Excerpt

Chapter Six

Schools for Business

There were once three occupations in Britain for which you required

no qualification and for which no training existed: politician, parent

and manager. Unfortunately, they were also three of the most important.

Management, in particular, was something that, it was felt,

everyone could do at a pinch. Rather like making love, it was something

that sensible people instinctively knew how to do, when and as

the need arose.

But then, as I discovered, even lovemaking isn’t quite as natural as

people assumed. Nowadays there is such an abundance of explicit

magazines, films and books demonstrating just what goes where and

how that no one can be ignorant of how it should be done, even if not

always expert in the execution. I had only a strange magazine called

Health and Efficiency, a nudist publication, to acquaint me with some

rather bowdlerised photographs of the female body – even James Joyce’s

Ulysses was banned in the Ireland of my youth. I learnt by experience

in due course, but not without much fumbling frustration and

gaucherie.

Parenting wasn’t much better, although my young wife and I did

have Dr. Spock’s bible Baby and Child Care at our side, by day and night.

Then there were always mothers and mothers-in-law all too eager to

advise. Looking back, I can only apologise to our two children. Our

daughter once, half jokingly, accused us of using her as a social experiment

in her education. She did not know the half of it. All her early

life was an experiment, as it inevitably is for the first child of first-time

parents.

Management didn’t even have a Dr. Spock. There was no decent

book, as far as I can recall, back in the fifties in Britain, to which a

would-be manager could go for help. The first remotely readable book,

The Human Side of Enterprise, by Douglas McGregor, a professor at MIT,

was not published until 1960. Shell was very taken by McGregor’s book,

in which he distinguished two styles of leadership. One, Theory X,

worked on the assumption that people needed to be told what to do,

while Theory Y assumed that people could be trusted to act responsibly

on their own initiative. Shell memorably sent out a circular to

every manager in that year, summarising the book and decreeing that,

with immediate effect, Shell would be a Theory Y organisation, unaware,

presumably, of the confusion they caused by using Theory X to implement

Theory Y. Old habits die hard.

The thought of actually going back to school to learn about management

struck people as bizarre, or so it certainly seemed to both Oxford

and Cambridge universities who each turned down the invitation from

the business community to establish graduate business schools along

American lines. ‘We are not a trade school,’ one professor said, indignantly.

That was in the early sixties when the government in Britain,

urged on by a group of leading business people, had begun to worry

about the state of British management and how it might be better

educated. It was right to be concerned. Thirty years later, as part of

‘The Making of Managers’, a 1987 report for the government that I

chaired, I calculated that almost every business executive at that time

would have left school at fifteen and not had one day of formal education

since. This was because only eight per cent of school leavers in

those days went on to university and they almost all went into the

professions or the civil or colonial services. Business had to make do

with the ‘University of Life’, as the managers of the day defiantly

termed it.

There were two exceptions: the alumni of the armed services and

accountants. The armed services took management seriously. They

trained their officers on recruitment and, later, at their staff colleges,

where mid-career courses for high flyers lasting up to a year were the

norm. Many British managers in the fifties and sixties had done their

national service and had been exposed to the management theories

and practices of the armed services. They carried this experience into

their new business careers and, for a time, the businesses of Britain

bristled with the equivalent of officers’ messes, where the managers

enjoyed three-course luncheons while the lower orders made do with

the works canteen. It often took time for the new ex-servicemen to

understand that business organisations operated in a different world,

one where the right to command had to be earned and where they

could no longer count on the ready acceptance of authority and the

privileges that went with it. No one ever suggested that training to

fight a war was the right preparation for managing a business. It just

happened to turn out that way, the unintended consequence of the

national need for military preparedness.

The best preparation, however, for a management role in business

was generally thought to be an accountancy qualification. In preparing

my report ‘The Making of Managers’, I unearthed the intriguing fact

that Britain had 168,000 qualified accountants compared with four

thousand in West Germany, six thousand in Japan and twenty thousand

in France. We didn’t need or use that many accountants. The

great majority were not working as accountants at all, but as nonfinancial

managers in business organisations. There is nothing wrong

with the accountancy training – for accountants. But accountants are

taught to give priority to the visible financial costs and assets, not to

the less quantifiable human assets, which they regard as costs. They

focus on the past rather than the future, because that alone can be

accurately measured and audited. Their training regards risk, uncertainty

and the unknown as undesirable. People management, at that

time, had no place in the curriculum, for money and its measurement

was all that mattered. The accountancy professions had, accidentally,

become the business schools of Britain. No wonder our economy was

lagging behind that of our competitors.

I didn’t know all that back in 1965 as I prepared to leave Shell. I was

just hugely excited by the discovery that there were such things as

places in universities where one could learn all the secrets of business

and organisations and how to run them. A few of my generation had

known of the Harvard Business School and its competitors, had even

won Harkness fellowships to study there for an MBA, a degree that

was unknown to me. But I had been immersed in South-East Asia,

where such things were not talked of. Little did I know, back then, that

I would be privileged to study at one of the leading American schools,

would help to build one of Britain’s first two graduate schools, would

later play a leading role in the first course of what was to become the

Open Business School of Britain’s Open University, would act as advisor

to Cambridge University when it belatedly got round to establishing

its own business school and would chair the ‘Making of Managers’

task force that helped to fuel the blossoming of management education

in British universities in the nineties. In the process I learnt a lot,

about management, about education and about the learning process.

I now believe that we and I got a lot of it wrong, but, as in much of

life, if we had waited for perfection we might never have got started.

Looking back now, after forty years, I can see that, if nothing else, we

helped to make the study of management and business respectable.

So much so that Business Studies is now the most popular undergraduate

course at most British universities. Given the anti-business culture

of the land when I left for America, that must count as a cultural revolution.

It was exciting to be a part of it.

I was full of excitement and trepidation when I arrived at the Sloan

School of Management at MIT one sunny May day in 1966, having

survived the immigration process. So ignorant were we in Britain, at

that time, of things American and of business schools that one of my

friends, hearing that I was going to study what he called Commerce

at MIT, thought it must be the Montreal Institute of Typing that I was

headed for. I knew, however, that the Sloan School was one of the top

ten business schools in the world, that MIT was famed for its engineering

and science schools and that it had one of only two sabbatical

year programmes for high potential managers in mid-career, the other

being at Stanford University Business School in California. The director

of the MIT programme, one Peter Gil, sensibly suggested that the best

way for me to get to know the programme would be to participate as

a normal student. Thus it was that I joined fifty large crew-cut American

male executives – no women then – for a year of full-time management

study.

I remember thinking that there must be, in the Sloan Library, the

secrets of good management, that the scholars and researchers there

must long ago have found out what worked and what didn’t and that

all would soon be revealed to me. I felt that I had been deprived, during

my ten years in Shell, of all the accumulated wisdom that must lie on

those shelves. After all, if there were such a thing as Management

Science, presumably there would be scientific laws and rules. I was to

be grievously disappointed. I read endless hypotheses that tried to

explain why people and organisations behaved as they did, but no

proofs. I ploughed through secular sermons, case histories and books

of tips, but remained confused rather than enlightened. Managing a

business, or any organisation, I came to see, was more practical art

than applied science. Yes, there were some useful disciplines, as in any

art form, but what worked best could not be wholly determined in

advance. Every situation was different. The actors, the motives, the

resources, the constraints were never the same.

The discovery came, unexpectedly, as a great relief. It meant that

ingenuity, imagination and character still had an important part to

play. The world of organisations was not firm and fixed like a piece of

engineering. An organisation was more like a mini society, one in which

anything could change or be changed. Not that that inhibited the

teachers of the Sloan School from trying to reduce the management

process to teachable formulae. It was my first blinding insight – that

schools, at every level, prefer to teach what can be taught, rather than

what needs to be learnt. It was to colour all my future thinking about

education.

Economics was a staple subject of our first semester. I was not

expecting to be troubled by the subject. I had educated myself in

economics at Shell and had worked as a business economist for a time,

both for Shell and in the interval between leaving Shell and going to

America. That was until we took the examination at the end of the

semester. It was a multiple choice examination paper, which, the

professor irritatingly informed us, had been marked by his ten-yearold

son, who had only to check our ticked boxes against the crib. I

scored twenty-three out of one hundred, the lowest in the class. I was

shocked. The problem was that I had ticked the box ‘none of the above’

in too many instances, believing, as I saw it, that the correct answer

often depended on the circumstances. In time I learnt to play their

game, if only to ensure that I got the degree, but I disliked the oversimplification

and reductionism that was involved. It was only later

that I myself came to see that you have to oversimplify things sometimes

in order to begin to understand them. Only when the basic

frameworks are established can you add in the qualifications and

complexities. Perhaps, I now think, it was injured pride rather than

undue simplification that triggered my annoyance.

The basic rules, as the professors defined them, were complemented

by case studies, in which we were presented with piles of data about

a business situation and were required to discuss what we saw as the

problem and what to do about it. These were useful exercises in analysis,

in sorting out the wheat from the chaff in the accumulation of information

and in trying to formulate a way forward. It was, for me, a new

and exciting way to study, with real problems as the meat rather than

pages of a textbook. My worry, however, was that the case studies

inevitably passed over one of the main problems of real life, the actual

collection of the data, including, particularly, the assessment of the

individuals involved. The case-study classes also suggested, by implication,

that the analysis was key and that implementing the decision

was secondary. Too often, however, I have found that knowing what

one ought to do in a situation is easy; it is the doing part that is tough.

But that, of course, could not be tried out in the classroom, so it, too,

was seldom discussed. Fascinating though these classes were, I

worried, with my future role in mind, that it all made management

look easier than it really was.