by
John R. Bryson
22nd August 2025
Management is all about decision making, but this is a challenging process. One issue to reflect upon is the relationship between decision makers and their context. All managers work within the context of a firm, and every international business firm operates in a different national context. Management is about choices, but the context in which these choices are made really matters.
An excellent example is the case of Neil Woodford. Woodford used to work for the giant fund manager Invesco Perpetual. While working for Invesco Perpetual, Woodford developed such a reputation as a fund manager that he was close to becoming a household name.
In 2013, Woodford left Invesco Perpetual to establish his own company. Initially, his new flagship investment fund attracted over £10bn of funds from small and large investors. However, all was not well, as Woodford and his fund management team no longer benefited from the systems that were in place at Invesco Perpetual to monitor and regulate fund managers’ activities.
Those investing in Woodford’s new investment fund expected high returns, but they were to be disappointed. Initially, investors benefited, but the Woodford Equity Income Fund was suspended in June 2019, and investors were unable to access the capital they had invested.
On 5 August 2025, the Financial Conduct Authority (FCA) fined Neil Woodford and his investment firm nearly £46m: Woodford Investment Management (WIM) was fined £40m and Woodford £5,888,800. The FCA noted that ‘the very minimum investors should expect is those managing their money make sensible decisions and take their senior role seriously. Neither Neil Woodford nor Woodford Investment Management did so.’ The difficulty was that neither Woodford nor WIM reacted ‘appropriately as the fund’s value declined, its liquidity worsened, and more investors withdrew their money. These disadvantaged investors who remained in the fund, compared to those who had withdrawn their investment before the fund was suspended.’
This is a sad story of many small retail investors who had believed that Woodford had special capabilities. At Invesco Perpetual, Woodford had the support of a large company, which included monitoring procedures intended to reduce risk. At WIM, the context was different.
Why responsible management matters in a global context
Every day, the business press covers companies or managers that have failed. This failure may result in environmental consequences, labour exploitation, unnecessary deaths or activities that destroy the lives of people. There are two points to consider here.
The first is that managing a business is a complex process that involves reading the business and the market and making informed decisions. All managers should act with due diligence, but there will be times when managers fail. The case of WIM and Woodford is an excellent example of management failure that, according to the FCA, included ‘unreasonable and inappropriate’ decisions. Some management decisions are, at the time they are made, ‘unreasonable’, and this was the case with WIM. There are also instances when it is impossible to tell if a decision will be considered as unreasonable at some future time.
The second point concerns the motivation that drives a management decision. In one account, it is important to frame management decisions within a discussion and strategy that is deemed responsible. This is to highlight the importance of management being an exercise in responsible business. The difficulty is that acting responsibly requires management decision-making processes that are both reasonable and appropriate, and that balance profitability with responsible practice. Responsible decision making is good business as it may enhance profitability.
Balancing short-term challenges with long-term strategy
The corporate decision-making process involves managers and their advisors ‘reading a business’. This is an ongoing real-time process that combines long-term strategy with everyday decision making. Too often, managers focus on the distraction of the immediate problem and neglect long-term strategic objectives. While the immediate challenge needs to be solved now, there is a danger of mission creep. Decision builds on decision, and a company that considers that it is acting responsibly suddenly finds that it has been acting in a less than responsible manner. All this highlights the need for managers to be aware of long-term strategy and the motivations that drive their decision-making processes. It also means that managers should pay much more attention to reading their business. This includes being sensitive to short- and longer-term challenges that might impact their company’s long-term survival.
WIM is an excellent example of management failure, and it is one that all who are interested in understanding business behaviour should reflect upon. Extremely talented managers failed to consider the wider picture. This failure meant that WIM was exposed to unmanageable risks, and the outcome was the instigation of a domino effect that managers were unable to control. All this could have been avoided if suitable controls had been in place.
The WIM example highlights the importance of context in understanding decision-making processes. Neil Woodford was an exceptional fund manager when he was employed by Invesco Perpetual, but resigning to establish his own firm was a step too far. Running a business is a very different challenge to managing an investment fund.
John R. Bryson is Director of Research, Strategy and International Business, and Professor of Enterprise and Economic Geography at Birmingham Business School, University of Birmingham.
International Business as Responsible Business by John Bryson, Jennifer Johns, Laura Salciuviene and James Blackmore-Wright is available on Bristol University Press for £27.99 here.
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