medium-size firms.

Manufacturers often share production capacity with competitors through sub-contracts to maximise returns from fixed costs. They can also combine their production capacity together in order to win bigger contracts, which may not be accomplished by any one company alone.

The Learning Race Most competitive collaborations are short-to-medium term project-based agreements. After signing collaborative agreements and setting up objectives, most companies will only review the financial gains or losses arising from the project. However, this overlooks the real value of coopetition. Sometimes companies collaborate with competitors because there is something that competitors are better at. Therefore learning from competitors and paying attention to knowledge generation from the relationship should be an ongoing process during coopetition.

Naturally, you need to be aware that when you are learning from competitors, they are also learning from you. This is why we sometimes compare this competitive collaboration to a learning race. The winner is not necessarily the one who made more money in the short-term, but the one who learned more from their counterpart and converted that into their own knowledge-base for future exploitation.

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LOUGHBOROUGH UNIVERSITY

Contact the research team This article is based on a joint research project being conducted by the SBE, Durham University and Ruppin College. For more information, or if you would like to discuss coopetition with us, please do not hesitate to contact a member of the research team:

Managing Tensions Coopetition does not bring guaranteed benefits. Tensions arise because of the combination of two contrary forces: competition and cooperation/ collaboration. Many relationships fail because the problems in it are neglected or badly managed. Therefore, monitoring tensions and conflicts needs to be an ongoing process. Setting up longer-term arrangements is useful here to establish a platform of trust. Where arrangements are short-term the implications of cheating or opportunism are potentially less for the cheating/opportunistic party.

Opportunism and mistrust hinder the most important purpose of cooperation, which is to develop mutual benefits. The wellbeing of the relationship needs to be monitored and maintained while also monitoring partners’ potential opportunism. Here is a checklist for you to reflect on: • Does our competitor have a history of cheating on collaborative partners?

• Do our competitors exaggerate needs to get what they want?

• Have our competitors breached cooperative agreements or taken advantage of “holes” in our contracts to further their own interests?

• Have our competitors over-promised or not delivered their promises?

• Do we trust and rely on each other?

Before entering into a coopetition agreement, companies need to be clear about what information can be shared and what cannot (the scope and boundaries of the cooperation) and which employees will be involved. Moreover, employees may encounter role ambiguity when working in a project team. Therefore, the role of each individual involved in coopetition also needs to be detailed and confidentiality agreements developed where necessary.

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Research shows having one person (or a very limited few) being responsible for both competing and cooperation is problematic.

Therefore, the management of cooperation and competition needs to be split into teams so that partners can cooperate on some aspects of business but compete on others as normal. This ‘separation’ strategy can minimise tensions between participating firms but may create new challenges like internal tensions among employees. To minimise possible conflicts arising between the two teams, you may wish to develop an ‘integration’ strategy so that both teams understand the logic of coopetition and each other’s roles in the strategy. Internal meetings should be conducted on a continuous basis so that information can be exchanged and progress reviewed.

CONCLUSION

Jinqiu Cai Doctoral Researcher SBE, Loughborough University, UK j.cai@lboro.ac.uk Anne Souchon Chair of International Marketing SBE, Loughborough University, UK a.l.souchon@lboro.ac.uk Kalanit Efrat Senior Lecturer Department of Business Administration, Ruppin College, Israel kalanite@ruppin.ac.il Paul Hughes Senior Lecturer in Strategy Durham University Business School, UK paul.hughes@durham.ac.uk

Many companies are still exploring how to manage and benefit from this sensitive relationship.

Simultaneously, researchers are also studying this phenomenon to better understand it, develop systematic solutions for how to manage it and to make the most of its benefits (while mitigating risks). Coopetition may not be suitable to every company, but it can give you a new angle to investigate competition and develop strategic options.

Jinqiu Cai is a Doctoral Researcher within the Marketing and Retailing group and can be reached on j.cai@lboro.ac.uk

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STAFF INTERVIEW: Dr Patrick Stacey

NAVIGATING EMOTION-CENTRED DESIGN Dr Patrick Stacey explains why emotion is an integral element of good systems design How would you describe yourself in terms of your professional career?

Patrick: I’m a Senior Lecturer in Information Management. I joined Loughborough from Lancaster University, where I was a Lecturer in Information Systems and Co-director of the Highwire doctoral training centre. Before that I was a post-doctoral researcher at Imperial College, a PhD student at the University of Bath and a software engineer in Singapore.

My research chiefly concerns the socioemotional aspects of systems design, development and use. I was drawn to this following actual experience of systems design, which involved a diversity of disciplines including putatively more expressive ones such as art in the production of web-based artefacts.

A common stereotype of the computer programmer is that they are emotionless, but this is changing, particularly with the rise of computer games and the like.

What is your research focussed on?

Patrick: My research on socio-emotional systems design, development and use focuses on the contexts of computer games and cancer care. Strides have been made in re-thinking systems design since Mumford’s seminal humanistic studies.

I take this further by investigating the emotional facets, which the humanistic approach did not quite nail. My work on cancer care system design has been

published in A-ranking journals and a variety of Care magazines. The findings suggest that patients can be nudged into a more positive state by activating their agency (the theory of human social action), which has direct implications for the recuperation process. This insight has been employed by designers of the Maggie’s Cancer Caring Centres.

Laura Lee, CEO of Maggie’s, says: “Dr Patrick Stacey’s study of Maggie’s West London provides a comprehensive summary of Emotion-Focused Product Service Systems and how such systems can create positive ‘emotional chain reactions’ for people with cancer, their family and friends.

“His findings affirm the emphasis Maggie’s places on creating empathic environments as an integral element of effective psychosocial cancer support and his conclusions are now used to bring even greater depth to discussion between Maggie’s and their Architects in the process of translating the Maggie’s Architecture Brief into practice.

For example, in the recent builds at Stirling and Manchester. Specifically, the relationship he found between domestic positivity and patient/user agency or activation helps us focus on particular design processes and facets to heighten the uplifting experience of patients at our Centres.”

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LOUGHBOROUGH UNIVERSITY

NAVIGATING EMOTION-CENTRED DESIGN

— “If we were to rely on big data for scholarly ‘enlightenment’ this would be a mistake. It has to be put into context.”

—

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I’ve used a similar model to help hightech multinational corporations realise the emotional triggers of many facets of their systems design/development processes. By revealing these triggers, they can anticipate emotional issues and deal with them early, facilitating a smoother pipeline. Reversely, employees’ emotional ‘buttons’ may be pushed by incorporating agentic, novel, and personal goal considerations into systems tasks.

These are also important concepts in computer games, and indeed computer game design theory has much to contribute to the systems design and use, perhaps even work design in general. By employing game design thinking, we can enhance the efficacy of many aspects of systems design and use.

To facilitate my research, my professional networks extend to being a Senior Editor for IT & People journal, Associate Editor for the ECIS and ICIS conferences and co-chairing a mini-track at the Americas Conference on Information Systems (AMCIS) called “Negative Cognitions Due to IS Use”. A few accomplishments include winning Best Paper at the ACM Web Science conference (2014), an Associate Fellowship at Warwick Business School (2010-2013), an Advanced Institute of Management (AIM) Scholarship (2009-2010) and winning the Best Software Application award in Singapore (1998).

I also research user-emotion phenomena in Online Social Networks (OSNs). This has produced insights into trends of alcohol consumption and language use and I am expanding this into the Emotive research project with Professor Tom Jackson and Dr Martin Sykora.

Another emotional phenomenon I have researched is computer game violence.

I contributed a piece to The Conversation based on interview data, entitled “Gamers want epic tales, not just violent short-cuts”. It considers the power of the narrative and that epic tales are actually at the heart of any violent game, not the animations and physics.

Patrick: There is a great deal of attention on big data analytics currently. This is ripe for sentiment and other forms of analyses that I’m currently engaged with.

There is an emergent view however, particularly in information systems, that there is no longer a need for a priori theory; that we can find ‘the truth’ by pure induction from big data. This is not only worrying but misinformed in my view. Whichever way we approach a piece of research, there will always be SOME theoretical assumptions, at least at the level of research method. For me, an a priori theory is like a lighthouse, a beacon; it suggests areas of investigation and helps us move towards a better understanding collaboratively. But this

Are there any issues on the horizon that you are keeping a watchful eye on?

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Did you Know?

“I’m a musician and music producer. My music has been aired on BBC Radio, on some TV shows, and released on a few minor labels. I think this also explains my interest in emotion.”

‘beacon’ is always subject to revision or debunk. If we w ere to rely on big data for scholarly ‘enlightenment’ this would be a mistake. It has to be put into context and mustn’t send us into a state of revisionary panic. It’s possible too that this view is symptomatic of the IS field, which currently is under revision itself in terms of identity and cumulative tradition.

Another worry is the demise of the humanities subjects in UK education.

It is misdirected in my view to think that if students focus on STEM subjects that the economy will turn-around.

Firstly, there is so much lag in the economy’s processes that this effect is difficult to detect. Secondly, the arts and humanities are fundamentally about creativity, which is absolutely vital to innovation. A more effective approach is to establish a multi-disciplinary innovation-led economy, rather like the national system of innovation the UK profited from a Century ago. Consider the success of the Albertopolis, when the Arts (Royal College of Music etc.) and Sciences (Imperial College) worked hand-in-hand. QED. On a more positive note, what currently excites me ‘out there’ is the renewed vigour in the space industries. The knockon effect for other high-tech industries including the study of information management and systems is massive, in terms of the usability, efficiency and effectiveness of systems under extreme

conditions. A great deal of scholarly opportunity and innovation awaits.

Do you have any advice for organisations?

Patrick: A top-tip for any effective organisation is: activate the agency of your employees, customers and users.

When people are fostered towards discrete achievements, no matter how big or small, they feel happier and efficacious.

PhD Students Patrick is recruiting PhDs in the area of emotion in systems design and development principally. Also – computer games development phenomena such as gamification + cancer care service systems development and use.

Patrick Stacey is is Senior Lecturer in Information Management, a member of the Centre for Information Management and can be reached on p.stacey@lboro.ac.uk

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STAFF PROFILE Professor Gilberto Montibeller

A decision scientist, Gilberto Montibeller’s research is focused on behavioural operations research, and specifically on risk analysis, strategic decision making and resource allocation in the areas of bio-security and terrorism threats.

He has worked on decision analytics research projects for DEFRA (Department for Environment, Food and Rural Affairs, UK), the UK National Audit Office, WHO (World Health Organisation), FAO (Food and Agriculture Organization of the United Nations) and Babcock International to name a few, creating a name for himself and his research internationally.

Anyone reading or listening to recent news will have heard of the terrible Zika virus that has been plaguing South and Central America, an example of a bio-security threat.

Gilberto and colleagues, notably Professor L. Alberto Franco at the SBE, have been working with a number of organisations on how best to handle the various decisions that need to be made associated with bio-security threats as such.

Current research includes a decision analysis for PAHO (Pan-American Health Organisations) wherein he and Alberto Franco are providing an assessment of the capability of health systems against threats, in this case rabies.

“My expertise,” he explains, “is on designing methods that can support strategic decision making, particularly where there are conflicting objectives and uncertainty. The other area of huge importance is behavioural decision making: we now understand much better how humans make decisions and what kind of biases they have when they make judgements. This is a key area for development in my field as our quantitative models require the elicitation of judgements from experts and decision makers.”

Gilberto and Alberto have together developed frameworks that are designed to help an organisation analyse decisions and prioritise resources based on expert judgments and facilitated decision modelling.

“You have to start by interviewing the top experts in the world and getting their views of what matters in terms of capabilities against threats and also different priorities and begin thinking about the possible impacts. Then you prioritise each consequence and after that assess your capabilities of dealing with the threat and, finally, assess the impacts that the threat may cause. The frameworks we have developed can be applied to any kind of prioritisation of resources against threats.

“Animal health threats, such as Mad Cow Disease outbreak or agricultural-related problems such as drought or food-borne pathogens, they are all similar from a prioritisation perspective: you’re dealing with limited resources and often limited timescales.”

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“There are rabies endemics in many places around the world, notably India and Africa. We are developing a system that basically assesses how capable countries are at dealing with outbreaks of this deadly virus and how they can employ more effectively the very scarce resources against rabies, again using decision sciences and expert judgments.

“I see the link between research, practice and impact as very important in the School and also in my research, so often we bring problems encountered in consultancy projects back to the research bench, which in turn has helped us to develop new methods and ways of supporting decision making.

“Big data has driven the research agenda towards analytics. The issue with big data is that data itself cannot really support decisions; we need to have proper frameworks to support decision making, and these frameworks can only come from decision sciences. We need decision analytics!”

Gilberto joined the School in 2015 from the London School of Economics (LSE) where he was a member of their decision sciences team for a decade – and from September 2016 will take on the role as head of the SBE’s Management Science and Operations Management (MSOM) discipline group. Already a recognised group in the management science field, the MSOM team is swiftly becoming one of the leading groups in the area of behavourial operations worldwide and with a unique focus on simulation, decision and risk analysis, and optimisation. In addition Gilberto is a member of the newly established Centre

for Productivity and Performance in charge of multi-criteria performance analysis for supporting policy and decision making.

Gilberto has won several best publication awards during his research career, from the Society of Risk Analysis, the Institute for Operations Research and the Management Sciences (Informs), and the International Society of Multi-Criteria Decision Making.

Not confined however to Zika, or indeed viruses, Gilberto is also conducting research currently on terrorist behaviour for counter-terrorism risk analysis. “With the terrorist behaviour research I do, the key is to ascertain what they value. The main difference between health threats and terrorist threats is that terrorists actually have a purpose, a virus doesn’t really have a purpose, it’s not thinking about how to attack – but an opponent is, and this has important behavioural consequences.

“I think the most interesting thing is to look at what exists in terms of science and try to apply this in practice to help organisations to better allocate their resources. It’s always exciting improving their decisionmaking processes, but also looking at how challenging it is to build up models that are theoretically sound and fit for purpose. This link between what science prescribes and how to implement these things in this loop between research and practice, is what really attracts me.”

In addition to his research, Gilberto is also passionate about teaching, and is on the look-out for students interested in behavioural operations research. He has also been instrumental in helping deliver one of the SBE’s newest specialist Masters programmes: Business Analytics and Consulting MSc, wherein students studying for the degree might end up working as analysts for a large multinational company or as consultants in banks or public companies: “The idea is to cover all the key aspects of analysis and analytics in an organisation, so it is very flexible for students and very attractive for employers.”

Gilberto Montibeller is Professor of Management Science and can be reached on g.montibeller@lboro.ac.uk

INSPIRE

SCHOOL OF BUSINESS AND ECONOMICS

— “The issue with big data is that data itself cannot really support decisions; we need to have proper frameworks to support decision making and these frameworks can only come from decision sciences.”

—

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LOUGHBOROUGH UNIVERSITY

CAN RESEARCH CHANGE PEOPLE’S LIVES? Mark Hepworth explores his research project, AURA, which is aiming to improve sub-Saharan African academic practices in a bid to create societal improvements on a grand scale.

By Mark Hepworth

AURA (African Universities’ Research Approaches) is a three-year multi-million pound research project begun in 2015, co-created by IDS, ITOCA and academics in the Centre for Information Management (namely, myself). The overarching aim of the AURA project is to develop effective strategies to help foster research capabilities that can be applied in academia, the world of work, the community or for personal advancement.

Employers and educators want critically thinking learners, who are confident in their ability to tackle problems, seek, formulate, communicate and implement solutions.

To encourage such learners is, however, challenging. Students entering higher education (HE) are often passive – ‘waiting to be fed’ (as a fellow colleague once said) – and also highly pragmatic, driven by extrinsic motivation rather than intrinsic.

This is primarily because of the education they have experienced with its constant assessments and an emphasis on content rather than the process of discovery.

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There are exceptions, for example in Finland, where secondary schools encourage learner-centred, holistic, inquirybased learning. In addition, HE, partly due to increasingly large numbers of students and dated pedagogic models, finds it difficult to create learning environments that address these issues, motivate the learner or enable the outcomes desired by employers and educators.

The challenges facing the world require researchers who can help resolve complex, often multidisciplinary, problems.

Academia and research environments need people who can collaborate, identify research problems and potential funding; contextualise their research; fully appreciate and draw on a range of research paradigms and methodologies; effectively process their findings and ensure these are communicated effectively. However, they are challenged by teaching and administrative workloads; often their own professional development exposes them to a limited range of ontological and epistemological

orientations. Plus, the teaching of research tends not to draw on the most affective (note to Mark: effective?) pedagogy. It also tends to be disconnected from the academic’s own research agenda and the pragmatics of developing and implementing successful research projects.

Although universities around the world are aware of these issues, they have tended to approach them in a fragmented fashion, often led by a range of competing players: research support; teaching support; professional development; ICT services (digital literacy and e-learning); academics and academic librarians (who have been supporting information literacy and aspects of research capability for a number of years).

At the undergraduate level in some countries, study skills and academic literacy have become compulsory core modules, yet these suffer from a lack of integration with the research and discovery process. There is therefore a lack of an integrated, holistic

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SCHOOL OF BUSINESS AND ECONOMICS

— “The AURA programme, through a rigorous scientific process, is determined to explore… new possibilities of enhancing teaching and learning and increasing capacity in research.”

— “AURA has helped us bridge the gap in qualitative research… and work in multidisciplinary teams.”

Muhimbili of Health and Allied Sciences

—

Kenyatta University

—

institutional framework that addresses these complex cultural, organisational and individual factors that enable both academics and students to participate in the multidisciplinary and often digital research landscape.

In Africa, research with colleagues in Botswana, Malawi and Zambia found that the situation described above was recognised and is exacerbated by higher student numbers, low staff-student ratios and a lack of resources, including the information infrastructure (although with the spread of internet access this has become less of an issue).

What was evident was a deep desire to foster both research and graduates to address the challenges the institutions experience in their countries, and to have high impact. It was also evident that this could and should be addressed in a way that would not only develop academics’ research capacity, but also their ability to create teaching and learning environments where these capabilities could be fostered among their students. In fact it was found that where students were involved in real-world research, which addressed genuine concerns in society, they were highly motivated to be independent learners. There was therefore the potential for a symbiotic relationship between the development of academics’ research capacity and those of their students and the achievement of the outcomes desired by society, academia and the employers.

As a consequence, the AURA programme was proposed and funded by the UK Department for International Development (Dfid). This initiative drew on a range of knowledge in project management, academics’ and students’ information behaviour, research paradigms, pedagogy and teaching and learning technologies, and ways to monitor and evaluate learning outcomes and impact.

Partners in Ethiopia, Kenya and Tanzania who were ideally placed to participate and help co-construct and develop sustainable, institutional, solutions were recruited. They have played a key role in testing ideas and assumptions and developing strategies to achieve our shared goals.

Furthermore, a multi-modal approach has been taken using social media, blended learning and face-to-face workshops, video podcasts of experts, forums, virtual conferences involving our partner institutions and participants from around the world. The latter was hosted by the World Health Organisation (WHO). This has helped to model effective pedagogy and the use of current technologies. Open access has made all material publically available.

The first year of AURA has been successful, as can be seen from Dfid’s review of progress (you can find the DfID report online), but of course there have been challenges. The larger academic institutions, far larger than an average UK university, for example, find it particularly challenging due to established organisational structures that compete for resources and power and become entangled in the bureaucracy associated with change. Individual capabilities vary.

Motivating and implementing change, new world views, require time. It also requires recognition and reward for those who participate.

Addendum: Professor Mark Hepworth, the driving force behind AURA, has been diagnosed with an aggressive form of Motor Neurone Disease called Bulbar and has recently taken ill health retirement. He says: “Dfid itself is under pressure to concentrate on projects where outcomes and impact are predictable. Whereas AURA, although outcomes and impact are defined, is complex and to some extent evolving and requires institutional change. In addition, solutions need to be co-constructed to ensure their sustainability. As a result, the roll-out to other institutions is in doubt. Nevertheless it is possible for others to benefit since the strategy and all the learning resources are available on open access.”

You can join the conversation about AURA by tweeting #AURA2018 or following @AURA2018

Mark Hepworth is Professor in People’s Information Behaviour and a member of the Centre for Information Management.

Mark can be reached on m.hepworth@lboro.ac.uk or @kampalamark

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LOUGHBOROUGH UNIVERSITY

STUDENT PROFILE Dom Matcham

Dom Matcham is a final year International Business student and Chair of the Loughborough Students Football Club. After taking a year out to pursue his footballing dreams at Rotherham United, between AS and A levels, Dom arrived at Loughborough keen to make his mark.

“In my first year I set up Loughborough Invades, which takes students to new cities for a different kind of night, and it’s currently still running. One event last year, a trip to a nightclub in Nottingham, attracted over 600 students. It was originally my idea, and then I approached my friend James and we’ve both been running it since then. Over the past year we’ve expanded it to St. Andrews, York and Bristol.”

“I was attracted to Loughborough because of its sporting reputation, and the courses it had to offer. The course I chose was in the top ten in the country and the football club was really impressive. In between my AS levels and A-levels I played football full time, so I thought I wanted to carry on my football but also attend a good university.

Loughborough was a perfect fit for me.

Dom is nothing if not enthusiastic, creative and deeply motivated. He entered his latest business idea, ‘LEEN’, into the 2016 Virgin Media VOOM pitch competition in June, making it into the top 10 finalists.

“My course is interesting because you do get a lot of choice in what you study and the assessment criteria is quite effective, in that if you don’t like exams you can pick modules with lots of coursework. I can tailor my course to how I learn and how I would best be assessed.”

Throughout his time at Loughborough Dom has been involved in plenty of entrepreneurial activities.

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“LEEN is essentially a fitness travel site where you can find and book the best gym passes and fitness classes across the globe. I have recently taken on board a fellow IB student, Harry Sellers, who has worked at Nike and Men’s Health, so he’s really well aligned to be part of this business. He has some great contacts and ideas. It’s all very well doing things on your own but it’s nice to have someone there that you can bounce ideas off of, and I think we compliment each other quite well.”

In March 2016, Dom was invited to attend a ‘Founders of the Future’ event

at 10 Downing Street after hearing a talk at the SBE with Andrew Fisher, Executive Chairman of Shazam.

“I met Andrew, got on really well with him, then had an hour-long phone conversation with him soon after where I pitched one of my business ideas, ‘Tortoise’, to him. He really liked it, and referred me to Brent Hoberman, founder of Lastminute.com, who then referred me to the Founders of the Future organisers.”

Through the Downing Street event, Dom was offered two graduate jobs but his passion lies with creating his own business, and we have no doubt he will continue to generate innovative ideas.

To follow Dom’s next move, you can find him on Twitter @dommatcham12

INSPIRE

SCHOOL OF BUSINESS AND ECONOMICS

BUSINESS INSIGHT

By Jeff Prestridge

EVERY LITTLE COUNTS I have spent most of my 30 years as a money journalist, urging people to save for retirement. Sacrifice today in order for a more financially secure tomorrow. ‘Pensions, pensions, pensions’, has been my mantra. Save as much as you can while you can so that you can then enjoy a long and happy retirement, free of money troubles.

their (defined benefit) work pension schemes, endangering the future pensions of those workers yet to take retirement. Just think BHS, Sir Philip Green and a £571million hole in the BHS pension scheme – and then shudder. Pension fund deficits nationwide are in the order of £300billion. Unless you believe in financial miracles, many workers will not get the pension they thought was theirs by right – according to the number of years worked and their final salary at retirement.

Yet pensions in recent years have lost some of their lustre. Indeed, a lot of their sparkle. Blame for this undermining of the pension can be attributed to a range of guilty parties – governments past and present, greedy pension providers and profit-besotted employers.

Against this troubling backdrop, my reading of the personal finance runes suggests that we are about to witness a major change in the way we are encouraged to save for our retirement.

One that could undermine pensions even further.

Governments, as is their way, have meddled too often, in the process bringing about the demise of the defined benefit company pension scheme – once seen as the Rolls-Royce of all pension arrangements worldwide.

They have also tied up pensions in knots with a stream of rules changes, the latest being a reduction in the amount that people can save inside a pension fund before tax charges are applied to any surplus. It’s a tax on pension success – very unconservative-like and, more importantly, horribly unfair.

requires me and you to fund our pensions from taxed income. In return for the loss of tax relief, the Government will lob in a uniform contribution ‘bonus’ into our pension funds each year. At retirement, all withdrawals will then be free of tax – as opposed to the current arrangement where withdrawals (other than the right to limited tax-free cash) are taxed.

Pie in the sky? Maybe. But Mr Osborne is about to test a vehicle set up in such a way with the launch of the Lifetime Individual Savings Account – a savings vehicle that the under-40s will be able to use either to fund a house purchase or build a retirement pot. This could be the precursor to a new pensions world.

Be prepared. Very prepared – but keep on saving in the meantime.

Last year, the Government announced a review into how people are incentivised to save into a pension. Although it said the review’s objective was to ‘strengthen the incentive to save’, it was nothing of the sort. It was a probe into how it could cut the cost of pension tax relief, currently running at some £20billion a year (net). The results of the review were due to be announced in the March Budget but a middle-class backlash and a precarious economic backdrop persuaded Chancellor of the Exchequer George Osborne to hang fire.

Many pension providers – insurance companies in the main – have riddled their plan offerings with onerous charges, making it harder for investors to accumulate pension wealth.

But it can only be a matter of time before Mr Osborne shows his hand.

In all probability, pension tax relief on contributions will be scrapped, a system that rewards high earners the most.

Some employers have added to this pensions woe by underfunding

Instead, it is likely that a new pensions ‘model’ will come into play, one that

Jeff Prestridge is a Distinguished Alumnus and Personal Finance Editor of The Mail on Sunday. He can be contacted via Twitter @jeffprestridge

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www.lboro.ac.uk/sbe

65499 C&PS June16

Loughborough University School of Business and Economics