This is a dark day for management journalism. Everybody’s favourite case-study, Toyota, has been hit by severe technical problems. Some of their accelerator pedals are not working properly. And this from the ultimate Total Quality Management company, the Kaizen Queen, the zero defect champions.
So: they are human after all. They have pushed too hard for growth, cut costs too aggressively, and paid the price. This is not the Toyota way.
But Akio Toyoda, the company’s chief executive, is on the case. He has declared that Toyota has fallen into the trap described so well by Jim Collins in his latest book How The Mighty Fall. Toyota has strayed, and engaged in the “undisciplined pursuit of more”, as Collins, and Toyoda, have put it.
You can read more about this story in Saturday’s FT. In the meantime, the search for the perfect management case-study continues.
UK medialand has a new story to gossip about: Adam Crozier has been appointed the new chief executive of ITV. The company has taken eight months to fill the post. Chairman Archie Norman says the company has conducted a worldwide search, and taken up 15 references on its new appointment.
And yet eyebrows will be raised at this news. Mr Crozier made some bold moves at the English Football Association (his first major CEO post), challenging the old “blazers and ties” culture and relocating the organisation from its old Lancaster Gate HQ to fashionable Soho. His appointment of Sven-Goran Eriksson as England manager was initially hailed as a masterstroke, especially after England defeated Germany 5:1 in September 2001.
But when he left the FA did not seem a very happy place, the organisation was subsequently torn apart by scandal, and there was a sense in which several important nettles had been left ungrasped.
A similar story could be told about his tenure at the Royal Mail. Yes, there have been some brave attempts at modernisation, and improvements in performance. But he leaves an organisation in some disarray, with horrible industrial relations, and an unattractive management culture.
If you were tempted to make a bet about ITV’s future, you would have to wonder how long Mr Crozier will manage to survive in what will be a very challenging position. No doubt he will be getting a very good salary in this new post. If he does not prove successful, public cynicism over top pay and the merry-go-round in CEO jobs will only increase.
First President Obama turned to the 82 year old Paul Volcker for urgently needed advice on banking reform. Now Sir Brian Pitman, the distinguished 78 year old former Lloyds TSB chairman, is going to return to high street banking as chairman of Virgin Money. And this after Stephen Hester, chief executive at Royal Bank of Scotland, admitted the other week that his parents were not short of an opinion or two on the way his industry is going these days.
In the UK, the opposition Conservative party’s most plausible (and popular) spokesman is probably Ken Clarke, the 69 year old former Chancellor of the Exchequer. Certainly, he seems to inspire more confidence than the party’s current shadow chancellor, George Osborne.
Until fairly recently we were often told that youth was everything, and that the world would soon belong to the all-conquering Generation Y. Suddenly there is a bull market in grown-ups. The financial and economic crisis seems to have provoked many into seeking out “monuments of unageing intellect”, as WB Yeats put it.
And all this while the UK employers organisation, the CBI, is still arguing for the right for UK employers to keep a mandatory retirement age of 65 – in other words, the right to sack people at 65 whatever they may still have to offer. I wonder how much this stance really supports their members’ interests?
I was sorry to hear the news yesterday that David Smith, chief executive of Jaguar Land Rover, had left his post with immediate effect. I have met Mr Smith on a number of occasions, and found him to be a thoughtful, intelligent and committed boss.
He was under no illusion about the difficulty of the job he was doing. As an economist, he understood how dire market conditions are. The bonus season has not come in time to boost his company’s sales and maybe give him a bit more job security.
There has been speculation that unhappiness over the closure of a plant in the midlands lay behind the sudden departure. The truth will come out eventually. The bigger point is that the auto industry itself is just in a pretty horrible state. More reliable, longer lasting cars put people off from buying new ones. And the instant depreciation in value of a new car makes the idea of buying one new seem pretty unwise.
We will keep buying cars, with their internal combustion engines, for a little while yet. But not in anything like the numbers the auto makers needs to be sustainable. This is not an industry with a great future. We need rapid innovations – better hybrids, and maybe even something completely different…
Excitement in the business school community today as the FT’s global MBA rankings are published. And there will be great satisfaction in Regent’s Park, London, as London Business School comes out on top.
Competition among the world’s business schools is intense, which must be a good thing. And the publication of these tables gives some of the schools an excuse to celebrate a little.
But the challenge facing the schools is not just about the rankings. There is also the question of legitimacy. In the post-crisis world, we will look to the B-schools to lead the debate on the future of business and finance.
I have written a piece to coincide with the publication of the results: a challenge to the schools to prove their continued relevance and effectiveness.
Interesting story by my colleague Michael Peel in today’s FT. The “magic circle” legal firm, Allen & Overy, is introducing more flexible working, in part to try and retain more of their talented female lawyers.
That is my second post today on leading organisations that are trying hard to keep their best people.
In the media we call that a trend. But there may be some substance to this one.
Congratulations to SAS, the North Carolina-based software business, which has been chosen by Fortune magazine as its “best company to work for” in 2010.
I met SAS’s founder, Dr Jim Goodnight, in London five years ago. An impressive man, he was pretty unsentimental about business. To him it just made sense to treat employees well and provide generous benefits. The company HQ, just outside Raleigh, the state capital, is a campus where all sorts of personal services (hairdressers, laundry, fitness classes and so on) are available.
Dr Goodnight told me it was simply more efficient to try and retain more good staff through this sort of benign management. Interestingly, SAS is a privately-held company. (It is in fact the world’s largest privately held software company.)
“Being private gives us the ability to be more long-range oriented, instead of having to produce those quarterly numbers,” Dr Goodnight told me back then. “You can make yourself look really good for a quarter if you want to: cut back on travel, cut back on investment, cut back on everything and the numbers will look good. But in the end over the long term that sort of behaviour is going to catch up with you.”
It seems to work. The 34 year old company had revenues of $2.3bn in 2008, and remains a leading player in the “business intelligence” market.
Scott Moeller, a former investment banker, now a professor at Cass business school in London and author of Surviving M&A: Make the Most of Your Company Being Acquired, has helpfully offered the following ten point plan to any manager worrying about his or her future in the wake of an acquisition. Worth thinking about.
1. Find ways to add value
2. Don’t rely on your boss – in a merger everyone looks out for themselves
3. Be patient – don’t make rash decisions about your role – but also don’t wait too long
4. Don’t be a complainer: be perceived as a team player
5. Expect change and don’t resist it: adapt to the new dominant culture
6. Use your network, both professional and social
7. Understand the new partner’s objectives, not just your own company’s
8. Promote your capabilities and accomplishments
9. Volunteer to serve on an integration team
10. Prepare a contingency plan
Subject to shareholder approval, the US food group Kraft will acquire the British confectioner Cadbury for £11.6bn ($19bn). It has been a long, tough and at times hostile process.
But this was actually the easy bit.
My colleagues at FT Alphaville estimate that Kraft will have to borrow $7bn to pull off this deal. An aggressive programme of cost-cutting will be required to help make that sort of increased debt affordable.
Not only that, but this proposed deal will bring together two very different organisations, with cultures and histories that appear to have little in common. A lot of management time will now be taken up trying to integrate the Cadbury business into the Kraft empire. A lot of good Cadbury people will probably be tempted to leave.
The fact remains that the majority of big M&A deals ultimately fail to create value for shareholders. Alleged synergies never materialise. The disruption, and added costs incurred by the transaction, wipe out many of the financial benefits of doing the deal in the first place.
No business has a right to exist for ever. Cadbury directors have a legal duty to recommend this offer if they believe it is the best option. Kraft shareholders will be relieved the battle is over, and perhaps impressed that the corporate leadership has achieved its immediate goal.
But the really hard work starts now. There are no guarantees that this deal will turn out to have been a good idea. And more than enough precedents to suggest that the reverse may be true.
Take a look at this rather interesting website, which tells the story behind Domino’s ambitious attempts to rebuild its reputation as a high quality pizza deliverer.
Just before Christmas Domino’s announced that it would be launching a new recipe pizza, confronting head-on the growing criticism of its tired and sub-standard offering.
In 2010 the company is marking its 50th anniversary. It was very smart PR to open up to the critics in this way, acknowledge Domino’s failings, and publicly set about trying to improve. In fact it has been a two-year-long initative, as you will see in their video clip.
Is this how it has to be for marketers in 2010? No spin is the new spin? The company embraces and even amplifies the negative comments, to show it has listened and has taken its customers seriously.
Of course, it is still quite a hard sell. But it is a rather disarming hard sell.
It will be worth watching how Domino’s performs this year in a recession-hit US. If they are successful we may start seeing a lot more advertising campaigns like this.