Tied to the stake of modish ideas

The time has come to kiss goodbye to fashionable management and economic theories
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The Independent Online
So we are going to get our post today, but little thanks to the management theorists. For it seems to have been the cack-handed application of an American concept,"Total Quality Management" (TQM) that led to the impasse at the Post Office. The management there had been trying to impose an aspect of TQM that involves "teamworking", splitting workers into "motivated teams" instead of letting them just get on with the job.

The union has been unhappy about this, and had been pointing out that the US Post Office, which introduced the idea as part of its "Employee Involvement Program", had already pulled the plug. According to the US Postal Service vice president, Joseph Mahon, "national productivity has gone down while grievance activity has gone up".

Teamworking has proved a particularly disappointing idea. In the Seventies Volvo pioneered the idea of building cars with small teams instead of the regular production line. Workers were happier, absenteeism was down, cars were of better quality, we were told. But has it continued? Er, no. That plant was shut a few years back because it was not nearly as efficient as the company's conventional ones.

But this is the norm. Take another idea, perhaps the most widely applied: "downsizing". A few weeks ago Stephen Roach, the Wall Street economist who was its most vocal advocate, reversed his position, acknowledging that while taking out layers of management might in the short term save costs, it also took out the experience that enabled companies to develop and grow.

On Tuesday this view was given further support by Howard Davies, deputy governor of the Bank of England and former director general of the CBI. If companies said that their employees were their greatest asset and then readily cut back on those assets there was, he said, "a danger of communicating mixed and confusing statements". This confusion, he argued, was not likely to create the state of mind that would bring improved performance.

Or take "core competence". This is the current fashion, the obverse of a former one, "diversification". The idea seems sensible enough - do things you know something about, instead of doing things you don't understand. But if you look at Britain's two best-known businessmen, both have become most successful by departing from their original competence.

It is hard to see any rational link between pop music, airlines and financial services, but Richard Branson used his experience of the first to found Virgin Atlantic and recently to launch his successful personal equity plans. Sir John Harvey-Jones was head of ICI, but only came to public prominence as an author and television performer, two activities he knew nothing about until after he retired.

Unsurprisingly, companies that seem wonderful one moment run into trouble the next. Perhaps the most famous book on management, In Search of Excellence, by Tom Peters and Robert Waterman, examined a string of companies which they classified as "excellent". Five years after it was published two- thirds of the firms has run into some sort of trouble.

"Benchmarking" was another US technique, where a company tries to measure itself against its competitors to make sure that in each area of business it is as good as the others. The trouble with this is that if your aim is merely to be as good as your competitor (or more probably, given the problems of implementation, not quite as good as your competitor was a couple of years ago), you are never going to be better. Toyota was always happy to show rivals its car plants because it knew that by the time they had copied its techniques, Toyota would have progressed and done even better.

It is not only American ideas that are biting the dust. In Japan much of the post-war economic success has been ascribed to the highly regulated economy, which some argue enabled the country to focus its effort on particular export-driven industries. Well, this month that approach saw its strongest challenge yet, from the head of government's Economic Planning Agency, Shusei Tanaka. He has not only proposed radical deregulation of the whole Japanese economy but has got the backing of the ruling Liberal Democratic Party to do it.

And Britain? We have not been particularly prolific at sprouting management theories, so there are fewer opportunities for home-grown hubris. But one candidate has emerged this year, the idea of the "stakeholder society". The concept seemed sensible: that a wide group of people should have an interest in the future of a company or any organisation, and that their views should be taken into account when changes are made. Thus a company would have an obligation not only to its shareholders but also to long- serving employees and long-term customers. The two most vocal advocates have been the author Will Hutton and Tony Blair.

Alas, this fine notion has met a more speedy nemesis than most. Mr Hutton was made editor of the Observer, whereupon he sacked large numbers of the staff, the very people who had thought they were "stakeholders" in the paper's future. And it could be argued that Mr Blair's revival of the Labour Party has only been possible because he was prepared to override the views of "old Labour", the long-standing supporters who again thought of themselves as being its principal stakeholders.

Is there any lasting management nostrum which will not be overturned shortly after it is introduced? I have a candidate. It is called "common sense". But I doubt it will ever catch on.

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