Category Archives: Management

Business fiction

The New Year has started strongly on BBC Radio 4, with several thought-provoking programmes:
Last week In Business examined why so few novels are set in the world of work, and attempted to explore the consequences for both business and society. As presenter Peter Day said “fiction normally shuns the working world or is deeply suspicious of it”. He wanted to investigate “why creative types don’t respond to this thing called work”.
Fiammetta Rocco, literary editor of the Economist, was interviewed and expressed a feeling I’ve had for a long time:

“We’ve really lost that sense that business is about progress and doing good. There’s no sense of that anymore. It’s very, very hard when people don’t feel strongly about something to create fiction out of it.”

Peter Day then pointed out that:

“The way business is presented to people is part of the culture. If decent people think that it’s not a subject that engages the imagination, or the intelligence, or the humanity of themselves, and don’t go into business, then you kind of get the second-raters all joining up for it. So we need decent artistic representation of the business world.”

However, the hottest tip of the year came from Rocco:

“We do review a lot of fiction in the Economist. We review it every single week and I’m always looking for great books. But a book that really told a story that developed a fantastic hero, that armed itself with this person’s struggles and fears and difficulties and problems and triumphed in the end, in a business setting would be truly fantastic. I think that one of the enormous difficulties that exist now is that we’re more comfortable with the idea of business than we may have been in the 19th century, and that makes it much harder to explore, it’s a much bigger challenge to create something which is subtle and interesting and not a caricature. Somebody should do it.”

So there you go. There’s still time for one more New Year’s resolution — write a great novel about business. For inspiration, here are a few of the authors or novels mentioned in the programme:

  • Hard Times by Charles Dickens.
  • The Way We Live Now by Anthony Trollope.
  • Manhattan Transfer by John Dos Passos.
  • Nice Work by David Lodge.
  • Free to Trade by Michael Ridpath.
  • Bonfire of the Vanities by Tom Wolfe.

No place for novices

I used to work for an auction house, and found myself campaigning constantly for the simplification of the business’ operations. So I felt somewhat vindicated this weekend when the Financial Times published an article about investing in antiques (The fine art of polishing auction costs) that concluded with the following:

Would-be investors need to look closely at the fine print and bone up. Auctions are no place for novices, say experienced collectors. And it is not like buying stocks and shares. The process of buying and selling antiques, fine art and collectables is considerably less transparent than dealing in stock markets, where trading is incomparably quicker, easier, cheaper and clearer.

The moral of this story is that there are easier and much safer ways in which to make money.

Strategy for insecure businessmen

Yet more news from the Economist:

[BSkyB’s independent shareholders] were angry that Tony Ball, the departing boss, will get £10m ($17m) for agreeing not to work for competitors.

So that’s yet more evidence that “…the aim of business strategy is to move an enterprise away from perfect competition and in the direction of monopoly”.

Never believe anyone who tells you that all they want is “a level playing field”. It’s not true. They want it to tilt their way, and in some cases they are willing to pay handsomely to achieve it.

Mediocrity rules

News from this morning’s Guardian newspaper:

An investigation into last month’s derailment of an inter-city train at King’s Cross has found that the engineering company, Jarvis, failed to file paperwork for maintenance to a crucial set of points.

Jarvis has suspended an engineering supervisor after the accident, in which a GNER train carrying 150 passengers came off the tracks as it left London for Glasgow. Jarvis admitted a rail was missing because of an employee mistake.

A joint inquiry by Network Rail and Jarvis will this week publish findings which criticise a failure of communication between the two companies.

Industry sources say the two firms relied on a “verbal agreement” to carry out overnight maintenance to the track, rather than keeping detailed records. The points ought to have been disabled after Jarvis’s work but Network Rail’s signallers seemed unaware of the issue.

A rail was missing? A verbal agreement? Sometimes it is hard to believe that this is the same country that once ruled India.

Early bird still catches the worm

Roquebrune-Cap-Martin, FranceMost of Europe will go on holiday at some point this month, and the Economist has obligingly published an article on the resurgence in tourism titled Crowded out. It’s introduced as follows:

As British Airways' latest dispute with its unions shows, travel and tourism companies are finding it difficult to modernise as quickly as they would like. They need to keep trying, because the internet and the trend towards late booking have brought about the biggest revolution since the start of scheduled flights.

If last month’s wildcat strike over punching in and out at British Airways wasn’t sufficient proof that the airline is struggling, an acquaintance provided anecdotal evidence not long ago. He travels regularly to the south of France and noted that while the discount airline easyJet operates with a cabin crew of four, BA provides 11! No wonder BA announced a second quarter loss of £45m last week (see Losses batter bruised BA), especially given that BA has been forced to reduce its fares:

Full-service airlines are being forced to slash prices (and costs) to compete with low-cost airlines like easyJet, Ryanair and Southwest. The advent of the internet has made prices transparent, and made it beguilingly easy for customers to shop around. Customers, in turn, have become more comfortable in using the web to find last-minute deals. The effect is nothing short of revolutionary.

My wife and I are flying to Nice on BA this week, and the airfare is the lowest I’ve paid in a decade of travelling that route, which used to be the most expensive per mile of all BA’s destinations. Never before have I paid so little, which is even more astounding when you consider that we’re travelling at the height of the summer season. British Midland, Buzz (now part of Ryanair) and easyJet have finally forced BA to offer more competitive fares, and it will be interesting to see if BA has managed to simultaneously reduce its costs (i.e. the size of the cabin crew).

Although I booked these flights on-line, I did so in June, which can hardly be considered “last minute”. Experience has taught me that on popular routes cheap fares are only available if you book early. Leave it to the last minute and you’ll be lucky to find seats, let alone a good price. The Economist may be correct to say that “The web has become a vast clearing house for the travel industry's overcapacity: the more deals it offers, the more buyers it finds”, but the overcapacity only exists because the destinations are comparatively unpopular for some reason. If you are happy to go where few wish to travel then by all means use, but if you want a real bargain at a popular resort book as much in advance as you can.

Pathological business studies

Sumantra Ghoshal is a professor of strategy and international management at London Business School. Last week an article that he wrote was published in the Financial Times. It was titled Business schools share the blame for Enron (subscription required). It was an interesting critique of business education, and it occurred to me that his conclusion could form the basis of an excellent final exam question for MBA students:

“By incorporating negative and highly pessimistic assumptions about people and institutions, pseudo-scientific theories of management have done much to reinforce, if not create, pathological behaviour on the part of managers and companies.”


Crisis? What crisis?

Several years ago the Economist published an interesting series of articles about crisis management. More recently the magazine suggested that it was important for any business in a crisis “to act fast, tell the whole truth and look as if you have nothing to hide” (see Bad for you). So it’s been interesting to watch the self-imposed crisis at the Franklin Mint that has been brewing since last November and developed rapidly during the last 72 hours.

The Franklin Mint, which sells “collectibles” including several Princess Diana dolls, is suing the Diana, Princess of Wales Memorial Fund for “malicious prosecution”, accusing the charity of having “acted in bad faith” when it initially sued the Franklin Mint for the rights to Princess Diana’s image in the late 1990s. The charity lost that case and was required to pay all the legal fees. The Franklin Mint subsequently decided it wanted revenge, and filed suit last November. This week the charity froze all grants to its beneficiaries citing the Franklin Mint’s lawsuit as the reason.

The initial reaction in the press was that the Princess of Wales Memorial Fund is in crisis, but in fact I think the Franklin Mint has more to lose from this unnecessary and wasteful dispute. The charity and its beneficiaries may suffer in the short-term, particularly if the Franklin Mint wins its case, but it’s unlikely that they will be affected permanently. The social problems that they address combined with the public’s collective memory of Princess Diana, will ensure that her favourite causes continue to receive help.

The Franklin Mint on the other hand is playing with fire. The media have cast them as the aggressor in this story, with Princess Diana’s favourite causes as the victims. Can you imagine the dilemma some of the Franklin Mint’s customers now face? Do they boycott Diana dolls in order to support her memorial fund, or do they continue to feed their collecting habit but possibly harm her charitable legacy in the process? That’s a tough call; either way the doll collectors can’t help but feel unhappy, and they may well hold the Franklin Mint responsible.

What was the Franklin Mint’s management thinking by taking on the ghost of a martyred royal celebrity? How could they possibly hope to win?

For more on this story see:

The irony is that the Franklin Mint is suing for “malicious prosecution”, but what other kind is there? Can you sue someone out of “good faith”?

Management is a dirty word

This morning I realised that “management” is in danger of becoming a dirty word in the UK.

Estelle Morris, Minister for the Arts, was interviewed on the Today programme, because she has just been chosen as “Minister of the Year”. This award from her peers made the headlines because Morris was not a Minister for much of the last year; in October she resigned as Secretary of State for Education after publically admitting that she wasn’t up to the job, and she was appointed Minister for the Arts only last month.

On the Today programme Morris praised the Blair government for holding itself accountable for the standard of public services, but she went on to say (RealPlayer required):

The danger is [accountability] turns politicians into managers and I think it’s because of that, that sometimes it looks as though we want to control things at the centre…

…You know I think another thing is that politicians deliver nothing. They only deliver in conjunction with the service, with teachers and doctors and nurses. And sometimes ’cause we’re so managerial I think that we probably exclude those other people from taking credit for what is being done as well.”

What Management Is book coverGiven her comments Estelle Morris must have had some experience with bad managers (haven’t we all?), but the negative connotations she associates with managment generally, indicate that she needs to read the excellent book that I’ve just finished: What Management Is by Joan Magretta and Nan Stone. The subtitle is “How it works and why it’s everyone’s business“.

Everyone includes politicians, of course; and the following excerpt seems tailor-made for Estelle Morris:

Back when labor was mostly a matter of brawn, the work itself could be managed: analyzed, organized, and specified. Workers had only to do exactly what they were told, and supervisors made sure they complied. But even as the supervisory component of management has shrunk considerably, we continue to confuse authority and control. Having the authority to reward and punish – being in charge – isn’t the same thing as being able to control an individual’s performance. When people become managers for the first time, they often experience a rude awakening. At last they take control, only to find they’ve been taken hostage instead. They realize that they are now dependent as never before, because management creates performance through others. Without the willing cooperation of others, management can accomplish very little.

Clearly Estelle Morris was talking about something else when she used the words “manager” and “managerial” this morning. I suspect she meant that holding politicians to account can turn them into tyrannical, dictatorial control freaks, and that they sometimes fail to give credit where it’s due because they’re too autocratic (and selfish?).

In the end I think her choice of words was unfortunate because they will only compound the poor opinion of management that is already palpable here in the UK (see BBC Newsnight: Economy hit by bad days at the office, Top bosses ‘overpaid and mistrusted’ and No confidence vote for British business), which would be a shame because Magretta and Stone are correct, management in its broadest sense is everyone’s concern:

We began the book by saying what management isn’t. It isn’t supervising other people, it isn’t applied economics, it isn’t about occupying a privileged rung in a heirarchy, and it isn’t confined to commercial enterprises.

Because we have been defining terms as we’ve gone along, we can now venture to say what management is.

Management is the discipline that makes joint performance possible.

Its mission is value creation, where value is defined from the outside in, by customers and owners in the case of a business; by society, more broadly, in the case of government agencies and nonprofits.

Despite being a politician for 24 years, Estelle Morris has yet to understand what management is: the discipline that makes joint performance possible, otherwise known as leadership.

Business versus babies

The alumni magazine from my university arrived last week, and I was struck by the size of the “births” section that was allocated to my contemporaries.

Of course, that’s simply a function of age, but it was interesting to note that almost every alumnus’ message gives the impression that their greatest accomplishment is the birth of their latest child. All these intelligent, well educated, high-achievers, and yet not one highlights a single professional accomplishment of note. Is it significant that after 20 years of learning and another 20 of hard work, they’re most proud of simply doing what comes naturally?

Well, it seems so. A couple of weeks ago the Economist published an article on the lack of women enrolled in MBA programmes, and it elicited the following response ( see Economist – Letters – The family business):

Typing WomanSIR – As an MBA who left a career in economic research to care for my two young children, I can tell you why more women do not pursue the qualification (“Men’s work?“, June 14th). Business schools and the careers to which they lead mould one to be self-promoting, analytical, decisive and ambitious. Motherhood requires that one be self-deprecating, intuitive, patient and tied down.

I have had to develop hastily the skills for motherhood that I had repressed in order to succeed in the business world and now resent having spent so much time and energy developing exactly the opposite of the talents I need to do what I consider the most important job of my life. For business schools to attract women they would need to change the very nature of business itself.

Barbara Ross Epp
Port Washington, New York

That’s quite an indictment of the business world and executive education. It seems business requires cold-blooded warriors, whereas motherhood calls for, well … passionate mothers.

What seems most likely to me, however, is that people are simply listing their most rewarding accomplishments. In other words, these intelligent, well educated, high-achievers have simply found raising children to be much more fulfilling than any amount of previous job satisfaction. All of which presumably bodes well for the propagation of the human race, but what does it imply about business?