Anthony Sampson: The trouble with fat cats is they lose touch with their customers

I remember meeting Lois Sieff, who asked me what underwear I was wearing, then lectured me on the merits of M&S

The recurring dramas at Marks & Spencer have always aroused a public curiosity which goes far beyond the business pages, for they reflect the social history of our times, and all the mysterious fluctuations of fashion. For anyone interested in the changing character of Britain the shops provide vital clues.

The recurring dramas at Marks & Spencer have always aroused a public curiosity which goes far beyond the business pages, for they reflect the social history of our times, and all the mysterious fluctuations of fashion. For anyone interested in the changing character of Britain the shops provide vital clues.

But the boardroom belongs to a quite separate world of finance and management, peopled by bankers and accountants, with a few dignified outside directors to reassure the others. And there has always been an element of comedy and farce in the spectacle of ageing directors puzzling over declining profits while the company's future depends on young people they never talk to, whose taste in brassieres or knickers is crucial to the business.

I learnt my own expensive lesson some years ago when I bought some M&S shares, only to find them rapidly halving their value. When I told my son he had no sympathy: "Dad, why didn't you ask me before you bought them? Marks and Sparks are completely out of fashion."

The history of M&S has always provided a kind of commercial parallel to the history of the Labour Party: like Labour the company first prospered on mass appeal, and close contact with its customers, and then became self-enclosed by its own bureaucrats. It became preoccupied with its own mythology and lost touch with a new generation.

Businessmen are more immediately affected than politicians by the loss of customers, who can much more easily go elsewhere to find what they want. But M&S developed a widening gap between the top and bottom, while the the bosses proved almost as difficult to dislodge as Labour leaders.

The legendary company originally had a unique reputation for understanding its customers. It began as a family firm run by successive generations which, unlike most English business heirs, retained a passionate interest in their products, and developed a keen instinct for social trends. In the post-war decades they saw how their shops could trade upwards to represent a new classless Britain, escaping from the stratified associations of Savile Row or Burton's, to cater for busy people buying off the peg.

The extended Marks family, followed by their in-laws, the Sieffs, continued to throw up enthusiastic traders, while the company was able to offload family members who were not equipped. The family combined great wealth and peerages with an awareness that their prosperity depended on the customer.

I remember meeting at a party Lois Sieff, the sociable family matriarch, who immediately asked me what underwear I was wearing, and then gave me a lecture on the unique merits of Marks and Sparks.

The family bosses were quite autocratic, but the retail trade had always required bold decisions at the top to respond quickly and ruthlessly to changing fashions. Lord (John) Sainsbury, the last successful chairman of his family firm, had a fearsome reputation for sweeping into his stores like a typhoon, as well as a tycoon, but he insisted that big retail businesses needed dictators to keep up with the times.

The problems of M&S, like those of Sainsbury's, began when the dynasty lost interest, and the firm was taken over by business meritocrats who became engrossed in management methods and high finance, rather than the customers. The new bosses of M&S were admired as master-managers; Lord Rayner later advised Mrs Thatcher on how to restructure the whole civil service; Sir Richard Greenbury was asked to chair a committee on corporate governance.

But Greenbury, meanwhile, was losing touch with the customers of M&S, failing to notice a key change: that young people were no longer having their clothes bought for them by their parents, but spending their own money on more adventurous outfits.

The directors of Marks & Spencer were far too slow to intervene, and it was only when they were threatened by a takeover that they finally deposed the chairman and chief executive, and brought in an outsider, the Belgian Luc Vandervelde.

"Cool Hand Luc" at first appeared to be turning the company round, and reconnecting with young customers. But soon he too seemed to be losing interest, as he accepted more outside directorships. The profits turned down again, while the board once again saw sharks on the horizon, led by the alarming Philip Green, the brash billionaire who had successfully taken over and revived another high-street chain, BHS.

Now Green has launched a £9bn bid to take control of M&S, and the scene is set for the mother of all boardroom battles. The directors have responded more ruthlessly and swiftly than their predecessors. They have chosen an interesting new chairman, Paul Myners, a former fund manager turned gamekeeper, with a highly critical report on his former City colleagues, who is also chairman of the Guardian Media Group.

And they have picked a new chief executive, Stuart Rose, who they hope can see off the dreaded Philip Green. He has some of the right qualifications. He is non-English. (His father was a Russian, born Bryantzeff, and he was brought up in Tanzania.) He is quite ruthless, very smooth, and financially ambitious. He was trained by M&S before its decline. But is he close enough to the crowd?

For whichever man wins will face the same problems which are part of Britain's fast-changing social history. The big shops find it harder to attract customers as inner cities languish, while it is young people, not their parents, who decide what to buy - and do not wish to be part of the mass market like earlier generations.

The problem of how to adapt big stores designed for mass-marketing to an era of individual choice remains daunting, perhaps insoluble. But even ageing visitors to the M&S shops can see that their managers have not grappled with the problem. They still retain an unglamorous corporate atmosphere, with bleak lighting glaring down on forbidding rows of identical suits or costumes.

How could this have been allowed to happen, after so many profit scares and boardroom convulsions over the years? It can only be explained by the gulf which still separates the boardroom from the customers. The directors, skilled in finance and marketing, must still be seriously disconnected from the young people they are selling to. How many of them, one wonders, would care or dare to ask their younger friends, or their children, what underpants or knickers they are wearing? Who on the middle-aged board can really represent the millions who would not be seen dead in Marks & Spencer shops?

Among all the current complaints about the fat cats in corporate boardrooms, the most serious is that they have cut themselves off from their real business. They have become so obsessed with financial operations and self-enrichment that they have lost sight of the ordinary people on whom their companies' future depends.