CorporateCoach eNewsletter

Issue No. 52, 29th March 2004


  1. Editorial: Problems of success
  2. Coaching notes: Lessons for young citizens (1)

1.     Editorial: Problems of success

Richard Winfield - editor and principal consultantThis year is the 250th anniversary of the Royal Society of Arts.

The Society was founded in 1754 by William Shipley, a painter and social activist. He brought together a group of individuals to propose a manifesto for Society "to embolden enterprise, enlarge science, refine arts, improve our manufactures and extend our commerce". The RSA originated in Rawthmell's coffee house in Covent Garden, London, and to celebrate the anniversary, the RSA launched the Coffee House Challenge.

I was honoured to be asked to facilitate the event in Birmingham in the local Starbucks. Over a period of two hours some 26 guests discussed "Developing a capable population" in four groups. Not surprisingly the subjects that arose were not related to traditional education but tended towards communication and social skills.

I have for some months been considering what I would include in a curriculum for young people. I get frustrated by the ignorance of politicians and the press and have wondered what teaching in schools would improve the situation in the future.

One that commonly manifests is a result of not appreciating the significance of price elasticity of demand. Our railways have grown very successfully since privatisation ten years ago. Unfortunately, although we now have some wonderful new trains and improved frequencies, the growth has been faster than the rail network can cope with. The public response to overcrowding is to ask for the fares to be reduced because of the resulting poor quality of service.

This is nonsense. If the price is reduced, patronage will rise and overcrowding will increase. However, if we follow the basic laws of economics and increase the fares, patronage would go down making it more pleasant for the remaining passengers, and the railway companies' earnings would rise - encouraging them to invest more in increasing the capacity.

Unfortunately, what is "fair" is not necessarily what is sensible.

On Friday I used the new M6 toll road. This is the first commercially funded toll road in Britain and provides a bypass to the heavily congested M6, north of Birmingham. The toll for lorries has been set at £10, which hauliers say is too high, so that they do not use it. There have been outcries in the press that setting the toll at this rate is unfair because it will "increase" the cost of goods delivered by road and consumers will be penalised. It cannot do so because all the hauliers are doing is to refuse a choice that they previously did not have. Further, the removal of significant numbers of cars at peak periods will reduce the congestion on the old M6 and imrove travel times for those who continue to use it.

There is, however, another argument. I know from my training as a highways engineer that the wear and tear on a road is a function of the number of heavy lorries that use it. On a road designed for lorries, cars and light vans have little effect. So, it can be argued, the toll authority is "cheating" by taking the low cost traffic and leaving the damaging heavy lorries on the government owned road. Perhaps, however, they have calculated that £10 is the cost of damage of a heavy lorry journey.

I think economics is a wonderful subject - it allows us to get to logic behind emotion. As a consultant and coach, part of my job is to challenge easy asssumptions. If the press did the same we would have a more mature (and capable) population.

Here are some more of my chosen lessons for young citizens, with more to come next week. I would be interested to receive any other suggestions.


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2.    Coaching notes: Lessons for young citizens (1)

Here are some concepts that I would include in my curriculum for young people: -

The Law of unintended consequences

Readers will have heard me ranting about this in the past. The more bad laws the government passes, the more this law becomes evident.

We live in a stable but dynamic system. The world we live in operates consistently and, if we try to change it, it reacts in order to regain equilibrium. Unfortunately, we often forget this and treat new ideas from a single point of view. The result is that the consequence is the opposite of what we intended.

A good example of this is 'women's rights'. If laws are passed to simply increase the pay, privileges and maternity benefits of women employees the result will be that they find it more difficult to find employment. Their increased rights over male employees will count against them at recruitment.

If we wish to improve the employment situation of women, therefore, it is necessary to explore opportunities within the 'system' so that a new equilibrium can be reached and our intended consequence achieved.

Opportunity cost

Opportunity cost is the lost benefits of what could have been achieved if this particular action had not happened. So, for example, the cost of a training course includes the cost of the work that cannot now be done by participants on the days they attend as well as the direct cost of travel and fees.

Moral hazard

When I was young, a schoolgirl in the house opposite became pregnant. This was in the days before such things became the norm in Britain!! The question was: Should we celebrate and look after the young mother and her baby? or: Should she be shamed as a lesson to other potentially delinquent teenagers? Clearly, we would prefer to look after mother and child. But the moral hazard is that such action could unintentionally send a message to other girls, leading to more schoolgirl pregnancies and greater total suffering.

To take a business example. If government is seen to underwrite banks, insurance companies and businesses that fail, in order to protect the lenders and investors, the moral hazard is that managers will be more willing to take risks and the likelihood of failure will increase.

The reality of risk

When I was young it was common for school classes to include someone with an arm or leg in plaster. We were allowed to take risks, and sometimes it led to a broken limb or to some other minor harm.

Today, in Britain, we have replaced an acceptance of risk with both a desire to protect citizens from all chance of harm and a desire to litigate against someone in case of personal harm. Here is a form of unintended consequence. Now that children are protected from risk they have no swings or roundabouts to play on, and may not be able to learn to swim at school or go on foreign holidays. As a result, not only do they miss many of the joys of youth, but they lose the experience of learning to manage risk and take personal responsibility in later life.


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