Talking to outsiders helps the troubled to see and face reality, writes Robert Heller.
Whatever happened to ...? That's a question which future students of the 1980s will be asking about many names, great in their brief season, which have already vanished from sight. More of today's living dead will yet be following in the forlorn footsteps of British and Commonwealth, Parkfield, Polly Peck, MCC, etc. But whatever happened to the multitude of companies that never were that famous or notorious, but still suffered the torments of the last decade?
Thanks to Inside Story, in the April issue of Management Today, the story has now been told of five firms whose joint claim to fame is that Sir John Harvey-Jones, the former chairman of ICI, shot their troubles in a justly celebrated TV series. The chief surprise is that only one of the five had flopped: Tri-ang (and its seams were visibly parting during his visit). The fortunes of the other managements which Harvey-Jones advised had prospered mightily over the two years.
Yet, as I wrote at the time, "with the greatest good humour, the trouble-shooter relentlessly exposed muddled minds, wishful thinking, basic incompetence, inadequate delegation, hopeless misinformation and management which is neither production nor marketing-led, but floundering in some morass in-between. Many of his studies, what's more, seemed equipped by neither nature, nurture nor experience for their posts - middle or major."
Mismanaging misfits could hardly do so well, surely? Did the programmes accentuate their negative points to the exclusion of positive qualities? Or did the Harvey-Jones hand miraculously turn the tiller in the right direction? As Inside Story observed, this could be said of three successful survivors. But the fourth, Morgan Cars, had rejected his advice - with some contumely, at that.
Harvey-Jones admits himself that the sharpness with which he slated Morgan's extreme conservatism in management had "quite shocked" and "rattled" the two Morgans, father and son. As he writes in Troubleshooter (the book of the series): "I get the feeling they had expected me to endorse their methods, and come up with a few practical tips which they could easily implement for increasing production to 10 cars a week."
Note the words "they had expected". For another common thread binds these five firms. Each had volunteered for the trouble-shooting inquisition. It's an utterly safe bet that none of the mighty failures of the 1980s, even the honest ones, would have stood for this trial by television - and one of the five, the former Apricot Computers, was a public company, at that.
Its chairman, Roger Foster, had enjoyed a starry reputation. The programme glaringly exposed the weaknesses of a strategy which rested on persevering with lame manufacture of hardware in tandem with a vigorously profitable business in services and software. This lumbered Foster with two managing directors and a dire threat to the viability of the entire company.
Harvey-Jones left the scene with Foster still in thrall to "a stubborn part of him which remains glued to the bit of Apricot which manufactures computers". When the glue came unstuck, and Apricot sold out its manufacturing to Mitsubishi for £39 million, the shining prospects envisaged by the outsider were realised by the renamed ACT. The impact of arguing the wrong case against a right outsider must have been considerable.
That's the true moral of the trouble-shooting. Individuals are commonly advised to unburden their troubles to outsiders, not because the latter will necessarily produce the solution, but because confession and dialogue help the troubled to see and face reality.
If the first necessity is to call for outside advice, the next is to respond in some positive way. Churchill Tableware reacted to the troubleshooter's attack on its minuscule spending on design and its muddled management style in an especially forthright manner. The changes quintupled profits in a year - and even included "hiring marketing consultants and taking them and senior management away for two days" to a country hotel.
That's especially hilarious, given that, in the chaotic discussion programme that ended the series, one of the managing Roper brothers pointed accusingly at the seats where a few consultants sat and smote them hip and thigh. The reaction is typical and not unhealthy: creative friction must arise when consultancy really pierces to the core of a troubled business.
Managers need their egos to manage effectively, as well as badly. Few people enjoy having their failings pointed out in private, let alone on national television. But the point remains: all the firms invited the investigation, and in doing so, consciously or not, showed awareness that they couldn't cope with their troubles without assistance from outside.
Which leaves the case of Morgan. Like John Major, who won the general election at the wrong date, with the wrong economy, and the wrong campaign, Morgan, as managing director Charles observed, "must have been doing something right". True, any marketing consultant can see why the four or five-year waiting list reportedly shot up after the programme. TV advertised a truly Unique Selling Proposition: the only car made in an old-fashioned way left on the market, an anachronism that represents living nostalgia. It's embodied by the Morgans, who "cling to the idea that they have a mission in life to provide cars at a certain price to a certain type of person whom they happen to like" - and who doesn't mind waiting several years for a new car.
Scarcity is a potent marketing weapon for so long as it lasts. But even the Morgans, who two years ago were grappling in hamfisted manner with their abortive plan to raise output from nine cars weekly, came under the outsider's influence to some extent. That presumably explains the fact that output did rise by 10% in the year after the programme, lifting profits by half. In the interim, the younger Morgan had familiarised himself with modern production methods and begun work on a plan to raise output by "a number of changes to the layout and sequence of production" (which were sorely needed). You can, after all, be old-fashioned without being wilfully inefficient: the Morgans merely face the familiar enough management problem of not throwing out the baby with the bathwater.
The grave fear is that two severe recessions within a decade caused too many leading UK companies to do exactly that - sacrificing products, facilities and investment simply to stay alive. Better acceptance of outside troubleshooting might well have led these leaders in better directions - emulating the spectacular turnround of Harvey-Jones's greatest despair, the Shropshire Health Authority. But then, that happened after a change of top management: a prospect which could explain why the outsiders, or their advice, are too often kept outside.