South Wales Business Review Vol 5 Issue 2 by Lucy Griffiths

Vol 5 Issue 2 2014

Brain-Powered Business

How do we Value Intellectual Capital?

“Knowledge... is outperforming every other resource as the world’s most valuable asset.” Professor Medwin Hughes 10 Key Skills for the Workforce of the Future

What’s an Apple Worth? Understanding Brand Value

Swansea Business School Ysgol Fusnes Abertawe

l ti a p a lC a u ue t c ll e Iss te n I

inside

Spring 2014 Volume 5 Issue 2

Editorial:

BRAIN-POWERED BUSINESS How do we Value Intellectual Capital?

BEWARE THE DOWNSIDE OF INTELLECTUAL CAPITAL

The Big Interview: PROFESSOR MEDWIN HUGHES on the Value of Higher Education

If you require this document in an alternative format (e.g. Welsh, large print or text file for use with a text reader), please email swbr@sm.uwtsd.ac.uk

Fformatau eraill Os hoffech y ddogfen hon mewn fformat arall (e.e. Cymraeg, print mawr neu ffeil tesun i’w ddefnyddio gyda darllenydd tesun), anfonwch e-bost i swbr@sm.uwtsd.ac.uk ISSN 2049-5544 Disclaimer: The articles in this publication represent the views of the authors, not those of the University. The University does not accept responsibility for the contents of articles by individual authors. Please contact the editor if you have further queries. Ymwadiad: Mae’r erthyglau yn y cyhoeddiad hwn yn cynrychioli barn yr awduron, nid rhai UWTSD. Nid yw’r Brifysgol yn derbyn cyfrifoldeb am gynnwys erthyglau awduron unigol. Cysylltwch â’r golygydd os oes gennych gwestiynau pellach. Registered Charity Number / Rhif Elusen Gofrestredig 1149535 © UWTSD 2014. All rights reserved/ cedwir pob hawl. Front cover image: ©mamanamsai/Shutterstock

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Student View: MAKING YOUR MARK The Value of ExtraCurricular Experiences at University

Future of Business: 10 KEY SKILLS for the Workforce of the Future

News and Events

Think-Piece:

Books THE SECOND MACHINE AGE by Erik Brynjolfsson and Andrew McAfee

Point of View: WELSH MEDIUM BUSINESS EDUCATION: What’s the Point?

Think Piece: WHAT’S AN APPLE WORTH? The Paradoxical World of Brand Valuation

THE VALUE OF STUDENT PLACEMENTS Alternative formats

Opinion:

10 Minute Guide:

Next Issue: BUSINESS UNBOXED Rethinking 21st Century Work Culture

INTELLECTUAL CAPITAL

www.uwtsd.ac.uk/swbr swbr@sm.uwtsd.ac.uk @SWBusReview Lucy Griffiths South Wales Business Review Adolygiad Busnes De Cymru Swansea Business School Ysgol Fusnes Abertawe University of Wales Trinity Saint David Prifysgol Cymru Y Drindod Dewi Sant Ty Bryn Glas Campus Campws Ty Bryn Glas High Street / Stryd Fawr Swansea / Abertawe SA1 1NE

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PRODUCTION TEAM Editor: Lucy Griffiths Editorial Board: Kathryn Flynn Samantha Morgan Christopher Thomas Design & Print: UWTSD Print Unit

Brain-Powered Business Editorial:

How do we Value Intellectual Capital?

Selected Contributors:  Richard Dunstan

Richard Dunstan is a Senior Lecturer in Accounting in the Faculty of Business and Management at Swansea Business School. He is a Chartered Accountant and his teaching specialisms include corporate reporting, auditing and corporate governance, accounting software and business law.

 Siȃn Harris

Siân Harris is a Senior Lecturer and Regional Co-ordinator for Business and Management for Coleg Cymraeg Cenedlaethol. She has conducted research into the demand for higher education in Business Management through the medium of Welsh and is a Welsh Medium Subject Specialist in Public Service for the Assembly.

 Steve Griffiths

With a background in Economics and a strong interest in Business Ethics, Steve has taught at Swansea Business School for many years, and is currently Assistant Dean Faculty of Business and Management and Head of the Centre for International Development.

Lucy Griffiths Editor We live in a world that is increasingly driven by ‘intangibles’. Information is created, stored and exchanged in forms that we cannot touch, and the trade of this information plays an important role in our economy. Conversely, the ability to create, share, and access information has also made certain forms of ‘knowledge’ incredibly cheap. If we need to know the population of the country we live in, we can search online for official statistics. If we need to know which smartphone to buy, we can find hundreds of reviews and ratings within seconds. We can even find out how much our neighbours sold their house for (if we really want to). Despite the extent of this freely available information, knowledge has never been more important in organisations – and knowledge is in many cases dependent on the people who generate it and ‘hold’ it. In this edition we look at the importance of intellectual capital to our economy, particularly focusing on the role of education in developing people capable of working in this environment.

Professor Medwin Hughes, ViceChancellor of the University of Wales Trinity Saint David, shares his view on the role universities can play in our knowledge economy in our big interview on page 4. We showcase some of the ways in which higher education in Wales is contributing to this with pieces from Siân Harris and Richard Dunstan on bilingual business education and the value of work placements on pages 8 and 10. From an economic perspective, Steve Griffiths explores the complexity of the intellectual capital debate on pages 14 and 15, and we highlight some of the key skills 21st century employees may need to operate in knowledge driven economies on page 7. With all that and the usual round up of news, reviews and events, it’s another packed issue. I hope you enjoy reading it.

Lucy PS. To receive a regular copy by post or view earlier editions of the SWBR online visit www.uwtsd.ac.uk/swbr.

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The Big Interview: Professor Medwin Hughes on the Value of Higher Education We asked the Vice-Chancellor of the University of Wales Trinity Saint David, Professor Medwin Hughes, for his views on Wales’s knowledge economy and how the education sector contributes to its development. SWBR: What do you see as the role of Universities in today's globalised knowledge economy? MH: Their role is crucial. Universities occupy the space between what we know and what we do not know. In today’s world, knowledge is indeed power and it is outperforming every other resource as the world’s most valuable asset. Our global economy therefore relies on knowledge to drive growth and create prosperity. Universities can effect transformational change that benefits society and encourages social mobility. Not only do we benefit our local and national economies through job creation, developing a highly-skilled workforce, and creating new products and services, we also benefit society through improving the life chances of individuals, contributing to greater community cohesion and social inclusion. Universities are full of talented and creative people – researchers, lecturers, students - who each possess a thirst for new knowledge that can offer solutions to challenges and create good. We are about unlocking potential, harnessing and exploiting knowledge for economic and social gain. We can cross national and international boundaries to foster greater understanding of the world and its needs – whether that is from an economic, cultural, political, social or an environmental perspective. The number of people accessing university education across the globe has grown exponentially in recent years. The higher education sector in the UK alone is expanding despite changes in the funding regimes of Wales and England. Over 49% of young people enter higher education in the UK each year according to YouGov suggesting that aspiration still outweighs financial concerns. Over 87% of graduates in the UK, and over 91% of Welsh graduates, are in employment or further study within six months of leaving higher education. Graduates also earn on

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average some £12,000 a year more than non-graduates. When you consider the impact of the higher education sector to the UK economy alone, currently estimated as £73 billion and contributing 2.3% to the gross domestic product (GDP), just imagine what that figure is across the world.

SWBR: What about the role Universities can play in tackling the specific economic and social issues we face here in Wales?

expenditure to the Welsh economy annually, while generating 3% of all Welsh GDP and earning over £400 million in export earnings through overseas revenue and international students studying here. The Welsh Higher Education Sector also generates some 38,802 jobs across the country and a total of 43,294 UK-wide. Of course, the higher education sector itself is a major employer in Wales and it provides support for cultural, social and economic activity by its very existence.

MH: The Welsh Government has identified the two pillars of social justice and supporting a buoyant economy to underpin what we do as universities in Wales. Given that we are about effecting transformational change, universities are vital to the well-being of our society. They are civic institutions that make an enormous contribution to their local communities, their regions and to Wales. Universities in Wales have been instrumental in building the nation over the past three centuries. Our campuses in Swansea, Carmarthen and Lampeter were created in the 19th Century to address the educational, economic and social imperatives of the day, and we can still claim that we’re doing that work today. We may have changed the names of those institutions a few times along the way and we may now be one institution covering the whole of the South West Wales region, but we are still true to those original values.

The sector is also well placed to tackle issues relating to social mobility and inequality. Our own Wales Centre for Equity in Education, developed jointly with the University of Wales, represents our commitment to develop policy, applied research and innovative practice that will contribute to improving equity within the Welsh education system. Widening access to higher education means that every person, regardless of where they start out in life, has the opportunity to achieve their potential. The Welsh HE sector, and UWTSD in particular, has an excellent track record of encouraging students from non-traditional backgrounds to access higher education. We have much to celebrate but of course there is still work to be done.

The UWTSD Group, which includes Coleg Sir Gâr and Coleg Ceredigion, has created a new system of education for Wales delivering education and training from entry level to post-doctoral studies, with progression routes and alternative modes of delivery that address the needs of employers.

MH: Graduate employment is of course a major concern of all universities. Economic success depends on the expansion of a highly skilled workforce and the sector in Wales plays a key role in that. Graduate employment in Wales is high with 91% of graduates from full-time, first degree programmes finding work or further study within six months of leaving higher education. This is higher than the UK average of 87%.

An economic impact report commissioned by Higher Education Wales last year noted that as a sector we contribute £3.6 billion in gross

SWBR: In an environment where the labour market is changing rapidly, how can Universities ensure their graduates are equipped for success?

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│SOUTH WALES BUSINESS REVIEW As a sector we are making great advances in graduate employability through a range of initiatives including through our learning and teaching methods and through developing workbased programmes, flexible and blended learning, providing work experience programmes and internships which enable our students and graduates to work with companies on real work-place challenges. We are about to launch the Wales Institute of Work-Based Learning at UWTSD, developed from our award winning Professional Practice Framework, to provide employers and employees with higher skills in areas directly related to their work. For example, we are working with some 12 Local Authorities in Wales on the Porth Agored scheme to train Social Workers. We have also developed the Professional Certificate in Employability Skills which will be available to all UK undergraduate degree students and which is designed to

encourage them to acknowledge and develop the skills that they gain at University so that they can secure that vital first job or even develop their own business. I’m particularly proud of this institution’s track record for entrepreneurship. It’s not just rhetoric because we have taken a global lead on enterprise and entrepreneurship education. Earlier this year Professor Andy Penaluna contributed to a major UK Government report which recognises the key role that entrepreneurs and the micro business that they create makes to the economy. The University also recently played host to the United Nations’ Head of Entrepreneurship, Fiorina Mugione, who chose to spend three months working with us on enterprise education pedagogies. We also have an excellent track-record for graduate spin-out companies in Swansea and they are making a real contribution to the city and the Swansea Bay City region.

“A vibrant city experience, connecting academia with innovation, enterprise, businesses and the community.”

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SWBR: The University is developing a new Campus in Swansea’s City Centre – what impact will this have on the Swansea Bay City Region? MH: I’m delighted that we have secured this prime waterfront location as it will transform the educational experience for staff and students. It will enable UWTSD Swansea to provide a vibrant city experience, connecting academia with innovation, enterprise, businesses and the community. We aim to develop a range of innovation hubs in different disciplines bringing together the expertise and creativity of our staff so that we can continue to make, and increase, our contribution to the Swansea Bay City region. Over the coming months we will be working with the City and County of Swansea, as well as our own staff and students and the local community to develop the vision.

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10 Key Skills

for the Workforce of the Future Combine rapidly changing technological capability with globalisation and population shifts and you have a recipe for a transforming work environment. Today’s employers looking to ‘future proof’ their organisation are demanding new sets of skills, and those seeking employment need to be able to adapt and learn constantly throughout their ever longer working lives. The Institute for the Future’s ‘Future Work Skills 2020’ report (IFTF, 2011), highlights ten key skills that workers will need in the future. Here’s their list, and our view on why they may or may not be important for future employers and employees. 1. Sense-making Although computers are becoming increasingly sophisticated and can do amazing things with data, there are some things that only humans can do. Understanding and interpreting complex and seemingly unconnected environmental factors and making sense of what data outputs actually mean will be in-demand skills, even in an environment where computers do the ‘number-crunching’. 2. Novel and Adaptive Thinking Creative and intuitive leaps of thinking that help organisations solve problems will always be important, but these will need to be coupled with a need for increasing levels of adaptability in the rapidly changing working environments of the future. The ability to cope with rapid transformation and respond positively to shifting circumstances will be vital skills for our future workforce. 3. Social Intelligence Humans are of course social by nature, but the organisations of the future are likely to place increasing value on the social ‘intelligence’ of workers. The Institute for the Future use social intelligence in a similar way to Goleman’s ‘Emotional Intelligence’, highlighting the importance of empathy and social adaptation, and the ability to build relationships based on trust – skills which now have to be adapted across a wide range of face-to-face and electronic communication settings. 4. Transdisciplinarity This describes the need for workers who can understand, make connections, and solve problems across traditional disciplinary boundaries. The IFTF suggest that ‘the ideal worker of the next decade is “T-shaped” – they bring a deep understanding of at least one field, but have the capacity to converse in the language of a broader range of

disciplines.’ With human life-spans extending, it could be argued that individuals will be better able to develop both broad and deep knowledge than ever before if they continue to learn throughout their working lives. 5. New Media Literacy Clearly, new media play an important role in organisations and are likely to in the future. Ensuring that workers are literate across all relevant media types and able to select channels and use them appropriately will be critically important factor for employers of the future. 6. Computational Thinking The IFTF highlight the need for an understanding of computational processes – how computers work with data and the outputs they are capable of creating. They also suggest that it will become increasingly important for individuals to understand the limitations of computing power, and to be able to make good decisions both by using computer data and in situations where data analysis may not provide a complete or accurate picture. 7. Cognitive Load Management This one deals with something we’re probably familiar with already – information overload. With so much information at our fingertips, it can be easy to become overwhelmed. The ability to filter through masses of information quickly, identify key themes and important issues, and use appropriate tools to support this will be highly valued by employers. Luckily this is a skillset that higher education environments are already particularly good at developing. 8. Design Mindset Although the IFTF appear to base their definition of this skillset on the design of working environments, design thinking has the potential to have far wider

applications within organisational environments. Adopting a design process, which places users and stakeholders at the centre of decisionmaking, and allows for both free thinking and the iterative development of solutions, could have profound impacts on the way we solve problems in a wide range of workplace contexts. See designthinking.ideo.com for more. 9. Cross Cultural Competency Employees’ ability to work across diverse cultural settings is increasingly important for employers in organisations of all sizes, as doing business globally becomes the norm. It will be interesting to see whether in the longer term cultures will start to become less distinct as we engage cross-culturally, but in the next twenty to thirty years, having an understanding of cultural and linguistic differences is likely to be a crucial skill employers will need from workers. 10. Virtual Collaboration Finally, the ability to operate effectively as part of virtual teams and to use technology to enhance collaborative activity will also become important as organisations seek to bring together groups of skilled staff from multiple locations to work on projects. Social skills in virtual environments will be important here, as well as a willingness to share, adapt, and resolve problems without face-to-face communication. Join the Debate Do you think these are the most important skills our future workforce will need? What would you add to the list? Let us know by tweeting @SWBusReview Discover More You can read the Institute For The Future’s full report on their website: www.iftf.com

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Think-Piece: The Value of Student Placements Richard Dunstan Richard Dunstan of Swansea Business School considers the importance of the sandwich placement in enabling students to gain experience during their studies, and how we can encourage more to take up this opportunity.

Work-based learning at higher education level has long been a feature of UK higher education. The emphasis on vocationalism in the Robbins Report (Robbins, 1963) led to the development of polytechnics in the 1960s and in subsequent years workbased placements have been introduced into a wide variety of undergraduate programmes. In 1997, the National Committee of Inquiry into Higher Education, chaired by Lord Dearing (Dearing, 1997) recommended that all undergraduates should have the opportunity to undertake a period of work experience. Placement years offer the opportunity of formal work experience, the most common type in the UK being the 12 month work placement undertaken between year 2 and year 3 of an undergraduate programme. This is commonly referred to as a “sandwich year”. During the last decade, however, a significant fall in the number of UK students undertaking placements has been noticed nationally and is true both in business undergraduate programmes and across a range of all programmes. The views of those students who have, however, undertaken a sandwich year focus strongly on the benefits they perceive that have resulted from the experience, not only in terms of the impact upon their future studies but also upon their own personal development.

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The benefits expressed can be summarised as follows: •

Working in a setting in which to put theory into practice

Students greatly benefit from the placement experience by being able to appreciate how their academic studies link with the “real world”. They feel that they are able to apply concepts and theories that they have studied at University to a practical situation. Placement students often perceive that they are able to learn experientially from their practical involvement with the subject and can see a noticeable development in their levels of understanding. •

Enhanced possibility of graduating with a better degree

succeed. Student desire for increased employability has also been identified and student reliability may also have been improved by their placement experience and, as a consequence, they take their coursework and examinations more seriously. •

A key theme identified by students is the perception that they have of their overall personal development as a result of the experience. An improvement in their selfconfidence has been noted by many students, as has the feeling of a greater sense of maturity. Also, an awareness of workplace culture is developed and the appreciation of the opportunity to work in a professional business environment. •

It was felt that the benefits of the placement year are displayed in both the level of experiential learning and the greater motivational impetus that results from the experience. The experience is generally seen as greatly advantageous in the search for a better degree upon graduation. The potential reasons for such improved student performance are manifold. The issue of increased student maturity has been noted which may also lead to increased ambition or motivation and increased focus and determination to

An opportunity to develop a range of personal attributes

Enhanced employment prospects and the potential of commanding higher wages when starting employment after graduation

In the current education climate, with an ever increasing percentage of the population obtaining University degrees, the perception of many placement students appears to be that any added experience that will set them apart from their contemporaries in the search for graduate employment is seen as very advantageous.

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Students from Swansea Business School, Hollie, Jade, Nia and Hayley, are currently all on placement at the Rancho Valencia Resort and Spa near San Diego, California. A placement year can also assist in developing career strategies and help with career choice. It can aid students in becoming aware of opportunities and building up a network of contacts. The majority of students, however, despite an awareness of work placements are increasingly not taking advantage of the opportunity to undertake a placement year. The potential difficulties or barriers experienced by students in this regard include: • • • • • •

The desire to graduate within a three year time period Difficulty in finding an employer Rising levels of student debt Clashes with part time work Family commitments The wish to graduate with their peers

There are, additionally, many benefits to an employer of providing an opportunity for a student to complete a placement year. A study at the University of Central England revealed the following possible benefits to employers (Harvey, Geall and Moon, 1998): • • • • • •

Filling a vacant post (e.g. special project) temporarily Act of social responsibility Screening future potential employees Extra workers at low cost The setting up of a new project The opportunity to give a potential recruit a trial without obligation

• • • • •

Using students’ reflection on work experience as a recruitment criterion Having a pool of potential recruits with some general awareness of workplace culture An injection of new ideas Developing links with higher education institutions Staff development opportunities that arise from employees mentoring students.

Unfortunately, there are barriers from the employers’ perspective in expanding work placement opportunities and there are many cases of Universities, in recent years, having increasing problems in finding placements for students, in both the public and private sectors. This is largely the result of employers facing severe financial constraints. In addition, employers have faced unprecedented changes in recent years. Large manufacturers, for example, have less capability than they used to have. This is especially true in South Wales where the overriding trend in the last ten years has been the move away from an industry dominated by large manufacturing companies to one of a more service company orientated business environment.

encouragement may be needed to initiate the process and Government may have to consider tax or other incentives which will encourage more employers and particularly small and medium employers to become more actively involved in the provision of work experience. Short internships, especially those over the summer vacation may also prove to be increasingly popular. Clearly, there are multiple benefits to both the student and the employer and it would be a sad loss to both parties if such student placements in the local area were allowed to decrease even further. At UWTSD Swansea one recent graduate of the BA Human Resource Management (With Placement) programme, Claire Watkins, commented that she found her year’s placement at Tata Steel “invaluable in aiding her future studies and her practical experience and understanding of HR”. She graduated with a 1st class honours and the Ede and Ravenscroft prize for the best student on the BA Business Studies portfolio of awards in 2011/12. It would be a calamity if other future students were not able to benefit in a similar manner from a placement opportunity.

However, there may be room for expansion of placement opportunities, particularly in small and medium sized enterprises that previously have not had placement students. Some form of

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Point of View: Welsh Medium Business Education, What’s the Point? Siân Harris Siân Harris, Senior Lecturer and Regional Co-ordinator of Business Management at Coleg Cymraeg Cenedlaethol, considers the value of higher education in business through the medium of Welsh. Until quite recently, the availability of Welsh medium higher education was minimal, patchy and ad hoc. Then in 2011, following a commitment by the Labour-Plaid Cymru coalition at Cardiff Bay, Coleg Cymraeg Cenedlaethol was established in order to expand and oversee developments. During the last couple of years, it has worked with and through the existing higher education institutions in Wales, as well as establishing its own independent network. Its activities have included funding hundreds of students from undergraduate level through to PhD; funding just under a hundred lecturer posts across a wide range of subject areas from business to biology; publishing an academic e-journal, Gwerddon; and supporting various projects such as the HE Terminology project. The cynics would argue that since Welsh is a minority language (spoken by 19% according to the 2011 census) all of this is a waste of time and effort because much of the world’s population communicates in English - especially in relation to commerce. However, there are strong arguments for transforming the linguistic nature of higher education in Wales: Firstly, there is a need for continuity. There are increasing numbers of parents across Wales choosing to send their children to Welsh medium primary and secondary schools - according to Rhieni dros Addysg Gymraeg, between 2001 and 2011, in Swansea there was an increase from 8.5% to 12.5%, and in Carmarthenshire from 50% to 54%. They are doing so for a variety of reasons such as excellent results, the benefits of being bilingual per se and a growing awareness

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of Welsh identity. Vocational subjects such as Business Studies, Health and Social Care, Leisure & Tourism and Public Services are popular in schools. Therefore it is illogical and unethical for so many young people to have to switch the language of instruction when they progress to study these subjects at university. Secondly, by facilitating Welsh medium education, universities are maintaining students’ language skills and adding value to their curricula vitae. In particular in relation to a language, ‘if you don’t use it, you lose it’; and so it is important for Welsh speakers to have the opportunity to continue to submit assignments and discuss academic matters in Welsh. As a result, when the time comes for them to enter the highly competitive jobs market, they will have an additional skill to offer. Jessica Davies is a Member of Coleg Cymraeg Cenedlaethol and is a student on the BA Business Management, University of Wales Trinity Saint David. She attended Ysgol Gyfun Gymraeg Bro Myrddin and is currently writing her dissertation in Welsh whilst studying for other modules in English: “Studying bilingually is very important to me. After years of studying bilingually at school, I jumped at the chance to study some modules in Welsh at university.” Jessica works as a retail assistant to support her studies and communicating in both languages is a requirement of this role. In the future, she hopes to work as a teacher locally and is aware that being bilingual will be necessary: “I’m certain that this will give me an advantage in the future - especially when starting a career in Wales.”

Another argument from the point of view of the employer is that an employee who has been educated in Welsh to degree level is a valuable resource. After all, Welsh speakers are customers and clients and, in the public sector in particular, they have specific rights in view of the Welsh Language Act. At the time of the launch of Coleg Cymraeg Cenedlaethol, its chair Professor Merfyn Jones referred to “...the people who will be able to use the Welsh language in all sorts of fields, in business, the civil service, in education. We've got to be able to produce a certain number of people in Wales who can conduct any conversation at the highest possible intellectual level through the medium of Welsh and that's what this is all about.” In recent years, after centuries of repression followed by neglect and dismissal, there has been a relatively rapid rate of change of attitude that has led to the Welsh language approaching equal status with English. “Things have changed within a generation,” according to Huw Thomas, Senior Lecturer in Marketing at UWTSD. “When I opened my first bank account in 1975 at the age of 17, a cheque would simply not be accepted in most places if it was written in Welsh, and bilingual road signs were a rarity. The days of believing that you had to speak only English to ‘get on in the world’ have faded; and many organisations and businesses in Wales now require strategic documents and plans to be drafted in Welsh - and not simply directly translated from English documents. Job opportunities for bilingual staff are on the rise; and universities have their role to play in helping to develop the necessary skills.”

“…from the point of view of the employer, an employee who has been educated in Welsh to degree level is a valuable resource.”

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A further argument for transforming the linguistic landscape of higher education in Wales is that it is likely to promote ‘Brand Wales’, and in the longer term contribute to the development of the economy. Language and culture are closely intertwined, and these give a nation its identity. Commercially, this has financial worth, which to date Wales has largely failed to utilise. There are some exceptions of course - for example, Halen Môn produces salt and Tŷ Nant produces bottled water, with their distinctive Welsh branding giving them global recognition. Daioni flavoured milkshakes are widely available in supermarkets; and Glengettie tea has successfully offered its bilingual Welsh and English packaging throughout England, as well as Wales, for several years. For most of the world’s population, bilingualism or even multilingualism is intrinsic to their culture. This is clearly manifested by the students from overseas who attend higher education establishments throughout Wales. Multinational organisations are well used to accommodating a whole host of languages and cultures - because it makes commercial sense. Indeed, there are many reasons for pursuing Welsh medium higher education; but preserving one of the world’s oldest surviving languages is probably the worthiest.

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10 Minute Guide: What is Intellectual Capital? Intellectual Capital (IC) is often used as a term that encompasses all of the intangible, knowledge-based assets an organisation owns or has a stake in. Stewart (1997) describes intellectual capital as “knowledge, information, intellectual property, experience – that can be put to use to create wealth. It is collective brainpower or packaged useful knowledge”. This definition highlights the importance of actually using these knowledge assets in ways that generate further value – intellectual capital is therefore only truly valuable if it is employed to aid the organisation in achieving its objectives.

What kinds of things form intellectual capital within organisations? The elements that make up the organisation’s Intellectual capital are often subdivided into three categories which highlight the wide range of intangible assets each organisation may have and the complexity of the relationships between them.

Structural Capital Structural capital consists of the intangible assets an organisation has which are not embedded in people and their relationships. These include systems and processes (e.g. customer relationship management systems, production processes, financial systems and processes), intellectual property assets (e.g. trademarks, brands, patents, registered designs), and people management systems (e.g. training programmes, employee engagement and

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reward schemes). Structural intellectual capital can replace other tangible assets such as storage (i.e. for example by implementing a Just In Time system you might eliminate the need for warehousing).

wholly ‘owned’ by the organisation – they are shared with their employees and customers/stakeholders and so are never fully within the organisation’s control.

Human Capital

Measuring intellectual capital is notoriously difficult. Quantifying the value of know-how, processes, brands and relationships has, however, been attempted and several models exist (see page 16 for more on brand valuation models).

Human capital is the knowledge or power that employees have that can be used to create value within the organisation. This could be in the form of experience, specific skills and knowledge, creative capability, or even their levels of energy, commitment and motivation.

Relational Capital The relational capital of the organisation is the value of the relationships it has with its stakeholders. For example, this could include customer and supplier loyalty and goodwill, and positive working relationships with regulators, the media, lobbyists and investors.

Can the value of Intellectual Capital be measured?

However, many organisations review and manage intellectual capital within the firm in order to maximise its value. For example, Marr et al (2003) consider Intellectual Capital valuation to be useful in the following ways: • • • •

Why is it important? For many companies intangible assets play a vital role in the success of the business as a source of competitive advantage – typically because they are difficult for others to replicate. This links IC to both resource-based and competence-based views of competitive strategy. Staff knowledge, customer relationships, efficient systems, and brands are all potential sources of differentiation for organisations, and yet they can be difficult to manage and value. For example, it could be argued that relational and human capital are not

•

Helps in strategy formulation Contributes to evaluation of strategies Assists in decisions around expansion and diversification Can help determine appropriate compensation levels for staff Can be communicated to shareholders

The question of whether to attempt to value IC is important for organisations from both internal and external perspectives – but whether the benefits of assessing IC and attempting to manage it outweigh the financial and time costs remains moot. See overleaf for a further discussion of the pros and cons in our Opinion Piece from Steve Griffiths.

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Reading list Bontis, N. (2001) ‘Assessing Knowledge Assets: A Review of the Models used to Measure Intellectual Capital’, International Journal of Management Reviews 3(1), pp.41-60. Edvinsson, L. and Malone. M. (1997) Intellectual Capital, Harper Business, New York. Marr, B., Gray, D. and Neely, A. (2003) ‘Why do firms measure their intellectual capital’, Emerald Journal of Intellectual Capital 4(4), pp. 441-464. Roos, G., Pike, S. and Fernström, L. (2006), Managing Intellectual Capital in Practice, Butterworth-Heinemann, USA. Stewart, T. (1997) Intellectual Capital: The New Wealth Of Organizations, Nicholas Brealey Publishing, Business Digest, New York.

“As the foundation of industrialised economies has shifted from natural resources to intellectual assets, executives have been compelled to examine the knowledge underlying their businesses and how that knowledge is used.” Hansen, Noria and Tierney (1999) Vol 5 Issue 2 2014 | 13

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Opinion: Beware the Downside of Intellectual Capital Steve Griffiths Steve Griffiths, Assistant Dean at Swansea Business School, considers the pros and cons of valuing and attempting to manage intellectual capital within organisations. Industry journals, in particular, assert that the creation, development and application of Intellectual Capital (IC) are a prerequisite for success. IC drives competitive advantage, improves earnings and allows sustainable development. IC can represent a “missing value” between the measured physical assets and the full market value of a company. In a knowledge economy this might represent up to 75% of the company’s market price. Therefore measuring IC and IC Management (ICM) become critical concerns for a modern organisation, including governmental and not for profit enterprises. However, academic literature also identifies that IC may have a downside, which managers should seek to avoid. It has been suggested that IC is composed of three levels – human capital, relational capital and structural capital (see p12). Each element may not always enhance the work of the others. However in an ideal model they would be symbiotically interactive and require leverage or else their value will remain unexploited. Much research tries to evaluate the impact of IC disclosure and the value generated. Most agree that disclosure must take place as companies see it as a way to demonstrate their competitive profile. There is also an assumption that disclosure will impact on the cost of capital and the financial performance of the organisation. These assumptions are contentious when the empirical evidence is reviewed.

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There are problems of measurement with significant variance, even within the same industry, let alone between industries. The researcher seeking to collect data and analyse it will be presented with very different narratives in different contexts making generalisation a problem. The evidence is mixed, perhaps because the tools for analysis are not appropriate for this intangible asset and activity e.g. the use of the well-worn Capital Asset Pricing Model (CAPM) which uses set priced risk factors to determine cost of equity, rather than more predictive measures. Some measures are developing wider implementation and impact such as the Value Added Intellectual Coefficient (VAIC), which allows predictive valuation of activity relevant to possible future investment or Mergers and Acquisitions (M&A) activity. Similarly the Value Network Analysis (VNA), which allows evaluation of networking in IC development, with shared leveraging of intangible assets. The International Accounting Standards Board (IASB) has also developed standard IAS 38, to account for intangible assets, an IC component, to standardise the disclosure to which most companies seem committed. The impact of IC disclosure on financing costs, particularly equity capital (not so much on debt capital), seems to confirm that most IC elements contribute to lower costs. This may be due to improved investor information, particularly in initial public offerings (IPOs), where previously uninformed investors will recognise the attractiveness of the venture. Also positive development of governance structures will enhance shareholder

information and reduce the fear of regulatory intervention, thereby lowering uncertainty and risk. The impact on financial performance is less certain, due to the lack of uniformity in presentation of data, weakness in defending IP rights and loss of control of implementation processes. The tools to measure and manage IC remain poor. The Brookings Institution asserts that there remains a discrepancy between the importance of intangible assets to economic growth and the ability to identify, measure and account for these assets. Nevertheless there is a general acceptance that traditional book values of organisations must increasingly incorporate IC assets, or else the market value of public companies will be impossible to predict or explain. Some other influences which complicate IC evaluation include: Cooperation/networking - Industry seems to engage in partnerships with rivals to develop and utilise IC. This coopetition allows lower cost R&D, development of new products and implementation of improved structures, but may also mean losing unique competitive advantage to a partner/competitor, unless well-defined rules are agreed for the time the network cooperates and when it is in a competitive mode. Inevitably this impacts on Relational Capital. Since cooperation might be with existing rivals, suppliers, substitute producers etc., it will impact on any application of Porter’s ‘5 Forces’, changing the competition threat analysis.

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Impact of recession - Evidence shows that in recession IC develops more slowly and indeed may cease, if organisations downsize too quickly. It appears that a critical mass of engaged, motivated and challenging personnel is required to maintain an innovative environment for IC development. However the recession may also stimulate the cooperation noted, due to scarce resources. Use of social networking media Linked to the general networking factor above, the use of Social Networks by organisations and their employees has stimulated easy networking to the benefit of IC creation, its development and utilisation to improve performance. However Social Network usage is

notoriously difficult to control and once started difficult to stop. Networking will also take place at several levels simultaneously and not necessarily in line with corporate protocols, leading to information leaks and threats to reputation. Dynamic environment - From the earliest IC reporting decades ago, the latest IC configurations have greatly evolved in complexity, causing uncertainty about the nature of IC priorities, the means to measure it, impact and the mode of implementation. Despite this, everyone seems committed to measuring IC, in this complex and risky environment, in order to drive the value creation process.

It seems the predominant role is the Human Resource elements in IC creation, implementation and value generation. There also needs to be care when disclosing IC assets to the public domain, respecting the impact on financial markets, company share prices and partners/rivals in the market. Many of the positives derive from the technical possibilities. Most of the negatives relate to the people side of operations and culture, including the need for developed ethical and socially responsible behaviours.

Positive and Negative Aspects of Intellectual Capital Positive

Negative

Lower cost of capital, via information access and lowering investor risk.

Possible financial instability as IC reporting attracts corporate raiders who might target companies with strong IC, but weak financial reserves.

Creative collaboration opportunities to share information, innovation and develop “products” faster. Synergistic networking. Internationalisation: widening outsourcing and market opportunities. Democratisation: overcoming information asymmetries, widening access & reduction of IT costs. Innovation to develop faster affordable products to enhance welfare. Access to wide information networks, sharing values, opportunities for joint development and sharing of experience. Coopetitive structures, shared development cost and reduction of wasteful competition.

Shared information and organisational structures makes IP defence and confidential competitive strategy difficult. Clash of cultures: exploitation of weaker stakeholders in a global context. Digital Divide: information rich v information poor communities. Socioeconomic exclusion. Volatile markets and the need to find receptive consumers of the ‘new’, regardless of their intrinsic needs. Loss of IP might reduce innovation incentives. Unethical behaviours, theft, cybercrime, misinformation, loss of trust and threats to reputation. Loss of corporate independence and possible cartel structures to fix markets against the interests of consumers.

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Think-Piece: What’s an Apple Worth? The Paradoxical World of Brand Valuation Lucy Griffiths Lucy Griffiths, SWBR Editor and marketing lecturer questions the value of brand valuation methods and considers why organisations might want to put a price on their intangible assets. How much would you pay for an apple? I’m guessing it would be less than a pound for most of us – and yet there’s one Apple that’s estimated to be worth $98,316 million (Interbrand, 2013). It’s the same word, with pretty much the same representative image, but with such a massive difference in represented value. The success of Apple as a company shows how paradoxical branding can seem. The asset valuation of brands has long been seen as a complex problem for organisations. It’s easy to see why firms want to know how valuable their brands are, particularly in an age where the development of service-based economies mean that the company’s output itself is often intangible.

In service organisations, the brand is one of the clearest representations of the value received by the customer, and for products the symbolism of the brand is what differentiates it from the competitors on the next shelf.

value of the brand fits into the market’s valuation of the organisation. Particularly when the value of ‘intangible assets’ listed in their financial statements is unlikely to represent the whole of their intellectual capital (IC).

In this context, a company’s brand can increasingly be one of its most important assets, and yet it is not something that it’s easy to put a trade value on. You could argue that the worth of any asset is only what someone is willing to pay for it, but in publicly traded companies, where the share price of the company can depend on all sorts of factors, it’s often difficult to identify where the

Let’s take Coca-Cola as an example. In December 2013 their reported intangible assets were $27,611 million (Coca-Cola, 2013). However, Interbrand, one of the world’s leading brand valuation specialists valued the brand at $79,213 million (Interbrand, 2013). So what’s happening here? Well one key issue is that financial regulations specify that only ‘acquired’ intangible assets appear on company financial statements – so intellectual capital in the form of brands that

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1 2013 BRAND VALUE (USD $billion) % CHANGE IN BRAND VALUE

2013 BRAND VALUE

2013 BRAND VALUE (USD $billion) 93.291

98.316

28%

% CHANGE IN BRAND VALUE

34%

% CHANGE IN BRAND VALUE

4 2013 BRAND VALUE (USD $billion) 78.808

79.213

(USD $billion)

5 4%

% CHANGE IN BRAND VALUE

2013 BRAND VALUE (USD $billion) 59.546

% CHANGE IN BRAND VALUE

Source: Interbrand (2013)

have been developed within the organisation is not included, but the IC related to brands that have been purchased is included. The value of these intangibles not included on the balance sheet is often cited as one of the key reasons for differences between the market capitalisation of most companies and the value as per their financial statements. So they are hugely important, and yet in some ways hidden. How then, do we value brands? Is it even possible to place a realistic valuation on something that many find difficult to define, let alone attempt to value, and which can be incredibly fragile and difficult to protect. Well, many researchers and commercial providers have studied this and a range of brand valuation methods now exist. There are a number of factors at play in any consideration of brand valuation. For example, the size of the market and growth trends, the difference the brand makes to consumer purchasing decisions and profits, how strong the brand is within the market (customer loyalty, competitive rivalry), and the level of risk the brand faces (the likelihood that brand damage might occur through a negative press story for example). Over time, and with different commercial providers supporting different methods, brand valuation became something of a murky area. In response to this confused environment, and following a review by the International Organisation for Standardisation, ISO 10668 ‘Monetary Brand Valuation’ was released in 2010. This provides a framework for the monetary valuation of a brand which it defines as “a marketing-related intangible asset such as a name, term, symbol, logo or design, or a combination of these, which identifies goods, services or entities and creates distinctive images and associations

in the minds of stakeholders and generates economic benefit” (ISO, 2010). The standard specifies that brand valuations should include legal, behavioural and financial analysis in order to be considered compliant. The legal ‘module’ details how brand valuations should define what they are valuing in legal terms, setting out standard legal approaches to the due diligence and risk analysis around this and ensuring that segmentation (such as consideration of IPR across international territories) is taken into account. The behavioural module requires the consideration of stakeholder behaviour in relation to the brand across the range of identified segments, including market trends and the influence of the brand on purchase decisions. Finally, the financial analysis module offers three alternative approaches – each of which are considered compliant - to evaluating the financial impact of the brand. The first is a ‘Market Approach’ to determining value, which requires comparison to a ‘market value’ of similar brands. This would require a recent sale of a very similar brand – and the likelihood of a really good recent match is very slim so in practice this method is difficult to use except under a very specific set of conditions and during a short timeframe. The second approach is a ‘Cost Approach’ which bases the value on the amount invested in creating and building the brand. Once again, the usefulness of this could be called into question as the amount invested in creating brand assets may in fact be very small when taken in isolation, and may not have been the crucial factor in a brand’s success.

The final, and most widely used method is the ‘Income Approach’ – which involves estimating the future financial incomes the organisation will gain from the brand during the rest of its useful life. There are numerous ways in which this can be calculated (see Kapferer, 2012 for a useful overview and discussion) but all require some level of forecasting of an uncertain future. All of these methods could be criticised in some way, but perhaps they are better than nothing? Certainly, creating a standard framework in this way has made it easier for brand owners to compare their brand valuations with those of others, and indeed the comparability and repeatability of methods that comply with the standards are likely to be valuable in brand strategy development. However, it would still be difficult to say that any of these methods produce a value that we can rely on - so with this potential for divergence, can we really place an accurate, comparable monetary value on a brand? Well, perhaps not across multiple methods, but indices like Interbrand’s can at least provide us with directly comparable, longitudinal data which when compared with itself is a useful indicator. Is it worth it? Well, for the biggest global brands yes it probably is – and if you’re selling your company you’ll certainly want to make sure the value of your intellectual capital is taken into account. However for the average SME, I’d suggest it’s more important to understand, develop and protect your brand than to be overly concerned with putting a monetary value on it. Better to focus your time and efforts on analysing the data you do have, devising a strategy, and investing in building a strong brand…

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Student View: Making your Mark

The Value of Extra-Curricular Experiences at University Whilst at University, students have a wide range of opportunities to take part in extra-curricular activities such as volunteering, competitions, student representation, sports and societies, but what impact do these ‘extras’ have on the students and their future prospects? We caught up with Alex and Dan from ‘Team Trinity’, a group of students from UWTSD who recently won the Chartered Institute of Marketing’s national competition ‘The Pitch’, and their lecturer Will Fleming, to find out more. SWBR: Tell us a bit about the CIM competition you won and how it worked? Alex: The competition was advertised via the CIM's twitter account, advising to visit their website for further details. They sent us a brief outlining that we were to innovate within product, packaging or distribution for either Pedigree or Whiskas. We chose Pedigree and had four weeks to produce our ideas; we did so by creating a video taking the judges through our thinking and our product. One month later we received an email confirming we had made the finals with feedback suggesting we had done very well. Further instructions were given to use our feedback to fine tune our idea and then we had to go to Mars head office to present our idea. On the day we met a range of people from the CIM and Mars and had a tour of the head office. We then pitched our idea to four judges; we were one of five finalists, and when the winner was announced thankfully Team Trinity was called. Dan: We came together as a team of three; from there we began brainstorming ideas and concepts that would stand out to the judges. We came up with an idea that surprised us all; from there we just built around it, working as hard as we could.

SWBR: What inspired you to enter? Alex: The CIM is central to most marketers in the UK and will be something I refer to and come back to throughout my career as a marketer, so to have the chance to compete against likeminded people in a recognised national student competition was too good to miss. Having done well in university so far I wanted to see if I could compete on a practical level, and working with the lads we were more than capable. Dan: I was the last person to join the group, as Jonny and Alex, two guys with great minds for business wanted a design/advertising mind to join them. Alex sold me the idea that it would be a great experience and a lot of fun. He was right, but he didn’t mention how much work there would be!

SWBR: What were the biggest challenges you faced? Alex: We found that resources were a difficult barrier when trying to come up with a viable product, finding out certain figures and ways of doing things was not easy. I also found that during my third year the additional work was not ideal, and as we are the first team to represent the university in this competition everything was a little bit new for all of us. Dan: There were endless obstacles to overcome, just as we thought we were on the right path, we realised there was

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either something that didn’t add up or we had forgot to include. But overall there were no real problems as we worked really well together as a team and backed each other up all of the way.

SWBR: What did you learn from the experience? Alex: I learnt that we are able to work in a practical way and apply the things we have learnt to real life situations, as a team we worked incredibly well and all brought a different element to the success of the project. Dan: It was a great experience and I’m very grateful for everything, I enjoyed every moment and learnt a lot about the business side of things, as I was from a design background. This I hope will propel me further in the future as the knowledge I have obtained is priceless.

SWBR: What were the best things about taking part? Alex: I found the best parts were that we got to work in a completely different way to what we usually do, and it gave me an appreciation for what my career in marketing may look like. I really enjoyed working in the team and coming up with "light bulb" moments and what then came from them. I also really appreciated the experience of going into a professional environment at Mars and the people there who were able to share their opinions and ideas with me.

ADOLYGIAD BUSNES DE CYMRU│ Dan: There were so many it is hard to choose. If I had to I would pick two. Firstly working with Jonny and Alex, who were a great team and very passionate about their work. The second would be going to Mars Pet Food, as there we met some amazing people who were very welcoming and gave us some great advice.

SWBR: What would you say to any other students thinking of taking part in similar competitions? Alex: I would highly recommend competition participation, I personally believe that a degree is not quite enough to differentiate a graduate anymore. The experience that we had as a team was

invaluable, whether we had won the competition or not I would still have been recommending that students participate. We had the opportunity to meet people within the industry that now know who we are and what we are capable of.

Tutor View

Dan: I would highly recommend doing it, the things you learn, see and participate in will be crucial for your future. So, you’d be crazy not to. Will Fleming, Senior Lecturer in Marketing and mentor to Team Trinity, reflects on the benefits of the experience for students.

SWBR: What did you see as the benefits for the students in taking part in this competition? Will: As I see it the main benefits have been working toward and meeting the criteria of a brief as this is an essential skill for marketing and advertising professionals. Then there was the working together as a team - and as Dan Short was from another course and another faculty his input and his views encouraged Alex and Jonny to think differently. The fact that the brief wanted creativity encouraged them to be innovative and entrepreneurial in developing their concept. Then in the final they had to present their ideas to a distinguished panel of experienced marketers in a professional and confident manner….and they won. Winning a national competition run by the Chartered Institute of Marketing (the CIM) that has to look good on anyone’s CV!

SWBR: What would you say to students thinking of taking part in similar competitions? Will: I would recommend it to all students, it is a fantastic way of taking what they have learnt over the three years of their degree and putting it into practice. Even if they had not won the competition it was clear that the team enjoyed the process; it was hard work and it took time and effort on top of their important final year studies but the feeling we had when we were finally notified that we had made the shortlist from 41 teams to the last 5 was special and as for the moment when the master of ceremonies said “…and the winners of the CIM 2014 Pitch competition are….Team Trinity”, well that moment will stay with me forever.

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News and Events

Events @ Swansea Business School

For full details and booking for any of the below events please contact Jamie Tavender (Faculty Marketing Officer): jamie.tavender@sm.uwtsd.ac.uk

25th April 2014, 6pm

SBS & CMI event ‘The mutualisation of public services’

Speaker: Mark Bandalli, Consultant, Mutual Ventures. Open event at Swansea Business School, all welcome.

1st May 2014, 6pm

‘The Robert Owen Challenge’ our annual student enterprise competition sponsored by the Chartered Management nstitute (CMI)

Open event at Swansea Business School, come along to watch our students pitch their ventures to a panel of expert judges in a competition to win the Robert Owen Cup. All welcome.

5th June 2014, 6pm

SBS & CMI event ‘Management Research Conference’ Staff and students present recent research activity from the Faculty.

Open event at Swansea Business School, all welcome.

5th July 2014

Swansea Open Day

Open day for prospective students. For details and bookings please visit http://www.uwtsd.ac.uk/opendays/

Faculty Welcomes New Dean The Faculty of Business and Management has recently welcomed a new Dean, Professor Zeljko Sevic, following the retirement of Leigh Jenkins. Professor Sevic has previously served as Dean of the Caledonian Business School at Glasgow Caledonian University. He has also been a Visiting Professor at Temple University, Australian National University, the University of South Australia, the University of Ljubljana and the Japanese Ministry of Finance Policy Research Institute. “I am really pleased to join UWTSD at this exciting point of development, when the University is looking to expand both nationally and internationally, develop a new campus with the students’ needs and welfare in mind, and to increase its support for the communities of South West Wales. These are challenging times for the Faculty, where we have to merge in the best possible and productive manner the historical prestige of Lampeter, educational excellence of Carmarthen and community access championed

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successfully for many years by Swansea Met. This opens great opportunities for the Faculty to enter a new stage of development, widening the focus of its outreach, and developing new avenues of engagement with the various partners – developing further practicerelevant research (especially in the Welsh context), expanding on our community outreach initiatives, developing new innovative programmes for the learners not only in South West Wales, but also nationally and internationally – to redefine business and management education for the next generation of socially aware and highly demanding pre- and postexperience, traditional and non-traditional learners. Diolch.” us.’

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An Enterprising Approach to Teaching Developing and evolving individual teaching philosophies was the subject of a recent series of workshops at the University from Dr Colin Jones from the University of Tasmania. Dr Jones, who has authored several books on teaching enterprise and entrepreneurship gave an insight into his own teaching philosophy and encouraged staff at the University to take a reflective approach to the underlying values and aims of their teaching practice. The sessions were part of the University’s commitment to developing enterprising educational practices and ensuring our teaching and learning is continuously developing and adapting to meet the needs of today’s students, employers and society.

UWTSD Impacting Entrepreneurship Education Policy University of Wales Trinity Saint David has recently contributed to a major UK Government report, which recognises the key role entrepreneurs play in the drive for growth, and looks at the effectiveness of our education system in supporting our entrepreneurs. The Westminster launch of the All-Party Parliamentary Group (APPG) for Micro Businesses report, entitled An Education System Fit for an Entrepreneur included a presentation by UWTSD's Professor Andy Penaluna and the report itself contains a foreword from the United Nations' Chief of Entrepreneurship, Fiorina Mugione who recently chose UWTSD to support the UN's Empretec programme, which inspires entrepreneurs in developing countries and countries with economies in transition. UWTSD has taken a global lead on enterprise and entrepreneurship education. Last year, the University was at the heart of the two major reports relating to enterprise and entrepreneurship education across the UK. This included The Wilson Review of Business-University Collaboration and the Quality Assurance Agency's (QAA) Guidelines for Enterprise and Entrepreneurship Education.

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Books: Spare Wheel?

‘The Second Machine Age’ by Erik Brynjolfsson and Andrew McAfee Brynjolfsson, E. and McAfee, A. (2014) The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, W.W. Norton and Company Ltd. Choosing to write books about the march of technology is either a fool’s game or a stroke of genius depending on how you view it. Almost as soon as the manuscript reaches the editor, the parameters of the subject have probably changed; but at least there will always be a need for a follow up. With ‘The Second Machine Age’, the authors of ‘Race Against the Machine’ (2012) return, (already!) with another zeitgeist-capturing vision of the present and future of our economy in what they call ‘a time of brilliant technologies’. Where Race Against the Machine set out the complex and competitive nature of our relationship with technology, The Second Machine Age promotes the opportunities that technology creates and provides recommendations for individuals, policy and the long term on how to make the most of these and protect against human obsolescence. For individuals, education is still a crucial factor in their view coupled with the ability to develop skills that it is still difficult to automate like creativity, synthesis of complex ideas, and a strategic overview of a situation. For policymakers and the longer term they propose Milton Freidman’s ‘negative income tax’ as one option, along with the reduction of general taxation on labour and a reduction in the tax and administrative burden on employers, essentially calling for a re-evaluation of our standard approaches to taxation on labour as a means of raising funds for government activities. This is one more in a long line of books seeking to predict the future for our economies in the light of technological advances. In this case the authors base their analysis on their review of our recent past, and through the lens of both recent and notso-recent economic theory. They don’t provide us with any firm answers, and indeed we cannot expect them, but neither are there any radical suggestions that have not been made before. Perhaps we do not need to reinvent the wheel after all…

Reviewed by Lucy Griffiths

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Next Issueâ&#x20AC;Ś Business Unboxed Rethinking 21st Century Work Culture

Out Summer 2014 To reserve a copy please visit www.uwtsd.ac.uk/swbr or email your name and address to: swbr@sm.uwtsd.ac.uk