Imprisoned by a grand delusion

The notion of management as a pure skill is a fraud, says Nicholas Fait h
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IT IS probably asking too much to hope that the troubles confronting Derek Lewis, the beleaguered head of the Prison Service, will put an end to the Great Managerial Delusion. This heresy (not to be confused with GMT, let alone PMT) is the widely held notion that there is such a thing as managerial competence, a pure skill that can be applied to any business sector or public organisation.

In the public sector, GMD has already done untold damage to the National Health Service - remember the cry from the archetypal manager, Roy Lillie, that the organisation was more important than the patients. In private business, it has proved seriously damaging to the health of many companies that really needed the ministrations of executives who actually knew something about the business rather than being all-round managers. Lewis is typical: he is an alumnus of the London Business School.

Unfortunately, the GMD is backed by a gigantic and growing pressure group, which, for instance, applauded the appointment of the ultimate management whiz-kid, Martin Taylor, to the chief executive slot at Barclays (in that particular race, I would put mymoney on Lloyds Bank, run by plodding bankers). Most of its teaching can be traced back to the Holy of Holies, the Harvard Business School, which has been purveying the delusion of all-round managerial competence for over half a century. Its case study method assumes that all corporate problems can be reduced to a series of formulae, unrelated to the particularities of the industry involved. In this country, it has replaced an older and less harmful delusion, that a grounding in classical languages andphilosophy was the best - indeed only possible - grounding for managing anything from the British Civil Service to the British Empire.

My conviction as to the evil nature of GMD was formed long before Mr Lewis's latest troubles. It derived from a close observation of comparative national economic performance since the Second World War. To put it in the jargon beloved of economists, there is a near-perfect negative correlation between national economic performance and the spread of the business schools that are the breeding grounds of GMD. Take the best performers: Germany, Japan, South Korea, Hong Kong, Italy, Singapore, Taiwan, and wh at do we find? That they have very little in common apart from a perfectly sane business landscape generally free of business schools.

France, another success story, is still run almost exclusively by graduates from the Grandes Ecoles, whose graduates are noted for their intelligence and capacity for ferociously hard work rather than business acumen. By contrast, Britain has more schools per head than any other European country and still has a pretty lousy performance (except, be it noted, in industries created or taken over by foreigners free from the disease, indeed inoculated against it by their business culture). The rea son is pretty simple: there is still an anti-business culture in this country, and going into the corporate world is respectable only if it is seen to be a quasi-professional sector, concerned with plans and paperwork, far removed from the vulgarities of producingor selling goods or services.

But, I hear you ask, what about the original home of the GMD, the United States? Well, for a start the economic performance of the US since 1945 is not all that hot. Then, the Americans dominated the world economic landscape to a degree never before seen, and for a generation afterwards it was assumed that they could take over any sector or country they chose. In the early 1970s, I was laughed to scorn when I wrote a book arguing that the tide had turned, that the Europeans were increasing their investments in the US faster than the Americans were doing in the rest of the world. But I was right: the American trade balance has been unhealthily negative for a couple of decades now, and the Americans are increasingly dependent on a steady devaluation of their once-almighty currency to maintain their place on the world business scene.

Moreover, if you examine the most internationally competitive business sectors in the US, you find two star exporters: aerospace and entertainment. Aerospace is dominated by Boeing, a home not of MBAs but of boring engineers who simply know how to designand build aircraft better than anyone else in the world. Hollywood - which is now vying with Boeing to be top exporter - is even more of an anomaly, since it is controlled by a group of moral deviants who can most politely be described as entrepreneurs,whose chief qualities are a gift of the gab and a talent for mental arithmetic. The only cases they ever study are the box-office returns.