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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.


Chris Bourke said...

Eloquently put, and as true on the other side of the world as it appears to be in Britain: in government departments and in private (ie, public) companies. Let's call in some consultants for "change management"..

Steve Lake said...

I think there's some truth in this but it does come dangerously close to the fallacy that was in vogue some years back which centred around bringing people into government who had run successful businesses. The thinking being that if you could make BP work then the same skills should apply to running the country.

But this only stands up if you consider the business of government to be nothing more than the effective management of the existing system.

Call me an unreconstructed idealistic old leftie (as indeed many do) but I still feel there's a place for vision and ideas and even (gulp) ideals in politics.

Which is not to say business leaders don't possess those qualities but they are only focused in one area - making profit - whereas running the country surely demands a more rounded approach.

Of course many of the previous generation of senior Labour figures emerged from the union movement - something which seems to have dried up completely (Prescott perhaps the last?). Which is why I have a sneaking regard for health secretary Alan Johnson who at least seems to have had some proper jobs.

gunnerboy said...

Its really not the MBA that's to blame. I have one and its nothing more than a general degree in business which gives a reasonable grounding in many of the basic disciplines - an entry level qualification used by business to sort wheat from chaff in world where everyone's got an undergraduate degree. The problem is that the banks then took so-called MBAs (usually the ones with good levels of numeracy (the mathmeticians and scientists usually)) and made them do sums which were too hard for the human mind. So, lets blame science and greed.

dolly said...

I agree completely about the MBA culture being a significant contributory factor to the current chaos. In trying to do and explain "sums which were too hard for the human mind" my experience is that the MBAers develop a language that nobody else in the room fully understands. All revolutions start with language. All dislcoations start with dislocated language.

And they are such arrogant sods.

gunnerboy said...

I think you'll find we are not all arrogant sods. Lots of us simply get on with life and never mention it again and DON'T end up working for banks. We get everywhere and not everywhere is messed up. Your arrogant sods are the product of bank culture - believe me I worked in one BEFORE I got my MBA (now ganifully employed manufacturing actual things and keeping my jargon to myself).

John B said...

@gunnerboy AIUI it was mostly physics and maths PhDs doing sums that were too hard for human comprehension, with MBAs working in support & sales.

robram said...

Agree with a lot of what you said, but there's an interesting feature in the Launch issue of Wired in the UK about the 'man who caused the recession'.

Basically, one very mathematically-intelligent man came up with a formula to work out the risk of lending people money, but didn't claim it could be extrapolated over large numbers of people and an entire market.

Basically (and clearly I'm paraphrasing here), what then happened was that lots of greedy opportunist bankers saw a way of making a fast buck and the sub-prime market was born which spiralled and spiralled before imploding.

The intelligent guy never claimed his original formula, but it was 'obviously his fault'.

By the by, I've never really worked out how to quantify whether someone's genuinely clever or intelligent.

Anonymous said...

A friend summed up his experiences with consultants to me by saying 'they ask to borrow your watch and then tell you the time.'

office pest said...

Consultants - my own favourite summary would be:

"Like seagulls - they fly in, swirl around your head, make a lot of noise, steal your food, swirl around you some more, crap on you, then fly off again."

I'm not bitter though.

Andre Carlos Raposa said...

Is it not the case that everything is just too complex to be managed? (See
I have a friend who told me, years ago, that he was in charge of marketing "for Europe and Africa". In those days I was teaching English to classes of up 15 teenagers, and that was enough to wear me out, thank you very much. My friend didn't see the joke when I asked what he did in his spare time, but I do remember that he eventually paid a high price for the workload. The company remains healthy.

trail of bread said...

I generally dislike the consultancy business - and I am one. But I work for myself and can do things my way. There is a value in a new pair of eyes, and someone who has relevant experience. The big consultancy model is dishonest at best, and a scam at worst. And I know too many technical people who got MBAs to make themselves "commercial" as opposed to, you know, actually doing the job of selling stuff (or buying, or marketing or whatever).