In a risky world, companies need to get better at understanding and evaluating risk

Richard Lambert, Director-General, CBI, warns of the death of managerial capitalism in his speech at Tanaka Business School

In a stirring and wide-ranging key-note address on Friday, at Tanaka Business School's centenary alumni reunion, Richard Lambert, Director General of the Confederation of British Industry (CBI), warned more than 100 attending managers and executives that "the good times can't last forever". Addressing the theme of "global challenges facing British and international companies"; Lambert suggested that although the economy had boomed over the last ten years, there are a significant number of British companies who have yet to prepare for the risks they will face in the future.

Lambert cited geopolitical, financial, logistical, innovation and reputation linked risks as the main challenges facing our corporations in this new century. He then focused on both climate change (linked to both geopolitical and reputation issues) and changes in innovation processes, suggesting that companies need to acquire more skills and change their business models in order to meet global challenges head-on. He pointed out that strong new innovations are emerging through multi-disciplinary activities, and companies must widen their innovation processes to continue to compete. Companies must seize the opportunities of the new global perspectives to research and innovation and learn to reach out to their stakeholders across the world, using the internet and new technologies. Lambert said that "this is going to take a very different mindset from what we've been used to in the past. Less hierarchical, more outward looking. Less linear, more capacity to build formal and informal networks of relevant partners."

He also reminded the Tanaka Business School alumni and guests that new rules and regulations guiding the capital markets mean that mistakes made by managers will be much more visible than in the past. Quoting Alfred Chandler's description of managers as the invisible hand that guides the market, he added that these traditional managerial capitalists may be a dying breed, as financial ownership becomes more complicated and the balance of power swings towards financers and speculators. Quoting an FT journalist, he said that we are seeing "the triumph of the global over the local, of the speculator over the manager and of the financier over the producer."

Ending on a positive note, Richard Lambert hailed the magnificent culture of innovation at Imperial College London and its Business School, saying that a key way for companies to maintain their competitive advantage is to work with such institutions.