Inspire - Issue 6

Loughborough University School of Business and Economics Bi-Annual Magazine /

issue 6 /

Transforming the digital world Cover Story: Transforming the Digital World P8 Looking East for Foreign Direct Investment P14 Jeff Prestridge: In His Own Words P16

www.lboro.ac.uk/sbe

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Welcome

Editor: Ondine Barry Assistant Editor: Simon Pond Designer: Ian Jepson Photographer: Phil Wilson

Dean Angus Laing

Welcome to the latest edition of Inspire, the magazine of the School of Business and Economics at Loughborough University. I am sure that you will find the articles in this edition stimulating and occasionally provocative. If you have particular interest in specific articles I would encourage you contact the relevant colleagues to discuss your interests. As a School, we are committed to working closely with organisations, and colleagues will welcome the opportunity to explore the development of their research with interested professionals.

The announcement as you arrive into St Pancras Station from Loughborough of “All change. All change” has inescapable resonance with the world in which we live. That business is undergoing transformational change is unquestionable. That our social and working lives are changing before our eyes is undoubted. At the heart of this change, is technology. Specifically, information technology. It is the inescapable feature of the 21st century. Jeff Prestridge in his inaugural column reflects on the impact social media is having on the way we live our lives and manage our careers.

We are all to varying degrees having to become digital natives, even if the conversion process can be painful!

The establishment of the Centre for Information Management within the School reflects this centrality of IT-driven change in shaping the ways in which businesses and consumers operate and interact. The new Centre will provide a focus for research across multiple aspects of information management, from consumer use of Twitter to the benefits of information systems for organisations, and will position the School as one of the leading international centres of research excellence in this critical field.

The impact of change is a central theme within the broader research agenda of the School. The work by Xiaohui Liu on multinational enterprises and crossborder flows of knowledge, again aided by technology, addresses some of the challenges organisations face in operating in an ever-shrinking, ever-moreinterconnected world. In that interconnected world of intensifying competition, the search for efficiency is critical to enable organisations to cope with the changing environment within which they operate.

The work of the Efficiency and Performance Analysis interest group within the School has an enviable track record. In this issue, Tom Weyman-Jones describes the research his interest group is doing in this area.

That the rapid pace of change poses major challenges for all organisations underpins the work by Ray Randall on the way in which organisations can seek to cope with change. That change is the inescapable feature of our world is evident from the selection of research highlighted in this edition of Inspire.

Yet in this world there are some constants. One of these is the commitment of the School to research that matters, research that makes a difference. As we move towards the national Research Evaluation Framework assessment, I have been struck by the tremendous impact our research has had on practice.

The evidence that our research does matter, does make a difference, is incontrovertible. One could point to many examples of this impact across sectors and across the world, but I will limit myself to one case, that of the work of Jiyin Liu who won the Franz Edelman Award for Achievement in Operations Research. A leading international award, it reflects the impact that the work of Jiyin and collaborators had on the performance of a major Chinese steel plant.

Saving the plant $76million (and rising at $19million per year) and reducing its carbon dioxide emissions is quite an impact!

I hope this edition of Inspire provides further insight into the work of how the School’s research benefits organisations and society, and encourages you to get involved in the School’s activities.

Sincerely Yours,

Angus Laing Dean, School of Business and Economics Loughborough University

Developing Winners | Achieving Excellence | Delivering Value

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New Masterclass Series

Watch us on TEDx Talks!

The first in a new series of Masterclasses, organised by the School and open to all, was held in May with the second this October, and the third taking place in December.

The October Masterclass was led by Dr Grahame Boocock on “Entrepreneurs, Business Planning and the Value Proposition”. In session, which was informal and interactive, Grahame explored the key characteristics and behaviours of entrepreneurs; focussing on the core of a business plan (creating value), and wrapping up by showing how business ideas can be captured in a Value Proposition.

The Inaugural Masterclass in May was delivered in partnership with Audi and was led by social media expert Josh Robinson, Creative Director of Sport Revolution and Loughborough Alumnus, looking at how leading sports brands are exploiting social media to better engage with fans.

Earlier this year, Dr Cheryl Travers, Director of Executive Education and Senior Lecturer in Organisational Behaviour and Human Resource Management, was invited to give a talk for TEDx on her research into empathy.

The December Masterclass is being sponsored by Coca-Cola Enterprises and will be on ‘Leading a Fast-moving Business’ and will be led by Simon Baldry, General Manager of Coca-Cola Enterprises and Management Sciences Alumnus.

The fourth Masterclass is scheduled for January 2014, so please do book your seat at the next of our highly popular and informative workshops.

To find out about our upcoming Masterclasses, please email mba@lboro.ac.uk, ring 01509 228839 or Tweet to @LoughboroughMBA

We now run three different MBA programmes, a full time MBA to supplement our well-established part time MBA programme and also a new MBA that is focused on International Sports Management. With the increased student cohort comes a rich set of opportunities for networking and sharing and so we hope you will take the opportunity to get involved.

An Evening of Celebration and Recognition Our second annual Awards Dinner at the School of Business and Economics took place recently and was a wonderful evening by all accounts. Graduate and entrepreneur Stuart Miller, Co-Founder of ByBox, gave the keynote speech, speaking from his experience of setting up and running a successful business.

This year, three Distinguished Alumni Awards were presented to John Dunford, Martin Strzelecki and Jean Tomlin for their exemplary contribution to their respective fields and to society in general. We are honoured to have such outstanding graduates!

For the first time at the Awards Dinner, Dean’s Awards were handed out as well to students and staff for their truly excellent work at the School.

“In the often expedient, challenging and competitive world we live in, we frequently forget to use empathy,” said Cheryl. “This talk explored the nature, role and ‘art-form’ of empathy. It showed us that, whether you are a natural empathiser, or more contrived, the outcomes of a greater empathic focus can be life enriching – both for others and ourselves.

“My central argument was that, whether or not we are a ‘natural-born empath’, we can learn to become empathic or at least develop the skills for showing empathy in practice.

We only have to consider the many benefits for ourselves

and others to see that it makes great personal and business sense to make the effort to ensure empathy becomes a key part of how we behave.

“One of my key points was that, the more empathic we act, the more likely it is that we will end up truly feeling empathic. This is crucial, as experiencing real empathy is good for us. One of the key images used with empathy is that of trying to walk in someone else’s shoes. Towards the end of my talk, I drew upon two great props: a pair of box-fresh red glittery highheeled stilettoes and a pair

of old fluffy slippers. I made the point that, it is so much easier to wear the well-worn and moulded-to-our-feet slippers and not attempt to try on the new shoes, which actually may give us a different and elevated view of the world, in spite the need to get used to wearing them.

“I guess the point I wanted to leave with my audience was, ‘Try empathy for size!’”

Created in the spirit of TED’s mission, “ideas worth spreading,” the TEDx programme is designed to give communities, organisations and individuals the opportunity to stimulate dialogue through TED-like experiences at the local level. TEDx events are fully planned and coordinated independently, on a community-by-community basis.

You can watch Cheryl’s ‘TEDx Loughborough’ programme on YouTube: http://www.youtube. com/watch?v=q52A0aCFcq0

STUDENT AWARDS The Dean’s Award for Excellence went to Economics student Kamya Buch The Dean’s Award for Enterprise, supported

by ByBox, went to Accounting and Financial Management student Hamzah Manir The Dean’s Award for Employability went to International Business student Christopher Oliver-Byrne

STAFF AWARDS Researcher of the Year went to John Cadogan; Teacher of the Year went to Cheryl Travers; Early Career Researcher of the Year to Antuela Tako; Early Career Teacher of the Year went to Chris Wilson; Outstanding Contribution (Academic) went to Ruth King; and Outstanding Contribution (Support) went to Elizabeth Bucknor.

Building Links with China Glendonbrook Centre for Enterprise Education Director Julie Holland, along with Amanda Berry and Dr Sarah Cromie, had a very successful trip to Asia this summer, looking at building teaching links with organisations in China.

Julie and Amanda were awarded a department seed-corn grant to visit the Guanghau School of Management in Beijing, but they were able to add a visit to Tsinghua University, the British council, a range of recruiters, including the PAGE group, and a variety of companies including Caterpillar.

“We made some great contacts with organisations who are going to contribute to the Enterprise and Employability module for the MSc programme next summer,” said Amanda, “and some potential research links with fellow Enterprise centres.

We owe huge thanks to Dr Lili Yang and Professor Xiaohui Liu for putting us in touch with some very kind and hospitable contacts.”

Pride of Loughborough Awards The SBE has great pleasure in once again sponsoring an award at the second Pride of Loughborough awards ceremony, taking place on Friday 22nd November.

Inspire was going to press before the ceremony took place, but Dr Cheryl Travers will be presenting the School-sponsored award this year to the winner of ‘Small Business of the Year 2013’: AMK9, a grooming, training and boarding centre for dogs.

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Award-winning operations research saves China’s Baosteel $76million (and rising)

Lord Young, the PM’s enterprise advisor, visits the School The Prime Minister’s Advisor on Enterprise Lord Young visited Loughborough University’s School of Business and Economics today to see first-hand the work it is doing to support small businesses and encourage young entrepreneurs.

The Prime Minister’s Advisor on Enterprise Lord Young visited Loughborough University’s School of Business and Economics today to see first-hand the work it is doing to support small businesses and encourage young entrepreneurs In his Government report Growing Your Business, Lord Young outlined the important role business schools play in supporting local SMEs as advisors and providers of highly qualified graduate employees. His visit to Loughborough is part of a select tour of UK business schools to see good practice in action.

Lord Young was welcomed by Dean of the School of Business and Economics and Chair of the Association of Business Schools (ABS) Professor Angus Laing.

He met with staff and students in the School’s Glendonbrook Centre for Enterprise Education which works to develop enterprising and innovative skills amongst Loughborough

students through formal modules and extracurricular activities.

He also met with academics working with the ‘Love Loughborough Partnership’ on the Portas pilot which aims to improve the customer experience for shoppers in Loughborough, and spoke to staff and students about the value of student work placements.

Professor Laing said: “I am delighted that Lord Young chose to visit Loughborough to see the work the School undertakes in the areas of enterprise and innovation.

“The Glendonbrook Centre for Enterprise Education provides unrivalled support to undergraduate and postgraduate students in fostering a culture of entrepreneurship among the student body at Loughborough.

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“The School plans to invest significant further resources in the activities of the Glendonbrook Centre to consolidate its position as a centre of excellence in enterprise education, and associated with this we look forward to participating in the Small Business Charter scheme which is being championed by Lord Young.”

Lord Young said: “Loughborough is one of the institutions leading the pack in the ways they encourage students to think more of working for themselves, and to think more about what they’re going to do later on in life. The foundations students lay whilst at Loughborough should serve them well. I’ve been very encouraged by what I’ve seen here.”

The Institute for Operations Research and the Management Sciences (INFORMS®) every year presents a Franz Edelman Award for Achievement in Operations Research and the Management Sciences, which recognises excellence in advanced analytics. This year the six Franz Edelman Award finalists included a group comprising several academics from China, the US and Professor Jiyin Liu from the School of Business and Economics for their research into efficiencies at an iron and steel factory in China.

Professor Liu’s and colleagues’ research, entitled “Operations Research Transforms Baosteel’s Operations”, focused on the production and post-production processes of the Shanghai-based steel and iron complex, Baosteel, China’s largest and the world’s thirdlargest steel company.

“It’s an energy-intensive industry,” explained Jiyin, “and our research is important not just because of saving a specific company money, but because the benefits affect the global environment as well.”

Here’s to All New Graduates!

For more than a decade, Professor Liu and colleagues at the Logistics Institute of Northeastern University (China) and the RH Smith School of Business at the University of Maryland worked with Baosteel to transform its in-plant production and logistics operations in four key areas of its entire steel production process.

The summer 2013 graduations were celebrated once again by the School as a whole on a beautiful day in July, with drinks and canapés, music and awards (and the obligatory speeches!) to properly mark the occasion.

“Overall, we looked at the decision problems in these key areas of the company,” said Jiyin, “starting in the first instance with trying to find ways the company might increase the efficiency of the continuous casters used to produce steel slabs.

Dean Angus Laing led the proceedings, remarking on the outstanding calibre of the School’s graduates, of whom we are so very proud.

If you are a new graduate, please do keep in touch with us – and if you want to be interviewed for Inspire magazine or have news to share with us, please get in touch: O.Barry@lboro.ac.uk or +44 (0)1509 228849

“Next we looked at ways for Baosteel to schedule production and to allocate products according to customer orders,” he added, “so as to reduce their inventory and storage costs as well as to increase customer satisfaction. Then

we looked at ways of grouping steel coils into batches in the batch annealing process in the final stage of production aimed at improving product quality and saving energy consumption.

And finally, we looked at shipping: how to select most efficiently what gets loaded and how to plan the stowage onboard so as to reduce the cost of shuffling and to maintain the balance of the ship throughout the voyage.

“We built optimisation models for these decision problems and proposed efficient solution methods. Based on the research work, we developed four different decision support systems for Baosteel, each for one of the key areas, and Baosteel implemented all four,” said Jiyin.

According to Baosteel, the decision support systems (DSSs) significantly reduced their production, inventory and energy consumption costs; increased revenue; and improved product quality. Specifically, the company saw a 16.8 per cent improvement of Baosteel’s IT and operations management capability, a 9 per cent reduction of inventory, an annual reduction of 293,967 tons of standard coal consumption and an annual reduction of 585,770 tons of carbon dioxide emissions, as well as an increase in overall product quality and customer satisfaction.

Professor Jiyin Liu

In addition to these environmental and management benefits, Baosteel’s monetary savings have been immense: by implementing the developed decision support systems, and changing its planning and management culture, the company saved more than $76million up to last year, and will continue to save $19.8million every year from now on.

“The influence of the research is immense and very exciting for us,” said Jiyin, “with increased awareness of the role operations research (OR) plays in manufacturing, the adoption of scientific approaches instead of experience-based approaches and a positive influence on other similar companies in China.”

The company plans to implement the group’s DSSs in its other plants outside the Shanghai area, which will bring in additional benefits. Meanwhile the research team is exploring applications of OR techniques in other industries.

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Transforming the Digital World:

The Centre for Information Management With articles in media outlets across the globe, interviews peppered all over YouTube and invited talks at institutions such as MIT, Professor Tom Jackson, Director of the Centre for Information Management, is well known in the e-communications and information and knowledge management world.

Researching email communications and the flow and management of information across the internet since before the dot-com bust at the turn of the millennium, Tom has built up a powerful reputation in this field.

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Transforming the Digital World:

The Centre for Information Management

Joining the School of Business and Economics in 2013, Tom and fellow academics from Information Sciences almost immediately found distinct synergies with several members of staff from the business and management side who undertake research in Information Systems. They created the Centre for Information Management (CIM) which launched in September, thereby joining these two areas together under one roof. Focussed on investigating the complexities surrounding the management of soft and hard data and on helping companies realise the maximum potential of their information and technologies, CIM is expected to be a flagship research centre for the University, and has already developed links with companies such as IBM, Jaguar Land Rover, Leicestershire County Council, Microsoft, Rolls Royce, SAP, alongside SMEs like Hillarys Blinds.

In the last decade, the ‘dot-com’ industry has of course recovered, the internet has exploded and social media outlets, such as Twitter, Weibo, Facebook and LinkedIn, have completely altered the landscape. Tom’s research has followed suit, expanding to embrace these new outlets.

“Communication and information management has radically changed in the last decade, and continues to do so,” Tom explains. “When I first started researching the area about 15 years ago, businesses were only just thinking about installing email applications onto their computers, and they were very unsure about it, asking: Would it be used for non-business purposes only?

So I wrote an application that would monitor email communications in order to determine if the content was primarily business or nonbusiness. At the start, roughly 69% were nonbusiness, but over a few months it started to invert, and moved to 57% business. A decade on, using an amazing stat ‘what happened in 60 seconds around the world’ (©Go-Globe. com), last year there were 98,000 tweets sent every 60 seconds around the world. Less than a year on and we’re already at 278,000!”

“The connectivity is extraordinary,” agrees Dr Crispin Coombs, Deputy Director of CIM. “I was talking to a friend in Montreal who was watching the Wimbledon final on the TV, whilst Skyping with her family in Cape Town who were also watching the game, in completely different environments (one was boiling hot, the other freezing). At the same time I was watching the final in my hotel room Skyping with my wife who was also tuned in, and

we kept forgetting we weren’t in the same room. The breaking down of barriers is extraordinary.

“One of the things I particularly like about the Centre,” says Crispin, “is that it’s bringing together a group of like-minded people who’ve been scattered in different departments for some time. We bring different things to the table. The business side is very much organisationally driven, trying to get the benefits for organisations and for business, trying to increase value. The information management side includes that, but has a focus as well on society and welfare and, of course, the digital practice.”

Speaking with many of the Centre’s members, the overarching objective that they all mention is to desire to push forward the fields of information management (IM) and information systems globally. They have an ambitious goal of becoming the top European centre for IM within 5 years, the top global centre in 10, and have already drafted a schedule of studies and events based on the Loughborough University motto: ‘Research that Matters’.

“When we all met for the first time as CIM,” says Crispin, “what became clear to myself and Tom was that the single unifying objective everyone felt with regards to the research was that we all wanted to do something that made a difference to people in the real world, and which had an applied element to it that people could use. And we already have a track record. What we’re doing is really quite groundbreaking, as well as being engaging, inspiring and useful!”

Dr Crispin Coombs

“Dr Cooke and I conducted research that led to the introduction of mobile data terminals being placed in police vehicles, which has already saved them millions of pounds a year and increased police officer visibility,” explains Tom, “and we’re hoping to continue to work on those sorts of projects that make a difference. It’s an exciting time right now to be in the IM field. IM is key to many activities, and organisations are starting to understand what it’s all about.”

To find out more about CIM www.lboro.ac.uk/cim Follow CIM on Twitter: @LboroCIM Tom Jackson is Professor of Information and Knowledge Management and Director of the Centre for Information Management. Tom can be reached at t.w.jackson@lboro.ac.uk Crispin Coombs is Senior Lecturer in Information Systems and Deputy Director of the Centre for Information Management. Crispin can be reached at c.r.coombs@lboro.ac.uk

One of the largest areas of their research is centred on helping businesses efficiently manage, understand and obtain value from all the information, knowledge and data they store.

“This is the absolute lifeblood infrastructure of modern-day business,” emphasises Crispin, “and of organisations, charities and society – everything we do is underpinned by this.

Marketing, human resources, operations…

It’s integral to pretty much all aspects of a business these days.”

“Everybody talks about ‘big data’,” says Tom, “but some elements of big data are not really a challenge anymore. Storage and computer processing power are no longer issues. The problem is understanding what that data means and what value it holds throughout the supply chain. To do this one has to look at people, systems and organisations. We have set-up CIM research themes and will push the boundaries in these fields so we can make a difference within the world of IM. “What drives me… That’s a good question,” reflects Tom. “I guess the fundamental thing is about making a difference. If we can do research that has a positive impact on life, that’s really worth doing. I have lots of admiration for the researchers who work in the cancer research field, something that is really worthwhile. What drives me is conducting research that can make a difference to organisations and the public, and that will have a positive effective of people’s lives”.

The CIM Team

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CIM research projects Extracting the Meaning of Terse Information in a Geo-Visualisation of Emotion (EMOTIVE) The ability for ordinary people to express and exchange their opinions and feelings has increased beyond all expectations in the past ten years of internet expansion and availability. To the military and national security agencies this has provided both opportunities and challenges. Recent urban disturbances have illustrated the key role played by social networks. The challenges have escalated due to the sheer number of sources of social interaction and public communication media.

This research, funded by the EPSRC and DSTL, addresses some of these issues in a bold initiative to combine well-established and considered science with the increasingly familiar tools of Web 2.0.

Professor Tom Jackson and Dr Martin Sykora

“In essence, EMOTIVE is about trying to add value or meaning to data sets,” explains Tom. “With social media like Twitter and Facebook, you have very terse information, and often ‘unconnected’ data, and we’re trying to provide

value-added information that enables a much richer interpretation of the data.

EMOTIVE is a good example of how you can provide added-value information in the form of emotion to tweets surrounding various events. We focussed on specific events that evoked a large number of tweets, like the Lee Rigby murder in the spring. EMOTIVE gave us the capability to start looking at event patterns. So we could start to compare the emotions from previous events and the outcome of an event (e.g., a riot, peaceful outcome) to real-time events.

“This enables the analyst looking at current events to determine if any intervention is required to ensure a peaceful outcome compared to previous event patterns.

Once you start storing all these patterns you can start to see what sort of course of action you should take. If things start to deviate from the norm then you know someone may need to intervene to try and quell the situation.

“But you can also use it for shows like the X Factor.

For instance, X Factor has introduced some sort of voting device, but they could have done it by Twitter alone: you’re watching a live programme and tweeting about it, and because it’s live you can see the acts coming on, you can see immediately the sort of emotions that act is evoking. If the public response is negative or the viewers are bored, as the producers you can decide to change the act sequence in real time to regain the attention of the viewer.

“More importantly, before going into a commercial break the TV channel could see the emotions of the nation and put on the most effective advert that would capitalise on the viewers’ emotions and get the most out of trying to sell a service or product. So the advertisers would have to pay a lot more for using that sort of system.”

For more information, see http://emotive.lboro.ac.uk/

Robust Lifecycle Design and Health Monitoring for Fuel-Cell Extended Performance (RESILIENCE) The durability and reliability of producing high-quality power for long periods of time have the potential to be the leading marketing factors for future hydrogen and fuel cell power sources. Improvements to current real-world environment durability levels, and hence improving the performance criteria, is limited by: (i) a lack of understanding of the state of the cell/stack, (ii) the lack of ability to deal with data currently obtained in an informed manner, and (iii) the limited support and decision

making throughout the lifecycle to optimise performance. The vision of this proposal is to develop an optimal integrated fuel cell system design, encompassing an intelligent health monitoring capability, to enable maximised lifecycle performance.

The RESILIENCE project is a four-year project funded by SUPERGEN and the EPSRC and is a joint project with the University of Nottingham.

“Fuel cells can be anywhere,”

explains Tom, “but let’s take a car for example. We will monitor fuel cells to see if their performance can be optimised.

Research will be conducted to produce a optimal integrated fuel cell system design within a real-time dynamic and adaptive intelligent lifecycle infrastructure, yielding the increased optimised performance of cells (e.g., self: -monitoring, -adapting, -optimising and –protecting).

Providing an intelligent information infrastructure leading to smarter, optimised

cells will require leading-edge research to semantically model relationships between the cell and environmental data coupled with the necessity of performance techniques which enable systems to be optimally designed for reliability, with an intelligent diagnostic and prognostic capability.

“The reliability, or resilience, of a battery has never been looked at before in this way.”

Managing Access to the Internet in Public Libraries (MAIPLE) Dr Louise Cooke is a Senior Lecturer and member of CIM, researching information access, filtering of information and censorship. Her primary research at the moment is on an Arts and Humanities Research Council (AHRC) funded two-year project called MAIPLE, which is now in its second year.

Benefits Realisation Management Professor Neil Doherty is a member of CIM, conducting research focussed on benefits realisation, often in conjunction with Dr Crispin Coombs.

Neil specifically looks at the value of information and benefits, with the objective of helping companies obtain value from their often considerable IT investments.

“The key issue,” explains Neil, “is that organisations don’t seem to have found any widely applicable and reliable ways of getting a clear benefit from their IT. There’s a real mix of competing factors: technical, social, political, commercial… How can you take good-quality technology and then leverage it so it benefits your organisation?

“It’s unlikely that organisations can predict in advance whether or not they’ll get benefits, or what types of benefits, and so it’s a matter of experimenting and testing – getting the technology up and running and running it over six months or a year to understand what its capabilities are, and constantly coming back to the question: ‘Is this doing the best that it can for us?’

“One of the main problems that organisations have is how to measure benefits. Isolating the benefits and attributing them to a particular technology is quite difficult. Until you can find robust ways of measuring the benefits, it’s difficult to find effective ways of managing the benefits.

The introduction of internet access in public libraries has been important in generating greater equality of access to information for UK citizens and has enabled significant steps to be taken in the provision of electronic public services (e.g., the ability to renew driving licences online). This offers considerable potential benefit to both the government and the citizen, in terms of cost-savings, accessibility, democratic participation, environmental sustainability etc. However, the provision of public internet access has also led to concerns that such access would lead to misuse and the downloading of inappropriate and illegal content.

To date, there has been little research undertaken that provides a comprehensive picture of measures taken in the UK to address these concerns, or of the effectiveness and impact of alternative approaches.

The project therefore aims to fill this gap by identifying and quantifying measures implemented in UK public libraries to regulate and manage access to internet content. It will investigate the adoption of technical measures such as filtering software, and organisational measures such as Internet Use Policies, as well as the provision of user education.

“As I always say, ‘Benefits realisation is a journey not a destination’.

Organisations evolve, priorities change, so it’s important to look at it as a journey of understanding.”

As well as working with organisations directly trying to help with technology benefits, Neil and Crispin would very much enjoy working with technology companies on developing competencies and approaches that the companies could use alongside the products in order to create relationships with the clients using their technologies, rather than simply selling the product and going on to the next client.

If you would like to discuss potential research with Neil, he would welcome your getting in touch.

Neil Doherty is Professor of Information Management and can be reached on n.f.doherty@lboro.ac.uk

The project’s main focus is on managing ‘acceptable’ use of information at public libraries, examining censorship and filtering issues, as well as the role of librarians changing due to filtering software that has in essence replaced their traditional role as ‘monitors’ of information. Her team focussed on five public library systems in the UK (Edinburgh, Derbyshire, Northern Ireland, Brighton & Hove, and Wales), and is now in the process of interpreting the data they have collected via questionnaires and interviews, with findings to be disclosed soon.

Project website: www.lboro.ac.uk/microsites/infosci/lisu/maiple/about-us.html Blog: http://maipleblog.wordpress.com/ Twitter: @Maipleproject

Professor Neil Doherty

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Staff profile Professor Xiaohui Liu

There and Back Again R

esearch carried out by the School of Business and Economics shows that a focus on emerging economies’ outward Foreign Direct Investment (FDI) is just as important as Western investment in developing nations. The article discusses research by Professor Xiaohui Liu that also reveals the importance of knowledge flows through Chinese migrants and returnees in improving business efficiency.

Educated at the University of Birmingham and Beijing Normal University, Xiaohui Liu joined the School of Business and Economics in 2008 as Professor of International Business and Strategy. Since 2008, Professor Liu, known as ‘Hui’, has become a well-established researcher in the field of international business for her research into international knowledge flows, Chinese returnees and outward foreign direct investment (FDI) from emerging markets, with special reference to China. She has published widely in top-tier journals and has received several ‘Best Paper’ awards at international conferences. She has been awarded a number of prestigious research grants, including funding from the ESRC, Leverhulme Trust, British Academy and the National Natural Science Foundation of China. In addition, Hui was recently invited to become a Senior Editor of Management and Organization Review and is a member of ESRC Peer Review College.

Hui’s most recent research examines the factors affecting Chinese firms’ accelerated internationalisation through increasingly engaging in outward FDI. She and her collaborators have conducted a series of studies on this research theme, looking at the extent to which Chinese government support of FDI projects and host country institutional environments moderate with previous entry experience by Chinese firms, and how this interrelationship affects FDI undertaken

by Chinese firms. They found that home government support and well-developed host country institutions compensate for the lack of experience of emerging economy firms, reduce the importance of previous entry experience and significantly increase the likelihood of FDI entry into a host country.

Their findings help explain why some emerging economy firms have rapidly internationalised in a short period of time and have not followed the pattern predicted by classical international business theories.

She and her co-authors have also examined the impact of domestic diversification on Chinese firms’ international diversification, and they found a clear, positive link between domestic industrial and regional diversification and international diversification. They also found that if a firm’s top management team (TMT) had prior international experience, such an impact could be strengthened, but, conversely, that any TMT prior political connections weakened the impact.

In addition to Hui’s research on Chinese outward FDI, she is now starting to look at cross-border knowledge flows in the context of emerging economy multinational enterprises (EMNEs).

“This is an area,” she says, “that has been overlooked because existing research has predominantly focused on the movement of knowledge within developed countries’ MNEs, and/or on how local firms in developing countries benefit from the entry of foreign firms. Such dominance may reflect the technologically leading position of developed countries, but emerging-economy firms that have lagged behind firms from developed countries in the past are now rapidly catching up.”

In particular, she says that EMNEs have gained new momentum in the world economy through actively engaging in outward FDI. This new trend may change the landscape of the world economy and could have profound implications for businesses in both developed and developing countries. Hui’s research into this area specifically attempts to better understand how EMNEs engage in the process of intra- and inter-firm knowledge transfer across borders and within host countries, as there is a significant research gap in this area.

There is a current call for papers on this topic for a special issue being organised by Hui and Dr Giroud (UNCTAD) in International Business Review (the submission deadline is 31st January 2014).

Hui has taken the lead in research on human mobility and recently completed two research projects on Chinese returnees and Chinese migrants in the UK, which were funded by ESRC and the British Academy, respectively.

With her ESRC project she collaborated with Dr Jiangyong Lu at Peking University and focused on the role of return migrants in knowledge flows between local Chinese firms and foreign firms, including British firms that operate in China. Their findings have helped to provide new insights into knowledge exchanges by emphasising the socio-cultural aspect of knowledge flows and how sociocultural embeddedness enables foreign firms to learn from local firms. In particular, they highlight the fact that research on FDI-related knowledge spillovers should move away from focusing on the technical capability of recipient firms to focus more on the social aspects of knowledge exchanges.

Hui’s and Jiangyong’s research emphasises the important role of individuals and calls for more studies focusing on the individual level in order to reflect the impact of internationally mobile individuals, such as return migrants, on inter-firm knowledge spillovers across international boundaries.

They have made some recommendations regarding how relevant policy agencies could provide institutional support to maximise the advantages and minimise the disadvantages of return migrants, and how to build bridges between returnee firms and local non-returnee firms in China.

Hui’s British Academy project has extended her returnee study from China to the UK by looking at the role of highly skilled Chinese migrants in the UK in knowledge transfer between UK and Chinese firms. Recognising the increasing heterogeneity of the workplace within the language and cultural context, she and fellow researcher Dr Lan Gao examined how highly skilled Chinese migrants affect the knowledge transfer process, highlighting the importance of migrants’ bilingual and bicultural competence in identifying key contacts, building relationships and facilitating knowledge exchanges.

Through focusing on highly skilled migrants, their research has helped to advance the existing literature on how the characteristics of individuals contribute to the efficiency and effectiveness of cross-border knowledge exchanges and has drawn attention to the importance of the heterogeneity of workforce.

Xiaohui Liu is Chair of International Business and can be reached on x.liu2@lboro.ac.uk

Loughborough university School of Business and Economics

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graduate profile

The Man who Wields a Mighty Pen Speaking with personal finance editor at THE Mail on Sunday Jeff Prestridge

Jeff Prestridge An award-winning columnist for both the Financial Times and The Mail on Sunday, graduate Jeff Prestridge began his prestigious career as a personal finance journalist after studying economics and econometrics in the late 1970s at Loughborough University. We sat down with him recently to discuss his career in journalism, his studies as back in the day and the astounding ‘10 in 10’ he did a couple of years ago.

“I wrote a lot of the society’s reports on money matters, and that’s where my interest in personal finance began. I started to write on a freelance basis for The Guardian newspaper, worked for a while as a reporter on a magazine called World Investor and in October 1987 I got offered a job at a monthly magazine called Money Management owned by The Financial Times. I joined in the week prior to Black Monday. I shall never forget leaving the magazine’s offices on the Friday before Black Monday, with the country in the grip of violent storms, and struggling to keep my Renault 4 upright on the motorway. On the Monday, the stock market opened and it was carnage. What a baptism of fire!”

How would you describe your years as an undergraduate?

JP: “It was. I don’t think I’d be where I am today without the grounding I got at Money Management because I was required to write big research pieces on key aspects of personal finance, and there was no way you could bluff your way through them. You had to understand the subject matter completely. I owe a lot to the editor there, Janet Walford OBE. She taught me the nuts and bolts of personal finance – a subject matter I then decided to choose as my journalistic specialism.

Jeff Prestridge: “University was a big issue for me and my parents – I was the first in the family to go. I was good at sport and it was the main reason why I chose Loughborough because I wanted to pursue my rugby prowess. I had trials at county level, but I soon found out there was a world of difference between being a good rugby player at a grammar school and stepping up to the mark at Loughborough.

Sadly, I ended up playing house rugby and that was as far as I went.

“But I enjoyed my three years at Loughborough. I look back upon my time with nothing other than great fondness. I met good friends there and I learnt a lot about myself. To be honest, I found the economics course a challenging one, very theoretical. But I struggled through.

Was it an exciting time then to be a financial journalist?

“The trouble with journalism is that once you become a specialist it’s difficult to break away from it. But Money Management gave me the tools to become a personal finance journalist, and as a result of the three productive years I spent there, I managed to obtain a job at the Sunday Telegraph as its personal finance editor.”

“When I graduated, I was not quite sure what I wanted to do. I fell How did you find the transition from writing research into accountancy and was fortunate to get a traineeship at Price reports to writing for a newspaper?

Waterhouse, one of the leading firms JP: “It was not easy. It required different of chartered accountants at the time. skills, but you soon learn on the job. Now, I enjoyed my 18 months there, and I sometimes look back at some of the I was a solid auditor and good with articles I wrote in my early days and I people – and wrote beautiful audit We should be doing wonder how I got away with such poor work. papers. But I realised quite early on But I read other articles and I am surprised that it wasn’t what I really wanted to far more to embrace the at how splendid they are. Indeed, I ask do with my life and I resigned. A lot of youth of today and to use myself: ‘Did I really write that?’ my colleagues were surprised, as were my parents who had been so proud of their incredible talent.

“Personal finance is not as complicated as the career path I had chosen. Looking econometrics, but it’s a subject that a lot of back, it was the right move because I people are intimidated by. It does require probably would have ended up being a a certain level of skill to get quite complex mediocre accountant living a mediocre money issues over in a simplistic way. And life doing a job that didn’t embrace all my talents.” when I joined The Mail on Sunday in 1994, that’s what was required of me every week. I soon realised that every single word counts. Every You didn’t know you were going to pursue journalism sentence needs to make sense, and it’s far more difficult to write for at this point? a tabloid newspaper than for a broadsheet. Writing in plain English JP: “No. After working in a factory as a stock controller for a couple is an acquired skill. of months (I was useless), I managed to find a job as a researcher “My job has always fascinated me. I love to campaign, and I’ve for a company of chartered surveyors in London called Debenham, had some fantastic victories along the way. The minute I don’t enjoy Tewson & Chinnocks. I came down to London an innocent Midlander, this job I’ll look for another career or another opportunity, but The and it was the making of me because I soon realised I had a Daily Mail is one of the few newspapers that continues to invest in talent for writing. the quality of its editorial, and gives me the freedom to campaign “I enjoyed the research, putting words down on paper, and I felt proud on issues that are perhaps sometimes counter to the politics that when my reports were published and generated press coverage. underpin what The Mail on Sunday and The Daily Mail stand for.

It convinced me I should pursue a career in writing. I moved to “I’ve won many awards along the way. I’m not arrogant about these Bristol, got married, and ended up at the now-defunct Bristol and triumphs, and I constantly remind myself of what Maureen Lipman West Building Society as its economist. On my first day, I remember said: ‘Awards are like piles. Sooner or later, every bum gets one.’ But thinking: ‘I hope Tom Weyman-Jones is proud of me – Jeff Prestridge, winning the Wincott award was a proud moment in my life.” an economist!’

in the 1970s Loughborough university School of Business and Economics

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graduate profile Jeff Prestridge

Jeff won the coveted Wincott ‘Personal Finance Journalist of the Year’ Award in 2009 for his work with the Financial Times.

The Wincott Foundation’s annual press awards recognise outstanding achievement in the field of economic, business and financial journalism. While the inspiration for the awards comes from the columns written by Harold Wincott in the 1950s and 1960s, the scheme is designed to cover a wide range of styles and formats, from analytical features on economic issues through to reporting on companies and industries. As far as individual journalists are concerned, reporters as well as commentators can qualify for the awards, and there is also a specific award for personal financial journalism – a category that may include investigative reporting as well as advice for investors and savers.

Financial industry executive Mary Francis said of Jeff at the time: “He explains complicated topics such as pensions and Sipps; once he gets his teeth into an issue he never lets go… His stories often make the transition from the personal finance to the business pages. inner of the He is a highly effective He’s also w nce Journalist ina and influential journalist”.

Consumer F

Award of the Year

at the nder 2013 Santa s rd a w A ia Med

Loughborough campus in the 1970s

Is there a campaign that you are most proud of?

What would you say drives you now?

JP: “One of the big issues that I campaigned on was protection for people who had pensions in company schemes that had been set up on a defined benefit basis (where you build up a pension according to how many years you work and your final salary upon retirement). It was the early 2000s and there were a lot of companies that were going bust and which were leaving in situ a pension scheme with insufficient assets to meet all of its liabilities.

In such cases, the pension scheme was automatically wound up, leaving people with a fraction of the pension they thought they were going to get once they retired.

JP: “I’m dedicated to my career. I’m often in the office at 6:45am and I don’t leave until 8:00pm, and that doesn’t lend itself to a conventional life. It is a job that you can’t do unless you do it with gusto, and you put your heart and soul into it. It’s not a 9-to-5 job.

I’m an obsessive person, and I’m obsessive about what I do on The Daily Mail. I want our personal finance section to be best in show.”

“The Maxwell saga and his destruction of the Mirror group pension scheme had ensured that all pensions in payment would be protected, but there was no protection in place for those who were building up pensions and who were yet to take them. So, over a series of six months, I campaigned tirelessly on this injustice, and eventually politicians did listen, and it led to the establishment of the Pension Protection Fund (PPF) that now pays out in situations where employers go bust leaving a pension scheme with insufficient assets to meet all its liabilities. I am quite proud of my work in bringing about the PPF’s creation.”

How different is the world of personal finance now from when you first began writing?

JP: “The personal finance world has changed – primarily because of the growth of the internet. A lot of people now take financial decisions without seeking advice, which is both a positive and a negative. I’m all for self-empowerment. I think it’s key that people understand personal finance issues and take control of their own money matters. But I do lament the loss of widespread financial advice. I think the banks pressed the self-destruct button on advice by their rampant mis-selling of products such as payment protection insurance. As a consequence, truly independent financial advice is something that’s only available to those with a lot of money and a lot of assets under their belt. I’m saddened by that because I’m a big believer in the ‘personal’ in personal finance.

Often it seems that the personal finance world is becoming more impersonal.”

Are you an advocate of competition?

JP: “Absolutely. I’m a big believer in competition and in the free market, and I like the fact that in banking for example we’ve now got the likes of challenger banks such as Handlesbanken and Metro giving the established banks a run for their money.

“But I think a lot of destruction was done in the personal finance marketplace when building societies demutualised – the Bradford and Bingleys and Alliance and Leicesters of this world. It perpetuated a ‘money for nothing’ culture. It made a lot of people wealthier, but I don’t think it made the personal finance world a better place.”

And your charity work – how does that fit in?

JP: “Journalism is a career that is laced with drink and good food.

Some 15 years ago, I decided I needed to get fit and I became committed to running. I regularly used to run between 75 and 80 miles a week, and I used to race competitively and enter marathons all around the world. In doing this, I thought: ‘why not raise money for charity?’

“I meet a lot of people in high positions across the financial services industry, and I’ve used these contacts to help me raise money for charities that are close to my heart. Over the years I’ve raised more than £100,000 for Dream Come True, which is a charity that gives terminally ill kids the chance to enjoy a dream holiday – for example, swimming with dolphins in Florida. I’ve raised money for Starlight, which is another children’s charity focused on terminally ill kids. I’ve also raised money for the Peace Hospice in Watford which does fantastic work in helping people die in comfort and in peace.

“More recently I’ve raised more than £100,000 for Brathay Trust, a youth charity that tries to give challenged kids the opportunity to get a break in life. These kids often come from broken homes or disadvantaged areas, and what it tries to do is to equip them with skills to break out of the situation they’re in and to empower them to move on and make something from their lives. Two years ago I ran 10 marathons in 10 days and raised a lot of money. I would like to do another challenge for Brathay next year. I love my running.

I’ve done 100-mile challenges up in the Himalayas and 50-mile canal runs. I love it, and I think I will continue running until my feet wear out.

“I’m privileged to have the job I’ve got and to make the money I earn, and I believe it’s important that I give something back. It feeds the goodness within me. It atones for all the mistakes I’ve made in my life, and it’s made me a better person.”

Do you see the student today as being very different from students in the ’70s?

JP: “Yes. I look at my three boys who are all going through university. My eldest is embarking upon a Master’s degree at Loughborough and I think he embodies the student of today. He’s a worker. He analyses football matches in his spare time so he’s got pocket money to keep him going during the week. I don’t think I worked as hard as he did at university, but I think he’s going to find it more difficult to get a job than I did, and is that right?

I don’t think it is.

“Society needs to look at some of the imbalances that exist between the younger generation and the older generation who seem to have a lot more privileges than the kids who leave university today. We should be doing far more to embrace the youth of today and to use their incredible talent.”

Do you have any money advice for prospective students nowadays?

JP: “It’s imperative that students become financially aware.

They need to be financially savvy more than ever before because they’re going to take big debts into their working lives. As a result, they need to understand the mechanics of the personal finance world, whether it’s how to run a bank account properly through to putting money aside for when they want to buy a home and start a family.”

Is there anyone in particular whom you remember when you were a student?

JP: “Professor Tom Weyman-Jones is someone whom I have fond memories of. He was the one who taught me econometrics, and he showed a lot of faith in me when lesser men would have given up. He was a good man. Tony Westaway was a top egg too. He and Tom wrote a book together which was the bible for anyone doing economics at Loughborough. They would occasionally take us out for a drink. And, of course, Professor Llewellyn. He has done some exemplary work on the benefits of mutuality in the financial world.”

When you returned recently for your son’s graduation in Sports Science, did the campus seem any different?

JP: “Loughborough has come on leaps and bounds since I was there. It’s become one of the leading academic establishments in the country. Its sporting facilities are second to none – and I think it’s fantastic that the England cricket team trains there! Since I left, Loughborough has soared into the stratosphere, and I’m proud to be associated with it.”

Jeff Prestridge is a graduate of the Econometrics BSc and is currently Personal Finance Editor for The Mail on Sunday and a columnist for the Financial Times’ Financial Advisor and ThisisMoney.com.

He can be contacted via Twitter at @jeffprestridge

Make sure to read Jeff’s inaugural column ‘Business Insight’ on page 31 – this issue’s column is all about the importance of social media in your business.

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Loughborough university School of Business and Economics

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There are many drivers of significant change within organisations, whether they are external factors such as economic, political, social fluctuations, or internal factors such as upheavals in management.

Recently, global economic problems have been the main drivers of change for private sector organisations, causing them to reshape, restructure and even to reinvent significant parts of their businesses.

In the public sector, government-led reforms have gathered pace because of national austerity programmes and highprofile cases of serious problems in service delivery. (Does ‘MidStaffordshire’ ring any bells?)

the Potential for Positive Organisational Change

By Ray Randall

Loughborough university School of Business and Economics

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C

hange initiatives are usually focused on bringing

about improvement. Some might be ‘quick fixes’ (such as changes to working hours or simple adjustments to work practices), while others may be more long term, such as structural and strategic changes (e.g., altering the culture of an organisation). Desired outcomes often include better productivity, financial savings, enhanced corporate reputation, improved staff motivation, a more flexible and skilled workforce and so on.

Given these often lofty (and sometimes expensive) aims, do change initiatives deliver? Research into this question is complex and difficult, not least because it takes time to answer and requires the collection and analysis of lots of data from different sources. However, good studies exist from which some overarching conclusions can be drawn. The most striking finding is that the majority of change initiatives fail to result in the desired outcomes. The reasons for this are not always clear because the focus has been on the outcomes of change, in other words ‘what changed?’ This has often been at the expense of detailed analysis into how the change was initiated, developed, delivered and maintained. As a result, we know relatively little about the ‘how’ and ‘why’ of change: i.e., the change processes.

This is a problem because explanations for the success or failure of change can usually be found in these change processes. Teamwork is a case in point. There is enough research to show that getting people to work in teams can be good for individuals (better wellbeing and job satisfaction) as well as employers (increased productivity). However, teamwork has some key ‘active ingredients’ that need to be delivered through the change process. These include co-dependency (workers being dependent upon each other for getting the job done) and autonomy (control over at least some of the key decisions that impact on their work). This means that if teamwork is implemented in a way that does not deliver these ingredients then it is unlikely to succeed.

There is an increasing amount of research showing that how workers experience and perceive the active ingredients of change is important in determining change outcomes – and that within the same change initiative different people have different experiences and perceptions. Research carried out by work psychologists has shown that change processes impact on the demands workers face, the amount of control they have (over what they do and how they do it), how well they understand what is expected of them (often referred to as ‘role clarity’) and the amount of support they get from colleagues and managers. This has led to a growing interest into how ‘psychologically healthy’ change processes can be delivered – especially as such processes can increase the chances that organisational change will deliver the desired outcomes. This has been the recent focus of my research, and in the remainder of this article I will summarise some of the key findings from my own and others’ work with various private and public sector organisations going through significant change.

For work psychologists, the unpredictable and variable outcomes of change pose some interesting questions. Might there be something about the way change is perceived and experienced that helps to explain the variability in change outcomes?

Might it be that change presents demands and challenges that some people thrive upon while others struggle to cope? How might we use theory and research from work psychology to help organisations implement change processes more effectively?

research shows that timely, open and honest communications about change – bolstered by opportunities to discuss the likely impact of change – can have a positive impact on employee readiness. This is undoubtedly especially important when workers have been through difficult change processes in the past (e.g., downsizing).

Research in this area consistently shows the importance of line managers’ competencies in shaping employees’ responses to change.

Change processes appear to be healthier Focused research into the psychology of when managers are alert to different healthy change processes is relatively new, employees responding to change in different but already some consistent and potentially ways (e.g., by offering help and support to important findings those who are struggling have emerged. Across to adapt). Managers a variety of change who are knowledgeable processes the extent about the change to which workers are process – and who able to participate are prepared to share in the design, that knowledge with implementation and Readiness for those they manage – management of can help employees change relates change appears to be understand and deal to employees’ linked quite closely to with the consequences change outcomes. This of change. Managers expectations of could be for a number can also help to drive the impact and of reasons. Capturing employee involvement employee expertise in the change process outcomes of the can lead to change by harnessing their change process activities that integrate ideas and discussing well with other work the potential demands; this in turn advantages and allows employees disadvantages of new to feel ownership ways of working. Recent of the change and findings also underline gives them more the importance of line tangible control over the way that change is managers in constructively resolving some delivered. Giving employees the opportunity of the conflicts between employees and the to ‘craft’ their work environment (i.e., by uncertainty about roles and responsibilities making subtle self-initiated changes to that can occur during difficult periods the way they do their job) can also help of change. them to benefit from or be less disrupted To understand fully change processes it by change. is vital to gather information from workers Readiness for change relates to employees’ about how they perceive the change is expectations of the impact and outcomes impacting on their own individual situation. of the change process. Before any change The key questions here are: Are the process begins there may be some workers employees receiving the ‘active ingredients’ who expect to be ‘winners’ and others who of the change, and how do these fit with their expect to be ‘losers’ in the process. These own circumstances? The nature of these expectations can have a significant impact on ingredients will depend upon the change their behaviour during organisational change itself. However, if the change has clear (e.g., by impacting upon the extent to which working mechanisms (like those mentioned they engage in change-related activities). The earlier for teamwork) then workers can be

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asked about their experiences of those mechanisms (e.g., whether there is real codependency within their team).

Broader perceptions about the quality and sustainability of activities associated with the change also appear to influence change outcomes (for instance, workers are less likely to choose to engage with changerelated activities if they do not see them as offering a positive, long-term solution for them as individuals). Such information can offer a real insight into how change is being perceived and experienced at the ‘coal-face’, but is too often overlooked when change is evaluated.

All of this might seem a lot for organisational stakeholders to think about when the challenges of implementing change are already large enough. However, information about change processes can be collected relatively easily through discussions with workers or short and simple questionnaires.

These can be used at key points during the change process (such as when information about change is distributed or when changerelated activities have begun). This data can then be used as ‘dashboard’ information to help solve implementation problems or to cement and spread activities that are working well.

Personally, I’d like to think that having more information about change processes can only help to reduce the high failure rate associated with costly and important organisational change initiatives.

Dr Raymond Randall is Senior Lecturer in Organisational Behaviour and Human Resource Management and can be reached on R.Randall@lboro.ac.uk

Loughborough university School of Business and Economics

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Exploring Efficiency

Professor Tom Weyman-Jones is a prominent figure in both the academic world and in industry, having been a researcher and practicing economist for the better part of 50 years, working with organisations such as the National Grid. Tom is also a much-respected lecturer at the University, often being cited as an inspiration by graduates like Jeff Prestridge. We sat down with him to explore his research in the area of performance and efficiency, and also to find out about his new Research Interest Group: Efficiency and Productivity Analysis.

Tom Weyman-Jones: “I’m in my 40th year at the University, which makes me one of the longest-standing members of staff. And I’ve therefore had the opportunity to watch the Economics discipline grow up and into the now-thriving group of students and staff.

“I became interested in the issues around measuring efficiency and productivity largely because of the drive towards privatisation under Mrs Thatcher. And the question then that kept coming up was: How do we know this is going to be an improvement? How do we know policy changes make a difference?

One or two economists around that time started to question how you measure the performance of an organisation or an arrangement or a policy, and they developed a lot of statistical and quantitative techniques for measuring efficiency of performance and how it changes. And that was an area, because I was interested in that area of privatisation early on in my career, that made me think that there’s something more in that to explore.

By Tom Weyman-Jones

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“This is an area I think where there is a lot of interest, not only academically, but also in government amongst regulators and in companies.

Given the situation in the UK where a lot of government activity has been outsourced or privatised, there are many agencies and regulators with responsibilities for managing large parts of public policy, and there is an interest in how well they’re doing it. So measuring efficiency of performance has become a growth industry, but it is specialised, so we spend a lot of time talking to companies about how this is being done academically and then how to apply it in practice.

“Outside academia, I started measuring efficiency in the Netherlands back in 1999 where I was involved with a study for the Dutch energy regulator looking into how efficient their energy companies were. 15 years on and this year has been the busiest so far, involved with work for the German regulator Bundesnetzagentur, the UK regulator OFGEM and the National Grid.

“Knowledge transfer has been a major part of the impact of this work. So although it’s a quantitative technique and

had its start in economics, it has huge practical uses and significance. Indeed, I spend most of my time trying to show companies, regulators and governments how you do it quantitatively and then getting them to think about what it is they are trying to produce or do.

Because until you decide what that is, you don’t know what outputs to measure.

“For instance, what does a school do? Does it just get students to pass exams? Or does it form their character?

Does it prepare them for life?

Does it change the nature of society in terms of taking disadvantaged pupils and giving them a fresh start? And how do you measure those things?

Because it’s no good simply saying that students came out better than they came in. We need quantitative measures of that, and to be able to compare it to other, similar institutions.

We do have to be rigorous in our analysis which can be quite technical, but there’s a very real socially important impact in what we’re doing.

We need quantitative measures of that, and to be able to compare it to other, similar institutions.

We do have to be rigorous in our analysis which can be quite technical, but there’s a very real socially important impact in what we’re doing.

Loughborough university School of Business and Economics

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“The disadvantage of what we do is that if we can’t measure the outputs then we can’t deliver a verdict. A recent example of this is the work I’ve been doing for UK and European gas and electricity grids. One of the questions I’m looking at is what does the National Grid do well? An obvious answer is that it allows the delivery of electricity to customers, but the NG does a huge amount more. It stops the occurrence of blackouts, it implements government policy to try and move more to a fossil-free, carbon-free economy. But how do you measure its success in those areas? We can easily measure the amount of electricity that comes out of a socket, but because the NG does so much more than that and uses huge resources in doing it, it then becomes difficult to say what they actually do.

“Our Research Interest Group on Efficiency and Productivity Analysis is exploring efficiency and productivity in a wide range of areas. Our external member is Professor Robin Sickles from NYU. Robin is one of the world’s foremost researchers in this area and we’re delighted to be working with him. One of our School members, Hailin Liao, is interested in comparing how Asian countries have performed as compared to Western Economies. Hailin is also working with myself and Professor Baibing Li looking at how IT has increased the efficiency of performance of companies. This is an interesting area, because we’ve seen the huge information revolution and yet there’s very little evidence of a gain in performance.

“In addition, Karligash Kenjegalieva and Tony Glass have been looking at measuring the way innovations in one country spill over into innovations in another country.

One of our PhD students is looking at the performance of UK universities. Another is investigating how successful different countries are in implementing emissions policies, and yet another student is looking at how efficient British households are in insulating their houses.

All these members have very different foci to their research, but we’re all using the same techniques, and that’s what’s brought us together.

“One question I am thinking of a lot is: Why doesn’t everyone perform equally well? Humans naturally like to perform well, but it’s clear that some people perform better than others.

Is it random? Yes, partly, and there’s luck. But there must be deeper causes. You can’t do this subject for long without starting to think about the whys of performance inequality.

It invariably then makes you question what is this organisation for, and so you go back to trying to measure what an organisation does. Basically, if we can measure the outputs as well as the inputs, then we can say something. If we can’t, we’d be better to shut up.

“A psychologist called Daniel Kahneman has a theory that people are not irrational, but they continually fail to act in sensible ways because they take decisions rapidly. Instead of thinking slow they think fast.

We’ve evolved as a species to think fast because we were preyed upon by predators, so the human being is attuned to responding instantly to stimuli.

Kahneman quotes a situation where people evaluate each

other within milliseconds.

You’re watching somebody you haven’t seen before and within a second or two you have an idea of whether you like that person or not. This is the instinct of a creature that is always looking for danger.

But that ability to jump to instantaneous conclusions stops you calling on the other aspect of your brain which processes and considers.

“Time and time again, people jump to the instantaneous response and fail to use the considered response, and Kahneman says this is what leads us to make apparently irrational decisions or act inefficiently and why humans are notoriously bad at evaluating probabilities.

Kahneman is using this theory to explain why people appear to be irrational, and it just seemed to hit a nerve when I read it. But for my research, I’ve adapted it as an additional explanation as to why not everybody is equally efficient all the time.”

Measuring efficiency of performance has become a growth industry, but it is specialised, so we spend a lot of time talking to companies about how to apply it in practice.

School staff members Dr Anthony Glass and Dr Karligash Kenjegalieva have been researching spillovers for a few years now, and they are integral members of the EPA-RIG, where Tony says: “there is definite cross-fertilisation of ideas between different areas of research in the School of Business and Economics”.

Their research uses ideas from spatial econometrics in looking at efficiency and productivity: efficiency spillovers and productivity spillovers, where one’s region’s output depends upon another region’s output (e.g., high unemployment in the North East results in high unemployment in a neighbouring region).

“We find that productivity spillovers are actually bigger across trade flows rather than near neighbours,” says Tony, “indicating that economic distance is a bigger source of productivity spill overs than geographical distance.”

“What we’re doing is a very nice technique to measure efficiency and productivity,” explains Karligash, “which can be applied to pretty much anything – universities, manufacturing, countries, bank branches, hospitals, etc…”

“Interestingly, we’ve just been through a financial crisis in which banks appear to have behaved very inefficiently, but nobody spotted that coming.

Everybody thought the banks were operating very efficiently.

How did we not see that? One of the issues is that we used to measure how successful banks were by the number of loans they gave, and we stopped paying attention to the fact that banks were giving away loans to people who couldn’t repay it. And we just said that if they’re giving more loans they must be doing well…”

Tom Weyman-Jones is Professor of Industrial Economics and can be reached on t.g.weyman-jones@lboro.ac.uk

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Basically, if we can measure the outputs as well as the inputs, then we can say something. If we can’t, we’d be better to shut up.

Loughborough university School of Business and Economics

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Mutual Respect There are many ways in which ordinary consumers are not well served by the financial system. It is for this reason that I am working with a leading Think Tank (ResPublica) on what we term “A Civic Approach to Financial Reform�.

T

he consumer is at the centre of this approach. We focus in particular on the lack of diversity in business models in the retail financial sector and follow two long reports on financial system diversity that I co-authored in 2009 and 2011 at another Think Tank: the Brussels-based Centre for European Policy Studies. Our theme there was that both effective competition and systemic stability are enhanced through having a financial system populated by a diverse set of business models.

In these two reports, we made a generic distinction between Shareholder Value (SHV) banks and financial firms, and what we termed Stakeholder Value (STV) banks. The STV sector in the British financial system includes mutual building societies and insurance companies, cooperatives, friendly societies, credit unions and industrial and provident societies. In continental Europe the dominant STV institutions are Cooperative banks, which have a far greater and more extensive role in the financial system than do mutuals in the UK. There is a long history (over 150 years) of mutuals in the UK, most especially in the retail savings, mortgage and insurance and life assurance markets. However, the SHV model has come to dominate the British financial system both ideologically and in terms of critical mass and market shares.

The conversion to SHV (plc bank) status of some of the largest building societies and insurance companies in the 1990s produced a major structural change in the British financial system, which substantially lowered the critical mass of mutuals and weakened the balance between mutual and SHV institutions. A lot has been lost as a result of conversions from mutual to SHV status.

by David Llewellyn

A civic approach to financial reform The two types of banks compete alongside each other in several key markets, notably savings, mortgages and consumer loans.

The essential difference is that, unlike SHV banks, the primary purpose of mutual institutions is not to maximise profits but to focus more explicitly on the interests of customers who are their owners. In other words, mutuals are under no pressure to maximise profits.

The starting point in the ResPublica report is our analysis of how and why consumers are not served as well by the financial system as they should, or could, be. In our report we analyse these in some detail.

Several elements of this market failure can be identified: n

n

Lack of diversity in terms of ownership, corporate governance arrangements, capital structure and, above all, business models Lack of effective competition

n Complexity of charges, prices and products together with a lack of transparency n An unnecessarily complex relationship between the consumer and the supplier of products n

Two different incentive structures within the financial system: incentives inherent in the SHV model to focus on shareholder value (maximisation of profits) and also within firms, such as remuneration packages often based on the volume of business.

n Low consumer trust and confidence (i.e., distrust of financial institutions) n Lack of equal access to financial firms and products n Weak market for genuinely independent advice A key issue to consider is the extent to which enhancing the role of the mutual sector, and fostering greater diversity of models in the financial system, can contribute to alleviating these market failures.

Two central themes of the Civic Approach are that the mutual model in finance remains a valuable and viable alternative to the dominance of the SHV model, and there is a consumer and public policy interest in enhancing diversity. On the basis of both theoretical analysis and recent experience, there can be no presumption that the typical SHV model is best for all types of financial transactions. On the contrary, many financial transactions (most especially those that are low risk and where there is an on-going customer relationship with the provider of financial services) are more suited to the mutual model.

There are strengths and weaknesses in all business models. However, there is a systemic advantage in having a mixed system and a strong critical mass of institutions (most especially mutuals) that are not dominated by the SHV model.

The Civic Approach to financial reform is holistic and designed to address some of the market failures identified. In particular, it focuses upon six key issues: (1) increased diversity in the financial system most especially with regard to greater plurality of business models; (2) enhanced effective competition; (3) problems inherent in the financial services sector (unnecessary complexity, lack of transparency, weaknesses in the provision of advice, weak consumer trust and confidence, etc); (4) given powerful demographic factors, coupled with severe government budget constraints, there is a long-run imperative for the personal sector to save more and to shift some of the burden of pensions provision away from the taxpayer; (5) for the same reasons, current levels of welfare and pensions provision are unsustainable and consideration needs to be given to alternative sources of provision (including people themselves through higher saving); (6) there is a potential role for mutuals alleviating the strain on the Department of Work and Pensions in the area of welfare.

Substantial benefits are to be derived from greater diversity (most especially with regard to business models and ownership structures) and a plurality in the financial system in three main dimensions: (1) the enhancement of effective competition, (2) systemic stability characteristics of the financial system, and (3) the risk appetite and profile of financial firms.

For these reasons, enhancing diversity is a public policy issue that needs to be addressed. In particular: regulatory impediments need to be reviewed; there needs to be a clear public policy commitment to diversity; the legislation regarding mutuals needs to be updated and rationalised; regulation should be competitively neutral as between SHV and STV institutions and should take account of different business models; and there is need for a comprehensive public policy strategy to enhance diversity. A financial system populated by diversity of ownership and governance structures, and with contrasting business models, is likely to be more competitive and systemically less risky than one populated by a single dominant model, whatever that model might be.

Government should systematically monitor trends in diversity, which is now possible with the recently-created Diversity Index (which measures and tracks over time the degree of diversity in the financial system) and should consider the potential impact on diversity of its own policy measures and of regulation.

Legislative reform should allow for a more diversified range of financial services Mutuals should have an intrinsic advantage in building trust and confidence as they have members who are also owners rather than solely consumers. Indeed, market research consistently shows that consumers have more trust and confidence in mutual building societies than in SHV banks.

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There are several areas where public policy initiatives could enhance the position and role of mutuals in the interests of both competition and systemic stability. I believe legislative reform should in particular: reflect current competitive conditions in the market place; be competitively neutral; make it easier to form new mutuals; enable mutuals to play a greater role in the economy and in delivering public services; allow for a more diversified range of financial services and types of loan to be provided; and allow all types of mutuals to merge with each other as envisaged in the recent Butterfill Act. Given trends in the demographic structure of the population (most especially the aging population), coupled with severe constraints on the public finances, there is a need to raise personal sector savings for both social insurance and pensions purposes.

However, there has been a distinct lack of a coordinated government savings policy designed to emphasise this.

Much was lost to the financial system by the demutualisation of building societies and Life Assurance and General Insurance companies, both in terms of the intrinsic characteristics of the mutual model, and in terms of systemic stability and effective competition. For the same reasons, and given the limits to the sustainable role that the State can play in welfare and pensions provision, alternative models of provision need to be considered.

We stress in our report, however, that the objective is not so much to ring the praises of any particular business model (SHV v.

STV) but to emphasise the merits of greater diversity in the financial system: within a diverse system, the total of different models is greater than the sum of the parts.

In this context, there are three compelling reasons for creating an enhanced role for mutual building societies and other financial institutions, such as credit unions and friendly societies: 1.

The ownership structure, regulation and traditional business model of mutuals makes them less prone to risky speculative activity than is the case with SHV banks.

2. A mixed system of different corporate structures is likely to produce a more stable financial system.

3.

A larger critical mass of mutuals is likely to enhance effective competition in the financial system, because of the different business models, and decrease the dominance of SHV banks.

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

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Business Insight

The social media advantage

D aring to peak from the black box :

Insights from neuropsychology relevant to m a r k e t e r s by Lara Stocchi Stretching back by over 2,000 years, studies on human memory are arguably one of the most interesting examples of multidisciplinary scientific research.

With an overwhelmingly vast academic portfolio, cognitive and neuropsychology provide elegant explanations of how human memory works.

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Marketing science has certainly a stake in this, with a large number of studies published over the past four decades exploring the hypothesis of the existence of a link between memory and consumer behaviour. Arguably, marketing is a much less sophisticated discipline, with abundance of field data, whilst neuropsychology provides natty lab-based evidence for amateurs only.

Dr Lara Stocchi, Lecturer in Marketing, has established a research programme intended to bridge extensively neuropsychology and marketing research. The programme consists of a large number of studies aimed at analysing typical marketing data, such as panel data and brand image monitors, with well-known models of human memory. The aim is to obtain valuable insights for marketers that are consistent with the nature of human memory and cutting-edge psychological interpretation of consumer memory. The applications tackle various important domains of marketing strategies, such as positioning, branding, advertising and communication strategies.

tudies explicitly marrying these two disciplines are very limited, especially in terms of adopting robust theories of human memory as interpretative benchmarks for marketing studies, but also in terms of bringing neuropsychology experiments from the lab to the field.

A first project explored the concentration of spontaneous associations with the product category and brand held in memory by consumers. Repeat investigations across countries and markets displayed that within a given product category consumers typically recognise the brands depending on how familiar they are to them, but the ability to do so is strongly dependent on the

By Jeff Prestridge, guest columnist for Inspire Sometimes, I look back on my super university days (and nights) and wonder how I ever managed to survive. Not financially – I was a graduate when grants, not loans, were the norm – but in terms of communicating with the outside world.

information about the product category previously acquired. This effect is not symmetric across all brands: brands that enjoy greater market share tend to be more easily recognised in general, without the need to leverage on product category references. This contradicts common belief held by brand managers, especially in terms of recommending highly differentiated positioning strategies.

Another project explored how deliberate brand positioning strategies (e.g., the creation of niche brands) are not reflected in the imagery of the brand held in memory by consumers. Rather, the effectiveness of such strategies can be reflected in consumer memory depending upon the creation and constant reinforcement of strong memory links.

Further studies in progress for this research programme include the conceptual advancement of consumerbased brand equity model, the investigation of other key regularities affecting information acquisition and retrieval, but also the classification of markets according to the cognitive aspects of consumer choice, rather than buying behaviour patterns.

Dr Lara Stocchi is Lecturer in Marketing and can be reached on l.stocchi@lboro.ac.uk

Back in the late 1970s (how time flies!), mobile phones were unheard of – even the brick version used by Michael Douglas’ Gordon Gecko in the 1987 film Wall Street.

Personal computers were a rarity (certainly on campus), Google was 20 years away and the term ‘social media’ had not been invented. ‘Social’ to most ‘Loughbrites’ (especially those wearing purple tracksuits) meant ‘socialising’ in the Students Union bar until all hours.

So, if I wanted to make contact with distant girlfriends or nosey parents (I seldom did), it was done by handwritten letter or by queuing up to use a coin-operated phone in the halls of William Morris, my university home for three golden years.

And if I needed to do research for my relentless coursework (thank you, Professor Tom Weyman-Jones), the only option available was to trudge up to the library (often in rain, hail or snow) and immerse myself in economics textbooks before retiring to the Elyn Richards bar for a recuperative drink or two. No internet for the graduates of the 1970s.

Nearly a quarter of a century on from leaving Loughborough University to pursue a career as a personal finance journalist, I’m not sure I could survive today without my Blackberry, my personal computer and the instant knowledge that the internet brings via my fingertips. Indeed, whenever my

Blackberry goes into meltdown (too often for my liking), I feel temporarily detached from the world and start wondering what important texts and emails I’m missing out on.

All this new-fangled communications technology is empowering – as indeed is the growth in social media with the advent of the likes of Twitter, Facebook and business networking tools such as LinkedIn. Who among us would have thought that seven years after the first tweet was sent

by Twitter’s co-founder Jack Dorsey (“just setting up my twttr”), the company would be heading for a blockbusting $1 billion float with an audience of 215 million monthly active users and 100 million daily active users?

Or that Facebook, the world’s largest social networking site founded by Mark Zuckerberg and fellow Harvard University graduates in 2004, would become one of America’s biggest corporate brands?

If you haven’t already seen the 2010 film The Social Network charting the rise of Facebook, I highly recommend it (Wall Street is also worth watching if only for the brick-like mobile!)

For the record, I tweet on a regular basis – using the social media platform (via URLshortening service bitly) to market the words of financial wisdom that appear in the pages of The Mail on Sunday. Not only does it mean that my articles reach a wider audience (unfortunately, not everyone buys newspapers these days), but occasionally I am given stories by those who follow me. Equally, my presence on LinkedIn has resulted in speaking engagements coming my way and fresh ideas for personal finance stories. If it works for me professionally, I am sure it will work for you in either a marketing or sales capacity.

We live in an era of unprecedented technological change. Embrace it and maximise your business potential.

My business view on social media is pretty simple. Forget the fact that Twitter is not yet profitable (it will be) or that Facebook’s stock market debut in 2012 bordered on the disastrous (its shares have since recovered). If you are in business, you simply have to embrace the world of social media.

That means tweeting, having your own Facebook page and using LinkedIn (225 million members and growing) to cement and extend your business network. They are tools that provide you with the perfect opportunity to market yourself and your business wares. If you don’t use them, I bet you a brick phone that your competitors will do – and effectively so.

Jeff Prestridge

/LboroSBE

www.lboro.ac.uk/sbe

follow @lboroSBE

56131 D&P Dec 2013

School of Business and Economics Loughborough University Leicestershire LE11 3TU UK T: +44 (0)1509 222701