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Wednesday, April 29, 2009

Cleverness is overrated

This Australian Broadcasting Corporation programme traces the roots of the economic crash to the rise of MBA culture, which valued decision making over in-depth knowledge of how a business works. Somebody points out that George W. Bush went to Harvard Business School where the prized skill is to read a 20-page report and then make a decision. That's how the Iraq War was started.

Many of us have been in companies where we've seen firms of consultants introduced at eye-watering expense to point out how savings could be made and business processes streamlined. In most cases you could predict what they were going to say long before they said it. Some of what they say is true but impractical. Some of what they say is practical but not in their hands. Some of what they say is the kind of nonsense that plays in a presentation and won't bear a minute's scrutiny in the outside world.

The main point of outside consultants is to come into an organisation, say the unsayable and then retreat to a safe distance. This catalytic function is often undervalued and can even work if the business remains in the hands of people who have a long-term understanding of which levers operate which functions. That's what they call "domain knowledge".

Which brings me to government. The last twenty years have seen the emergence of a governing class who have little or no experience of the key management skill, which is organising people to make something happen. The previous generation gained this skill either in industry or the armed forces. People like Gordon Brown, David Miliband, Harriet Harman, Nick Clegg, George Osborne and David Cameron are all former academics, journalists or PRs. William Hague went straight from Oxford to a short career in management consulting via an MBA. Barack Obama has ascended to the highest office in the world without having had even one day's experience in actual government. These people's key tendency is to legislate and then wait for the world to behave. They are all frighteningly clever people - which rather assumes that clever people make the best governing class. They don't always.

I have had enough experience in and around the upper reaches of companies to know that their kind of Oxbridge cleverness is, except in the smallest of doses, surplus to requirement. What's needed is shrewdness, judgement, an ability to concentrate and, most important of all, a mastery of the possible. If you follow the thesis of this programme we arrived in the present pickle thanks to a load of clever people in business who thought they could change the world by moving a few columns of figures. There's some truth in that. What's even more worrying is that the clever people in government purporting to be able to get us out of it by a little quantitative easing here and the postponement of a few spending projects there know even less about how the real world works. I think they're all about to be found out.