Book review: Lessons from history, over coffee

From Dynasties To Dotcoms by Carol Kennedy Kogan Page (£20, ISBN 0-7494-4127-5)

This book is something of a curiosity. It has the look of a coffee-table tome - in keeping with its purpose as a celebration of the Institute of Directors' centenary. And yet within its picture-laden, easy-on-the-eye pages is a fascinating history of British business, with plenty of lessons for today.

One of the most obvious of these is that corporate scandals - pretty much like booms and busts - are not exactly new. For example, Kennedy relates an episode from the 1920s - the massaging of the profits of the Royal Mail Steam Packet Company and the subsequent jailing of the company's chairman, Lord Kylsant - that would appear to have plenty in common with those of more recent times.

But Kennedy, an experienced author perhaps best known for her entertaining and useful Guide to the Management Gurus, does not restrict herself to a few colourful scandals as an antidote to an otherwise upbeat primer on the triumphs of British industry. Instead, the book is peppered with examples of things going wrong.

For instance, one section chronicles how William Morris, later Lord Nuffield, not only brought mass production to British industry and enabled car making to survive the 1930s depression, and "effectively created Britain's first modern industrial management structure in 1923" by decentralising it under a board with himself as chairman and "governing director", but also "like many brilliant founder-entrepreneurs" became too emotionally involved in the business. This led to a dangerous break with one of his deputies, Leonard Lord, who left bearing a grudge that ultimately led to Nuffield being subsumed within the British Motor Corporation.

At various points, too, Kennedy laments how Britain failed to make the most of "the opportunities offered by her global empire". For instance, she describes how air travel failed to take off in Britain as quickly as in Germany, France or the United States - despite the apparent market in both people and freight to far-flung parts of the world.

Later, she touches on the debate over why in the early 1950s Britain failed to enjoy an economic miracle before Germany recovered its industrial strength. Some blamed a pre-occupation with defence spending, in particular supporting the United States in Korea and elsewhere. But the remarks of the senior civil servant Lord Plowden have a familiar ring, blaming "a national resistance to change, poor management in much of industry, reactionary trade unions, the poor education and training of much of the workforce and too great a concentration on old and declining industries." With timelines reminding readers of what was happening in business and in the wider world as the 20th century progressed, the book is compulsively readable.

But where it really comes to life - and is likely to appeal most to those involved in businesses - is when it covers "the enterprise years" of 1980 to 1990. Drawing on her expertise as a distiller of the thoughts of management gurus, Kennedy offers quick guides to outsourcing and portfolio working, while also describing the glass ceiling - the barrier to women's progress that was at times pierced by the likes of Jennifer D'Abo, who transformed the Ryman stationery products chain, and Sophie Mirman, who founded the Sock Shop business. There is inspiration, too, in the potted biographies of entrepreneurs Sir Alan Sugar and Anita Roddick.

Crucially, Kennedy never lets her enthusiasm run away with her. By the time she has moved on to the next decade and the "masters of the universe", she is recalling how "the dotcom frenzy of the late 1990s generated paper millions overnight for the founders of companies that never made any profit in their short lives." And reminding readers of the dangers of hearing only what you want to hear and forgetting the cautionary comments of such gurus as Intel's Andy Grove, who in 1997 told a London Business School audience: "I think that everyone agrees theoretically that the internet will change everything. But we will not agree when it will change each individual business."

Given this scepticism - some of it admittedly with the benefit of hindsight - it is perhaps fitting that the book's concluding chapter on "tomorrow's world" includes the observation that as the "new economy" began to recover in 2003, one of Britain's oldest industries, warship building, was making a comeback, at least partly in response to international events, such as the war in Iraq.

Whether that is sustainable, of course, remains to be seen. But whatever the outcome, it is still likely to be overshadowed by enduring concern over whether Britain can make the most of what it has. Whereas in the past the issue was the fruits of empire, it is now the products of the British imagination. As William Sargent - joint chief executive of the computer animation company Framestore CFC and chairman of the Small Business Council - has pointed out, loss of control over intellectual property rights and the means of global distribution mean that the real beneficiaries of smart British thinking are organisations such as Hollywood studios and Japanese electronics companies.