management blog

Now that the Kraft takeover of Cadbury is going through, the inevitable has happened. Chairman Roger Carr, chief executive Todd Stitzer and chief financial officer Andrew Bonfield have all announced today that they will be leaving the company.

We should not be too sentimental about this development. This is usually what happens after takeover battles. But it is a reminder that there is always a cost to these transactions that is not always factored into the much haggled-over price. A lot of experience, know-how and expertise is about to leave the building. And this may well not be the last of the departures.

It is one of the reasons why I remain a bit sceptical over the long-term prospects for and value of these mega takeovers.

It is almost impossible for me to get to the end of a conversation with a manager these days without the concept of doing “more with less” coming up. It is the new battle cry in business, and in the public sector too.

There is an obvious logic to it. Customers (or users) want more, and businesses and service providers have to try and offer it. But how to do it, without driving the organisation into the ground?

There are obviously no easy answers. But there are some obvious pitfalls. I have looked at this subject in my regular Tuesday column today.

Just a short P.S. to my column from last week on negotiating. On Sunday night the TV film “Mo” was shown on Channel 4, the UK network. It told a pretty remarkable story of the popular British politician who played a key role in establishing the devolved Northern Irish assembly, formed after the ceasefires called by the IRA and other paramilitary groups, and the formal acceptance by the Irish state that the consitutional status of Northern Ireland could only be changed with the consent of the majority of the Northern Irish population.

The film told a dramatic story well. Mowlam was an unconventional, spontaneous and uninhibited figure. What she knew, but had not told anyone outside her inner circle, was that she was suffering from a malignant brain tumour. (The public story was that her tumour was non-malignant and treatable.)

Mowlam’s doctor, who was interviewed as part of the research for the film, has made the following fascinating point. Perhaps Mowlam was such an effective (if unconventional) negotiator because she knew her time was short. There was an urgency to her work.

Not only that, but the side-effects of her illness and drug treatment may have made her more outgoing, less inhibited, and more likely to take risks.

It is a curious thought: the on-again, off-again, fraught peace process in Northern Ireland was given a big boost by a negotiator who may not have been completely in her “right mind”.

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.