Politicians could learn about risk from business

'When people say you're nuts, you just might be nuts.' Mr Blair, however, has no doubts
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The Independent Online

Books about business are an undervalued genre. I don't mean teach-yourself-to-be-a-good-boss publications, but works which take business as seriously as politics. For business, like politics, has drama, triumph and disaster and extraordinary individuals and, I would argue, has just as much impact upon our lives. Take the period 1880 to 1914. Did anything in politics, even including the events leading up to the First World War, actually exceed in significance the business developments of the time, which included electric power, the telephone, the radio, the motor car and the aeroplane? Yet we know much more about the statesmen than we do about the business leaders. More historians study Asquith than Marconi.

Interesting questions arise comparing the two activities. Leadership is exercised in varying ways but is, say, risk-taking in politics different in kind from business innovation? To shed light on such issues wasn't, however, the only reason why I enthusiastically turned to Matthew Symonds' new study of one of the great software billionaires, Larry Ellison, the founding genius of Oracle, second only to Microsoft's Bill Gates in wealth and superior to him in influence. Part of my eagerness to read Softwar: an intimate portrait of Larry Ellison and Oracle, (Simon and Schuster) was personal.

For Matthew was one of the creators of this newspaper and deputy editor throughout my time in charge. He had experienced all the tribulations, pains and joys of a start-up, and was thus well equipped to write the story of Oracle, founded only 26 years ago.

Oracle's importance is that its database software is an essential element of the internet which, as people never tire of pointing out, yet bears repeating, is as transforming as the coming of the railways. Mr Ellison's reputation is that he is a visionary thinker. He was one of the first to argue that the internet would become most effective when it resembled the water supply, centralising its raw material in databases (just like reservoirs) and its processes on large computers (the equivalent of purification plants) while distributing information (like clean water) on demand across a global network (the same purpose as pipes and aqueducts).

The strength of the book is not so much its narrative of Oracle's climb to market dominance but its insights into the nature of both entrepreneurship and business management. The core of Mr Ellison's business philosophy is that you can't get rich by doing the same as everyone else. This is obvious, but what does this mean in practice? It requires summoning up the sheer effrontery to assert that you are right and that everyone else is wrong. It means not minding that your peers think that you are mistaken - and tell you so.

As a matter of fact, this is the Prime Minister's situation in relation to Iraq. None the less, at the same time come the fears that your critics might be correct. As Mr Ellison told the author: "When people say you're nuts, you just might be nuts." Unlike Mr Ellison, however, Mr Blair has no doubts.

There is also risk-taking and extreme risk-taking, just as there are sports and extreme sports. Mr Ellison is the type of person who doubles and redoubles his stake. In business terms this means a willingness to bet the company on a particular strategy, in other words everything you have built up.

This is unusual and dangerous, as rare in business as in politics. I attended a business meeting the other day when it was pointed out that a particular course of action would put at risk the future of an entire product line. Straight away everyone round the table backed off. But extreme risk-taking is a function of temperament as well as sheer guts. You can see this in certain journalists who are happy only when they are operating in a war zone. Likewise Mr Ellison's sister once told him that whenever he got too close to a goal he'd "raise the bar for fear of actually clearing it".

If Mr Ellison is a visionary and a risk-taker, he is also an engineer, with all the habits of mind which that implies. And when he states that "the most effective way to grow sales is to make the product better, that is why I spend most of my time with the engineering teams," who could disagree?

But then, when he goes on to say that "these days I believe that every process within an organisation - marketing, sales, service, everything - should be carefully engineered" and that now he applies engineering discipline to his entire business, not just to product development, you begin to wonder. Hang on, won't this make the enterprise excessively rule-bound?

A version of this dominance by a particular mindset with the risk of perverse results is found in politics. It is when the lawyers' approach becomes too pervasive. I wonder, for instance, what historians will make of the fact that Britain was taken to war in Iraq by lawyers - the Prime Minister practised at the Bar and the Defence Secretary lectured on the subject. And just as engineers need to understand that their training cannot solve every business problem, so lawyers must realise that politics isn't just subtle wording or rewriting intelligence dossiers. This is why I like to read about business as well as about politics. The comparisons are illuminating.