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Saturday, December 31, 2011

Leadership Consulting: Stances on Scholarship

As the field of leadership consulting continues to proliferate, fringe-elements have developed that risk taking down the credibility of the field itself as well as its more solid practitioners. In this essay, my objective is to make those practitioners aware of the damage to their field (and indirectly to their own practices) that is being committed on the periphery. Relatedly, my task extends to making scholars of leadership aware of how leadership itself is being undermined as a concept used (and abused) in the business world. I contend that maintaining the distinction between consulting (including writing on it) and scholarship is in everyone’s interest, even if some “coaches” believe they have a momentary interest in blurring the lines for personal gain.

Taking a practitioner's experience, which is quite valuable in its own right as praxis, as tantamount to scholarship involves a rather basic category mistake. Treating an academic literature as if it were merely another opinion among those of practitioners is also a category mistake. For example, practitioners who view the academic literature on business leadership as "one of the many perspectives that make up the puzzle" attempt to reduce theory or the results of empirical research to opinion, as if the strictures of research methodology were mere dross. A category mistake is also made when one treats non-scholarship as if it were scholarship simply on the basis of being “actionable.” This includes conflating a "how to" book with a theory or the results of an empirical study.

I am not claiming that every (or even most) practitioners commit such category mistakes. Nor am I contending that scholars are the only people with knowledge; rather, scholars are in the business of formulating knowledge under fixed rules of reason and methodology and then passing it on to the benefit of practitioners. I am merely contending that the roles are distinct, even if some practitioners (and scholars) may blur them.

If scholarship is indeed the same as anecdotal experience or opinion--both being "perspectives" or knowledge--the accumulated knowledge is essentially relegated, not to mention disrespected. While Thornton may be a fantastic consultant, she does not have the educational credential necessary for her to function as and be recognized as a scholar. I want to emphasize that I am not disvaluing the work that she or other consultants do. In my view, they provide valuable services to managers and even entire companies. My point is merely that, as I'm sure more practitioners know, consulting experience is not the same as expertise in the study and knowledge of leadership.

The bottom line is perhaps that the accumulation of knowledge on leadership is difficult enough. A "new age"-like democratization of the formulation of what counts as knowledge, whereby every leader and consultant deems himself or herself to be an expert on the knowledge of leadership without an advanced degree on the subject, dilutes what counts as knowledge and misleads people who take the opinion as fact. That is, conflating opinion with knowledge is apt to increase undetected fallacies and errors exponentially (not to mention result in perpetually reinventing the wheel) because the "rules" established and followed by scholars in accumulating knowledge are not necessarily followed. Users assume they are, and are thus mislead when the rules are not followed because they are not known.

Therefore, I recommend that practitioners, whether leaders or consultants, take great care in utilizing the academic literature of leadership. Does the author have a doctorate, meaning a terminal degree that includes comprehensive exams graded by an academic faculty and a successfully defended dissertation (e.g., Ph.D., DBA, DSciM, JSD, or EdD)? Does the text look solid academically, with citations or end-notes and a healthy bibliography including articles in academic journals, or is the book essentially a "how to" book with bullet-points and "feel good" potential-sounding platitudes? My point is that there is A LOT of daylight between these two types of books on leadership; they should certainly not be conflated. Doing so puts the user at risk for relying on something stated as if it had survived analytical or empirical methodology when it had not.

To be sure, "how to" books with lists and inspirational platitudes may serve a viable purpose for some practitioners (including those who write them). This hypothesis could be tested empirically by a social scientist careful to distinguish positive correlation from causation. My point is that this purpose is different than that which is satisfied by the knowledge on leadership formulated and vetted by scholars. By its very nature, ratiocination and its accompanied research methodology live at some distance from praxis, even where the analytical beam is focused on an applied concept. You have a taste of this distance right here if you are thinking ratio what? Ironically, the best knowledge is accrued by scholars who do not conflate what they are with what they are studying. In the scholars’ world, “actionable” does not trump or eclipse, much less expunge theory and empirical results.

There are undoubtedly many practitioners who appreciate having access to knowledge that has been vetted by scholars; such knowledge on leadership can indeed be useful, whether to a leader or a consultant. Sadly, I must admit that I have encountered some consultants who seem content to vaunt their own "actionable" opinion over academic knowledge even on leadership, and still other consultants who seem to treat what they advocate as if it too constituted scholarly-derived and vetted knowledge. It is in the interest of the consulting sector to disgorge itself of such fallacies because 1) a leadership consultant’s practice can benefit from scholarship on leadership and 2) credibility is a valuable commodity for consultants. The last label a “coach” wants applied to him or her is “snake oil salesman or saleswoman.” By drawing on the academic literature, a consultant can distinguish himself or herself from the “coaches” who sell platitudes. In other words, distinguishing scholarship (even on applied concepts) from praxis is in the interest of consultants who want the field of consulting gain credibility and their own practice appreciate in value.

Click to view comments, or to add one or a question on how leadership consultants approach scholarship on leadership.

Anti-Corruption and Federalism in India

At the end of 2011, India’s coalition government adjourned the upper chamber of the federal legislature without passing legislation that would have created an independent anticorruption agency. India was a the time rife with governmental corruption. A college wants its foreign students protected from crime? A payment is made to local police employees, who pocket the money for themselves. Someone wants a government contract? Well, that goes without saying.

The lower house having passed the legislation, the inaction of the upper chamber was particularly frustrating, particularly to the supporters of Hazare, whose hunger strike  during the summer had led to a promise by the government that the legislation would be introduced. It would have been impractical, and even anti-democratic, for the government to have sidestepped the legislative process simply because a demonstrator of Hazare’s stature was undergoing a hunger-strike. Even heroes should not be lionized too much. Lest it be thought that the federal parliament’s inaction would provoke Hazare to renew hunger-strike, he had actually attempted during the week leading up to the anticipated vote to rally public support against the government’s bill—calling it too weak—by undergoing a hunger-strike, but the large crowds of the summer did not materialize so he called off his hunger-strike “prematurely,” according to the New York Times, “blaming poor health.” It is odd that a person who risks his or her life in a hunger-strike would call it off on account of poor health. “I’m risking death, but I don’t want to get too sick” belies the claim to authenticity and thus undermines the credibility of the movement itself. Ironically, Hazare’s lobbying against the government’s bill may have contributed to the eventual inaction, so the inaction does not necessary constitute a failure for Hazare.

Furthermore, concerns other than corruption legitimately contributed to the inaction. Specifically, the New York Times reports that “(m)uch of the argument centered on an often-technical discussion about India’s federalist structure and whether the provision concerning the creation of state-level anticorruption agencies was unconstitutional.” As the example of the United States suggests, the encroachment of a general government of a federal system on the state governments can compromise the sovereignty retained by the latter, and thus the “checks and balances” feature of federalism between the two government systems (i.e., that of the states and that of the general government). In the case of the anti-corruption bill, whether the federalist arguments were a smokescreen or not, it is significant and highly valuable that federalism was raised as a factor explicitly. In the U.S., the factor is not typically raised even where it is relevant and even vital; typically, the federalism being affected is simply compromised.

Therefore, both with regard to Hazare’s anti-corruption crusade and federalism, the inaction of the upper federal legislative chamber is complex. Ideally, corruption should be rooted out systemically while federalism should be fortified rather than enervated. Both objectives can be achieved—meaning that federalism need not be compromised in riding the society of corruption.


Jim Yardley, “Bill to Create Anticorruption Agency Stalls in India,” The New York Times, December 30, 2011. http://www.nytimes.com/2011/12/30/world/asia/anticorruption-bill-stalls-in-adjourning-india-parliament.html

Friday, December 30, 2011

Democracy Deficit in the E.U.’s State-Rights Federalism: The Debt Crisis

Holding back additional transfers of governmental sovereignty from the state legislatures to the E.U.’s legislative chambers not only inevitably pushes power to non-democratic E.U.-level  institutions, notably the ECB; the democratic basis even at the state level can be compromised.

The complete essay is at "Is the E.U. a Federal System?"

Thursday, December 29, 2011

An Aristocratic People’s House?

Between 1984 and 2009, the median net worth of a member of the House rose by more than 2 1/2 times, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity. Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.” This comparison excludes home equity because it was not included in congressional reporting.


These statistics support the view extant in the U.S. Federal Constitutional Convention that relative to all of the representatives in the legislatures of the several states, the “few” in the U.S. House of Representatives gave that body an aristocratic quality. This fear did not necessarily translate into a belief that the federal system itself would be consolidated as a consequence. Even so, aside from the growing economic distance between the U.S. House reps and their constituents, the increasing wealth can be taken as a baleful indication of a funneling of wealth and political power in ever tighter circles. In other words, the statistics support those who urge that more governmental power be shifted from Congress back to the semi- and residual-sovereign state legislatures.

While it is true that the delegates at the federal convention feared excess democracy, which was notably against the interest of creditors such as themselves, in the state legislatures (e.g. Massachusetts), it can be argued that his bias left them (and the constitution they drafted) vulnerable to political (and economic) consolidation, with Congressional power (and wealth) effectively setting its own limits. The statistics may give an unsuspecting public pause in taking seriously the proposition that the federal system should be readjusted so as to achieve better balance, which in turn enables more viable checks on the abuse of power—whether in Washington, D.C. or Topeka.

Click to view comments or to add questions or comments on the increasing wealth of representatives in the U.S. House of Representatives and the implications for federalism.


Peter Whoriskey, “Growing Wealth Widens Distance Between Lawmakers and Constituents,” The Washington Post, December 26, 2011. http://www.washingtonpost.com/business/economy/growing-wealth-widens-distance-between-lawmakers-and-constituents/2011/12/05/gIQAR7D6IP_story.html

Wednesday, December 28, 2011

Rolling the Dice: The E.U.’s Financial Regulatory Agency (the ESMA)

Even though the European financial sector integrated significantly during the first decade of the twenty-first century, the E.U. Government’s regulatory infrastructure and content did not keep up. As in the U.S. until 1933, state regulation carried the bulk of the weight. As the twenty-first century notably differs from the nineteenth, the relatively integrated financial sector in the E.U. means more risk is entailed in continuing to rely on state regulators. This is not good news for David Cameron, who in late 2011 tried and failed at a European Council meeting to hold strengthened enforcement of state-deficit limits hostage by demanding protection for state-level financial regulation over federal regulation. Like South Carolina was in the nineteenth century, United Kingdom was decidedly in the states’ rights camp as late as a decade into the twenty-first.

Retaining a state-regulatory presence in the E.U. does not necessitate relying on state regulation. In fact, an alternative could invigorate American federalism. To see how, let’s go to work!

In 2011, the E.U. established its own counterpart of the Securities and Exchange Commission (SEC) in the U.S., according to the New York Times. The European Securities and Markets Authority (ESMA) began with the mission of creating one set of securities rules for all 27 E.U. states. According to the New York Times, the lack of coordination, even just in terms of sharing information on the extent of credit default swaps in 2008, had been problematic. "There's a likelihood that the impact on the financial system could have been smaller if we had access to more information," according to Steven Maijoor, the first chairman of the E.U.’s financial regulatory body. In terms of the subsequent E.U. banking and state-debt problems, the patch-work quilt wherein only some states allow short-selling on bank stock exacerbated differentials within the E.U.’s financial system that compromised stability in the E.U. as a whole.

According to Maijoor, much of his first year was spent getting state regulators to share more information. Lest this remind one of Alexander Hamilton’s task on General Washington’s staff in getting the American republics to voluntarily provide their quote of supplies to the continental army, the E.U. was a federal system of government rather than a mere alliance in 2011, and the system’s financial sector was much more integrated than even that of the U.S. in the nineteenth century. "We already have a pan-European financial market, so it's crucial there's an institution that can coordinate all the regulation," said Diego Valiante, a research fellow at the Center for European Policy Studies in Brussels. "It's highly dangerous to have fragmented supervisory mechanisms."

For one thing, the ESMA was hampered in 2011 by limited resources. According to the New York Times, “The regulator's 2011 budget is 16.9 million euros, or $22.1 million, compared with $1.1 billion the S.E.C. receives. It has a permanent staff of 60, which will rise to 200 over the next three years. Its counterpart in the United States employs more than 4,000.” This problem is not unlike that facing the federal government in the U.S. until the 1930s. A “states’ rights” ideology can effectively starve agencies of the general government—risking dissolution. In the case of the E.U. after the first decade of the twenty-first century, the “starving” was just as problematic, if not more given the responsibilities of the E.U. and the extent of European integration.

The failure of the E.U. to “catch up” with itself, at least with respect to financial regulation, can be explained by the “states’ rights” ideology in states such as Britain and the Czech Republic. The fact that the ESMA’s board of supervisors, which decides on new regulation, is comprised of representatives from the 27 state regulators explains institutionally why the emphasis on state regulatory authority could continue even as financial integration took place. The E.U.’s agency's legal structure gives all 27 of the European Union's state regulators a vote in rulemaking. Disagreements could delay reforms or force stand-offs between states that differ on new legislation. In the context of the state debt crisis, the E.U. could ill-afford such standoffs.

Beyond the inevitable jealousies, there is a conflict of interest in giving state regulators so much power in an E.U. regulatory agency. The state regulators sitting on the ESMA board are undoubtedly interested in protecting their own turf at the state level, even at the expense of E.U.-level regulations commensurate with the extent of financial integration in the E.U. To solve this problem, the influence of the state governments should be checked, or bracketed, on the E.U. level. The ESMA’s board could include commissioners from the E.U. Commission, the E.U.’s executive branch. While not being a majority on the board, the representatives of the state agencies could appeal board decisions to the E.U. Parliament, which consists of directly-elected representatives of the European people. Such reforms would bring the E.U. itself closer to being in “balance” as a federal system—not excluding state officials at the federal level, but also not giving the state level (or any one state!) a veto either. Incidentally, the U.S. could stand to reform its own federal system to give state regulators a policy-making role at the U.S. level.

Furthermore, E.U. officials such as Steven Maijoor should be given more authority with respect to access to state agencies. It is in interest of E.U. officials in general to view problems from the overall perspective of the European Union. Such a vantage-point is valuable in the context of the financial integration reached already by the end of the first decade of the twenty-first century. It is not as if the state officials should not have any influence at the federal level; this has been one of the mistakes in the U.S. that brought about consolidation there. My point is simply that the state-level influence at the ESMA should be at most a check on excessive E.U.-level encroachments that could portend consolidation into a central state at the expense of the innate diversity on the ground.

The ESMA’s role in regulating rating agencies makes it a pivotal agency in the European financial market. Taking short-selling and the over-the-counter derivatives markets in 2012 only promised to add to the potential harm from particular state interests, or the interest of the state-level itself, in thwarting regulation spanning the entire E.U. financial market. Lapses by rating agencies in the U.S. and the intentional lack of regulation on housing-based derivatives were responsible for the financial crisis in the U.S. in September 2008. Therefore, along with particular regulations, the federal balance in at the E.U. level should be addressed or the actual integration will continue to outstrip the E.U.’s institutional wherewithal, with the risk of a financial crisis being raised significantly. Einstein said God does not play with dice. Mankind shouldn’t either, at least when a financial collapse may be in the cards.

Click to view comments, or to add a comment or question on the E.U.’s financial regulatory agency, the ESMA.

Mark Scott, “In Europe, Securities Overseer Spreads Gospel of Streamlined Regulation,” The New York Times, December 27, 2011. http://dealbook.nytimes.com/2011/12/26/in-europe-securities-overseer-spreads-gospel-of-streamlined-regulation/

Monday, December 26, 2011

Russia’s Common Economic Area: Not Another European Union

On January 1, 2012, a new version of the common economic area between Russia, Belarus and Kazakhstan came into effect. The three countries had already founded a customs union in 2007. As of the end of 2011, Kyrgyzstan and Tajikistan were still in talks about joining as well. Putin insisted that integration with the E.U. could take place by 2015. I cannot help but wonder if E.U. leaders were aware of this possible union of unions. It could be argued that Putin was making several category mistakes.

Most notably, the common economic area in Europe is the EEC, not the European Union. Putin’s “common economic area” would therefore merge with the former rather than the latter. Furthermore, Russia, in consisting of republics and regions on the scale of E.U. States, is itself equivalent to the E.U. Putin envisioned "a new, strong, supranational union.” It makes a difference whether the nations are kingdom-level or empire-level. In the European use of the term, the U.S. and E.U. are both in part supranational, as their federal units are themselves semi-sovereign—some governmental sovereignty having been transferred. In other words, in political genus, the E.U. can be classed with the U.S. rather than with NAFTA, the EEC, and the CIS. Putin was treating the E.U. as though it were NAFTA in Europe, or the EEC. Accordingly, his plan to copy E.U. governmental institutions in his common economic area involved the category mistake.

According to Deutsche Welle, “The EU is a model for the Eurasian Union right down to its name.” The "Eurasian Economic Commission" is to be the union's regulatory body, reminiscent of the European Commission, the EU's executive branch. Boris Gryzlov, a former speaker of the Russian parliament, has spoken of his pet project: a Eurasian parliament. According to Deutsche Welle, experts view the chances of the Eurasian Union becoming an "EU of the East" as slim to none. The transfer of sovereignty to the E.U.’s government from those of the semi-sovereign states would hardly be accepted by the Russian government. Relatedly, Russia would hardly view former republics of the U.S.S.R. as equivalent to Russia itself.

Putin insisted the principle of equality would be especially important for the union. That could be project’s undoing. Eastern Europe expert Gerhard Simon of the University of Cologne said the principle of equality, as exemplified in the EU, has no chance of holding in a union wherein Russia is poised to dominate so. "It's unimaginable for me to think that the Russian political class would be ready hand over to the Kyrgyz the right to make political and economic decisions that could be binding for Russia," Simon told Deutsche Welle. Although Putin was viewing both his “Eurasian Union” and the E.U. as mere customs unions, Simon doubts that the Eurasian Union was exclusively about economics. "Behind that there is the goal of the integration of security policy, the military and politics in general," he said. In the driver's seat, Simon added, will undoubtedly be Russia.

One could be excused for being confused about how Putin’s plans for Russia’s common economic area relate to the E.U., or even what the “Eurasian Union” would be as a “supranational” union. Suffice it to say that being confused or simply wrong about what the E.U. is can give rise to a cascade of blunders with great cost in wasted effort alone.

Click to view comments, or to add a comment or question on Russia’s customs union as being akin to the E.U. or U.S.
Roman Goncharenko, “Russia Plans ‘Eurasian Union’ on EU Model,” Deutsche Welle, December 26, 2011. http://www.dw-world.de/dw/article/0,,15615047,00.html