Tag: liverpool

Institutions, Not Individuals

Even the most casual of fans of football will know that Jurgen Klopp is leaving Liverpool Football Club at the end of this season:

To general surprise Mr Klopp announced on January 26th that he would be leaving his job as manager of Liverpool Football Club later this year. His team is leading the English Premier League, the most-watched competition in the world’s most popular sport. His job is secure—his contract does not run out until 2026—and he claims still to love it. But after eight years in the role, and more in management, he is running out of energy. His resources are finite, he said. “I can’t do it on three wheels, I don’t want to be a passenger.”

https://www.economist.com/business/2024/01/29/jurgen-klopp-and-the-importance-of-energy

Me, I’m a Manchester United fan myself. There was a time when this disclosure would have been met with groans of resignation from fellow football fans. These days, however, it is more likely to be met with a sympathetic chuckle, and that’s if I am lucky.

What has changed for Manchester United, and why are Liverpool fans so upset? Because both of these institutions ended up being dependent on the individual, and that is never a good idea.

An institution should be able to smoothly oversee the transition from one leadership to another, and that’s the point of that much derided term in management, “succession planning”. But in the case of Manchester United, it has been ten years (and counting) since we sat atop the Premier League at the end of the season – and Liverpool fear that the end of the Klopp reign signals something similar in store for them in the seasons to come.

But institutions ought to show more resilience than that. Ford shouldn’t have to struggle because Lee Iacocca is no longer at the helm, and Intel shouldn’t be dependent on a Grove (or a Krzanich):

There are times when being a semiconductor CEO is rather easy. Just consider Brian Krzanich: when he took over the Intel job in 2013, I wrote in The Intel Opportunity:
A new CEO has taken over Intel. Their core business, upon which the company has been built, is floundering. Does the new CEO, who is not really new at all (he’s the current COO), have the vision to ensure Intel’s continued success? I’m not talking about Brian Krzanich, who today was promoted from COO to CEO at Intel. Rather, I’m talking about Andy Grove, who took over Intel in 1987.

https://stratechery.com/2024/intels-humbling/

No institution, in fact, should be dependent on an individual. That’s kind of the definition of an institution, or at the very least an important part of it – an institution is defined by its ability to not be dependent on a particular individual for its survival and continued well-being.

But this is easier said than done, and this rather inconvenient lesson applies to countries, universities, firms and football clubs alike.

If a successful institution stops being successful because the leader is no longer around, then I’d argue that it wasn’t a successful institution in the first place.

Precisely because it was the individual who was successful, and not the institution.

What makes institutions successful? What makes them successful regardless of who is leading them? What lessons can we learn from institutions in other countries, and apply it to our own? How do we learn and internalize the art of building successful institutions, and not have them be dependent on individuals?

Institutional economics, if you ask me, is currently a most underrated field.

Links for 6th May, 2019

  1. “Not long ago, the Liverpool away coach uniform was technical mountain climbing apparel, which had its roots in drug dealers in cold northwest England figuring they didn’t need to freeze to death slinging weed in a park. That meant a lot of North Face gear, which became fashionable. One leader at an LFC firm bought so much high-end gear that when he got a stadium ban several years ago, he actually started climbing mountains around the country, unsure of what else to do with all the stuff he’d bought.”
    ..
    ..
    A nice long read on Liverpool: the city and the club. Also a fascinating peek into a place in England that isn’t necessarily English.
    ..
    ..
  2. “In my view, reform of government economic administration must take priority. As things stand, it is a prerequisite for the success of any other reform. A weak state cannot deliver anything other than grandiloquent statements of intention. This must change. Without a capable State, there can be no transformation.”
    ..
    ..
    Rathin Roy explains in the Business Standard why India hasn’t fulfilled its potential so far, and what needs to be done to change the status quo.
    ..
    ..
  3. “How much, in all, does Popovich spend annually on food and wine? That’s hard to say. But he reportedly earns $11 million a year, the highest salary in the league for a head coach. Considering the offerings from his private wine label and that he holds thousands of bottles in his cellar, plots out dozens of high-end dinners per year at some of the country’s most high-end restaurants, drops $20,000 on wine alone at some dinners, and routinely leaves exorbitant tips — well, it’s not a stretch to suggest that Popovich might ultimately drop a seven-figure annual investment on food and wine. “He’s spent more on wine and dinners than my whole [NBA] salary,” former NBA coach Don Nelson says. But in San Antonio — where Popovich has won more with his team than any NBA coach has with a single team in history — the investment, apparently, has been worth it.”
    ..
    ..
    Is good dining the means to an end? Read this fascinating article to find out one man’s answer.
    ..
    ..
  4. “Gorbachev pushes back at the notion that the Soviet Union’s end was somehow a triumph for the other side. “Americans thought they’d won the Cold War, and this went to their heads,” he says. “What victory? It was our joint victory. We all won.” Well, maybe not entirely — Vladimir V. Putin, pointedly absent from most of the film, is glimpsed in footage of Raisa Gorbachev’s funeral — but you come away from the movie agreeing with Herzog’s assessment, and yearning for Gorbachev’s brand of diplomacy.”
    ..
    ..
    A short article about Gorbachev – a documentary about the man. He’s 88 this year, but the article is interesting throughout. And the excerpt is a great way to think about whether you have really understood the concept of a zero-sum-game.
    ..
    ..
  5. “The Northern states are densely populated. But this density has clearly not provided the economies of scale to promote rapid economic growth. One problem is that the dense population in the Gangetic plains is not clustered in large cities. Prateek Raj of the Indian Institute of Management in Bengaluru has written about the metropolis vacuum in the Hindi speaking states of Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh and Chhattisgarh, which together have 500 million residents (bit.ly/2UOS2Kv). “The glaring absence of a major metropolitan center in the region has forced young people to migrate away from the small towns and move to other cities in the West and the South,” he argues.”
    ..
    ..
    A lovely read from Niranjan Rajadhakshya about what ails Northern India and how one might tackle the issue. The lack of urbanization is a very real problem in Northern India, among others.