The MT Diary: Howard Davies

A nation of David Brents; snake-oil charmer; ID crisis for Labour; butter-fingered Lions.

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Last Updated: 31 Aug 2010

The dirty secret of Britain's economic miracle is that our productivity per hour is 20% lower than in France and Germany, and 30% below the US rate. Since we work more hours in a year than the French and Germans, we end up with a similar GDP per head; but the Americans work longer than we do, as well as more effectively, so they are richer, on average.

If we better understood the reasons for these differences and correct our inefficiency we could clock off an hour earlier each day. So the LSE's Centre for Economic Performance has been working with McKinsey to find the answers.

Some of the initial hypotheses, such as our poor investment record and lower skill levels, explain only a small part of the difference. Recent work has focused on management. Is it true that British firms are less well managed? Are we a nation of David Brents?

In manufacturing, which lends itself better to this type of analysis, the answer is yes. British management practices - training, work organisation, performance measurement and management, incentive structures, communication etc - seem markedly inferior. They explain a lot of the productivity shortfall against the US in particular. Manufacturing plants owned and run here by foreign firms are just as good as in their home countries, so it's not the workers' fault.

Why is manufacturing management weaker here? It's not obvious, but one suggestive fact is that, in British business schools, not a single manufacturer appears in the top 10 favoured employers. In the US, three out of 10 are in manufacturing; in Germany six out of 10. So are all our top managers in retail, or finance? We now plan to find out, with a similar survey in other sectors of the economy. We'll find some good British managers somewhere, if it kills us.

One element of the American management mix that we are now importing in large quantities is ... snake oil.

You know what I mean: those motivational gurus in the evangelist tradition, who offer an afternoon session in the Albert Hall that will change your life, at the derisory price of £1,395 per person (plus VAT).

So I was thrilled to encounter an Englishman, Chris John Jackson, selling a domestic version of the product to US audiences in New York. 'Jackson's Way' is the latest surefire route to personal and business success. The essence of the message is simple: most people and things in life are entirely pointless. Only a very few are pointful. Retain that insight, and you've got it made.

The audience on East 59th Street took a little while to clock that Jackson was not quite as he seemed. He won last year's Perrier award for stand-up comedy at the Edinburgh Festival. But they caught on eventually, and were as convulsed as I was by his slide show and key 'takeaways'. If Jackson comes to a training centre near you, do not miss him. He could change your life.

Talk of pointless ideas brings the Government's ID cards Bill forcibly to mind. The apparent public popularity of the idea may not survive the scrutiny it will now get in Parliament, especially in the Lords. While the civil liberties arguments will get a good airing, cost is likely to be the hottest button. When you hear that the plan is for a centrally run, government-maintained database with 60 million files, the words billions and overrun leap on to the page.

I suppose even the Home Office can see that this is their Achilles heel, which must be why they reacted so sharply to a major study by a large group of academics, co-ordinated by the LSE, which put the likely cost per card at more than twice Charles Clarke's estimate. Indeed, the researchers were accused of producing figures that were 'mad', of fabricating evidence, and of political bias: and all that before the report was even published.

It bodes ill when the Government is not prepared to listen to reasoned argument even at the start of the process.

They are clearly running scared, in spite of their whipped majority.

Those who call this Labour's plastic poll tax may be on to something.

Talking of man-made disasters, the Lions' performance in Wellington, which I had the misfortune to witness, was right up there. A lifetime supporting Manchester City has taken me to many character-building sporting events, but this was special.

The whole city was taken over for the day by 20,000 Lions followers, every one in a replica top: our numbers awesome, our singing superb, our Steinlager capacity world-class, our hard-currency spending power enough to boost New Zealand's annual consumer spending figures measurably. We had the master of spin, too, in Alastair Campbell, and the world's prime motivational coach in Clive Woodward, the Chris John Jackson of the rugby world and indeed of £100-a-head sportsman's dinners from the Grosvenor House to the Inn on the Park. Just one thing was missing - a team able to handle that funny-shaped ball without dropping it whenever invited to do so by the Men in Black.

After the game, we moped around town, ending up in The Backbencher, a political pub opposite Parliament. When I tell you that we cheered a Gallic try in the Australia/France game shown later you will get an idea of the mood of despair. It's probably just as well that Campbell did not show up to tell us just why we had really won. He just might have been invited to go back home to sell the plastic poll tax.

- Howard Davies is the director of the London School of Economics.

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