There's something in firms that makes people stupid - Business - News - The Independent

There's something in firms that makes people stupid

On Thursday, David Blunkett, the Secretary of State for Education and Employment, became the latest government minister to acknowledge the growing importance of human capital as opposed to those old standbys, plant and machinery.

Tony Blair has long realised that Britain's future prosperity is dependent on our ability to harness the various talents that together make up this new form of capital. And now we have another member of the Cabinet speaking the language associated with Peter Mandelson, the former secretary of state for trade and industry.

"Knowledge is now wealth and power. Microsoft is so valuable, not because of its fixed assets, but because of the human capital of its software engineers and programmers," Mr Blunkett said in his lecture at the Centre for Policy Studies in Education at Leeds University.

But dramatic as this pronouncement may be for a Labour politician, it is really old hat in the world of business. In fact, the issue there is not so much the intelligence and skills of individual workers, but the intelligence of organisations themselves. According to James and David Matheson, authors of The Smart Organization, companies have put so much effort into achieving operational excellence that they have neglected to think.

They stress that they do not regard this "corporate body-building", as they call it, as bad. Indeed, it is so important that no business can expect to compete without it. It is just not enough on its own. Even Tom Peters, who wrote the bible in this area, In Search of Excellence, with his former McKinsey colleague Robert Waterman, would agree with that now.

The difficulty is that most companies seem to have become so obsessed with improving quality, cutting costs and making themselves efficient that they have lost the ability to form strategies, or to make effective use of their assets.

It is tempting to think that only dull old companies can lose out in this way. But the Mathesons, who work for the US consultancy Strategic Decisions Group, have plenty of examples of how hi-tech companies rich in brainy people can get it wrong. As they point out: "There is something in companies that dumbs them."

Some of this is down to the dynamics of companies or indeed any sort of organisation. People are generally unable to be frank and say what they mean to each other. Instead, they go through rituals.

One of the most serious of these is the "corporate liars game", which particularly comes to the fore during budgeting sessions. Essentially, it involves each manager concerned putting in for more resources than he or she needs on the basis that they will inevitably be bid down. In the end, say the Mathesons, the biggest liar wins.

This might seem harmless enough. But, they add, it destroys the ability to communicate. What happens is that the boss checks up on how the resources are used because he or she has gone through this process too. Their point is that, not only does this create an organisation that is lacking in social harmony, it makes poor business sense. Organisations do not make the quality decisions they could if their executives were having proper conversations about such issues as needs and aspirations.

Such a dialogue might also help organisations become flexible enough to respond, or even anticipate, changes in their markets. The much-cited example of this is Microsoft and how it suddenly abandoned its opposition to the internet and set out to embrace it so successfully that it ended up on the wrong end of a Justice Department anti-trust suit.

But the Mathesons have found so many other companies that are able to behave in this way that they are now convinced that corporate intelligence is a leading indicator - as opposed to the lagging indicator that is operational excellence - of corporate performance.

In other words, corporate turnaround artists may like to concentrate on wrestling with costs and the like, but what they need to do to give themselves and their organisations a better chance of success is get smart.

John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Home body: Badger stays safe indoors
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week