At the onset of the World Cup, the clichés will bounce around various forms of media as the participating prospects wax and wane. “It’s a game of two halves” will drip from the lips of those who pretend to have some kind of insight.

Soccer City, venue for the World Cup Final [Image: Digital Globe Imagery under CC-BY-NC-ND licence]

You could be forgiven in thinking that football pundits (the bland, the boring and the buffoon) and business gurus shared the same genetic code, expressed in their excessive desire to state the blindingly obvious.

For football it’s the game of the long ball versus the short ball; for business it’s the long run versus the short run. But, in a sense, it is about so much more, as the French-Algerian writer Albert Camus, who won the North African Champions League as a goalkeeper with his club, wrote:

"All I know most surely about morality and obligations, I owe to sport and learned it in the RUA [Racing Universitaire Algerios, his team].”

Even his former friend and existentialist protagonist, Jean-Paul Sartre, observed that the presence of the opposition complicated the game of football. Like football, business is not such a simple game but is one that is frequently reduced to cliché.

What connects the apparently disparate activities of banking, mining and music? Well you could say mining is concerned with the long term, whilst banking and music is about the short-term, with the last tow activities seeking instant returns from their immediate services.

But dig a little deeper and you find that they are all very old, and some would say timeless, global businesses. In music publishing the most popular tunes and songs were first written and played a long time ago. Morecombe and Wise may have sung “bring me sunshine” in the 1970s without giving any suspicion that its provenance which was of a decade earlier.

Retailing banking, despite the poor reputation it has developed since off-shoring much of its activities, is built on long-term relationships with its customers. In a fractional-reserve banking system, the state has to rescue it from trouble if the whole financial system is not to collapse, amply demonstrated by recent events.

Short-term horizons appear to be otiose for the mining industry, but the long lead times of investing in new technologies whose applications are uncertain tends to create incentives for mergers and acquisitions.

These incentives have been reinforced by the rise in global commodities prices which saw nickel move from US$4600 in 2003 a tonne to over US$55000 a tonne in 2007, whilst the price of gold hit an all-time high this week. In this environment, a company like BHP Billiton was encouraged to attempt a hostile takeover of Rio Tinto, which failed and cost the former US$462m in fees.

It was claimed that synergies for the merger would have significantly reduced costs and thus boosted the short-term share price. In other words, the idea that financial services promote the short-term at the expense of the long-term interests of a global primary industry is often not borne out in practice. A similar argument applies to hedge funds ,who now appear to conform to the cliché of being the arch-villain of financial capitalism.

They balance short and long investment positions to manage the risk of applying sum large of capital to small spreads between the buying and selling prices of assets. If they only operate on one side of these transactions they are engaging in speculation and trying to manage uncertainty rather than risk: a logically impossible task.

If we go back to economic theory we find that the long-run average cost curve is a locus of a number of short-run curves. So, in business practice and theory it is not only a game of two halves, but one of two times.

Time is also an important element in recruiting and retaining talented staff whose contribution should not be a short-term one, unless of course they are not sufficiently talented for the organisational roles they take on. The Long the Short and the Tall is a play written by Willis Hall in 1959, in which a seven-man patrol is engaged in distracting the Japanese during an exercise during the Second World War. The different psychologies of the protagonists come to the fore as they come under pressure – displaying varying degrees of dysfunctional talent, which in many ways is no different from that faced by any organisation.

Recruiting and retaining staff is a talent in itself and the first duty is not to fall into the Oscar Wilde trap. In The Picture of Dorian Gray , he wrote “It is only shallow people who do not judge by appearances”. Well if a mining firm is recruiting a senior geologist with specialist experience, it may wish to become shallow, if only momentarily, as such an individual would be retained for a long period. In recruiting a junior employee, a high-street bank would not be irrational if the candidate’s only response was to iterate “computer says no”.

Other people are always hell, as Sartre perceptively noted, but trying to make them round pegs to fit into rounds holes is not always rational and what may have been a round peg at interview may turn out to be a square peg upon employment. Pride and prejudice are not good positions to hold in you are trying the recruit and retain the best talent. It often depends on the sector you operate in and whether the economic cycle is at a stage where there are labour and skills shortages.

Still everything to play for? [Image: laura padgett under CC-BY-ND licence]

Football used to be a 90 minute game but the introduction of added time means that is frequently a 94 minute one. In knockout competitions extra-time is often played with the result being decided on penalties. Well, the way in which teams negotiate the length of the game may be a more important component than their talent if its goes to penalties.

Similarly focusing on one time horizon rather than a number is a game that business plays frequently with subsequent losses. Equally in recruiting and retaining talent, time is an important consideration if companies want to get the best out of their teams and stellar players. But, the bottom line is that like football the results are not always the expected ones which is what makes both games fascinating to play and watch, which a lot more rewarding than TV talent contests in which the talentless are the star players.

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Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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Evan Davis gets to the heart of the big finance stories at The Bottom Line.

In 1984 Anne Clarke sang:

“Suicide is an urban disease, spread by people and places like these, a quick self-destruct from the 21st floor a smell of gas through the kitchen door.”

Two years later the classes of hope had triumphed over the classes of despair as the Big Bang of the reform of the City of London took place. In this new global - and electronically controlled-financial marketplace, the pin-striped suit, the bowler hat and the telegram were replaced by the Prince of Wales check double breasted suit, the Gieves and Hawkes shirt and the mobile phone.

The new had triumphed over the old as late modernity reached its apotheosis.

Last week Apple released its new tablet computer, the iPad, publicised by individuals queuing overnight to make sure of their purchase. The febrile reporting of this event made it seem on a par with the Queen’s Coronation of the funeral of the former Princess of Wales.

The iPad [Image: Apple]

From both these examples of this frenzy to embrace the “new”, one could conclude that the ghost in the machine had finally been exorcised, as if the way in which we think and behave had become completely technologically determined. But thus it ever was: every generation thinks it is different and in touch and tune with the “new”, dispensing the old to nostalgia and reverie.

But is the embrace of the “new”, whether is a technology, a product, or a management system and process always beneficial to business and society? There is a danger here of falling into what philosophers call a category-mistake: simplifying a concept to explain it better and by doing use misinterpret it. In other words: falling into the trap of caricature.

David Edgerton in his book Shock of the Old asks whether the condom is more significant than the aeroplane in history? His answer is that it depends on the usage and impact of low and high technologies, and it could be argued that the former is older and more significant than the latter.

In response to the idea that resistance to new technologies is stupid, he points out that the chronology of technology is one in which ‘old’ and ‘new’ variants are frequently complements and not substitutes and that most technologies fail.

In the trilogy of Bourne films, the central character, played by the actor Matt Damon, is the anti-hero of the “new” as he seeks to make sense of himself and regain his consciousness from being a programmed killer.

The birthplace of lobbying: Lobby of The Willard Hotel, Washington [Image: wahig under CC-BY-NC-ND licence]

This tension between the old and the new is played in the practice of lobbying. For many people lobbying is exemplified in the following quote:

"…winding in and out through the long, devious basement passage, crawling through the corridors, trailing its slimy length from gallery to committee room, at last it lies stretched at full length on the floor of Congress - this dazzling reptile, this huge, scaly serpent of the lobby."

This was written by an American newspaper columnist in 1869, which shows some of the historical lineage of lobbying. Many trace it back to the late 18th century where in the US lobbying, in the form of petitioning, is enshrined in the Constitution.

In the UK, it has been traced back to the 1930s, but rose to prominence in the late 1970s and 1980s, as the market as the organising principle of economy and society seemed to become universal. The Big Bang of 1986 was one of the drivers for the creation of financial, business and political lobbying firms, but you could find much older examples.

The tryst between business and government is a bit like a combination of Mills and Boon romanticism and the more emotionally challenged literature that has been termed “post-modernist”. The relationship between business and government can seem like that of an old couple: the early days of flirting and flattering; lust and longing giving way to comfort and companionship.

Although the German revolutionary Rosa Luxemburg said that marriage was “the funeral of hope”, the one between business and government always seems to need some form of intermittent relationship counselling, as the parties appear to be captured by some new potential mistress.

Until recently, globalisation was the new mistress on the block.

But the negotiation around the relationship is not at the level of some ageing male politician trying to sweep a younger female business supplicant off her feet in a celebrity-filled restaurant. It is as the level of senior public servants and regulators who are charged with developing public policy and managing its outcomes, thereby balancing a range of internal and external interests but always subject to the danger of being captured by business interests.

Keynes stated that practical men were slaves of some defunct economist. Business leaders and government officials today can seem to be slaves to the seduction of some new management guru whose Newspeak is hard to decipher and often has old ideas masquerading as new ones.

Going off the rails is always a pitfall in any long running relationship or marriage, which appropriate counselling should prevent. Like the block working system of trains, this tension is as old as the hills.

The bottom line is whether it is lobbying or technologies and products, it is as David Edgerton concludes: “The historical study of things in use, and the use of things matters”. This lesson is something we should all be counselled in.

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About the author

Leslie Budd is Reader in social enterprise at The Open University Business School. He is an economist and has written extensively on the relationship between regional and urban economics, and international financial markets.

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