From a communications perspective Ed Miliband’s inaugural speech as Labour leader provided a number of unique challenges. The need to appease members yet reach out to the wider public; to celebrate the achievements of New Labour while demonstrating an understanding of why the electorate turned away from the party; and the balancing act of showing consistent values while offering a new vision and a sense of renewal.
In this regard, his speech ticked most boxes. Opening with the time-honoured political back story and introduction to his political education, this was of course of greater importance given his relative anonymity among the electorate. Tribute was paid to the way New Labour challenged established thinking but there was also recognition of the movement’s stagnation, with a line skilfully drawn under the contributions and legacies of both Brown and Blair. Popular left of centre policies were mentioned both explicitly and in passing, including an increased bank levy and the aspiration to introduce a living wage. Predictably such statements were met with rapturous applause and followed a simple conference rule – it is hard for the wider public to react well to a conference speech if the audience present is not sufficiently enthused.
Floating left-of-centre voters and disillusioned Lib Dem voters were targeted with Miliband’s confirmation he would vote for the Alternative Vote system and his rejection of the Iraq War as a mistake the party should be honest about. Of course, doorstep issue politics weren’t missed altogether, and Miliband was at pains to demonstrate an understanding of the concerns of the electorate. This included the issue of immigration and the need to be honest with the public over its affects on communities.
Perhaps the most significant term used throughout the speech was “new generation”. Ed Milband regularly spoke of belonging to this new generation, and peppered his speech with the phrase to variously demonstrate a break from New Labour, a youthfulness and a distinction between the so called pessimism of the Coalition Government and the optimism of a rejuvenated Labour party.
Even more fundamental however was the speech’s skill in delivering an absolute essential of political communications, that is ‘Define your enemy before he defines himself’. David Cameron was described as a pessimist, using the economic climate as an excuse to deliver ideologically driven cuts to public services. Although an obvious criticism, it was tempered with a previous recognition that Miliband would not oppose cuts for the sake of it. Describing himself and the Labour party as optimists, Miliband moved into the territory Cameron seemed to originally fix on when he became leader of the Conservatives. Since then of course, the Coalition has been at pains to soften the public to the necessity of funding cuts. Importantly, Ed Miliband also moved to prevent himself from being defined as part of the ‘looney-left’. His almost scornful dismissal of his newest press moniker ‘Red Ed’ could point to a willingness to address the media with a more confrontational approach in future.
So where will this leave the party and its audiences. There’s little doubt that it was a largely popular speech among members and that voters inclined to move away from the Lib Dems will have been impressed. The trade unions and far left may have been less pleased with comments on preventing “irresponsible waves of strikes”. Financial services will have delivered a collective shudder at some fairly robust language discussing wages in the City while the higher education sector will no doubt follow with interest Miliband’s support of a graduate tax. The issue of 'equality' will make a few business audiences nervous too. This wasn't just expressed as a desire for equality of opportunity, but the desire to address disparities in wealth. It played well to conference, but will be played back as a desire to punish success. Miliband has to be sure that the public at large have the same 'bad guys' in their sights.
For the wider public, and those voters thoroughly unimpressed with the legacy of New Labour, it may be a harder sell. Miliband’s desire to drag the centre ground towards the left rather than move the party onto this ground was in evidence and won’t be missed by voters with a differing political compass, particularly social conservatives. His speech offered a sound introduction to an unfamiliar face, but he will undoubtedly need to include refined messages if it is to appeal to this significant section of the electorate.
John Hood, Linstock Consultant
http://www.linstockcommunications.com/
28 September 2010
24 September 2010
Will Liberal Democrats support a ‘middle way’ for higher education funding?
Vince Cable is a man with an increasing talent for controversy. His comments at Lib Dem conference regarding financial services produced a storm of media attention and predictable levels of controversy. But it was his statement on university funding in a fringe event that should have caught the eye. Cable seemed to make an important concession to his Conservative Coalition partners when he announced that a graduate tax would be “unworkable”. Cable’s statement came with the qualification that the essence of the idea, that graduate payments should be linked to earnings, was a “red line” on negotiations with the Conservative party. But it ignored the passing of a motion at conference which called for the party to explore the option of such a tax. The Times Higher Education covered the announcement.
While party members may feel some confusion over the party’s position, this should represent better news for the higher education sector. There were always likely to be a number of practical obstacles to a straight replacement of tuition fees with a graduate tax – will it break the link between the cost and value of a degree, discouraging competition? What is the definition of a graduate? How will money be allocated to individual institutions if stored centrally? And when will these institutions see this funding? Cable’s announcement appears to quash any chances of a full blown graduate tax replacement.
Although clearly not a complete climb-down, this does pave the way for a ‘middle way’ between the proposed raising of tuition fees and the development of a graduate tax. Director of Policy Exchange, Neil O’Brien, recently wrote an excellent account of what this may look like. Cable’s comments may well demonstrate a gradual edging towards this position, a more sensible extension of the tuition fees regime which would result in higher earning graduates continuing to pay fees past the total cost of their degree, to an agreed fixed limit. This would provide the fairness Cable and party colleagues such as Simon Hughes wish to pursue and could be a more palatable pill for the party faithful to swallow as an alternative to a straight increase in tuition fees.
Creases would undoubtedly need to be ironed out, but as an alternative to a graduate tax this would no doubt also be a huge relief to the higher education sector.
John Hood - Consultant
http://www.linstockcommunications.com/
While party members may feel some confusion over the party’s position, this should represent better news for the higher education sector. There were always likely to be a number of practical obstacles to a straight replacement of tuition fees with a graduate tax – will it break the link between the cost and value of a degree, discouraging competition? What is the definition of a graduate? How will money be allocated to individual institutions if stored centrally? And when will these institutions see this funding? Cable’s announcement appears to quash any chances of a full blown graduate tax replacement.
Although clearly not a complete climb-down, this does pave the way for a ‘middle way’ between the proposed raising of tuition fees and the development of a graduate tax. Director of Policy Exchange, Neil O’Brien, recently wrote an excellent account of what this may look like. Cable’s comments may well demonstrate a gradual edging towards this position, a more sensible extension of the tuition fees regime which would result in higher earning graduates continuing to pay fees past the total cost of their degree, to an agreed fixed limit. This would provide the fairness Cable and party colleagues such as Simon Hughes wish to pursue and could be a more palatable pill for the party faithful to swallow as an alternative to a straight increase in tuition fees.
Creases would undoubtedly need to be ironed out, but as an alternative to a graduate tax this would no doubt also be a huge relief to the higher education sector.
John Hood - Consultant
http://www.linstockcommunications.com/
23 September 2010
Lib Dem conference: Benefits, bridge-building and bonus bashing
The Liberal Democrats kicked off 2010 conference season with a strange mixture of delegate disapproval and subdued support. With the party in government for the first time in over 60 years, media scrutiny and security were both tightened. Commentators waiting in the wings to interview irate members and report on political gaffes and rebellion were largely left frustrated and although there were sporadic incidents of disharmony, there did not appear to be any appetite for all out opposition to the Coalition or to the party leadership.
Nick Clegg’s opening speech, described by Nick Robinson as ‘largely defensive’ received a luke-warm response from the floor. His statement that spending cuts were not ideological did little to allay member fears, particularly regarding planned cuts to benefits. Indeed, many members made their reservations felt throughout the next day. In essence it was a speech that recognised that triumphalism would be an inappropriate tone given the difficult decisions ahead. But in looking to soothe member anger, it failed to reach audiences beyond the conference floor.
Given the party’s and Nick Clegg’s poll ratings, shoring up the grassroots vote may need to be abandoned in the near future for a more ambitious approach targeting wider audiences, if the Lib Dems are to profit from the Coalition.
Secretary of State for Energy and Climate Change, Chris Huhne, produced a more warmly received speech, and in many ways helped to prevent a maudlin atmosphere developing. This, of course, was safe ground for the Lib Dems, long supporters of the green agenda. But as someone who has often failed to inspire at speech time, this was as much a personal triumph for Huhne as it was for the party. A strident tone that focused on championing consumer rights in the face of rises in energy prices allowed Huhne to push past the difficult question of nuclear power, an obvious stumbling block. By the end of his speech, there was a palpable sense of relief among members, here was a man who understood their concerns and wouldn’t be cowed by Conservative interests.
Of course, this was far from the being the most populist speech of conference. Vince Cable’s speech, leaked in advance, provided the sound-bite of the conference, as he announced "I am shining a harsh light into the murky world of corporate behaviour". Predictably the business world bristled while party members swayed to the theme of perverse bonuses and greedy bankers. Of course, the speech was somewhat more nuanced than this, but it hardly mattered. Cable’s anti-capitalist credentials had seemingly been confirmed, much to media delight, finally the conference’s headline had written itself.
While the confrontational approach was undoubtedly deliberate, so too were the relatively vague promises that accompanied it, recognition perhaps that financial services regulation is not an area to be tackled without Conservative support. While many commentators saw Cable’s comments as a rebellion against Conservative control of economic policy, others saw a more considered approach, possibly endorsed by Conservative HQ. A round of emotive bank bashing helped to demonstrate political autonomy and convince members that the party’s soul had not be subsumed within the Coalition. The wider public meanwhile were given the news they wanted to hear, that behavioural change would be forced upon banks. For the Conservatives meanwhile, a reputation for being business-friendly, economic heavyweights was largely retained as they floated above the debate. Naturally, long-term implications of such an agreed approach would be difficult to predict, but in the short-term, it seems to serve the interests of both parties. How this pans out during the Conservative conference will be of particular interest.
In many senses, this Lib Dem conference failed to spark. There were no real dust ups, and potential points of division both within the party and between the Coalition partners were largely averted. Although Vince Cable’s speech undoubtedly generated a lot of heat, it perhaps generated less light, and the long-term implications do not seem as damaging as first suspected. Despite this, conference undoubtedly had a sombre feel to it and the party is clearly still coming to terms with no longer being political outsiders. It is also clear that the real challenges for the party remain in the coming months. Members who voted against academies and free schools and who vehemently oppose cuts to benefits may well find that this no longer counts for much if Lib Dem policies are rejected in favour of Conservative ones. Managing the fallout from the painful decisions made in the Comprehensive Spending Review (CSR) will no doubt be first on the Lib Dem leadership’s ‘to do’ list.
John Hood - Linstock Consultant
http://www.linstockcommunications.com/
Nick Clegg’s opening speech, described by Nick Robinson as ‘largely defensive’ received a luke-warm response from the floor. His statement that spending cuts were not ideological did little to allay member fears, particularly regarding planned cuts to benefits. Indeed, many members made their reservations felt throughout the next day. In essence it was a speech that recognised that triumphalism would be an inappropriate tone given the difficult decisions ahead. But in looking to soothe member anger, it failed to reach audiences beyond the conference floor.
Given the party’s and Nick Clegg’s poll ratings, shoring up the grassroots vote may need to be abandoned in the near future for a more ambitious approach targeting wider audiences, if the Lib Dems are to profit from the Coalition.
Secretary of State for Energy and Climate Change, Chris Huhne, produced a more warmly received speech, and in many ways helped to prevent a maudlin atmosphere developing. This, of course, was safe ground for the Lib Dems, long supporters of the green agenda. But as someone who has often failed to inspire at speech time, this was as much a personal triumph for Huhne as it was for the party. A strident tone that focused on championing consumer rights in the face of rises in energy prices allowed Huhne to push past the difficult question of nuclear power, an obvious stumbling block. By the end of his speech, there was a palpable sense of relief among members, here was a man who understood their concerns and wouldn’t be cowed by Conservative interests.
Of course, this was far from the being the most populist speech of conference. Vince Cable’s speech, leaked in advance, provided the sound-bite of the conference, as he announced "I am shining a harsh light into the murky world of corporate behaviour". Predictably the business world bristled while party members swayed to the theme of perverse bonuses and greedy bankers. Of course, the speech was somewhat more nuanced than this, but it hardly mattered. Cable’s anti-capitalist credentials had seemingly been confirmed, much to media delight, finally the conference’s headline had written itself.
While the confrontational approach was undoubtedly deliberate, so too were the relatively vague promises that accompanied it, recognition perhaps that financial services regulation is not an area to be tackled without Conservative support. While many commentators saw Cable’s comments as a rebellion against Conservative control of economic policy, others saw a more considered approach, possibly endorsed by Conservative HQ. A round of emotive bank bashing helped to demonstrate political autonomy and convince members that the party’s soul had not be subsumed within the Coalition. The wider public meanwhile were given the news they wanted to hear, that behavioural change would be forced upon banks. For the Conservatives meanwhile, a reputation for being business-friendly, economic heavyweights was largely retained as they floated above the debate. Naturally, long-term implications of such an agreed approach would be difficult to predict, but in the short-term, it seems to serve the interests of both parties. How this pans out during the Conservative conference will be of particular interest.
In many senses, this Lib Dem conference failed to spark. There were no real dust ups, and potential points of division both within the party and between the Coalition partners were largely averted. Although Vince Cable’s speech undoubtedly generated a lot of heat, it perhaps generated less light, and the long-term implications do not seem as damaging as first suspected. Despite this, conference undoubtedly had a sombre feel to it and the party is clearly still coming to terms with no longer being political outsiders. It is also clear that the real challenges for the party remain in the coming months. Members who voted against academies and free schools and who vehemently oppose cuts to benefits may well find that this no longer counts for much if Lib Dem policies are rejected in favour of Conservative ones. Managing the fallout from the painful decisions made in the Comprehensive Spending Review (CSR) will no doubt be first on the Lib Dem leadership’s ‘to do’ list.
John Hood - Linstock Consultant
http://www.linstockcommunications.com/
14 September 2010
Diversity in the Workplace
As seen on the The Works
Despite the recent media coverage and research highlighting that the PR industry could be doing more to value background diversity, we admit, we were shocked by our survey findings. We were left wondering how to remedy this gross under-representation of BME candidates within the profession? Given that the combined spending power of BME groups is expected to exceed 300 billion in 2011, when it is estimated they will make up 15% of the UK's population, PR teams need to better understand how to engage with this audience.
We asked some of the leading diversity campaigners, Bieneosa Ebite, (Managing Director of Bright Star Public Relations and Chair of Ignite, a network that promotes cultural diversity) and Ashnoor Pardhan, (Consultant at Linstock Communications and currently leading the campaign to encourage BME audiences to respond to the 2011 Census) their advice.
The following is a summary of their key points. For a full, unedited version, please click here.
Q1. "Why is the PR industry lagging behind with ethnic diversity compared to other industries?"
BE: "The PR industry is one of many industries that have a lot of ground to cover to ensure that its workforce is reflective of the UK's demographic profile. I have been working in PR for over 10 years and during this time there has not been a genuine acknowledgement of the diversity gap that exits when it comes to ethnic diversity, or the desire to undertake long-lasting action to help improve the situation. Until something is acknowledged as an issue, it remains 'hidden' and does not have any place on the agenda of those that have the power to change the status quo...Since Ignite's inception in 2009, we have been campaigning to put cultural diversity on the agenda of those that have the power to influence and change things within the industry. We are now starting to see that PR industry bodies, agencies and some recruiters are acknowledging that there is issue. The next steps need to be about taking tangible action for long-term change".
AP: "PR has a reputation for being somewhat elitist and this certainly puts people from ethnic minority backgrounds off the industry - ironically we're suffering our own PR problem. As such the number of consultants from ethnic backgrounds is significantly underweight when compared to society as a whole".
Q2. "How should we combat it?"
AP: Both as a profession and as individual companies. As a profession we need to do more to break down the barriers, perceived or otherwise, and encourage people from ethnic backgrounds to consider PR as an attractive career option. The CIPR and PRCA are starting to do more work in this area on all of our behalf. Additionally, companies need to be proactive in this area; embrace the talent on offer and the commercial opportunity. At Linstock we engage with Universities and offer internships, as well as engaging with and supporting organisations such as Ignite.
BE: "There are a number of steps that we can take to enhance diversity in PR: through education and buy-in; recruitment; promotion of the industry; monitoring and policy setting and increasing the visibility of senior practitioners from diverse backgrounds."
Q3. "How effectively can an agency reach diverse audiences if their workforce isn't diverse?"
BE: "Having a diverse workforce, one that is incorporates all of the 'special characteristics', brings a number of benefits. Diversity enables agencies to enhance their ability to communicate effectively with a range of audiencesPR teams that reflect this diversity will have a better understanding of how to engage with this audience. As well as the increasing levels of diversity in the UK, we must not forget that top companies from rapidly developing economies are going global fast. PR agencies must understand their need for a PR strategy that takes account of multi-cultural sensitivities in different markets, which will be vital for their success".
AP: "I think that to reach this audience effectively you need to employ people from these communities. At Linstock we offer clients a real understanding of ethnic audiences and how to engage them - we can only do this because we employ and work with people from these communities who understand the culture and sensitivities. Consultancies need to recognise that a diverse workforce can bring a unique cultural intelligence and knowledge to an agency... The audience also represents a significant commercial opportunity, but only to those who know how to engage them".
Ashnoor Padharn - Linstock Consultant
Bieneosa Ebite - Linstock Associate
http://www.linstockcommunications.com/
Despite the recent media coverage and research highlighting that the PR industry could be doing more to value background diversity, we admit, we were shocked by our survey findings. We were left wondering how to remedy this gross under-representation of BME candidates within the profession? Given that the combined spending power of BME groups is expected to exceed 300 billion in 2011, when it is estimated they will make up 15% of the UK's population, PR teams need to better understand how to engage with this audience.
We asked some of the leading diversity campaigners, Bieneosa Ebite, (Managing Director of Bright Star Public Relations and Chair of Ignite, a network that promotes cultural diversity) and Ashnoor Pardhan, (Consultant at Linstock Communications and currently leading the campaign to encourage BME audiences to respond to the 2011 Census) their advice.
The following is a summary of their key points. For a full, unedited version, please click here.
Q1. "Why is the PR industry lagging behind with ethnic diversity compared to other industries?"
BE: "The PR industry is one of many industries that have a lot of ground to cover to ensure that its workforce is reflective of the UK's demographic profile. I have been working in PR for over 10 years and during this time there has not been a genuine acknowledgement of the diversity gap that exits when it comes to ethnic diversity, or the desire to undertake long-lasting action to help improve the situation. Until something is acknowledged as an issue, it remains 'hidden' and does not have any place on the agenda of those that have the power to change the status quo...Since Ignite's inception in 2009, we have been campaigning to put cultural diversity on the agenda of those that have the power to influence and change things within the industry. We are now starting to see that PR industry bodies, agencies and some recruiters are acknowledging that there is issue. The next steps need to be about taking tangible action for long-term change".
AP: "PR has a reputation for being somewhat elitist and this certainly puts people from ethnic minority backgrounds off the industry - ironically we're suffering our own PR problem. As such the number of consultants from ethnic backgrounds is significantly underweight when compared to society as a whole".
Q2. "How should we combat it?"
AP: Both as a profession and as individual companies. As a profession we need to do more to break down the barriers, perceived or otherwise, and encourage people from ethnic backgrounds to consider PR as an attractive career option. The CIPR and PRCA are starting to do more work in this area on all of our behalf. Additionally, companies need to be proactive in this area; embrace the talent on offer and the commercial opportunity. At Linstock we engage with Universities and offer internships, as well as engaging with and supporting organisations such as Ignite.
BE: "There are a number of steps that we can take to enhance diversity in PR: through education and buy-in; recruitment; promotion of the industry; monitoring and policy setting and increasing the visibility of senior practitioners from diverse backgrounds."
Q3. "How effectively can an agency reach diverse audiences if their workforce isn't diverse?"
BE: "Having a diverse workforce, one that is incorporates all of the 'special characteristics', brings a number of benefits. Diversity enables agencies to enhance their ability to communicate effectively with a range of audiencesPR teams that reflect this diversity will have a better understanding of how to engage with this audience. As well as the increasing levels of diversity in the UK, we must not forget that top companies from rapidly developing economies are going global fast. PR agencies must understand their need for a PR strategy that takes account of multi-cultural sensitivities in different markets, which will be vital for their success".
AP: "I think that to reach this audience effectively you need to employ people from these communities. At Linstock we offer clients a real understanding of ethnic audiences and how to engage them - we can only do this because we employ and work with people from these communities who understand the culture and sensitivities. Consultancies need to recognise that a diverse workforce can bring a unique cultural intelligence and knowledge to an agency... The audience also represents a significant commercial opportunity, but only to those who know how to engage them".
Ashnoor Padharn - Linstock Consultant
Bieneosa Ebite - Linstock Associate
http://www.linstockcommunications.com/
Mergers and Acquisitions: A Confidence Trick?
The recent upsurge in mergers and acquisitions flies in the face of strong evidence showing that key decision makers’ are tricked into underestimating the risks to shareholder value and profit by their own overconfidence about the likelihood of success.
In August there was a surge in mergers and acquisitions activity (e.g. BHP Billiton’s bid for Potash, Intel’s for McAfee). Thompsons Reuters’ data show nearly $90 billion worth of deals in one week alone, making it the largest weekly total for 4 years. This activity flies in the face of evidence showing a surprising lack of success e.g. simply announcing merger bids wiped off over $220 billion from the share price of acquiring companies over the period 1980 – 2001 (Moeller, Schlingemann, and Stulz, 2005); at best there is only a 50/50 chance of success (McGee, Thomas and Wilson, 2005). In any other context these chances would be considered far too risky. So why do CEOs and organisations do it?
Evidence suggests that key decision makers are blinded by overconfidence, leading them to over-estimate their own chances of success. They know that many other organisations have failed but are confident about their own chances of making it work. However, research shows that they are, in fact, overconfident and just as likely to fail as other organisations. This overconfidence is due to the short-cuts in thinking (heuristics) decision makers use when faced with complex decisions. These short cuts are very useful because they make complicated problems simpler and easier to resolve. However, when simplifying in this way crucial information is neglected and this usually reduces the accuracy or appropriateness of the solution.
One important simplification strategy used by decision makers is confirmation thinking - a strong tendency to focus on information that supports an existing belief and ignore information that challenges it. This leads to a number of biases:
• Overconfidence – people hold beliefs with higher degree of confidence than they should because they fail to take account of the information challenging this belief. Research shows that CEO overconfidence is a major factor determining mergers and acquisitions – those initiating these activities are much more confident of success as compared with external experts and analysts and this level of confidence is much higher than the actual likelihood of success.
• Optimism – allied to overconfidence; decision makers have a general tendency to believe that, in comparisons to people similar to themselves, good things are more likely to occur to them and that bad things are less likely to occur.
These factors mean that CEO judgements of success of mergers and acquisitions are overly optimistic and downside risks overlooked so not addressed.
Can anything be done to rectify this situation and help CEOs and organisations make less biased decisions? Research shows that there are three ways of overcoming this problem:
• Better governance: evidence shows there is more merger and acquisition activity when CEOs also act as president and chairman of the board (Malmendier & Tate, 2008); this highlights the crucial role of weak oversight by boards of directors and the need for better governance.
• Train key decision makers to think smarter: people can be taught to think in ways that reduce overconfidence.
• Better decision making processes e.g. use of techniques such as devil’s advocacy, since these guide the process in ways that minimise bias.
In August there was a surge in mergers and acquisitions activity (e.g. BHP Billiton’s bid for Potash, Intel’s for McAfee). Thompsons Reuters’ data show nearly $90 billion worth of deals in one week alone, making it the largest weekly total for 4 years. This activity flies in the face of evidence showing a surprising lack of success e.g. simply announcing merger bids wiped off over $220 billion from the share price of acquiring companies over the period 1980 – 2001 (Moeller, Schlingemann, and Stulz, 2005); at best there is only a 50/50 chance of success (McGee, Thomas and Wilson, 2005). In any other context these chances would be considered far too risky. So why do CEOs and organisations do it?
Evidence suggests that key decision makers are blinded by overconfidence, leading them to over-estimate their own chances of success. They know that many other organisations have failed but are confident about their own chances of making it work. However, research shows that they are, in fact, overconfident and just as likely to fail as other organisations. This overconfidence is due to the short-cuts in thinking (heuristics) decision makers use when faced with complex decisions. These short cuts are very useful because they make complicated problems simpler and easier to resolve. However, when simplifying in this way crucial information is neglected and this usually reduces the accuracy or appropriateness of the solution.
One important simplification strategy used by decision makers is confirmation thinking - a strong tendency to focus on information that supports an existing belief and ignore information that challenges it. This leads to a number of biases:
• Overconfidence – people hold beliefs with higher degree of confidence than they should because they fail to take account of the information challenging this belief. Research shows that CEO overconfidence is a major factor determining mergers and acquisitions – those initiating these activities are much more confident of success as compared with external experts and analysts and this level of confidence is much higher than the actual likelihood of success.
• Optimism – allied to overconfidence; decision makers have a general tendency to believe that, in comparisons to people similar to themselves, good things are more likely to occur to them and that bad things are less likely to occur.
These factors mean that CEO judgements of success of mergers and acquisitions are overly optimistic and downside risks overlooked so not addressed.
Can anything be done to rectify this situation and help CEOs and organisations make less biased decisions? Research shows that there are three ways of overcoming this problem:
• Better governance: evidence shows there is more merger and acquisition activity when CEOs also act as president and chairman of the board (Malmendier & Tate, 2008); this highlights the crucial role of weak oversight by boards of directors and the need for better governance.
• Train key decision makers to think smarter: people can be taught to think in ways that reduce overconfidence.
• Better decision making processes e.g. use of techniques such as devil’s advocacy, since these guide the process in ways that minimise bias.
Professor A John Maule
Director: Centre for Decision Research, Leeds University Business School
Linstock Communications Associate
www.linstockcommunications.com
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