BT2101 Summary - Responsible Business Leadership @EUR
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Kurs
Responsible Business Leadership (BT2101)
Hochschule
Erasmus Universiteit Rotterdam (EUR)
Book
Principles of Management
This document contains a concise summary of the book and lectures from the course Responsible Business Leadership (BT2101). The summary covers all the material in preparation for the exam (chapters 1, 3, 4, 5, 11, 13), as part of the material covered between weeks 1 and 6. Scored an 8 on the exam!
BT2101-Responsible Business Leadership
Book + Lecture Summary
Week 1
Book – Chapter 1 – Management in Context
Profession: an occupation that serves society and the world
➢ Due to the important role of professions, any unprofessional practices have the
potential to do much harm; for this reason most professions have a code of practice
outlining ‘professional conduct’ – i.e. which practices professionals should and should
not engage in, and how they should do it
• Professional practice: practicing and practices that serve society and the
world in professional conduct
Translating this understanding of professionalism to management, we understand
professional management as a management practice carried out with professional conduct
and in pursuit of goals serving society and the world
• Management practices: activities that management practitioners customarily
engage in
Old-world management
Richard Arkwright is often credited to be the management innovator who invented and
implemented factory production; this ‘management innovation’ was in a way the invention of
modern management itself as factory production required supervision of semi-skilled labour
by a manager
➢ Management innovation: invention and implementation of a management practice
that breaks with ‘normal’ practices
➢ Factory production drove down the costs of products, and consumerism beyond the
basic needs of people became possible
• Management innovation of factory production shows how practices in general
can change people’s lives and the world for better or worse – i.e. without
factory production many people now living comfortable middle-class lives
might still be caught in poverty; on the other hand, without factory production
we wouldn’t have today’s overconsumption that brought human existence on
planet Earth to the brink of collapse
Here’s a list of examples of how managerial practices invented in the last hundred years are
linked to some of the most serious problems we now face:
➢ Practices of continuous company growth have led to an economic system that
continuously produces more than the Earth is able to support while continuing to
function as a suitable habitat for humanity
, ➢ Consumerist marketing practices create unnecessary wants leading people to
overconsume → the increase of people with the money to overconsume now exceed
what the planet can support
➢ Practices of low-cost production to maintain growth-consumption leads to
exploitative (ab)use of workers in low-labour-cost countries
- See pg. 11 for more examples
All these practices are examples of what we call ‘old-world management’, and have not only
contributed to the critical situation we are now in, but also misaligned with the needs of the
troubled world we live in
➢ Engaging in these and similar practices makes a manager an unprofessional
manager – unprofessional management practice: managerial practice not
conducted in the service of society and the planet or without professional conduct
Transition world management – we are living in a ‘transition world’ characterized
by varieties of ethical, social and environmental issues, and by a tension between old
and new world management; a revolutionary new system will need professional
management practices, and for it to come into being we need to go through a
transition from old-world to new-world management
- A transition from management that parasitically uses the Earth, to a management
that serves the world, for all the people rather than just a few
Transitions: revolutionary systemic changes emerging from the co-evolution of economic,
technological, social, cultural, and ecological changes
Humanity’s global footprint is a way of measuring how much of our planet’s resources are
used for human production and consumption; we are currently using up 1.75 Earths a year, so
that each year we are getting closer to running out of natural resources
➢ Nine ecological boundaries, or planetary boundaries represent the ecological
thresholds, overstepping of which threatens humanity’s subsistence on Earth;
- We are currently overstepping four of them, creating a very real risk of such
catastrophes, among them climate change and species extinction → management
practices need to change so less damage is inflicted and we step back from
planetary boundaries, or to even start to restore ecosystems (i.e. Patagonia)
➢ Sustainable Development Goals (SDGs): 18 goals addressing humanity’s social,
environmental, and economic issues; addressing one or several of the SDGs is an
important step towards professional management practice (some ex. pg 15/16)
Managers have a central role for a broad systemic shift towards ethics, responsibility, and
sustainability;
➢ First, managers have the power to change business in their respective spheres of
influence, regardless of their hierarchical position
➢ Secondly, once the business has demonstrated success in transforming to more
professional ways, its industry peers are likely to follow for competitive reasons
➢ Third, while the economy is changing, the impact on society of the overall economic
system of industries and single companies become visible
, - i.e. Consumers are educated through companies and now have some choice of
sustainable and responsible products → employees who learned responsible
practices in companies might transfer those to their individual lives → companies
leading in professional management activities often lobby politicians to foster
public policies for ethics, responsibility and sustainability
The particular chain of beneficial events starts with management!
Professional managers at Patagonia realize institutional work: work realized to maintain the
‘old normal’, to change it, or to create an entirely ‘new normal’
1. Change what is normal – i.e. Patagonia’s management engages in restorative
agriculture, they aim to establish this as a new normal, where there is no
exploitative unsustainable agriculture
2. Maintain the ‘old normal’ – i.e. petroleum companies lobby against anti-carbon-
emissions legislation
3. Creating new institutions – i.e. a profession of management, an entirely ‘new
normal’
Drivers and Inhibitors of professional management – transition world management is
characterized by the continuous struggle between forces that drive us to engage with
professional new-world management, and the opposing forces, inhibitors dragging use back
to old-world management ( pp. 18 figure)
➢ Four main drivers (forces) of professional management:
1. Stakeholder wants (and needs) - Main stakeholders like customers,
employees, and civil society increasingly expect managers to contribute to
society and the world through their company
2. The business case - There are many business opportunities in professional
management in the service of society and the planet – ‘is just good business’
o Business case: business opportunities arising from ethical, responsible,
and sustainable management
3. Internet and transparency - With the worldwide use of mobile devices and
social media it has become almost impossible to hide unprofessional
behaviour
4. Normalization and Institutionalization - Professional management practices
in service of society and planet are increasingly institutionalized
➢ Widespread inhibitors of professional management:
1. There are critical arguments related to the profit
o Friedman argument implies that the only responsibility of managers
is to make money; according to Friedman, managers shouldn’t manage
in the service of society and planet as it takes away from their main
profit-making responsibility
2. There are often tensions and paradoxes between old-world and new-world
management; a management in service of society and the planet often requires
prioritization – i.e. as a store manager in a supermarket, should you place
, unhealthy or high revenue items at the cash register where people are more
likely to buy them in a spontaneous impulse?
3. Stakeholders might accuse a manager of greenwashing when creating a
misleading impression of the social, environmental, or ethical performance of
a product or company
4. There are also other varieties of operational inhibitors – often hard to
identify the business case; difficult to accommodate competing strategic
priorities with professional management and strategy; high complexity in
integrating professional management practices throughout all business
functions; lack of managers’ professional management skills; difficulty to
engage with external groups; financial markets not sufficiently recognizing
professional management efforts
New-world management – reinventing management as a whole will happen by
reinventing one management practice at time; it is a co-evolution with the economic
system that makes management, and a co-evolution of the economic system made by
management
o What all of them have in common is a rupture with the mainstream
neoclassical and neoliberal economic thought that the previously dominant
form of capitalism was built on
Ethics, responsibility, sustainability – professional management gets the right tasks done
(the ones in service of the planet), and does it ‘right’ (with professional conduct) by taking
care while doing the task
➢ The three dimensions of professional management: ethics, responsibility,
sustainability; they have significant overlaps and strongly influence one another;
however, they are centred on distinct core concepts to make complementary valuable
contributions to professional management
1. Ethics: focus on making the right decision in moral dilemma situations;
conduct that embraces ethical behaviours and serves moral excellence
2. Responsibility: conduct fulfilling its stakeholders’ – employees, government,
environment… - responsibilities, and serves stakeholders value optimization
3. Sustainability: favour conduct that balances social, environmental, and
economic value, and serves to restore value through triple bottom line
optimisation
▪ Professional management conduct asks whether management is carried out
ethically, responsibly and sustainably – i.e. marketing manager organizing a flyer
campaign using biodegradable promotional material (sustainability), ensuring that the
contents are not discriminatory (ethics), and that it is not distributed to children
(responsibility)
▪ Professional management service is centred on whether and how management
practice serves society and the Earth – i.e. the same marketing campaign goal being
the promotion of cigarettes or weekend flight trips does not pursue professional
service (unsustainable due to health effects or due to increasing carbon emissions)
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