Book Of The Week: Ups and downs of the high-flyers at BAe
Wednesday 30 June 1999
By Sir Richard Evans
and Colin Price
(Nicholas Brealey, pounds 18)
THIS BOOK is about winning, and how to win when all those around seem to have lost faith in your ability so to do. More than that it is a practical guide of how to set about it, and how to turn a theory into practical success.
It is really in two parts: the first, quite briefly, sketches the events which led to the collapse of the British Aerospace share price in 1992, when the company recorded the then biggest single asset write-off in UK corporate history - pounds 1bn. The second outlines the subsequent recovery, and the programme for the implementation of change under the then chief executive and co-author, Richard (Dick) Evans, now Chairman.
Any account of BAe, from its beginnings with Sopwith to the present day, is both fascinating and absorbing. The roller-coaster unfolds with equal measures of enormous technical success, lamentable failure, and often personal tragedy. The fact that all this is accompanied by financial failures and successes is inevitable.
It all makes fascinating reading and this book adds another chapter to the history of a company which evolved from a group of fiercely competitive independent companies, each with intense pride in their products, an ingrained culture, and territorial sensitivities. It was only in 1977 that BAe was created out of half a dozen defence and aerospace firms by the act of nationalisation, carried by one vote in Parliament.
This was bound to result in a conglomerate rather than a totally integrated machine. Perhaps, the kind of change required (which was obvious from the outset) could only take place after a near-catastrophe such as 1992. To convince independent corporate barons of the need to change is a very long process in which, sadly, redundancies were the result of a refusal to face facts.
What is always intriguing to the student of management is whether the changes brought about are due to the process introduced, or to other outside influences. It will be interesting to see the expansion of BAe through the planned pounds 7.8m merger with Marconi Electronics, and to see how this almost-inevitable coming together in an even larger world grouping will affect the situation.
Whether to have a devolved or centralised organisation should depend on events and the perceived solution to a particular structural problem. A pendulum in motion never stops in the middle. The history of management of change is constantly looking at the transitions that take place from one organisational shape to another. The one thing that is certain is that, for better or worse, change will continue - witness last week's announcement of BAe closures and redundancies.
As the book points out, BAe was one of the first and, at the time, the largest company to be launched into the private sector. No company today would be pushed into privatisation with all the baggage that BAe carried.
To be fair, the acquisition of other activities enabled BAe to realise much-needed funds when the time came. I don't recall that Rover, acquired in 1987, was ever a long-term strategic hold for British Aerospace but more, as one analyst put it at the time, an opportunistic move.
At the top of the company, Dick Evans' use of the term "a poisoned chalice" doesn't exactly describe either literally or historically the process by which executive responsibility was passed. As he said in 1991 in his statement at the end of his first year of office, no-one foresaw the coming together in such a cataclysmic way of the collapse of so many aspects of the business, nor how quickly it would impact.
As the foreword makes clear, this is more of a text book on the management of change - a project called "Benchmark BAe" - and as such provides a detailed account of the process of turning a concept into reality. It is interesting to note the importance of the European Foundation for Quality Management to this process.
Dick Evans' personal trauma after three years in office comes over quite truthfully. The solitary position of the CEO in times of crisis has to be experienced to be appreciated. It would have been intriguing, however, to know what went on behind the closed boardroom doors which led to the departure of both chairman and finance director in 1993. Who fell on whose sword and why? A lesser man than Dick Evans might have crumpled and, in this respect, I got it right in electing him as my successor in 1990.
As I said, this book is about winning. It adds to the understanding of "whatever happened at BAe", but it also leaves much unanswered. Its main value is in the progress of "Benchmark BAe', a case study in the management of change. In this respect it's a book more for the student of management than for the wide-eyed visitor to the Paris or Farnborough Air show.
Admiral Sir Raymond Lygo was BAe's managing director and then chief executive, 1982-89. Nowadays he is chairman of Rutland Trust, and enjoys flying his own airplane
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