Published On: Fri, Mar 28th, 2014

Defining executive priorities

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 (By Pharm. Nelson Okwonna)


In August 1939, Albert Einstein, who had fled Nazi Germany some years earlier, wrote a letter to President Franklin D. Roosevelt informing him of his concerns about Germany’s capacity to develop an atomic weapon and made suggestions on how America could so same.. In response, Roosevelt set up the Manhattan project, to work on developing an atomic bomb.The project was successful and resulted in the historical bombing of Hiroshima and, a few days later, of Nagasaki in August 1945.

Afterwards, the world would never remain the same. We’ve developed a relatively cheap way to annihilate humans. Following a thoughtful consideration of the damage done and the implications for the future, Albert Einstein spent the latter part of his life canvassing for an end to armed conflict.It was no longer a reasonable proposition for countries with nuclear capacities to engage in wars.

Einstein understood that technology, left in the hands of the wrong kinds of men, could wipe us out.In his words, “the human spirit must once again prevail over technology.”

In 2013, Pope Francis generated quite a controversy when he attacked unfettered capitalism as “a new tyranny”, urging global leaders to fight poverty and growing inequality. The crux of the Pope’s message was that, if left unchecked, the present exclusive culture that prevails in the marketplace, which extols money as king, would not help the society in the long term.

To me, the Pope was simply saying that the technology of enterprise, if left in the hands of the wrong kinds of men, could wipe us out as easily as the nuclear weapons could.

Both men are right. The aim of this article, however, is not just to prove the veracity of their assertions but rather to raise some pertinent issues within our unique context.


What is the goal?

This question is not just for the market arena where the CEO reigns but also for the serene academic institution, the health care service centres and the research community.

What really is the goal of the organisation?  Why do we exist?

This question should be answered in the light of the present societal environment, where the gaps between private and public organisations are fast disappearing. Globally, universities and research organisations that do not cultivate private sector influence and collaboration gradually become irrelevant.

All over the world, the health care sector is increasingly being private-driven and in Nigeria, the emergence of Managed Health Care led by Health Management Organisations is an indicator to the nature of the future. In India for example, the growth of huge private hospitals and the accompanying decline in the quality and funding of public health facilities give a pointer to the likely possibilities for us in Africa if we do not arrive at good answers to this question.


The Triple Helix

The concept of the Triple Helix of university-industry-government relationships, which was initiated in the 1990s,describes the shift from a dominating industry-government dyad in the industrial society to a growing triadic relationship involving the university, the industry and the government in the knowledge society.

The Triple Helix hypothesis is that the potential for innovation and economic development in a knowledge society lies in a more prominent role for the university and in the hybridisation of elements from the university, the industry and the government to generate new institutional and social formats for the production, transfer and application of knowledge.

The point is that the long legs of the industry have entered the hallowed chambers of the university and many other public service utilities, hence leaders in universities and other public organisations would need to answer questions they have not asked before. Questions like, “what really is the goal in light of scarce resources and competition?”

It is noteworthy therefore that in this brave new world of ours aptly called a knowledge society, the goal of the individual or individuals that lead this innovation environment is going to affect every one of us. A case in point is the efforts of Bill Gates with the Bill Gates and Melinda Gates Foundation; his personal answer to the question raised in this article is making a lot of difference even here in Africa.



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 Figure 1: Triple Helix

Corporate goals: What business schools teach

One of the introductory remarks one would get in any self-respecting business school is on the goal of the enterprise. The general answer is to “maximise shareholders’ wealth”; and, frankly, in the past half a century, business managers have done a great job of this. Figure 2 is a graph of corporate profitsvs. wages in the United States over a couple of years.


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Figure 2: Corporate Profits vs. Wages as percentage of GDP

The point to note from the above is that though the American economy is not getting any better, corporate profits are at their highest and there is almost an inverse relationship between profitability and wages. Though there are lots of arguments right now for the breaching of income inequality in most parts of the world, it is clear that business managers are doing a good job of achieving the goal of business – to maximise shareholders’ wealth.

Given the difference in knowledge base and the resources at the disposal of the operators of the machineries of trade, we do not expect the observed scenario to change much except when the conditions become quite intolerable.


Nations: Global competition

Recently, the Prime Minister of the United Kingdom, David Cameron, defending his visit to Kazakhstan, a nation with a rather bad reputation for human rights abuses, noted that “in the global race for jobs and employment”, some certain actions were necessary. The Prime Minister, I must say, is not at all squeamish about the way he has gone about driving national development, the latest of which is the planned “Islamic bond” that will make UK the first non-Muslim country to sell a bond that can be bought by Islamic investors. His aim is simple: to encourage massive investment. That said, we must bear in mind that other nations are making trade-offs to increase their aggregate productivities and it is with these nations that we are competing.


Implications for Africa

Given global trade dynamics and the current state of our economies, maximising shareholders’ wealth when adopted as the goal of the enterprise would not bring the majority of our people out of poverty because the wealth of a nation is measured in the aggregate productivity of her citizens and not in the number of billionaires she has (this is a question of wealth distribution); hence outcomes that increase aggregate productivity will go a long way to ensure long term prosperity.


Maximising aggregate productivity vs. maximising shareholders’ wealth

Many times, these are not the same thing and in developing economies like ours, they are definitely not the same. To maximise aggregate productivity, one has to own the factors of production and, sometimes, it is not immediately profitable to own the factors of production.

Consider the fact that it could be more profitable for a Nigerian trained doctor to practise in the UK rather than Nigeria.Though aggregate productivity has been reduced on the long term, maximum profitability has been achieved on the short term. The same applies to the cost of medications and other considerations. Hence, though maximising shareholders’ wealth could be a good goal for any particular company in Africa, for a whole industry it is not, especially as it is currently defined.


Can the human spirit prevail?

Einstein believed that the human spirit must once again prevail over technology; the Pope, in his address, sought to inspire the human spirit to prevail over the technologies of trade and, for Africa, that plea is timely. The best decisions that need to be taken in the Health Care Sectors of most African countries will most likely not be the most profitable decisions;yet they are the ones that will increase aggregate productivity.

This context, as said earlier, is important considering the increasing influence of the private sector. In pharmaceutical research and development, we know some diseases will never find funding until someone with a different goal comes around. Some health care training institutions will not be built, some products will be dropped from the product line and some indigenous research projects cancelled for competing engagements that are more profiting.

These ideals cannot be legislated (Marxism has tried); they can only be preached. Albert Einstein, Pope Francis and, now, my humble self, lend our voices to that cry – that the human spirit can prevail over the technologies of war and trade.

For Africa, we must think in terms of the aggregate productiveness of our industries – the ownership of the factors of production, human capacity development and retention, adequate technology integration and the right application of capital. Considering our current predicament, our challenges are great but so are our spirits.


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Defining executive priorities