Oh, how I wanted to hate this book.* That grating note of injured victimhood: the very title sets your teeth on edge. Yet another attack on the baby boomers. As if it was their fault they were born in the explosion of fertility that followed the most horrific war in history – in which many of them lost family and almost everyone someone or something precious. As for the optimistic aspirations of the 1960s – at least they had some. And guilt at having (eventually) bought houses and signed up (the lucky ones) for pensions? Grow up, get a life, get a job!

By the time I finished Ed Howker and Shiv Malik’s book, I was still boiling – but not at them. I still think the baby boomer angle is sensationalist and unhelpful: generations are too slippery to be useful units of analysis, let alone blame (as one cross friend said to me on his 46th birthday: ‘What about us? Our parents are going to live to 100, and our kids are still at home because they can’t get jobs or houses!’).

Above all aiming at their grandparents deflects attention from the real culprit – which the thrust of their case makes abundantly clear. What they eloquently trace is the consequences of a breathtakingly foolhardy 30-year (not 60-year) experiment in dismantling the state and individualising responsibility that has led straight to the debt crisis we face today.

As the authors note, this was a deliberate political project. Dazzled by the hard-edged arguments of Chicago monetarists, Margaret Thatcher (who hated the baby boomers) and co-ideologues in subsequent governments acted out the belief that the state wasn’t just inefficient: it was hostile to the individual. In this view, public service was an oxymoron, public employees of all kinds pursuing their own interests at the expense of those of citizens (think Yes, Minister). Since the latter could be relied on to know what they wanted, the argument ran, let’s get rid of the former and allow the marketplace – an instant information processor, in contrast to the hopelessly clumsy proceses of democracy – to coordinate needs and provision without bureaucratic interference. Even better: since markets are efficient and tastes constant, there was little need to plan for the future at all!

In a wealth of charts and tables, Howker and Malik lay out the price of this institutionalised short-termism for three things that matter most to young adults: jobs, housing and inheritance. These chapters are urgent, surprising and enraging. They show how at every turn human beings pirouette around rigid economic theory as effortlessly as foreign footballers past dim English defenders. In housing, they demonstrate how the great council-house sell-off and deregulation have bequeathed us a housing stock and tenancy regime (respectively poky, expensive and insecure) that meet the needs of buy-to-let investors but not those of young adults wanting a home. In jobs, the dropping of full employment as a political goal has been just as counterproductive. Far from being a consequence of Labour welfarism, the ‘benefits explosion’ that George Osborne is now trying to rein in is the direct result of Thatcherite deregulation – the counterpart to rising unemployment and, even more striking, a race to the bottom in employment in which more and jobs, particularly for young people, are so badly paid that they have to be supplemented by handouts from the state. Subsidising skinflint employers now accounts for a large part of the £90bn benefits budget.

As the book shows, abandoning collective responsibility for the future had other dire consequences, notably the crumbling of the apprenticeship system and the casual shrugging off, still proceeding, of pension obligations (let alone career). Free university education went the same way. Paradoxically, Conservative and New Labour governments that lectured the 1960s generation so sternly about living within today’s means were being as profligate with tomorrow’s as a flash City trader on his third bottle of Bolly. Unlike Norway, which quaintly funnelled North Sea oil revenue into a sovereign wealth fund for collective benefit, we blew it. Likewise the £60 bn proceeds of privatisation. And no, as our authors point out, the unleashed private sector proved no better at investment than the public, chief executives quickly twigging that the simplest way to win City kudos (and lavish bonuses) was to slash investment, research and jobs. Meanwhile, like a desperate gambler, governments have thrown around off-balance-sheet IOUs like confetti. Through the PFI, capital projects worth £56bn will end up costing £267bn.

Labour Treasury chief secretary Liam Byrne’s cheeky note to his coalition successor that the cupboard was bare was no joke. There’s nothing left to sell or pawn. Howker and Malik are right to dig through that flippancy to expose how successive governments have bet (and lost) the farm on a barren economic formula. This month’s savage cuts are payback not just for bankers, but for three decades of voodoo economics. We should applaud their forensic skill in exposing the rarely discussed assumptions than have led us where we are, and in setting out the consequences in concrete terms. Perhaps not surprisingly, they are less convincing in putting forward remedies, however. It will certainly take more than the mild doses of social enterprise and employee ownership that the authors suggest.

Yet it defies belief that that a nation with Britain’s resources should be going backwards in terms of simple basics that matter most to most people. To change that, it’s not the fringe manifestations of capitalism that have to shift, but the brutal and unrealistic economic credo at its heart. Putting forward a political programme that does that is the real challenge for the jilted generation – and one that the baby boomers, forgiving the brickbats, will support all the way.

* Jilted Generation: How Britain has Bankrupted its Youth, Ed Howker and Shiv Mali, Icon Books: London 2010

This article was published in Financial Times Business Education magazine, 25 October 2010. To read the article on ft.com, click here

This article was published in Financial Times Business Education, 20 September 2010. To access the article on ft.com, click here

THOSE OF a timorous disposition may want to avoid Enron: The Smartest Guys in the Room. Most Hollywood horror is ultimately comforting, since you can tell yourself it never happened. Not so the events recounted in this blood-curdling, neatly constructed documentary on the rise and fall of the notorious Houston energy giant, culminating in the world’s biggest bankruptcy.

As the film progressively reveals, principally through the mouths of the protagonists, they really were as bad as they seemed. We see the hubris (one of the shell companies set up to shelter the firm’s mounting losses was called M. Yass – OK, move the full stop to the right), the self-serving and the rampaging greed. In retrospect, though, what should send shivers up every spine is that if Enron and Arthur Andersen were business’s Twin Towers (40,000 jobs and $100bn of capital were lost between them), the fundamentalism that brought them crashing down was not some external malevolence: the enemy was, and is, within.

At one level, Enron was a microcosm of the dotcom extravaganza, a one-company bubble of its own. All the ingredients were present: within the firm, leaders who believed they could outsmart anyone or anything, and products that became increasingly disembodied from reality (from energy to futures and markets: at one stage it planned to sell weather) outside the firm, political support and willing believers – ‘useful idiots’ in both academic and financial worlds who took at face value everything the firm told them and eagerly talked it up.

Once the bandwagon started to roll, Enron became a model of self-sustaining momentum. Everyone was dazzled by the honeypot. Investors scrambled over each other to pile in. The top US investment banks, Wall Street’s creme de la creme, enthusiastically subscribed to the loss-hiding schemes, no questions asked. Laxer accounting rules? Regulators, perhaps mindful of chairman ‘Kenny Boy’ Lay’s political connections, were happy to oblige. Lawyers and auditors – the latter well enough aware of what was happening to shred the offending documents in panic when the balloon burst – were far too dependent on the gravy train to even attempt to apply the brakes.

Enron was a bubble in another sense. Disconnected from reality by both its conviction of invincibility and its fantasy accounting, and unchecked by guidance from the top, Enron employees behaved as if they were in a world of their own. Just how perverse this world had become is shown in one of the film’s most disquieting sequences where Enron traders are overheard laughing and boasting about their efforts to disrupt California’s energy supplies in 2000. The famous blackouts that year were not caused by shortage of capacity or poor regulation – they were caused by Enron, which drove prices (and profits) up by as much as nine times by shutting down power stations and creating artificial shortages. Caught on tape, one trader exults at the forest fires sweeping over the state, crowing ‘Burn, baby, burn!’

It may be significant that it took two women to make the first small punctures in this testosterone-inflated balloon – Fortune reporter Bethany McLean (one up for journalism here), who mildly asked if the company’s stock was overpriced, and Sherron Watkins, the Enron employee who undertook the dangerous job of informing the company emperors that they weren’t wearing any clothes.

Although Enron bosses used considerable ingenuity in their attempts to disguise the true state of the figures, in retrospect the most striking thing about their drive to auto-destruction is its utter pumped-up, fanatical single-mindedness: business as extreme sport.

Enron was the most extreme corporate monument to shareholder value ever erected. The entire system was geared to keeping the share price up. On the carrot side, the incentives for doing so were vast: even in the last months executives were collecting bonuses of tens of millions and cashing options for hundreds, even as they exhorted lowlier employees to invest their retirement savings in company stock (which was later pillaged in a desperate attempt to buy time). On the stick side, the system was ‘rank and yank’: every year all employees were graded one to five, and all the fives were fired. Fifteen per cent had to be fives.

In a culture formed by the sack on one side and a pot of gold on the other, it’s scarcely surprising that employees stopped at nothing, including shutting down California (which is now suing for $6bn compensation), to keep the quarterly numbers moving up. After all, their own greed could be, and was, justified because it was all for the shareholders.

But we should know that. In systems where incentives are sharp enough and the moral compass deliberately disabled – what’s good for shareholders is good for the company is good for me – that’s what happens. In that sense, to get where Enron ended up didn’t require management to be deliberately evil; it just required it to take what most MBAs learn at business school and pursue it to its logical conclusion.

The Observer, 7 Ma7 2006

BEHIND THE fiasco of last year’s vanishing Revenue and Customs disk lies an everyday story of outsourcing folk. You can imagine how it went. Senior HMRC manager to junior manager, on telephone: ‘Hello? Sir Humphrey here. The National Audit Office wants some numbers on families receiving child benefit. They don’t want sensitive stuff – names, addresses, bank accounts – just the basic figures. Can you get it off to them?… Oh. Why not?… You mean we don’t have anyone here who can remove the personal details?… Yes, I know we outsource data management to EDS, but surely – well, never mind, get EDS to do it then… What do you mean, it’s beyond the scope of the contract?… How much?… Good God! OK, just send the complete disk, then. Let the NAO desensitise it.’

Behind this story is another. The reason the extra charge was so high – reportedly thousands of pounds – was only partly that the outsourcer had its customer over a barrel. More fundamentally, many customers drive such hard bargains upfront that outsourcers can only make money through extras and small print that makes contracts heavily back-end-loaded. ‘If it’s not a fair price, something has to give – either quality or cost,’ says Geraldine Fox, of Compass Management Consulting.

HMRC ought to be a star exhibit in the inquiry currently being conducted by economist DeAnne Julius into the pounds 44bn-a-year market in outsourced government services, ranging from IT and payroll services to prisons, and how it can be made to function better.

Of course, ‘make or buy’ decisions have to be made in any business, and apply to services as much as manufacturing. But it’s hard to resist the feeling that Julius is addressing the wrong question. Her remit assumes that outsourcing is the right thing to do, and the route to efficiency is doing it better. Yet the real issue is how to make public services work better as a whole, rather than the outsourced part of it. In this larger issue, as we should know by now, outsourcing is often an irrelevance and a distraction, the wrong answer to the wrong question.

HMRC handily epitomises some of the most obvious pitfalls. For starters, when a service is outsourced, the accompanying know-how usually goes with it – even for such simple things as removing information from a database, or how to keep a hospital ward clean and infection-free. Since it’s impossible to specify all eventualities in a contract, such indirect costs are never counted, and costs of non-standard items always exceed predictions (and budget). In many cases, exasperated users end up creating internal specialist groups to fill in the outsourcing gaps, thus negating the reason for doing it in the first place.

Another casualty of the outsourcing decision is the ability to manage the function. IT and cleaning still have to be managed. Rather than tough bargaining at the procurement stage, ‘to get value from outsourcing you need a top-notch governance group – and they are as rare as hen’s teeth. It takes smart customers to get good deals,’ says Fox.

Alas, in most cases the emphasis is reversed. In their determination not to be ripped off, and meet fierce individual cost targets, buyers rely heavily on aggressive, legal-led purchasing teams focusing on short-term contract prices rather than the long-term needs of the business – an approach almost guaranteed to be self-defeating. What looked an attractive deal in year one, already looks a good deal less so by year three. ‘To get deep starting discounts, organisations are signing seven-, eight- and even 10-year deals,’ says Fox. ‘That’s consistently bad practice – the economy will change, the business will change, and you’ll be locked in. Some organisations will be paying 40 per cent over the market rate by the end of the contract, and for antiquated processes. That’s not a good place to negotiate from.’

It’s disappointing, she says, that after three generations of IT outsourcing, organisations still make the same mistakes – believing they can get rid of problems by outsourcing them, underestimating the management overhead needed to make contracts work, and overestimating cost savings. Indeed, with companies panickingly squeezing suppliers as recession bites, this round of mistakes may be bigger than ever.

At the heart of outsourcing is the Fordist faith in mass-production: specialisation, division of labour and economies of scale. But while the formula worked for Adam Smith’s pin factory, the diseconomies of scale – in the shape of massive demoralisation and labour turnover – were already becoming apparent by the time of Ford’s Model-T.

HMRC, and the vast shared-service factories being imposed on local authorities and other public service providers, are today’s equivalent of Ford’s River Rouge plant. Behind the automated document handling and batteries of computers sits a rusting, outdated hulk of a management model – and no amount of outsourcing can change that.

The Observer, 30 March 2008

’THIS IS a solution?’ marvelled Stanley Bing incredulously on business website TheStreet.com at the prospect of a new wave of bank consolidations.

’Didn’t we see what happened to Citigroup and Bank of America? Aren’t both now being deconstructed due to unsuccessful, if not heedless, acquisitions? Haven’t empires from Rome to ITT fallen into rubble as a result of getting too big, too fast?’

He has a point. Most people assume that sorting out the banks is a technical and financial matter – deleveraging, rebuilding reserves and writing down toxic liabilities. But that’s just the half of it. What has been grossly neglected is that, even when that’s done, many banks face the mother of all challenges on the management front – making business sense of vast, sometimes shotgun, acquisitions carried out in the most hostile economic conditions of our lifetimes.

Consider: at the best of times, mergers are worse business, and harder to do, than managers think. A third fail, and 80% fail to live up to expectations. The financial brainboxes are no better at it than the plodders: a recent City poll on the worst banking mergers of all time identified such turkeys as Citibank-Travellers, Credit Suisse-DLJ, Wachovia-Golden West and Commerzbank-Dresdner Bank – then put RBS-ABN Amro and Bank of America-Merrill Lynch, whose consequences are still ramifying, on top of the list.

’Value destruction in financial services isn’t new – we just can’t afford it any more,’ says Dustin Seale, managing director of the Europe arm of Senn-Delaney Leadership, a consultancy specialising in corporate culture.

The risk, he fears, is that the perceived remedy makes ultimate success harder to achieve. Thus, while banking is moving towards being smaller, more focused, and more conservative, the entities being cobbled together are bigger and more complex than ever. Banks were once too big to fail are today’s mergers creating organisations that are too big to save?

Bank mergers are not just ordinarily difficult. The credit crunch capsized all the assumptions on which they were based. RBS’s Sir Fred Goodwin had a good record of making acquisitions work, even expensive ones, but ‘Fred the Shred’ is toast, and his merger rationale and style volatised with him.

His bank’s strategy of globalisation no longer makes much sense, believes Andrew Campbell, director of the Ashridge Strategic Management Centre and co-author of a book called Smarter Acquisitions. Lloyds-HBOS, now relabelled Lloyds Banking Group, is a more coherent unit focusing on the UK retail market, but even here the merger will not be plain sailing integrating the workforce and senior managers of a fierce rival, part of whose identity is bound up with the rivalry itself, never is.

The very success criteria on which the mergers were predicated, and on which the current leaders rose to the top, have reversed overnight. The macho City culture of individual achievement and self-promotion has become the problem but moving to a culture where words such as engagement, trust and self-determination can be heard without provoking gales of laughter is a monumental management task – made more monumental, points out Ian Johnston, a Senn-Delaney partner, by the fact that the colossal bonuses that were used to paper over other cultural discontents are no longer available.

The sense that the world revolves around the banks has to yield to a humbler recognition of the need to serve customers and build relationships. Some banks will make wholesale changes in what they actually do (leadership, recruitment, reward) as well as what they say. Others will find it harder to get beyond spin. Yet, as Seale points out, those that do can contemplate an opportunity as enormous as the challenge.

Without exception, the big banks have been lamentable at dealing with retail customers. This is partly because their minds have been on sexier types of business, but much more because they have remained obstinately wedded to the cost-driven mass-production methods that render them brainless – and, incidentally, have taken General Motors and Chrysler to the brink of extinction.

The first major bank to use the opportunities of the merger round to renew itself by providing an honest, transparent and intelligent service to high-street customers will be greeted with tears of joy. OK, I exaggerate a bit, but renewing the link with customers is the best way for the banks both to make amends for the monstrous errors of the past few years and to proof themselves against foolishness in the future.

As they consider how to avoid a new wave of merger-driven value annihilation, bank leaders can at least comfort themselves with this unexpected thought: for once, as Seale points out, ‘no one wants them to fail’.

The Observer, 1 February 2009

THE BANKERS have claimed another victim – this column. Cost-cutting as a result of the worst media recession in a lifetime means that Observer Management will disappear next week.

I wish I could say the job was complete. When I joined the paper in 1993, the brief was to make visible and discussable something that was intangible, taken for granted, and, for better or worse, affected us all. That was the easy bit. The column instantly drew a rich and argumentative response that ensured a constant supply of issues to address that meshed directly with readers’ own.

But from this exchange emerged a second agenda item that soon overtook the first. Across both public and private sectors what readers experienced as ‘management’ was pervasively problematic. It just wasn’t what it said on the tin. Wherever they looked, readers found a glaring discrepancy between ‘official’ and ‘unofficial’ versions, between talk and walk.

The talk was empowerment, shared destiny, pulling together: the walk was increasing work intensity, tight performance management, risk offloaded on to the individual. The talk was flat organi sations: the reality, centralisation and a yawning divide between other ranks, required to minimise their demands for the greater good, and a remote officer class whose rewards had to soar to motivate them to do their job. Employees were the most valuable asset – until costs had to be cut. Repeated mis-selling and other scandals demonstrated it certainly wasn’t the customer who was king.

Somewhere along the line the edifice of management had been turned upside down – it was shareholders who had become monarch, their courtiers lavishly rewarded managers whose MBA courses had taught them to manage deals and numbers, not things or people. Management had suffered a reverse takeover. Finance annexed reality, cost ousted value, the means became the end.

This is the story that this column has reflected. Shamefully, it reached its explosive climax on the watch of a Labour government that, betraying its entire history, not only encouraged ethics-free market-led management principles in the private sector but imposed them wholesale on the public sector. The credit crunch is man(agement)-made – management, not market, failure. So is the Soviet-style targets and inspection regime, locked in place by lucrative IT contracts with private suppliers, that has made the public sector systemically less capable than it was 12 years ago, despite the billions spent. The emails of rage and despair from public-sector workers at what has been done to their profession have to be read to be believed. And still ministers don’t get it. The elevation of the grisly Alan Sugar to ‘enterprise tsar’ and the timorous, frozen-in-the-headlights approach to City reform in one sense are as risible as MPs’ expenses – but they are also a terrifying denial of reality.

Of course, institutional stupidity and failure to take responsibility are characteristic of all top-down organisations – in fact, they’re two sides of the same coin. Hence the reductio ad absurdum , also charted here, of gleaming hi-tech organisations too witless to stop themselves auto-destructing. What is there about the credit crunch and the environmental one hard on its heels that is not to understand? The management model that has run us for the past 30 years, like the discredited economic theories (rational expectations, efficient markets) to which it cringes, is bust, dead, finished – a mortal danger to us and the planet.

So where do we go from here? Optimism has been in short supply over the past few years. Yet this is not because of lack of alternatives (There Is Always An Alternative) so much as the arrogant certainties of the ruling doctrine that have pushed saner voices to the margin, at worst making unorthodoxy unpublishable. Perhaps the collapse of orthodoxy will make it easier to salute and cherish such exceptions: companies that refuse the dominant logic, such as John Lewis academics who risk their careers by engaging with big issues (would Darwin, Freud and Marx be employable in today’s universities?) courageous public-sector managers who find ways of circumventing the draconian targets regime to do what they know to be right.

As the 2009 Reith lecturer Michael Sandel noted last week, norms matter, because they so easily become self-fulfilling. It shouldn’t need saying in the middle of the biggest management meltdown in history, when the stakes are at their highest, that the debate about the norms that should govern a post-financial form of management must go on, even if not here. For my part, what I’ve learned from an amazingly rewarding 16 years will find its way into a book that, in honour of readers who are the joint creators, I had always thought of as The Observer‘s book of management – although regrettably, and not of my doing, now without the capital ‘O’.

THE BANKRUPTCY of General Motors was a defining moment – in effect a symbolic final line under the management century that began with the invention of mass production and was brought to an end by the series of explosions that blew up the financial sector.

The latter, ironically, was supposed to be the future, a weightless economic and employment successor to limping manufacturing. Only it wasn’t. Meet the new economy, same as the old one except on steroids, which just intensify rather than dampen down the destructive effects.

GM’s demise comes after the longest death scene in history. Its heyday was the postwar period up to the 1970s, when, to a degree unmatched before or since, this one company was management. Peter Drucker, the discipline’s first and most respected chronicler, wrote the seminal Concept of the Corporation after observing the company for two years in the 1950s, and its pioneering multidivisional structure – with a separate division corresponding to each market segment, from Chevrolet to Cadillac – had a huge influence on the shape of other large firms.

In contrast to the maverick entrepreneur Henry Ford, who had little time (or need) for management, GM was the embodiment of what the great historian Alfred Chandler dubbed ‘the visible hand’ – the revolution that substituted rational administrative co-ordination for market forces to drive productivity up and costs down systematically. In the 1950s, GM was the biggest and most successful company in the world.

But its days were numbered as the car industry became global and world supply started to outstrip demand. GM’s formula took Ford’s mass production to new heights. It built so many cars so cheaply that even if they weren’t what buyers really wanted, it could shift them by cutting prices and advertising heavily. But just as GM had undercut Ford’s management model, GM’s was destroyed. Japanese companies figured out how to make cars in small quantities equally cheaply and of higher quality and, being much more attuned to what customers wanted, they rarely had to discount to get rid of surplus inventory. Economies of flow and market pull replaced economies of scale and marketing push.

Since the decline really set in during the 1980s, GM has staggered from one crisis to another. Automation, changes at the top, new brands – nothing has turned the tide some of its brands now have negative value. But this is not surprising: GM’s management model is as obsolete as fins, chrome and whitewall tyres. It has been kept on the road only because, like the banks, it was too big to be allowed to run off it.

All companies are collections of subsystems within a bigger one, which in turn operates within the ecology of the market as a whole. At its height in the 1950s and 1960s, GM’s parts all worked in harmony with the market. Since then, the market has radically altered, and the set of accountabilities that worked in the past has driven them ever further in the wrong direction. Neither the parts nor the whole are now functional, and a small GM is a contradiction in terms barring a miracle, the only future for the surviving marques (probably Cadillac and Chevrolet) will, like Opel and Vauxhall, be in the bosom of an acquirer.

It would be nice to think that with its chief protagonist humbled, the GM management model could be buried, the page turned and a new one started. Unfortunately, it has developed a potent half-life in the services sector. With the development of computers and the internet, financial services and communications companies have been sold a vision of services mass-produced like consumer products, with a virtual supply chain linking low-cost suppliers around the globe.

Alas, the template is usually pure GM. The emphasis on economies of scale and low transaction costs achieved through specialisation and standardisation exactly parallels the obsessions of the bankrupt US carmaker. The result is white-collar factories like HM Revenue and Customs, the Department for Work and Pensions and the Probation Service, which are as inflexible, error-prone and customer-unfriendly as any car assembly plant.

But the mass-production analogy is false. Services can and should be systematised , not industrialised. The idea of mass production leads up a blind alley back to the past. The wide variety of service demand means that the standardise-specialise-automate formula can’t work. Services can be produced economically, but they need well-organised humans, not computers, to do it.

Services are the most likely place to develop a post-industrial management model, one that is more sensitive to customers than mass production, more responsible than the financial services industry, and less wasteful than either. To do that, though, the first imperative is to dismantle the legacy of GM. RIP

As Larry Elliott noted in The Guardian recently, since the 1960s the liberal state has been stood on its head. Whereas 40 years ago markets were framed by strong checks and balances, while within the law individuals could, and did, tell officials to mind their own business, the reverse is now true.

Individual behaviour is regulated by armies of surveillants enforcing guidelines on drinking, smoking, parenting, loitering, dog-pooping, refuse disposal, even school catchment areas, to make the world safe for unregulated markets, particularly financial ones.

Much the same has happened in management. In the 1960s there was less management, and although it was more paternalistic, it was (mostly) reined in by convention as well as stronger trade unions and collective bargaining (there’s a blast from the past). But managers grumbling about the ‘right to manage’ and leader writers fulminating about workers’ demands now seem from another world. In the ‘flexible’ economies, there are now, by design, very few constraints on management action. And, boy, have they used their freedom.

In the wholesale outsourcing of risk from the organisation to the individual, first to go was responsibility for careers. Next overboard was pensions, with companies seemingly competing nearly as hard to shore up their finances by closing schemes as by winning new customers. At the same time, financially trained managers increasingly looked to employees as their first resort for costs to cut. And a tightly yoked performance-management regime of targets and inspection (aka appraisal) made it clear that at work, as at home, people were not to be trusted, needing sharp sanctions and incentives to get them to perform.

In both cases, the cure was worse than the illness. After a couple of practice runs, free financial markets duly obliterated pension pots and savings that individuals had put aside after being booted out of company schemes, with governments utterly impotent to intervene except in the futile role of Humpty-Dumpty. Meanwhile, expecting the corporate officer class to look after the interests of the ranks proved as vain as the unions always said it would be.

Globally, the share of income going to capital has steadily risen at the expense of labour. At a human level, what this means at the coalface was revealed in a rich and fascinating report from the TUC last week. Life in the Middle (www.tuc.org.uk/touchstone/lifeinthemiddle.pdf) shows that the real middle Britain – the stratum of clerical and administrative workers, supervisors, lower-tier man agers, small entrepreneurs and skilled manual workers – has lost out sharply over the last 30 years compared with almost everyone else.

Thus the pay of median earners (pounds 377 a week) has gone up far less than the average – 60% versus 78% – and the gap has widened where 30 years ago the UK was one of Europe’s most equal societies, it is now among the most unequal. Middle-income Britons are less likely to have a university degree, a final-salary pension, or shares and savings, and more likely to have been unemployed than those just above them on the income scale. Four out of 10 think they are in a lower-status job than their fathers.

How all this has happened is not just economics. In their bold, original and agreeably opinionated The Puritan Gift , brothers Will and Kenneth Hopper argue that up to the 1970s, US management (which the British gamely follows at one remove) was living on the strength of its Puritan inheritance, part of which (with idealism, mechanical aptitudes and unparalleled ability to galvanise energy behind a single aim) was a belief that the coherence of the collective was more important than any individual.

But the obverse of US willingness to live in the present is the ease with which it forgets its past. Managers abandoned true north in favour of ‘neo-Taylorism’ – quantitative techniques, ‘the cult of the expert’, of which the temples were business schools, and heroic CEOs. Raging self-interest and the malign influence of shareholder value did the rest as it did in the UK, where, lacking their own tradition and burdened by inferiority complex, UK managers were all too easy to drag in the same direction.

The Hoppers end on a note of qualified optimism. Just as the French had to go to the US to reintroduce resistant vines after their own had been wiped out by phylloxera, so the most thoughtful Anglo-US firms are relearning what they once knew from Japan, inheritor of the human-centred US tradition via Deming and others after the war.

The crunch reinforces the urgency of renewal, as does the scandal of MPs’ expenses, both egregious management failures that focus the plight and the fury of the TUC’s ‘sinking’ middle. A new tax and mobility agenda is the TUC’s remedy; returning management to its virtuous roots would do more.

The Observer, 31 May 2009

IN BB KING’s song Recession Blues, the singer is about to (guess what) lose his baby because he can no longer afford to give her what she wants. Won’t someone go to Washington, he pleads in the last verse, to ‘get me out of this misery’.

Powerlessness corrupts. As recession brutally reveals, helplessness is what a century of wage work and increasingly abstract, remote management has left increasing numbers of people with – and, it is now clear, not just the working classes. Hence the unprecedented wave of outrage at City bankers, financiers who casually offshore themselves to avoid paying for the wreckage they have brought down on others, and MPs with their tragically revealing expenses.

After anger, frustration and the realisation that the only people anyone is going to Washington to bail out is themselves, what then? Time to get on your bike and take your destiny in your own hands. Lynda Gratton’s new book, Glow: How You Can Radiate Energy, Innovation and Success , was written before the crunch, but many will find its subject – self-help in a globalised and corporate world – perfectly suited for the times, and the positive message of individual agency at least a pinprick of light in the surrounding gloom. Why do some people radiate energy and optimism and attract other people to their projects? Can such qualities be created? And how do you deal with a situation that suppresses rather than encourages them, as many companies unfortunately do?

These seem simple ideas, and some people have been put off by the heavy emphasis with they are presented ( Glow always capitalised and in italics, for example). But don’t be misled. Gratton is no frothy new ager. You don’t get to be a director of a major consultancy at the age of 30 by being soft-minded, nor to be a professor at London Business School, where she has for some years been grappling with difficult issues of management practice (which is what she is professor of), rather than theory.

Glow is in this lineage. Whereas her earlier book, The Democratic Enterprise , as its name suggests, explored the implications of freeing up the company as a whole, and 2007’s Hot Spots dealt with firing the energy and creativity of groups, Glow turns the spotlight on the ultimate unit of management, the individual.

Gratton concedes there are many self-help books – but most of them leave out the context. She thinks people need to be ‘much more adult’ about the employment relationship. ‘Many of us are going to have to work till we’re 70,’ she says. ‘Work is it. So you’d better find somewhere where it’s fun and interesting.’ If the context doesn’t allow the individual to flourish, cut your losses and move. Project work, enabled by technology, makes this more feasible, she suggests.

But it’s also about taking responsibility. In far too many organisations, management absorbs energy, sucking the life out of groups and work. Gratton argues that by co-operating with others, ‘jumping across worlds’ (really networking to multiply the number of options and sources of inspiration), and setting audacious goals, backed up by supporting activities, such as sharing information, conversation, and asking questions, it can be consciously generated. ‘ Glow is the small actions people can take that add up to something larger,’ she says. The collective result is what in her earlier book she termed ‘hot spots’, those teams or groups that mysteriously flare up, radiate heat and light – and all too often die away again.

Do ‘quiet’ ideas such as co-operation and networking stand a chance against the stereotypes of competition and get ahead at any cost (as in the hideous caricature of business that is The Apprentice ), particularly in today’s hard times? Isolated individuals face a perilous future in global competition, responds Gratton. The corporation on the other hand is all about combination – collaborating to do things jointly that are beyond the scope of individuals on their own.

As to how her approach works in practice, though this was not part of her research, a number of companies seem to embody the ‘glow’ principles almost exactly. One is WL Gore, maker of the hi-tech fabric in the new folding roof over Wimbledon’s Centre Court. There are no titles or conventional lines of command at Gore, where the only way of becoming a leader is to attract followers. If a project can’t attract people to work on it, then it doesn’t get done. The Brazilian company Semco runs on similar self-organising lines. Both are highly successful both are besieged by job applicants.

Of course, this is only anecdotal evidence. But, pace BB King, they and other co-operative companies suggest that fatalism is not the only response to a difficult world. If you accept you have a part in shaping an organisation you would like to work in – and would want your children to join – then behaving in at least some of the ways described in Glow would be a start.