For the top jobs, we need to look abroad

We are in a world where even Japan looks outside the country for someone to run one of its great companies
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The Independent Online

What is the world coming to? Sony, that icon of Japanese commercial excellence, has just hired a Briton as its chief executive.

What is the world coming to? Sony, that icon of Japanese commercial excellence, has just hired a Briton as its chief executive.

True, Sir Howard Stringer, who is Welsh, is no ordinary Brit. He went to Oxford but has spent most of his career in the US, first as a journalist and then as a media executive at the television network, CBS, ending up in charge of it. He would have been a wonderful head of the BBC, but we were not bright enough to spot it.

For the past eight years he has been running Sony America, the group's US subsidiary that includes Colombia Pictures, pretty successfully. The electronics end of the business in Japan, however, is in trouble, so it is natural in a way for the company to pick their best-performing divisional executive to run the whole show.

But two things give the appointment a significance that goes far beyond the industry or the company. One is that it reflects the importance of Sony's software content - films, games, music, etc - over the hardware on which this software is played. The other is that this is only the second instance of a non-national taking a top job in Japan, the other being Carlos Ghosn, a Brazilian, who rescued the then struggling car company, Nissan.

Thus countries that wish to compete successfully have to look to the world for leadership talent. Even Japan is accepting that it cannot be successful if it relies solely on local skills.

Sony has, over the years, been wonderfully successful at coming up with gadgets that people want to buy: from the Walkman to the PlayStation, and charging a premium for them. But it is becoming harder to make money out of making things. Every now and again a company comes up with a winner than can justify a higher price: Apple's iPod or Dyson's vacuums. But more and more, manufactured goods are simply sold on price and are made in the lowest-cost producer, which increasingly now means China.

So making good products is no longer enough. As Sir Howard told Sony staff a few weeks ago: "The business of Sony has become management, not product design."

When most people think of management they imagine big investment decisions: which plant to build or shut down, what products to develop or kill, whether to take over other companies and so on. But increasingly, management is about managing human talent, and that is a very different talent from the up-market bean-counting that has dominated up to now.

Sir Howard's particular skill is managing talented people: one of his great coups at CBS was persuading David Letterman to transfer his highly-acclaimed late night show from NBC. Of course all businesses need to hire and manage clever people. But in service industries this is paramount. By elevating Sir Howard, Sony is effectively acknowledging that it cannot generate this skill from its Japanese management cadre.

This leads to the second point. A Japanese company going global when it needs leadership is very unusual. Ghosn was sent to Japan to run Nissan by Renault - which had a large stake in the Japanese car market. He has been hugely successful, and is now a hero there. But he was imposed from outside. Japan, however, is not alone in resisting the hiring of outside talent.

Very few large German, French or Italian companies are headed by non-nationals. There are foreigners in some key posts. For example BMW has had an American as its chief stylist, and if you think the recent BMWs look a bit odd, that may be why. But the top jobs are almost invariably filled from the home pool.

Britain is different. A couple of decades ago it would have been impossible to imagine British Airways run by a non-national. Now we think nothing of it. Yesterday BA announced that Rod Eddington, an Australian, would be replaced by Willie Walsh, the Irishman who revived Aer Lingus.

The US is so huge that it can usually find sufficient talent in its own pool. But that has not stopped it hiring foreigners to top jobs, as has been the case with Sir Howard. Here in the UK we have taken this global search for talent further than any other country.

A higher proportion of large British companies have a non-national as chairman or chief executive than those of any other country in the world: nearly 30 per cent of the 100 largest companies. But the magnet for foreign talent is not just in commerce. There are a host of other instances where a non-national is in the key executive post. In the academic world, there is the London Business School and Oxford University. In the public sector, there is the Office of National Statistics and Transport for London. In sport - well, start with Arsenal. In entertainment - start with the Old Vic.

This is new. At no stage of human history has a country so aggressively scoured the world for talent - or been prepared to trust foreigners with top jobs. Japan, Germany, France, Italy are where the UK was 30 years ago: doing the best they can with the limited pool of skills that their own education and training systems can develop.

When the key to economic success was excellence in manufacturing that, arguably, was good enough. I expect that China will manage to carry on growing successfully for many years without needing to hire foreigners to top jobs, just as Germany and Japan until recently have managed to do. But then China has the benefit of an enormous domestic market and an almost unlimited supply of cheap labour. It can be the workshop of the world.

But the present developed world, with its high-cost labour, is increasingly dominated by service industries. Many companies that started as manufacturers, such as Sony, have shifted the balance of their operations to services. The prizes in this go to those countries that are most open to talent - and talent at every level, from the young mobile professionals to the chief executives of its giant companies. The US has long been such a magnet and it still is. But proportionately the UK is more open to outsiders than even the US.

Now there are areas where many of us would rather like to see even greater outside influence: many of us would welcome Bill Bratten, who made New York the safest large city in the US, if he ever wanted to have a crack at reducing crime in London. I suspect that the NHS could learn a bit from health professionals in other countries too.

Naturally, not all foreign appointments work out. Cultural barriers do exist and some people find their skills are not transferable. But the principle: that if you are going to run a country successfully you have to get the best people to run its key institutions, is surely beyond dispute. And it would be astounding if those best people - best, that is, for the job in hand - happened to be in that country already.

This is a new way of thinking about a country. It is saying that to give the best lifestyles, the widest opportunities, the greatest personal fulfillment - all the things we really care for - we have to try to get the best people in the world to help us do so. We have to create an attractive environment for them.

Make no mistake about this. We are in a world where even Japan looks outside the country for someone to run one of its great companies. The more open we are to global talent, the more successful we will be. But competition for such talent will become much more intensive in the years to come.