David Cameron, the party’s leader, has embraced one of the book’s tenets: that politicians should use these techniques to “nudge” people into changing bad habits or adopting good ones. 

I saw Richard Thaler, one of the authors, speak in London last month. ”Don’t use bans and mandates, just nudge,” he declared. He convinced me that careful study of the way people make choices would improve market regulation and policy formulation.

However, his alternative to “bans and mandates” seemed too reliant on bombarding the public with information in the name of transparency. It’s worth checking out the Nudge blog, though. And here’s a video of Prof Thaler at the Royal Society of Arts.

Elsewhere:

1. Dealing with the talent shortage in China
2. Fostering leadership skills in Muslim women
3. How to raise capital without giving away your company
4. Confessions of a bank’s risk manager
5. The art of raising prices to offset cost inflation without alienating shoppers

Building on material already published, the working paper - from a pensions research body at Wharton business school - ranks 37 public investment bodies around the world on their governance, accountability and investment policies.

Istithmar World, one of the two Dubai bodies that took the stake in Cirque du Soleil, comes in third from bottom in the ranking, just ahead of the Abu Dhabi Investment Authority and Council and the Qatar Investment Authority, which share last place.

The New Zealand Superannuation Fund comes out best, followed by the Alaska Permanent Fund and then the global arm of the Norwegian Government Pension Fund.

Writing before the circus deal was announced, the authors of the paper - Olivia Mitchell, John Piggott and Cagri Kumru - said sovereign wealth funds “appear to be demonstrating an increasing risk appetite, very little transparency and virtually no clarity of objectives”.

Keen readers of the FT will remember that Cirque du Soleil employs a heckler called Madame Zazou to disrupt its management meetings. If she quotes this research in future subversions then she is a very bold jester indeed.

Harvard’s Toby Stuart and Soojin Yim studied 483 private equity deals announced in the US between 2000 and 2007. They looked at the directors of the public companies involved in these deals, tracking whether or not they had served on the board of a company previously targeted by private equity.

They found that having a director with such experience increased by roughly 40 per cent the likelihood of a typical US public company receiving a private equity-backed offer to go private. (That said, the baseline probability of getting such an offer was low in the first place.)

Why the increase in likelihood? The authors suggested that directors with prior exposure to private equity would know the relevant people needed to get a buyout done. They also reckoned that other directors would bow to their expertise when discussing a buyout offer.

I wonder how the credit crunch has affected all of this. My guess is that it would make boardroom buyout veterans even more effective predictors of interest from private equity. In lean times, personal networks should be even more potent than normal.

Perhaps, secretly, you have been asking yourself the same question. And think how your direct reports are feeling. They may not all share the same sense of responsibility that you do. They, too, are wondering why they are still at work. Their bodies are in the office, but their minds are elsewhere.

Motivation levels are low. What a relief, then, that this summer’s bumper edition of the Harvard Business Review contains an article promising to reveal “a powerful new model” for employee motivation. Drawing on the latest research into how the brain works, the article’s authors (Nitin Nohria, Boris Groysberg and Linda-Eling Lee) argue that employee motivation depends on four key elements, or “drivers”: the drive to acquire (rewards and experiences), the drive to bond (building a sense of belonging), the drive to comprehend (work must be meaningful) and the drive to defend (fair play for all).

Continue reading: “Keep up motivation levels through long summer days”

Fortune reports that the bridge-playing former Bear Stearns boss was rushed to hospital last September because of a severe prostate infection.

Sharp-eyed investors would already have known that Mr Cayne was not well then. The New York Times disclosed on September 21, 2007, that Mr Cayne had been in hospital “for several days”.

However, the Fortune article, which says it drew upon “a series of lengthy interviews” with Mr Cayne himself, claims that he only had a 50/50 chance of survival when he was admitted.

The hospital stay lasted 10 days, it asserts. Moreover, it claims that he took a Town Car to the hospital instead of an ambulance, partly to protect the firm from a potentially-damaging public disclosure of his condition.

Mr Cayne ceased to be CEO of Bear Stearns in January 2008 but remained chairman. The stricken bank was absorbed into JP Morgan in May. Mr Cayne could not be immediately reached for comment.

He was also, famously, President of Coca-Cola for 12 years between 1981 and 1993, during which time he oversaw the doomed launch of New Coke. That botched innovation is seen by some critics as one of the all-time great business errors, so we can be sure Mr Keough’s views are based on sound experience.

I spoke to him on the phone last week, before he headed off to Tuscany for a summer vacation with all of the above-mentioned family. He may have been demob happy, but there was still time for a brief but serious discussion on business disasters and how to avoid them.

Mr Keough has just published a book, The Ten Commandments for Business Failure. It is an enjoyable and succinct read (although my colleague, John Gapper, offered a slightly crisper assessment in this FT review). It was a pleasure to have the author take me through its contents in a kind of fireside management tutorial.

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The main findings have been widely disseminated. Yet I found something intriguing in the detailed assessments of 316 very senior executives that underpinned the research.

The stats suggested that the biggest weakness of these managers was a tendency to hang on to underperforming employees. And this was in spite of the execs ranking highly on other macho measures.

Did this stem from a squeamishness about jettisoning a predecessor’s dud hires? Or did it reflect a stubborn loyalty to one’s own flops? I asked Professor Kaplan. He said: “Probably a little of both, but more the latter than the former.”

Elsewhere:

1. McKinsey says some Asian companies are giving a masterclass in managing big capital projects.
2. A nifty interactive guide to common forms of accounting fraud (while this was published a little while ago, I thought it would be a handy follow-up to my recent post on accountancy’s invisible ink).

GMAC says it might cancel the scores of those who broke its rules by using Scoretop to share or confirm the content of “live” questions, leading to speculation that some students might be thrown out of business school or have the offer of a place on an MBA course rescinded.

In the light of this drama, I decided to have a chat with Dave Wilson, chief executive of GMAC, about the dos and don’ts of getting ready for the GMAT, which aims to test verbal and mathematical ability through multiple choice questions and essays (it is also a “computer-adaptive” test, which means it gets harder the better you do).

In the first section of the interview we talk about issues such as: the ideal length of preparation (100-120 hours spread over 7-10 weeks); new security features designed to prevent cheating; and the difficulties faced by non-native speakers of English. In the second part, we discuss the ongoing Scoretop crackdown.

Both sections can be found at the FT Podcast Player.

It is strange, our nostalgia for these vanished car marques. After all, it is not as though some of these older models were really any good, at least, not compared with today’s far more comfortable and reliable cars that are so much easier to drive.

Luckily for me – and for my fellow road users – I have never had to double declutch in my life. But I do remember those cold mornings when the jump-leads had to be applied and the choke was pulled out all the way, or those long summer drives when bare legs got scorched by boiling hot vinyl seats. The good old days left considerable room for improvement.

Petrol heads of a certain vintage will have been able to indulge all their nostalgic feelings in the past few days after reading the long and largely affectionate obituaries of Lord (Donald) Stokes, the former chairman of the British Leyland Motor Corporation, who died last week.

Continue reading “Why I’m still backing Britain”. Please post comments below.

This was not a case of gratuitous name-dropping. CK, who is professor of strategy at the University of Michigan’s Ross school of business, was trying to explain to me how all his major publications of the past 20 years have really followed the great mathematician’s example: establish a clear premise that is robust, and then follow the logic of your own argument.

This is what he had done (together with Gary Hamel) with Competing for the Future, with The Future of Competition and The Fortune at the Bottom of the Pyramid.

And this is what has done with his latest book, The New Age of Innovation.

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