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MANAGEMENT FROM MARS - THE NEW CORPORATE STRATEGY

No heart, no soul, no engagement - just the City and the numbers.

Author Robert Harris described Tony Blair's leadership as akin to being from outer space. This is not a bad analogy. Blair appears not to have engaged with his own cabinet, his own party or anyone except a small kitchen cabinet of intimates and of course, President Bush. His style appeared to have been intuitive and inspirational. He would respond to events and perceived opportunities by inventing instant initiatives without the least idea of how they were to be executed - what mattered was the moment and the instant credit he could garner from spinning to the media. The damage caused by this style has been spectacular. A more considered, involved and realistic approach would have brought vastly greater benefits for the vast expenditures on law and order; ("Take hooligans to cash-points and make them pay instant fines, introduce a national identity card"), the NHS; (Introduce 'choice' for consumers without an idea as to how to do it, pay doctors vastly more without any idea of how they needed to respond in order to increase effectiveness) and education (City academies and faith schools are the answer).
And in order to control things from the top, introduce layers of targets and reporting upwards, using data generated on the ground without the least idea of its accuracy, who was bending it or how.

If any of this sounds familiar, it should, because it is just the way that most contemporary FTSE 100 companies are run.

In a seminal publication, Financialisation and strategy, narrative and numbers, Routledge 2006, Julie Froud, Karel Williams and others from the University of Manchester have used their research to illuminate vast changes that have happened in the nature of corporate level strategy over the last 20 years.

In a nutshell, they vividly illustrate how the objectives of corporate strategy have moved from how to win in competitor markets to how to construct narratives and supporting numbers that will please the financial markets. The business of competing is relegated to division level or virtually ignored.
The Manchester group's findings exactly match with the author's investigations and direct experience at corporate level over 20 years. I participated at corporate level as the agenda moved progressively from how we could win in customer markets to how we could keep the City sweet. Most important, the very nature of corporate organisations shifted dramatically towards being set up to promote the image of the CEO and the company with the media and financial markets.
Directors with an operational bias (who understood the business) were progressively relegated to the back office. Corporate headquarters became virtual 'bubbles' floating ever further from the organisation that did the business and ever closer to the City. Public affairs, investor relations and finance became the key corporate functions, with the missions of supporting and promoting the CEO and communicating with the City and media.
The pressures on companies to do this are inexorable and nobody can resist them without risking being unseated.

It is the most important trend in corporate strategy of our times and until it is reversed, larger quoted companies will continue to under-perform and fail as they have been for 20 years. (See FTSE 100 in this site).