Inward Investment – friend or foe?

Inward investment – the short cut to a prosperous and fair city where all of our communities can flourish?

But, what exactly is it?

It is the process where an investor believes that this is the best place to put their money to get a secure and sufficient return.  They may invest by setting up a factory or, more likely these days, an office or call centre.  And most cities employ specialist teams to attract inward investment – to present the best case for their city or region as an investment proposition.

But it can go further than this.

We may be able to offer specific incentives to investors to bring their money and their jobs to our city.  We may provide them with low or no-cost infrastructure, or other benefits such as an enterprise zone where they may enjoy high speed broadband, simplified planning requirements  and reduced business rates.

So inward investment becomes a highly competitive, and sometimes very expensive process to get those scarce investors to being their money to our city.  Inward investment teams are under pressure to deliver, and the dynamic gets interesting as sassy ‘investors’ play country off against country, region against region, city against city and even neighbourhood against neighbourhood.  But just look at the prize for the winners.  They get ‘investment‘ and even better ‘jobs‘.

But, we must remember the investment comes because there is an expectation of a return.  And it has to be a good return.  The net flow of cash over time will be out of the local economy and into the pocket of the inward investor and their shareholders.

But, inward investment brings many gifts…

Inward Investment brings Wealth to the City

This of course is true.  But it does little to distribute wealth.  It concentrates it with the lucky few.  Inequalities of wealth and health are, in my opinion, increased by inward investment rather than decreased.  It drives social stratification and is unlikely to be a great policy for a city that wants all its communities to thrive.

Inward Investment Brings Jobs to the City

This too is true.  But usually the jobs that go to local people are largely low skill, low wage. Often inward investment can increase local unemployment rather than decrease it as investment tends to create relatively few jobs and automates as much as possible.  Let’s face it if employment costs are a large part of your business and you require large volumes of low skill workers then you are not going to be looking at the UK.  And if you do create high wage, high skills jobs what are the chances of local people being able to take them up?  It is likely that these jobs will go to incomers too.

Inward Investment Builds Houses

Very true.  Inward investors may take over a problem community – demolish or refurbish it and turn it into an aspirational address.  House prices are driven up and often beyond the reach of many local people.

Inward Investment Creates Dependency

We become a blue collar community reliant on employers and investors.  They become a powerful influence on the politics, economics and education in our communities as they demand more and more ’employability’, better and better conditions for business.  We end up with much time and energy being put into retaining our 100 largest employers and continually tipping the playing field in favour of ‘business’…. Becoming a dependent client class I believe has negative impacts on the wellbeing of community and acts as a significant barrier to the development of innate potential as we are shaped to meet the demands of employers.

Loss of Local Control

Not only are we dependent on the presence of inward investors in our communities but we cede control to them.  They manage their investments on the ground and if they choose to create redundancies in our communities there is precious little we can do about it.

Inward Investment is Fickle

The mobility of much modern business means that inward investors can go almost as easily as they come.  You might have to have very deep pockets to retain them in the face of all that competition for their ‘jobs’.

Inward Investment can Undermine Local Business

By competing for talent and skills and by driving up land values and costs beyond the reach of local independents.

It Plays a Zero Sum Game

If an inward investor moves from one part of the county to another there is no net gain in jobs.

Put More Strain on Local Services

Schools, hospitals, roads and other infrastructure may all face increasing demand as a result of inward investment. These costs are seldom met by the inward investor but are funded from other budgets.  Meanwhile in the community that the investor has just left services may lose viability and be forced to close.

It is Resource Hungry

Playing the inward investment game is a high stakes, high cost business. Renting a yacht at MIPIM and taking a high powered delegation there does not come cheap.  But that is just the surface.  Someone has to pay for the business rate subsidies and the infrastructure demanded.  And every pound spent on helping an inward investor to realise a profit is a pound that is not spent elsewhere in supporting the local community and its economy.

But I am not Against Inward Investment…

It has a role to play in bringing ideas, innovation and fresh blood to our city.  What I am against is a political and business narrative that says it is really the only game in town, and one that says it is the only strategy worthy of real investment.   Instead of economic hunting perhaps we need to look at nurturing the potential our own communities a little more, and recognising that there is much more to creating sustainable and fulfilling lives than the ever increasing growth of GDP and a touching faith in the trickle down fairy.

Visions of the Anointed?

Vision of the Anointed is the title of a book by Thomas Sowell, an American, right wing, historian, economist and social commentator.   The anointed are usually a small group of ‘professionals’ and ‘political leaders’, or ‘campaigners’ and their work frequently follows a well trodden path:

  1. They identify a crisis – a situation that, if not addressed, will lead to disaster
  2. They propose policies and interventions to ‘solve’ the crisis that they believe will lead to a positive set of results
  3. The policies are implemented and the results are usually (always) mixed.  There will be both benefits and detriments associated with the implementation of policy
  4. The anointed defend the success of their vision and the policies and impacts that sprung from it.

We can see this dynamic playing out now with climate change, peak oil, low carbon economics, the benefits culture, anti social behaviour, drug misuse and so on.

This archetype for social change is based on an assumption that the problems of society can be identified by the anointed and can be resolved by their vision.  Where does this leave the ‘unanointed’.  Those of us who aren’t involved in the process of identification of problems and development of vision?  Well we can adopt several positions. We can:

  • support the vision and plans of the anointed – become their followers
  • attempt to influence the anointed so that their visions and plans take some account of our vision and values
  • oppose their vision and plans – become their critics – point out their detrimental effects – and seek the anointment of a different group
  • blame the anointed for the ongoing existence and, in many cases, worsening of problems

In each of these cases we are giving power to the anointed.  Even if we oppose their plans, we will argue for the ‘anointment’ of a different group of leaders with different values and different visions.  Power remains with the anointed – whether they are on our side or not.  Their social policies too will have benefits and detriments.  We are relying on an anointed group to take responsibility for our success as individuals and as a society.  We can then sit back and hurl either brickbats or bouquets – depending on our values and beliefs.  WE are off the hook. We call this politics.

In my work I accept that their will always be an anointed and they will always be developing and implementing policies.   Some of which may work for us.  Some against.  With the dominance of the current economic growth paradigm you are more likely to benefit if you are economically active – especially at higher levels.  If you have money to invest you are likely to benefit even more.  Of course we can vote and we can take part in the processes that shape their visions.  The strategic plans of the anointed may be necessary – but they are not sufficient.

We should not rely on them to make our lives better.  They do not hold the keys to progress for us.  We hold them, if we have the courage and confidence to recognise it.  Often though we collude with the anointed as they unwittingly ‘put the leash’ on our enterprise, creativity and civic participation as they envelop us in their plans.

An approach to social policy and change that relies on the ‘vision of the anointed’ is like an ‘old school’ business that says to its employees – come to work, do as your told, work hard on implementing our cunning plans and policies and we will see you alright.  Just comply.  Don’t think.  Just do.  We have clever people in the boardroom who put us on course.  Compliance and order are the key organising values…

Many modern organisations have recognised that in fact with ‘every pair of hands a brain comes free’.  The organisation is turned upside down.  It is employees in the frontline who are asked to be enterprising and innovative in making things better.  The brains in the boardroom find ways to keeping this innovation and enterprise ‘on mission’.  Their job is to facilitate the emergence of strategy from a social process involving many brains.  They don’t have an elite planning ‘cathedrals of the future’ developing blueprints for others to implement.   They instead manage a messy bazaar of ideas and innovation helping all the market traders to promote their ideas and  form allegiances for progress.  They value a culture of enterprise over compliance.  They build chaordic systems.

Person centred and responsive work helps people to recognise the limitations of the anointed and helps them to recognise that the best hope for making things better, in ways that they value, lies less in engaging with the anointed and more in engaging with their own sense of purpose and practical association, collaboration and organisation with their peers.  It lies in their own enterprise and endeavour.  From a collection of enterprising and creative individuals emerges a diverse and sustainable community.

When we talk about encouraging civic enterprise, I think we are talking about shifting the balance of power from implementing the visions of the anointed to empowering the ambitions of the citizen.

If this analysis has any truth to it then the implications for leadership and its development are enormous.

Ordinary and Extraordinary Management and Leadership

The first thing to say on this subject is that ordinary management and leadership isn’t easy – it can be difficult, complicated and demanding. But it’s ordinary in the sense that it is used to tackle well-understood problems or opportunities using tried and tested methods.

For example to reduce infection on a ward, a nurse manager might pull together all of the people involved with influencing infection rates and agree a set of principles and procedures. Good, ordinary management and leadership is about standard operating procedures, mobilising a known way of operating that is going to produce the desired results. It’s difficult, takes discipline and courage and shouldn’t be overlooked or demeaned.

Then there’s extraordinary management and leadership, where the challenges are often less well defined, there is usually a lot of disagreement about the right thing to do and no guarantee that whatever you do will fix the problem. In fact the guarantee is more likely that it wont fix the problem…

When you’ve got lots of disagreement and uncertainty it takes a different type of leadership to be able to move things forward. Ralph Stacey called it extraordinary leadership. Essentially what you’ve got to do is build consensus around the uncertain, and build support to say ‘well, let’s try it.’ And if it doesn’t work this time, we’ll try something else. You are learning from a very uncertain environment in an iterative way by trying stuff and seeing what happens.

This is an entirely different way of leading because you don’t know what the outcome is going to be, so you have to learn from the action, in the action. What becomes important then is to develop the hypothesis and the actions to try, then try them quickly, learn from them quickly and try again quickly.

Extraordinary leaders need to:

  • Help people work through conflict and disagreement well and gain a sufficient consensus to act
  • Be creative, politically informed and emotionally intelligent
  • Be much more confident in dealing with failure, because often what you’re going to try isn’t going to work

One mistake I see being made is to pretend that something that requires extraordinary leadership can be solved by ordinary management principles. We will plan our way into a better future as if we know that our plans are going to work, rather than accepting that they might not. We lose that experimental way of working. We choose to look at a complex, messy problem as if it were ‘simple’ or complicated.

Just by existing, you’re leading and managing at the same time. So if I sit here with my head in my hands looking depressed, that will have an impact on you in terms of how you’re seeing the current situation. It will have an impact on my ability to take you somewhere new as a leader. Whenever we act; whenever we open our mouths, it can have a managerial impact (the here and now, keeping our show on the road etc.) and a leadership impact (how the future’s looking, etc.)

Sometimes leadership and management are presented as if they’re entirely different behaviours and there’s a set of behaviours that address each. For management it is efficiency, effectiveness and improvement. Leadership it is about taking people into a brave new world.

I don’t experience that; I don’t open my mouth and lead one minute, then open my mouth and manage the next. Both of these things are happening here in the present, right now. The two are inextricably intertwined. Sometimes I need to ensure that what I do makes people focus on the future and on change, which you could argue has a strong leadership bias, and sometimes what I do needs to focus on the here and now which you could argue has a strong management bias. If all you ever get from me is the here, and now I look very managerial and very operational; if all you ever get from me is where we’re going to go and where we’re going to be in the future I look very visionary and leaderful but perhaps a bit disconnected from reality.

Basic management processes with big leadership impact

There are some basic processes that would typically be described as management but that can have a big leadership impact. These give us the solid foundation from which to move into extraordinary management/leadership. They are:

Building relationships

We don’t value enough the time where we sit and talk to each other about what drives and motivates us. We need to teach people that of the hours a week they give to the NHS, a significant percentage ought to be spent on consciously building trust and agreement and building a relationship.

Hierarchies are still alive and kicking in the NHS. If you’re a doctor and I’m a nurse, what might pattern our relationship is our label; not us connecting as human beings and our shared purpose. If we talk about what we’re here to do, now and in the future, our labels can disappear and we can do some interesting work together.

It’s through relationships that we can manage and lead well. If I work with you to build trust and a relationship, I’ll be able to lead you better and you’ll be able to lead me better too. If I don’t, we won’t able to do either.

Giving feedback

We’re not always good at taking the time to give feedback in the NHS because we’re so results-focused. Whether given ‘in the moment’ or through planned appraisals, delivering feedback that’s useful and constructive needs to become part of the fabric of a leader’s regular responsibilities. It’s crucial in supporting everyone’s development and performance. Equally as critical is ensuring that colleagues have the opportunity to – and feel able to – give you feedback about any help and support you can give them.


The reason why some people are working 60 hour weeks is because they don’t know how to do their 40 hours and then delegate the rest. If we don’t delegate appropriately, we can’t get our jobs done so we end up recruiting another assistant director, for example, which means we have top heavy organisations and not enough people at the bottom.

Time and priority management

How can you transform the NHS in your sixty hour week if you spend 59 of them maintaining the current operation and one looking at the future and one day a month at a meeting to look at future strategy. Our practice doesn’t reflect what we say our priorities are – if you want to transform the NHS, spend 59 hours transforming it and one hour maintaining it.

The best leaders can do both things at the right time.

Extraordinary leadership doesn’t always make things better for patients 

Extraordinary leadership doesn’t always lead to better care. Quite often, it leads to worse care in the short term. Remember the Mental Health Act when we shut down the large asylums to care for people in communities? Some dreadful things happened because we didn’t know how to do it well. But 30 years on, most people would say mental health provision is significantly better than it was. From caring for 97% of mentally ill people in asylums and 3% in the community, it’s now the other way around.

Suppose we’ve got a large rural health economy with five community hospitals, all small and expensive to operate. So we shut them and build one world class hospital because it makes more financial sense and is more efficient. But when we’ve shut the hospitals down, the people who’ve used them may believe the care they receive is not as good, because it is more distant and part of a larger hospital that they don’t know as well. With something like that it’s very rare to make a step change from good to better. Seth Godin calls this ‘the dip’ and it can be long and expensive. With mental health reform it probably at least a decade for people to say ‘yes, that was worth it.’

Courage is the main thing we need to bring about this change. We need to face up to these big and sometimes overwhelming challenges and acknowledge them rather than only working with what we feel is in our control.

Extraordinary leadership can help people hold their nerve and believe that what they’re going through is worth it and will get us to a better place.