Brexit and the implications for Britain after voting to leave the EU

By | June 30, 2016

Brexit and the loss of meaning

Last Thursday’s referendum saw a seismic change in the business environment. In the United Kingdom we have become accustomed to stability. At the most basic level an analysis of any business environment starts with PESTLE; political, economic, social, technological, legal and environmental factors. We have become accustomed to technology as a driver for change in the environment, but it is extremely rare for the trigger to come from a political innovation such as Brexit.

Both major political parties are currently engaged in leadership contests: unprecedented in modern times. Whilst Leave voters point to the validity of a democratic process, the Remain voters of Scotland and Northern Ireland beg to differ. This threatens the future of the Union. Meanwhile the markets have plummeted globally by $2 trillion and sterling has dropped to levels not seen since 1985. Financial markets do not like uncertainty, and there is plenty of that about at the moment as the referendum has repercussions throughout the world. Not least in the campaign for the next President of the United States.

Meanwhile the social ramifications are still being felt. Incidents of racism have increased alarmingly by 57% compared to the same period last month as an emboldened right wing use the referendum as validation. Meanwhile local MP and undoubted talent Jo Cox was brutally taken from us whilst another Labour MP received death threats during the campaign.

The framework by Pina e Cunha et al. explains the shock of Brexit. The European Union has been a creeping development since the United Kingdom joined in 1973. Escalating commitment to a centralised authority and a popular media that ridiculed the bureaucracy alienated an electorate who have shown concern of the freedom of movement. This concern has been ignored by the political elite who are now in turmoil.

Expected process Unexpected  process
Expected issue Routines

Distinctive characteristics: organizational routines in moderately dynamic markets

Examples: linear routines, standard operating procedures, preventive action

Managerial implications: management as controlling

Creeping developments

Distinctive characteristics: emergent, complex and interactive processes lead to expected situations.

Examples: normal accidents, escalating commitment, cultural change

Managerial implications: managing as empowering

Unexpected  issue Sudden events

Distinctive characteristics: new themes emerge from existing processes

Examples: exploration, evolutionary dynamics

Managerial implications: management as facilitating learning

Losses of meaning

Distinctive characteristics: novel, incomprehensible situations

Examples: wild cards, crises of sensemaking, 9/11

Managerial implications: managing as sensemaking

 

For those in the Remain camp the outcome of the referendum has proved to be a loss of meaning. For the younger voters the European Union had been all they had ever known, whilst the older voters favour self-determination.  Indeed many older people complain the first referendum of 1975 could not have possibly anticipated the modern behemoth of a European Union of 28 member states.

Sensemaking is the process of learning through unprecedented experience. At its strongest it redefines our identity of how events shape our personal identity. The sensemaking of post-Brexit England is in stark contrast. For the Leave voters evidence from social media shows an unbridled optimism for the future. For the Remain voters it is a period of mourning for a cherished unity. Similar to the Kübler-Ross model of bereavement the Remain voters are progressing and regressing through stages of anger, denial, bargaining, depression and acceptance. As Rosabeth Kanter once wrote, change can either be friend or foe, disturbing when it is done to us, exhilarating when it is done by us.

The demography of voters contains a time bomb. Perhaps in another 30 years we will be holding a third referendum with older voters (by then) telling tales of life under the European Union. Communism, after all, was not universally denounced with the older generation in communist Europe nostalgic for the stability it brought.

In the short term at least Brexit is a trade-off between sovereignty and economic stability. Only time will tell if the optimism of the Leave campaign will result in greater prosperity. Perhaps their unbridled enthusiasm will diminish if prices rise at the petrol pump and the cost of the weekly shop increases. For sure the Leave campaign had no exit strategy from the European Union. The most charitable assessment of Brexit is that it is a leap of faith; the most generous short-term economic evaluation is that it was not as bad as the 2008 financial crises. Perhaps by 2020 the Leave voters will be saying to the pessimistic Remain voters, “I told you so”. I strongly suspect the truth will be somewhere in the middle as even the most basic economic facts continue to be contested and misrepresented.

Whichever side of the political divide you fall it seems the only aspect both sides can agree upon is that we are living through an historic and unprecedented period of the UK’s history. Article 50, yet to be invoked, has a two year time limit. The uncertainty will continue for at least another two years, so we will only really be able to evaluate the impact of this momentous decision after 3 to 5 years.  For the next two years at least, therefore, expect a bumpy and an unpredictable future full of sensemaking.

 

References:

Pina e Cunha, Miguel, Clegg, Stewart R. and Kamoche, Ken (2006). “Surprises in Management and Organization: Concept, Sources and A Typology.” British Journal of Management 17(4): 317-330.

About Craig Johnson

Dr Craig Johnson is Senior Lecturer in Operations and Information Management and Director of Studies, MBA (Full-time, part-time and accelerated) at the University of Bradford School of Management

3 thoughts on “Brexit and the implications for Britain after voting to leave the EU

  1. Owen Whitehouse

    ‘In the short term at least Brexit is a trade-off between sovereignty and economic stability. ‘ Could you elaborate on this please Craig, I am a little unclear on the realities of the sovereignty and economic stability trade off.

  2. wasim mohammed

    Hi Owen
    I think that statement has something to do with the regulations imposed by the EU. Especially the one imposed on fishing in the English channel. It has taken a huge chunk out of the local revenue or so I heard from the leavers.

  3. Jean-Marc Trouille

    Craig, I am puzzled about your claim that Brexit means ‘political innovation’: isn’t it rather synonymous with lack of plan and worryingly amateurish improvisation? Or do we understand innovation differently?

Comments are closed.