Goobye and good night, Boris Johnson, by some distance the most disastrous UK prime minister of our lifetime. His premiership will go down as an object lesson in leadership and management failure. 

Being prime minister is one of those in-the-public-eye jobs where, as the Queen pertinently put it, you ‘have to be seen to be believed’. Unfortunately, in Johnson’s case the visibility that he always courted does him no favours, because what you see is someone who has only to be seen not to be believed. 

Any post of this nature has two components: leading and managing. Peter Drucker, who was quite terse about leadership, maintained that it and management were poles on the same spectrum. Some roles, or people, had larger leadership requirements than others, which were more about management than leadership. What you couldn’t be is just a leader or just a manager. A leader without grounding in the management of the business loses touch with its reality and with it relevance, eventually undermining the organisation. Likewise a manager sans leadership qualities can offer no motivational energy or forward momentum.

For Drucker, for whom managing yourself was a prerequisite for managing anything else, a leader has to play to his or her strengths. Johnson got by during Brexit because he didn’t have to manage. He could leave that to Michael Gove and Dominic Cummings. In the 2019 election, trading on the successful effrontery of Brexit, he just had to segue to ‘getting [insert task here] done’, and the electorate believed him, or at least gave him the benefit of the doubt, because his cheek, and his ability to speak a different kind of language from conventional politicians, seemed to suggest the possibility of change – any change. 

Which they did – but unfortunately not in a good way. By the time of the pandemic, it was clear that Johnson was incapable of managing anything, particularly himself, and that in the absence of strong principles of his own he was taking his tactical cues not from his avowed hero, Winston Churchill, but from the erratic and impulsive Donald Trump. Witness his flippant initial dismissal of the seriousness of the disease (quickly reversed when he fell ill himself), then in the chaotic response.

The Tory party bears some responsibility for Johnson’s failure. ‘Cakeism’, Johnson’s preferred policy option of having his cake and eating it, was always a delusional solution for the party’s divisions over Northern Ireland and Europe, and the economic demands of its new and traditional voters. But it was an alluring one. The sheer carelessness of what ensued, though, was all his own: the cronyism of the contracting and the furloughs during the pandemic, the massaged figures around testing, the bold initiatives followed by hasty U-turns, were already in plain sight during his time as London mayor – remember his here-today gone-tomorrow bendy buses and the never-used second-hand German water cannon? – and in the made-up quotes and loose way with facts that he deployed in his previous career as a journalist. More concretely, £37bn spent on testing ‘that failed to make any difference’ and £4bn literally going up in smoke as useless PPE is re-routed for the crematorium are hardly trivial entries in the management ledger.

With hindsight, it seems predictable, indeed inevitable, that he would be brought down by another episode of monumental carelessness. Leadership, Drucker said, was a means to an end. When the end was Brexit, Johnson had followers to put himself at the head of (Drucker’s other leadership qualification), and a team of believers who were easy to motivate.

But by the time Partygate broke the dubious glow of Brexit had long since gone, leaving the illegal parties as not just the latest in the line of poor management decisions, but the encapsulation of the entire dysfunctional culture that Johnson trails around him like a miasma – the blithe insouciance about constraints that apply to other people, and that anyone with a gramme, or should we say ounce, of management sense would have taken into account before clinking champagne glasses in the garden of number 10; the subsequent denials, evasions of responsibility, brazening out of conviction for a criminal act and sacrifice of junior staff, all straight from the Trump playbook; and above all, betrayal of the fact that his only end, and the only end of his supine cabinet, was to stay in power.

That self-serving purpose was increasingly obviously out of sync with the extravagant and damaging means, such as proroguing parliament or repeatedly trying to change the law if it stopped him doing what he wanted, that he used to fulfill it. The cynical attempt to replay the Brexit card by weaponising the Northern Ireland protocol, the attention-seeking if welcome display of support for Ukraine (a desperate appeal to Winston), and repeated attempts to invoke divisive culture wars (the BBC, the National Trust and statues, immigration – the list goes on), were the same ploy in more recent disguises. 

In the end, with no credible purpose or management qualities to steady him, and no reserves of trust to draw on, Johnson simply ran out of leadership resources. With every week bringing a new example of his astonishing lack of personal judgment, Carriegate and Pinchergate being the final dismal straws, support gradually drained away, whether among officials (Lord Geidt, the second independent ethics adviser to throw in his hand, and the chairman of the Tory party), voters and belatedly, in an abject flood, his own cabinet, until suddenly he was bankrupt.

Leadership is to a large degree situational: Churchill, a notorious chancer as a young man, was redeemed by being handed a supreme purpose by Hitler, to which he was mostly equal, only to be handed his cards by voters after the wartime episode was over and a peaceful purpose took priority. Although Johnson’s day was mercifully shorter, the mayhem he caused will be hard to repair, and his graceless exit, blaming everyone else for his own character failings, was entirely consistent with what had gone before.

Toxic to the last, Johnson’s final act of anti-leadership was to comprehensively poison his succession. He had already purged his cabinet of its more competent and calmer heads. He now leaves his successor, already discredited in the public eye for not having acted sooner to remove someone whose character flaws should have disqualified him from ever holding serious office, a noxious populist agenda of Brexit (not just unfinished but barely begun), culture wars and tax cuts, which can only worsen the country’s dire economic problems. The first commandment of leadership is to leave the organisation in a better state than you found it. Johnson’s legacy is to have done the opposite. In evaluating people, Warren Buffett once said, ‘you look for three things: integrity, intelligence and energy. And if you don’t have the first, the other two will kill you.’ It is a fitting epitaph for Boris Johnson’s leadership tenure.

It’s the modern quest for alchemy. Every so often, a commercial idea is touted that quite hard-headed types persuade themselves is immune to the pull of financial gravity. Remember the dot.com frenzy in 2000 – the weightless economy and all that? Then, in the years before 2008, complex financial derivatives were credited with having abolished risk. Even Alan Greenspan bought that one, being ideologically incapable of believing that banks and trading outfits could act against their own self interest. Today’s new thing is, or maybe make that was, cryptocurrencies, which now transpire to have no inherent value as an asset class or hedge, are violently climate-unfriendly and of real use chiefly for buying drugs and arms, and money-laundering.  

The longest alchemical run of faith so far has been achIeved by the digital platforms – Amazon, Uber, Airbnb and their Silicon Valley ilk. These too seemed revolutionary at the time. Instead of, you know, the boring old way of figuring out a good way to make money and then using the returns to do more of it, what if we do the reverse: grow so big that we can’t fail and then figure out a way to make money? If another company acquires us, we might not even have to do that! I exaggerate slightly, but not much. Backed by enormous amounts of VC capital, ‘blitzscaling’, as LInkedIn founder Reid Hoffmann dubbed the new business model, soon became Silicon Valley’s startup mode du jour. 

The idea behind blitzscaling is that when turbocharged by network effects, rapid growth can generate such benefits to scale that the winner takes all – at which point it can turn its mind to capturing the rents of its unassailable market position. Of course, getting to that position costs, big time, but that didn’t seem to matter in the 2010s, when the problem wasn’t finding money so much as something to invest it in. So California is now home to a large number of startlingly-valued high growth companies that not only don’t make any money, but maybe never will, as Airbnb coolly informed investors at its nonetheless successful 2020 IPO.

Yet the glory days of profitless growth may be numbered. The reason is simple and without appeal: inflation. Money is no longer free, and some scared investors even want it back. To appreciate the implications, consider Uber, the poster child for the magical new business model. 

Uber was conceived as the embodiment of Silicon Valley fundamentalism, in particular the technological solutionism that holds that all societal and economic problems can be solved by networked digital technologies, if only the sector’s entrepreneurs are freed up to exercise their basic right to unfettered innovation. Founder Travis Kalanick played the part of Ayn Randian entrepreneur to the full, moving fast and breaking so many things that investors finally intervened to oust him in 2017 to limit the potential damage to Uber’s IPO prospects caused by repeated claims of sexual harassment*.

The scale of Uber’s ambitions was, and is, mind-bending. It currently claims to cover 10,000 towns and cities worldwide, has 3.5 million drivers on its books and carries 120 million active users at its peak. It had to be: nothing less than global domination of the taxi sector would give it the market clout to jack up prices and start paying back its costs. These are equally extradordinary. In its 12 years of operations, Uber has lost more money faster than any other new venture in history. Since 2015, when it started publishing figures, net losses have reached an astonishing $20bn, and they are still rising.  

Inflation is never welcome, but today’s upturn comes at a bad time for Uber. Many of the company’s blitzscaling assumptions have turned out to be wrong, or at least exaggerated. Network effects are much weaker than expected in the presence of fierce competition for both riders and drivers everywhere (all major ridesharing companies are unprofitable), and economies of scale in Uber’s asset-light model much less. Uber doesn’t have a technological lead – Oracle’s Larry Ellison reportedly declared that his cat could have devised a better app. Nor have regulators and city authorities had the grace to roll over in the face of Uber’s daring enterprise, instead insisting at least in some jurisdictions that it take responsibility for externalities like emissions and congestion, and treat its drivers more like employees. Finally, unexpectedly slow progress in bringing autonomous vehicles to reality (in the last two years Uber has ditched its own vaunted driverless car and vertical lift-off aircraft units, along with bikes and scooters) makes it unlikely it will be able to eliminate drivers, and thus its biggest expense, any time soon, delaying world domination still further**.

Inflation only intensifies the smell of burning money. For more than a decade customers have enjoyed rides subsidized by investors at well below cost. They may come to regret it: in that time many smaller, ironically more efficient operators have been driven out of business, reflecting a perverse flow of capital from more to less productive use (another thing to make Greenberg scratch his head). In this situation Inflation is a quadruple whammy – making customers poorer, drivers more demanding and debt dearer at the same time as the capital subsidies threaten to dry up. No wonder that in a recent memo to staff CEO Dara Khosrowshahi declared that the days of plenty were over. ‘Some initiatives that require substantial capital will be slowed,’ he said. ‘We have to make our unit economics work before we go big. The least efficient marketing and incentive spend will be slowed. We will treat hiring as a privilege and be deliberate about when and where we add headcount’.

Put more brutally: the blitzscaling business model is dead, with a stake through its heart. As the FT’s Sarah O’Connor tweeted: ‘Had to LOL at [the above quote] from Uber, a company whose entire strategy has been the opposite since it began’. Financial gravity has reasserted itself. Turns out ‘losses’ really are losses, and money really doesn’t grow on trees. Uber is only tangentially a tech company, and even its disruptiveness isn’t new, being based on a failed semi-monopoly play worthy of the last century’s robber barons rather than something original. So one more alchemical experiment bites the dust, leaving customers in some areas – food delivery, for instance, as well as taxis – worse off as it clears. Yet the hope of a free ride springs eternal: another one will be almost certainly be along soon enough.

*17 July 2922 Recent revelations in the leaked ‘Uber files’ show just how far the company was prepared to go in evading responsibility for its drivers, misleading regulators and secretly lobbying governments in order to get its way.

** In 2016 competitor Lyft’s CEO predicted that by 2021 most of its rides would be in driverless cars, and that in many US cities private car ownership would be practically extinct by 2025.

Welcome to the new-look site. The new one aims to be more consistent and stable as well as easier on the eye than in the past. Pages should also be easier to read on smartphones and smaller screens from now on.

The whole archive has been transferred to the new site – more than 500 articles going back 20 years and more. We hope to classify the archive by subject in due course and from time-to-time will be making reading lists or collections around particular topics. In the meanwhile, please use the search box (which appears at the top of every page) which, we hope, will lead you to anything you’re looking for.

As ever, thank you for your loyalty, most of you over many years. Don’t hesitate to let me know any issues – and all suggestions welcome!

On the surface, the extraordinary story of the ‘P&O 800’ – the ferry line’s summary firing, without consultation, in March of its entire seafaring workforce and replacement with agency workers earning a fraction of previous wages – is a simple if extreme tale of management ruthlessness. But investigated further, it’s more complicated with that, showing up some of the deep contradictions in the UK’s recent economic history.

Pushing a point, you might call P&O’s actions Putin-style management – brutal, contemptuous of ordinary norms and indifferent to public opinion. As it happens, this is not the only link to Russia. Leaving aside the mechanics of the operation, the shamelessly hypocritical reactions to it are remarkably similar to those that greeted recent revelations about the involvement of Russian oligarchs in the UK economy. Just as Johnson and his ministers were shocked – shocked! I tell you – to discover the extent of the Russian penetration of British economic and political circles that they themselves had not just tolerated but eagerly encouraged over at least two decades, so now they found themselves appalled, disappointed, dismayed, angered and astonished that a large international company should dare exploit the skimpy employee protections, feeble worker organisations and wider institutional incompetence that successive governments have deliberately engineered over an even longer period.

True to form, ministerial protestations were undercut by the subsequent discovery that they had been informed of the sacking the day before it happened in a departmental memo helpfully explaining that the job cuts ‘would align [P&O] with other companies in the market’ and ‘ensure that they remain a key player for years to come through restructuring’; that they themselves had eportedly changed the law as recently as 2018, engaging companies to notify authorities of job cuts only in the country ships are flagged in, and not automatically the UK even if they are based there; and that a letter expressing official disappointment to the previous P&O chairman who had left last year.

The follow-up has been little better. It beggars belief that ministers still had no idea whether the law had been broken at the moment the P&O CEO was admitting to a parliamentary committee that it knew exactly what it was doing from the start and had gone ahead regardless. What on earth is an attorney general for? Finger-wagging that contracts with the ferry company and Dubai owner DP World would be reviewed hardly cut it as retribution (from which state-owned DP World and its investment in UK freeports have in any case been expressly exempted). Nor do Johnson’s suggestion that seafarers take court action themselves, or transport minister Grant Shapps’ threat that ‘many customers, passengers and freight will quite frankly wish to vote with their feet and, where possible, choose another operator’. DP World ‘must be quaking in their boots,’ observed Labour leader Sir Keir Starmer drily.

Whatever happens next, the government’s hopeless response to a ruthless coup leaves it between a rock and a hard place. On the one hand it can’t allow a large company to knowingly and deliberately flout the law – and say it would do the same thing again in a similar situation, to boot – and get away with it. But in that case it dares P&O, or more likely parent DP World, to cut the losses and shut the company down entirely, with the loss not only of the jobs of 800 unfortunate UK seafarers but many more dockside and in offices besides.

The oligarch and P&O crises that have now bubbled greasily to the surface wouldn’t have occurred without, respectively, Putin’s murderous Ukraine adventure, and the travel lockdowns brought about by Covid. But under the surface they share the same root: the increasinly servile nature of British capitalism. Oliver Bullough, author of the depressing and self-explanatorily titled Butler to the World: How Britain Became the Servant of Tyrants, Kleptocrats and Criminals, locates the origins of its latest avatar in Suez and the loss of empire in the 1950s, at which point the City of London was forced to find new ways of leveraging its tentacular international financial reach.

After financing slavery and the empire, its business model would now be as a broker to the rich, selling anything to anyone if the price was right: reputation, social standing and access to political power as well as extravagant mansions and trophy companies ranging from football clubs to posh hotels and iconic British business names – Rolls Royce, Bentley and Jaguar, the Dorchester, Grosvenor House, the Ritz and Savoy, Harrods and Selfridges, technology companies like Arm and Deep Mind, and, as of course we now know, P&O, alongside all the most famous premiership football clubs.

The unwelcome consequences are now erupting in all sorts of places. One was the embarrassing ownership of Chelsea football club. Another is the row over the P&O seafarer sackings. Yet while the government has made much of its efforts to track, trace and immunise the assets of ‘bad’ foreign money, there is suddenly a deafening official silence over P&O – even in May when the DP World chairman warmly complimented P&O’s management on the ‘amazing job’ it had done in restructuring the company. The silence may have something to do with the fact that state-owned DP World just happens to be the largest investor in UK ports, with huge terminals at London Gateway and Southampton. Given that, it may be unwise to count on the avowed culprits suffering more than a token slap on the wrist any time soon.

Meanwhile P&O itself, while back in action, has suffered a number of publicised operating setbacks, including breakdowns and ships being taken out of service after inspections by the Maritime and Coastguard Agency that identified a number of safety and other drill issues It can stand as an apt metaphor for post-Brexit capitalist Britain: corner-cutting, mercenary, unrepentant about breaking the law and its effect on public opinion, and, like the government, not going anywhere very fast.

In 2009, before I left The Observer, I was approached by a private intelligence agency with a story of a London court case concerning shady business deals by rich Russian businessmen. I never got to the bottom of the plot, which was basically a settling of scores between oligarchs, but just as intriguing was the broader narrative that underlay it: the allegation that a wall of Russian money was starting to bend out of shape the UK professional services sector, with potentially disastrous consequences for the integrity of British justice and the honesty of British business in general.

As well as corrupt deals, manifestations ranged from taxi drivers’ tales of lurid mafia-style parties in postcodes they swore they’d never take fares from or to again, London councils unable to take Russian high-spenders to court for multi-storey excavation of superhomes for fear of bankrupting themselves (what’s come to be called ‘lawfare’), to multimillion purchases of UK trophy assets such as newspapers and football clubs, Roman Abramovich leading the way with his purchase of Chelsea FC in 2003.

At the time, the ‘corruption’ seemed to be simply the collateral consequence of very rich people flashing around unheard of quantities of cash. With hindsight, it’s tempting to see it as something more deliberate and more sinister: a deliberate institutional softening-up as a prelude for the more ambitious Russian covert attempts to subvert UK (and indeed Western) democracy that would follow.

This has taken two forms. The first is the continued inflow of Russian money, encouraged by successive governments and only halted in the last few months by events in Ukraine, into London. Not for nothing has the capital earned the nickname ‘Londongrad’ and the City of London ‘laundromat’ for the red carpet laid out for wealthy oligarchs – 700 of whom have purchased fast-track UK residency for amounts varying from £2m to £10m – and the efficiency of the laundry service for their wealth provided by a thriving network of law, PR, property, banking and accounting firms as ‘enablers’. The tentacles extend deep into the political parties – Labour says that Conservative Party has taken donations worth nearly £2m from Russian sources, mediated by no less than its co-chairman. One estimate puts Russian investment in the UK at £27bn.

Whatever: by the middle of the last decade, The New York Times concluded that Russia was ‘ensconced in…British life, and has been for so long that, now, it does not draw much notice. It is just another part of the background scenery’. In 2020 Parliament’s Intelligence and Security Committee echoed: ‘Russian influence in the UK is “the new normal”’, adding that the current level of integration ‘means that any measures now being taken by the government are not preventative but rather constitute damage limitation’. Some go further. Reviewing Oliver Bullough’s unambiguously entitled Butler to the World: How Britain Became the Servant of Tyrants, Kleptocrats and Criminals, the FT’s sober Martin Sandbu noted that ‘America’s and the UK’s enabling industries… are plainly international security risks. It is mind-numbing that it should take a war in Europe to make politicians aware of this’.

In turn the seepage of Russian money and influence helps explain why, despite the probing of the US Mueller Report (widely ignored because it didn’t indelibly compromise President Trump) and the The Observer’s own indefatigable Carole Cadwalladr, the darks arts of fake news, obfuscation and manipulation that were unquestionably at work in the 2016 US presidential election and UK Brexit campaign were brushed aside as nothing special – indeed, just part of the scenery.

Which, as we now know, they were. But that was why they were so dangerous. And what made them so insidiously effective was the ubiquity and reach – both global and deeply personal – of the business plumbing those dark arts depended on: not just the local butlering services, but also at global level the social media platforms. It’s now abundantly clear that the Russians were far faster off the mark than the West to spot and exploit the opportunities they offered for serious political and social mischief. Less appreciated is the central part that advertising and marketing, the fuel that the platforms run on, has played, and continues to play, in furthering the mayhem.

As the outspoken Bob Hoffmann, author of the The Ad Contrarian Newsletter, told British parliamentarians last year, much online advertising would be better described as spyware, tracking users over every inch of their internet travels, the better to keep them online where they can be fed a steady diet of lucrative (for the platforms) advertising. In effect, it is targeted advertising, a $360bn (2020) market owned by Big Tech, that supports and stokes the fake news, distortions and pile-ons that are driving our societies apart as effectively as financial corruption.

Online advertising is notoriously both universally detested by consumers and riven with fraud – much of the money that goes in simply vanishes without trace. Yet the industry unforgivably resists reform of the surveillance marketing model that has been so expertly weaponised against us by unfriendly actors of all kinds, and politicians with their own axes to grind are slow to enforce it. Those who are now loudly demanding redoubled sanctions against rich Russians they have welcomed in the past should be aware that dubiously acquired wealth in the past is less than half the story: unless the business vectors that smooth the translation of money into political influence – ‘butlerisation’ and surveillance marketing – are disabled, the rot will continue to spread. In other words, it’s a business story as much as a political one. I wish I’d written it a decade ago.

Link to my article first published in the Financial Times on 21 April 2022

In a recent piece for the FT, Tim Harford bemoaned the underrepresentation of women in economics, particularly academia. Despite a number of women economists in high policy positions (Janet Yellen, Christine Lagardère), there has only ever been one female economics laureate (Elinor Ostrom in 2009, who showed that ‘the tragedy of the commons’ was not inevitable) and given the numbers studying it, women economics professors were much rarer than they should be. Harford cited one of the exceptions, Cambridge professor Diane Coyle, who observed crisply: ‘it is not possible to do good social science if you are so unrepresentative of society’.

This got me thinking. If that goes for economics, the senior social science, it’s even truer of management, its envious younger sister. While economists of course affect people indirectly, through their influence on high-level policy, how managers do their job is a daily factor for good or ill in every workplace (more people leave their job because of their relationship with their immediate manager than for any other reason, for instance). So it matters that in 2023 management theorists and practitioners are still using concepts and structures that were almost exclusively developed by men; and white men of a certain age at that.

The bias is reflected in the management literature. Bookshop selections, lists of ‘great management books’ and, I have to admit, my own 30-year, fairly randomly accumulated library are all overwhelmingly male. Or take management surveys and histories. From my bookshelves, the index of Stuart Crainer’s Key Management Ideas: Thinkers than changed the management world (1996) references 15 women against more than 150 men, and of the 56 names that make up his concluding ‘Glossary of management thinkers’ just three – Rosabeth Moss Kanter, Mary Parker Follett and Jane Mouton (co-designer of the management grid) – are women. Likewise in Art Kleiner’s Management Heretics: Heroes, Outlaws and the Forerunners of Corporate Change (1996). His long and otherwise notably diverse index yields just six women. Michael Mol and Julian Birkinshaw’s Giant Steps in Management: Innovations that change the way we work (2008), in an eight-age index likewise lists six women, one of whom is an economist, another the author of a single HBR article, and a third Margaret Thatcher. Needless to say, their bibliographies or lists of further reading are almost exclusively male.

To be clear, this reflects past history rather than today’s attitudes, and although dismaying may not be surprising. Management is the product of its origins and history, which in the case of today’s dominant Anglo-US version passes through the army, the church, particularly the Roman Catholic church, and slavery, all primarily male pursuits, as was 20th century industrial management (think of the obsession with management science). In Managing the Human Animal (2000), LBS’s Nigel Nicholson, writing as an evolutionary psychologist, spells it out. If among all possible alternatives today’s business organisations are hierarchical, competitive, goal-focused and specialised, it is because that’s what suits male motivations and aspirations. The world of business organisations, he concludes, ‘remains male in design, rationale and functioning.’

This might help to explain the conspicuous continuing male bias in positions of power, in both the corporate and business school arenas. It has shifted a bit in women’s favour during the pandemic, but while women make up 50 per cent of the workforce, in the US only 37 per cent of midlevel managers, 26 per cent of senior managers and five per cent of CEOs are women. In 2019/20, UK business schools employed more than twice as many male as female professors. This at a time when women have overtaken men in educational achievement – and are outscoring male colleagues in leadership tests. In one study, women were rated better leaders than men at every level and in every one of 16 leadership competencies except strategic vision – not just in the ‘soft’ areas such as building relationships and communicating that have long been associated with women, but also ‘hard’ domains (driving for results, championing change, analysing and solving problems) that have always been been assumed, by men, to be their preserve.

The sad conclusion is that apart from the American Mary Parket Follett (dubbed by Peter Drucker ‘the prophet’ and Gary Hamel the most important of all management thinkers), women have yet to leave their mark on official management histories.

But this may at last be beginning to change. Although not strictly scientific, it is perhaps a sign of the times that the Thinkers 50, a bi-annual ranking of the most influential management thinkers, has since its inception in 2001 moved from a near exclusively male makeup to gender equality. Last year for the first time the top 20 contained more women than men, and women – Harvard’s Amy Edmondson and Columbia’s Rita McGrath – took the top two spots. Women are also increasingly prominent at the annual Global Peter Drucker Forum (where I am editor). As in other areas, Covid may accelerate the upward trend. According to McKinsey, harrassed senior women have performed heroics in supporting employee well-being and diversity efforts in the last year, with little recognition. They will surely be involved in the radical workplace change that is well on the way in the wake of Covid, and the rethink of management that is urgently required for the post-carbon planet.,

As in economics, the growth in women’s influence in management research and practice is long overdue. But as they take stock they will not fail to note that their male predecessors have left them a mountain to climb in tying performance to purpose, internalising unacceptable externalities, and addressing the giant deficit of engagement, the epidemic of burnout and the unacceptable costs in health and mortality of oppressive and ill-designed work practices, to name but a few.

Joan Robinson, a contemporary of Keynes who is sometimes described as the first great woman economist, once wrote: ‘The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists’. Perhaps those wanting to demystify, and demythologise, today’s management should take that motto to heart.

• This is an earlier version of my recent FT piece – with a different enough starting point to make it worth putiing up, I thought

When GE announced recently that it was splitting itself into three, it triggered a rash of articles declaring the end of a defining chapter in corporate history, signalling among other things just ‘how far from favour the conglomerate form has fallen’ (FT).

Like many such obituaries (and these were far from the first), this one contains an element of truth: it’s just not the obvious one. It’s true that the capital markets don’t like industrial conglomerates such as GE. But they don’t like any companies that are badly managed, and since they think industrial conglomerates are badly managed by definition, the argument is circular. The reason they think they are badly managed (and therefore dislike them) is that sometimes and at some stage they are worth less than the sum of their parts – a crime against shareholder value – and therefore should be broken up and reallocated to managers who will put shareholders first. Of course the argument is self-reinforcing. When he retired, Jack Welch handed his successors a poisoned chalice in the shape of GE’s toxic financial services division. The longer it festered, the more GE fell out of favour, the more the vultures gathered, until the break-up became inevitable.

It may be that the break-up is in the best interests of the individual units (comprising what were GE’s aviation, healthcare and energy divisions). The best argument in its favour is the extraordinary transformation wrought in GE’s lowly appliances division since it was divested in 2016. The white goods unit, an also-ran in the US market, was ‘dying on its feet’, in the words of its CEO Kevin Nolan, when it was bought by the Chinese company Haier. Liberated (there is no other word) from its over-dominant parent, except in name today’s GE Appliances bears no resemblance to the old company, and the venerable GE brand, to which Haier cannily retained the rights, is now the fastest growing in the market. 

Driven by Haier’s ambition, that is obviously a win, one that in practice couldn’t have taken place within the old GE embrace (which is the real bad management). But for a less favourable de-conglomeration, consider the sad case of ICI. For long the bellwether of British industry, postwar ICI was was an international science-based powerhouse whose policy of channelling returns from its mature chemicals business into innovative new ones was responsible almost single-handedly for developing the skills and knowhow behind the UK’s most successful 20th century industry, big pharma. As John Kay relates, it took 20 years of losses before ICI struck gold with the commercialisation of beta-blockers, one of the industry’s first blockbuster drugs.

ICI was, in other words, a conglomerate that worked. But that didn’t prevent it from falling foul of the break-up fashion. After being put in play by Hanson, the era’s most voracious break-up exponent, in the 1990s, ICI capitulated by floating off its pharma unit, Zeneca, to focus on its ‘core’ chemicals. Ironically, ICI was less good at the short-term shareholder-value game than building new businesses for the long term, and in 2003 the remains of what had been the UK’s biggest and most advanced company was ignominiously sold off to a Dutch competitor. Any temporary benefit to shareholders from ICI’s break-up was more than nullified by the long-term institutional harm done to the UK’s industrial, skills and management base by the ideological sacrifice of one of its few world-class companies on the altar of shareholder value. 

As often happens in management, the break-up fashion emerged from a previous excess in the opposite direction: namely, the conglomeration phenomenon that swept the US in the 1960s. An early form of financialisation, it was a growth-by-acquisition strategy using clever accounting techniques to ensure a positive effect on the acquirer’s price-earnings ratio, in theory enabling it to repeat the process ad infinitum. The result was the meteoric rise of companies such as Ling-Temco-Vought, ITT Corporation, Litton Industries,Textron and Teledyne – and their equally vertiginous fall when slowing economic growth and rising interest rates revealed that in the real world indiscriminate diversification offered no protection against a sharp economic downturn, rather the reverse. 

The problem with this fake conglomeration wasn’t the impossibility of managing a multi-industry group as such, but the idea that it could be done uniquely by the numbers, no industry knowhow required. (Harold Geneen, the legendary boss of ITT, is reputed to have said that when he had finished with it, the group could be rung by a monkey.) As usual, the wrong lesson was learned. Managers were accused of self-aggrandisement and the feathering of their own nests rather than looking after the interests of shareholders, which would be better served by running simple companies that were easier to understand and allowed investors to do their own diversification. More irony, the remedy was the shareholder primacy regime which was much worse than the original ill and whose toxic legacy is disruptively playing out across the western world to this day.

History doesn’t repeat itself – it rhymes, as the saying goes. So, yes, conglomerates are out of fashion – except when they are called private equity groups, some of which, confusingly, have turned themself into public companies. But of course the point of private equity is to maximise shareholder value, so in the eye of admirers, they can’t be called conglomerates. Likewise  Berkshire Hathaway, which just happens to represent one of the greatest single investment vehicles of all time, also escapes the dreaded classification. And what about the tech behemoths? On its own account, Apple runs both hardware and software, and services ranging from music and TV to filmmaking, Amazon stretches from shops, both virtual and bricks and mortar (as does Apple), to logistics, health, cloud services and advertising. Each is at the centre of wider ecosystems (transport, health, to name but two) where traditional industry boundaries and categories become hopelessly blurred – in autonomous electric vehicles more of the value will reside in electronics and software than in conventional hardware, for instance. So what is a car company?

Conglomerates are dead. Long live the conglomerate.