Philip Whiteley's Blog

January 26, 2012

Filed under: Uncategorized — felipewh @ 2:37 pm

One shouldn’t too often say ‘I told you so’, but sometimes the warning you issued was so strong, and so wilfully ignored, that the temptation is overwhelming. This year is the tenth anniversary of the publication of Unshrink, which I co-wrote with Max Mckeown. In the light of the subsequent heroic failures of the likes of Sir Fred Goodwin and Dick Fuld, it is interesting to reprise the following excerpt. Note too how fashionable it was to trash the collective German industrial model – an approach others are now scrambling to emulate. More excerpts to follow in this anniversary year, including a warning about risky mega-mergers.

From Unshrink, Max Mckeown & Philip Whiteley Pearson 2002:

Where the “Boss is Superhuman” is a truly damaging myth is where it becomes addiction to the notion of a ruthless, omniscient leader who eschews consultation and whose buccaneering sword can work miracles in our lives. The management writer Jeffrey Pfeffer has charted the dizzying obsession of investors and journalists with “hero chief executives”. Those who were aggressively opposed to trade unions were particularly feted. Whether or not they were any good was immaterial.

In business, the desire for a buccaneering hero who can rescue shareholders remains strong. Consider the following extract from the Financial Times, dated 28 November 2001:

“Josef Ackermann [at Deutsche Bank] wants to strengthen the senior manager’s role and turn it into something akin to a strong US-style chief executive. Executives say that he runs Deutsche’s investment banking division with an ‘iron fist’”

It adds: “The writing is on the wall for Germany’s traditional Vorstand [management by collective responsibility]. ‘The old consensus model is a hurdle to quick decision-making,’ says Dieter Hein at Credit Lyonnais Securities. ‘A strong CEO and clear lines of executive responsibility are a natural next step’.”

The plea of the executives referred to in this report is “give me more power because I want it”. One would imagine that, given this enormous political pressure to rip out checks and balances on the influence of chief executives, that there is a body of scientific knowledge demonstrating that an autocratic boss is better for shareholders, for staff and for society, than others. Those of us who hear the negative voice in our mind “Others know more than me” can assume that the writer of this news piece is onto something that we are too dim to understand. But the truth is, he isn’t. There isn’t such a body of knowledge. Management thinker Henry Mintzberg has been charting what actually happens to hero chief executives and their companies over the last ten years. He finds an extraordinary rate of failure. Moreover those with MBAs, the highly prestigious badge of executive respectability, were no more likely to succeed than others.

At this point, a reader may think: “Ah but that doesn’t mean that Germany has solved all the problems and that every company should be run by a committee.” This is true, but it misses the point: it focuses on structures, which are unimportant, rather than people, who are important. Of course it is better to have one good chief executive than five mediocre ones. But it is also better to have five good chief executives than one mediocre one. Leadership, teamwork and achievement are not the result of formulae or structural diagrams that can be drawn on pieces of paper. They result from mutual respect, allowing each other to grow. They are a function of people.” Unshrink by Max Mckeown & Philip Whiteley, (c) Pearson 2002.


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