It’s spring, and a chief executive’s fancy lightly turns to thoughts of – his (usually his) pay package. Here’s Elon Musk throwing a tantrum because a Delaware court declared his $55bn (yes, really) Tesla deal unfair to investors and blocked it. Here’s Nick Read, boss of the Post Office, threatening to resign in a huff if his pay isn’t doubled. And here’s Julia Hoggett, CEO of the London Stock Exchange, wringing her hands at the prospect of businesses and bosses currently paid ‘significantly below global benchmarks’ deserting London for the US, where in 2022 top CEOs trousered $16.7m (£13.1m), three times their paltry £4.4m, according to the High Pay Centre.

‘Everyone is doing it’ is the limpest of justifications, more disheartening even, says Margaret Heffernen, than naked greed. The only argument that really carries weight would be the one that’s never used: that they’re worth it. It’s never used because there is no evidence that it is the case. Not for want of trying, researchers have found  only the weakest correlation between CEO pay and corporate performance – indeed, as Gary Hamel noted at the last Drucker Forum, in one recent study the correlation is negative. 

That shouldn’t come as a surprise. Despite its ubiquity, incentive pay only works as intended in the simplest situations, such as individual piecework. In the words of economist John Kay: ‘There is a role for carrots and sticks, but to rely on carrots and sticks alone is effective only when we employ donkeys and when goals are simple’. Repeated studies show that when collaboration and interdependence are involved, incentives have no effect on organisational performance. On a second’s thought, this too is unsurprising. Tracing cause, effect and outcome through any complex process is notoriously difficult, and in large organisations over time, effectively impossible. So where does responsibility stop and start? While GE CEO Jack Welch lapped up plaudits as the ‘manager of the 20th century’, plenty of others contributed: ‘Jack did a good job,’ noted another GE executive, ‘but everyone seems to forget that the company had been around for 100 years before he ever took the job, and he had 70,000 other people to help him’.

Welch and GE illustrate an equally troublesome point. In hindsight, GE’s, and Welch’s, success was a house of cards, built on financialisation. Divested of that prop after 2008, GE faded into a shadow of its former imperial self. Even more humiliating: it has effectively repudiated its past by recruiting today’s boss from outside the company, while its then dullest division, white goods maker GE Appliances, has morphed into a poster-boy for for management innovation, as well as the fastest-growing US appliance manufacturer, under the entrepreneurial ownership of … Chinese enterprise Haier.

‘It is difficult to overstate the extent to which most managers and the people who advise them believe in the redemptive power of rewards’, wrote Alfie Kohn in HBR in 1993. Yet that belief is undercut by every social science finding, for reasons that a child would understand. Individual performance incentives play havoc with teamwork. They crowd out intrinsic motivation and focus attention on the reward rather than the job in hand. How else to explain Read’s demand for double pay at a time when the Post Office is on trial for one of the most damaging scandals in UK business history? Or just as blatant, Musk’s petulant move to swap Tesla’s state of incorporation to a jurisdiction more likely to nod through his reward, when he should be concentrating on the firm’s sales and manufacturing issues, not to mention the existential travails of X? 

Widely dispersed pay levels undermines cohesion and joint purpose. They make clear that behind the fine words we’re not all in it together. By definition, incentives can’t make anyone cleverer or more creative. As for effort, remember the words of then Shell CEO Jeroen Van der Veer in 2009. ‘You have to realise,’ he said, ‘if I had been paid 50 per cent more, I wouldn’t have done the job better. If I had been paid 50 per cent less, I wouldn’t have done it worse.’ In January this year, Centrica chief executive Chris O’Shea admitted that his £4.5m pay packet was ‘impossible to justify’ in today’s conditions.

The truth is that to become CEO today is to step on to a magic pay escalator that transports the occupant upward, come rain or come shine. At most large companies on both sides of the Atlantic, sales, profits and average worker pay most of the time go up roughly in line with GDP, or a bit faster: 3 per cent, say. CEO pay though rises much faster – 25 per cent a year from 1980 to 2000, 16 and 17 per cent in 2022 and 2023, for example. Simple arithmetic dictates that under this regime the cats get steadily relatively as well as absolutely fatter: the 20 times differential with the average employee in 1983 widened to 50 by 2000, and the process has continued inexorably ever since. US top CEOs are now paid 400 or 500 times as much as an ordinary worker, let alone Andy Jassy’s 6,500 times at Amazon. Musk’s interplanetary multiple is hard even to guess at.

The fuel that propels the pay escalator skywards? Simple. The stock awards that supposedly align the interests of CEOs with those of shareholders – and incidentally incentivise CEOs to inflate the share price. The easiest ways to do that are to buy back shares ($3tr worth in the US over the last four years); gear up by adding debt (growing at 9 per cent a year for the last decade, much faster than GDP and firms’ own capital spending; half of it has gone into those share buybacks); and acquire rivals, which provides a temporary hit even as it destroys value in the long term. Together these have fed the great supermanagerial heist that has contributed so much to the upward redistribution, aka growing inequality, behind the rising populism that now threatens to unravel the capitalist democracies.

Urging CEOs and boards to exercise forbearance on pay is a waste of breath. CEO compensation isn’t out of control. It goes up because that is what it is designed to do. Unless we consciously decide to change the model that drives it, it will continue to soar until – until what? I don’t think anyone would seriously want to pursue that experiment to the end.

It was Russ Ackoff who pointed out the irony that while capitalist countries vaunt the superiority of their free-market economies, they skip lightly over the fact that the companies and other organisations operating within them are islands of Soviet-style hierarchy and central planning: ‘We are committed to a market economy at the national (macro) level and to a nonmarket, centrally planned, hierarchically managed (micro) economy within most corporations and other types of organisations in our economy,’ he wrote.

That there have always been corporate dictators, then, should not come as a surprise. Most companies are set up as jousts that ensure that alphas end up at the top. Some of those are benign (think John Lewis, Robert Owen, Cadbury and the Quakers), others less so (Henry Ford, ‘Chainsaw’ Al Dunlap, who once appeared on a magazine cover clutching a machine gun, not to mention Harvey Weinstein). But up till now the effects of autocratic rule, however noxious, have been felt most directly by the unfortunates working for them. 

No longer. In the digital age, their baleful influence spreads much wider than that, to impinge on democracy itself. Blame part of this on the erosion of the internal checks and balances that up till recently kept the power of corporate autocrats just about in check. The other salient factor is digital technology and the networks and platforms it has enabled, particularly but not exclusively social media. They both come together in Silicon Valley in a justifying ideology that Jerry Davis has termed ‘authoritarianism with Silicon Valley characteristics’.

Boiled down to the elevator pitch, it could be summed up as Facebook’s original ‘move fast and break things’, never mind where it leads. For a longer version, try The Techno-Optimist Manifesto, a sprawling 5,000-word collection of sayings, warnings and prophecies posted on the internet in October by venture capitalist Marc Andreessen, one of the Valley’s most prominent and techno-aggressive investors.

Here’s a flavour of his worldview. ‘We believe’, he writes, ‘that there is no material problem – whether created by nature or by technology – that cannot be solved with more technology’. But wait: we must go faster. We also ‘believe in accelerationism – the conscious and deliberate propulsion of technological development – to ensure the fulfillment of the Law of Accelerating Returns’. Markets rule, naturally (central planning is anathema), and nothing must hinder the functioning of the ‘techno-capital machine of markets and innovation’ that ‘never ends, but instead spirals continuously upward’. We must not be taken in by the ‘lies’ we are told to hold back this headlong progress, nor by the ‘the enemy’ that still bars the way, in the shape of ideas such as ‘existential risk’, ‘sustainability’, ‘ESG’ (something that has Andreessen and co frothing at the mouth, on a par with the Chinese Communist Party (Elon Musk has declared ESG the ‘Devil Incarnate’), ‘social responsibility’, ‘stakeholder capitalism’, ‘Precautionary Principle’, ‘trust and safety’, ‘tech ethics’, ‘risk management’, ‘the limits of growth’. You get the drift.

Of course we couldn’t live without technology, and no one would deny that we will need plenty more of it in the future. But as The Atlantic noted, notwithstanding his hat-tip to the Enlightenment, at these extremes Andreessen’s aspirations resemble religious incantation more than a rational programme. Only a fanatic could fail to notice that his rant about ‘the know-it-all credentialed expert worldview, indulging in abstract theories, luxury beliefs, social engineering, disconnected from the real world, delusional, unelected, and unaccountable – playing God with everyone else’s lives, with total insulation from the consequences’ – is a perfect encapsulation not of the enemy but of himself and the programme of his Silicon Valley fellows. 

Unfortunately, the world that such would-be ‘technological supermen’ have been quietly working to bring about is further along the road to their desired destination than we might like. Not least because, beginning with Google and Facebook, egged on by venture capitalists such as Andreessen and Peter Thiel and meekly accepted by investors who have lapped up the dubious mythology of the visionary founder, many Silicon Valley firms have adopted dual-class voting share structures that effectively install their founders, immune to normal PLC governance constraints, as dictators in the literal sense. In 2021, notes Davis, ‘an astonishing 46 per cent of tech IPO firms had dual-class voting shares’, rendering ‘Silicon Valley … awash in dictators’. Their writ not only runs within firms, many of which ‘AI-enabled “bossware” has turned … into corporate Panopticons, enabling those at the top to monitor and control laborers in exacting detail through tentacles reaching directly into workers’ homes and cars’; but, because so much of our information and online life are mediated by the unaccountable gatekeepers of Silicon Valley, it increasingly encroaches on society as a whole, with direct implications for our democracy.

Thus, we all know about the Cambridge Analytica and other data abuses aimed at manipulating behaviour and affecting the outcome of elections. And whatever we think of Trump or other politicians, and the horror show that X has become, is it right that unregulated corporate autocrats personally possess the power to decide who benefits from freedom of speech in the public domain and who doesn’t? Or give themselves licence to indulge in divisive social engineering for their own financial or indeed political ends? Or intervene in foreign policy, as with Musk’s Starlink satellites in the fighting in Ukraine? Their combined financial, lobbying and social control potential is unprecedented, indeed allowing them to play God without fear of consequences. For Shoshana Zuboff, ‘the threats we face are even more fundamental as surveillance capitalists take command of the essential questions that define knowledge, authority, and power in our time. Who knows? Who decides? Who decides who decides?’ 

In TV series as in real life, dictatorship succession tends to be anything but smooth and willing, irrespective of formal voting structures – consider the florid exits of Logan Roy’s supposed real-life models, Rupert Murdoch and Sumner Redstone. This matters not just to shareholders: the companies dictators run are among the most powerful actors on the world stage. Sergey Brin and Larry Page may have relinquished executive positions at Alphabet, but they still have ultimate control through their shareholdings and board seats. Jeff Bezos remains the largest single shareholder in Amazon, where he is executive chairman. Mark Zuckerberg reigns supreme as executive chairman, CEO and controlling shareholder of Meta Platforms, as does Musk at X Corp (ex-Twitter), which he owns outright, de facto as CEO and product architect of Tesla and the same at Space X, a player in world conflict spots. (As if that wasn’t enough, piqued at being thwarted of his insane $55bn pay package at Tesla by the Chancery Court of Delaware, Musk is planning to reinforce his imperial position by moving the company’s state of incorporation to a more compliant Texas.)

All of these white male corporate emperors regularly crop up on lists of the most influential as well as richest people in the world. It might be a stretch currently to think of their companies coming under direct foreign control – but it’s worth recalling that Musk has spoken to Putin and opposes US miltary aid to Ukraine, while Putin last September praised Musk as an ‘outstanding person’ and ‘a talented businessman’. It’s no stretch at all to say that whatever happens to their corporate domains in the crucial next phase of their existence, for good or ill it will affect every person on the planet.

‘Meet the new boss, same as the old boss’, most people might have muttered cynically at the news that the Global Peter Drucker Forum had launched a five-year initiative to renew and reform the discipline of management for the 21st century. For them – and who could blame them – management is just a given: at best a yawn and at worst a bullying boss or a set of inscrutable work rules emanating without appeal from above. 

But whether they know it or not, management affects everyone’s life. It’s critical for the achievement of human purpose, and improving its effectiveness, improbable as it sounds, is the most powerful lever we have for making life better for almost everyone on the planet. 

Paradoxically, that’s partly because the present version leaves so much to be desired. Consider the evidence of the UK, transfixed this winter by the scandal of hundreds of sub-postmasters, prosecuted by the state-owned Post Office and wrongly convicted for fraud, that has dominated headlines since Christmas. Like the earlier suicide of a primary-school head teacher after an unfavourable school inspection, the tragic human story has implications that go much further than the individual organzations involved. 

Missing from the analysis is any recognition that these are peas from the same pod – failures of management that speak volumes about what is wrong with the present rules of the game. Thus, every other sentence uttered about the Post Office calls those responsible ‘to be held to account’. In this case the accumulated injustices were so flagrant that it was impossible for former CEO Paula Vennells to escape the rap. But it’s no accident that for 20 years no one did – just as, notoriously, no one went to jail after the Great Crash of 2008, another management-made crisis, while those implicated in the debacles that regularly disfigure our public and privatised services all too frequently crop up later in senior management positions elsewhere.

Today’s management might have been designed not to hold people accountable. Built as it is to a top-down, command-and-control design philosophy, it uses performance measures that rarely have anything to do with purpose as the customer understands it, instead relating to internal concerns such as activity, budget, sales or other financial consideration. In this context doing a good job means ‘making the numbers’, which not only entitles managers to a pat on the back and a bonus, but also neatly immunises them against accountability for anything else. 

This is why no one, including the 17 successive ministers with oversight during the period, wanted to rock the Post Office boat. It’s also why so many scandals occur in organisations that have been given glowing reports by inspectors, the latters’ exercises in box-ticking having zero relation to the experience of those on the receiving end. So inspections often yield false positives. But the case of head teacher Ruth Perry is a terrible reminder of the tragic human consequences of the reverse.

But then as soon as you’re aware of it, mismanagement is currently the distinguishing feature of the whole UK economy (a matter of some irony, considering the prominence of its professional services sector, including Big Consultancy). Beyond the Post Office and education, think of the crisis-ridden NHS, beyond shambolic railways and HS2, bankrupt local councils, sewage-spattered rivers and coastline, shamefully deficient social care and institutionally incompetent and sometimes malevolent police. Right on cue, the National Audit Office recently put a figure of £20 bn a year on the savings that could be reaped from better governance and management of UK infrastructure alone. 

Turning it round, try a thought experiment: if trains got us on time where we wanted to go, you could see a doctor within a week, crossed the odd policeman walking the beat, weren’t ripped off by greed- and shrinkflating companies or stalked, surveilled and targeted all over the internet – might the UK be a calmer, less fractious society, less prone to disappearing down conspiracy rabbit holes and being drawn into vicious witch hunts for identitarian scapegoats for anything that goes wrong? To ask the question is to answer it. You bet.

For a final exhibit in our management chamber of horrors , and one more proof of the urgent need for change, look at another crisis-hit organisation, Boeing. Reduced to the elevator pitch: proud engineering-led aircraft manufacturer Boeing makes ill-advised merger with smaller, more financially oriented rival, leading to culture clash in which finance wins out and an ‘investor-friendly’ strategy of cost-cutting, outsourcing and stock buybacks prevails. Subsequent design and safety short cuts are blamed for catastrophic crashes of two Boeing aircraft in 2018 and 2019, with the loss of 346 lives, grounding of the fleet, and large financial losses. On 5 January this year another Boeing plane experienced a mid-flight incident, raising fresh quality and supply chain questions and leading renewed operating restrictions. Takeaway (there are countless other examples to underline it, many of them casualties of private equity ownership):  governance based on maximising shareholder value, the current norm, is unsafe at any speed, not least for shareholders. And it can be lethal.

The bottom line is that management is both critical – ‘almost nothing in economics is more important than thinking through how companies should be managed and for what ends’ – and ‘a mess’, in the words of the FT’s Martin Wolf: to the point where, its costs having outweighed the benefits, it has morphed into the problem to be solved instead of an answer to the world’s issues. Hence the significance of Richard Straub’s announcement at the December Drucker Forum of the five-year project to develop a new and more reliable management template, in time for the 20th Forum in 2028.

The plan is ambitious as well as timely. Management’s ‘mess’ is foundational – an unsatisfying mash-up of ideologically-inflected economics, unrealistic assumptions and a crudely behaviouristic idea of motivation, protected by a hard shell of vested interest. Changing it won’t be easy. Yet despite some knotty philosophical issues, it’s not by any means all bad news. Over the years, progressive and open-minded managers and researchers, many of them regulars at the Drucker Forum, have made good progress with stuff that works in practice if not in theory, in areas such as customer focus, work design, and systems thinking. A few leaders and companies have been bold enough to strike out and follow their own path to excellence. Although these ‘positive deviants’ have attracted few imitators, they provide rich case material for those looking for a better way.

When Peter Drucker first launched into management in the 1950s, he saw his priority as bringing  together scattered islands of expertise into a coherent discipline. In the same way, today’s challenge is to build out the areas of evidence-based practice into a structure that reconciles business and planetary needs, reflects and reinforces more realistic and less gloomy underlying assumptions, and is capable of performance sufficient to compete in the market for management ideas with predatory variants such as private equity and surveillance by making people not only better off materially, but happier as well.

Buckle up for an eventful ride.

Is private equity, the polite name for the spreading ecosystem that developed out of the corporate raiding and leveraged buyouts of the 1990s, the best thing since sliced bread – ‘a purer form of capitalism’, as some have argued? ‘Who can argue with a new model of enterprise that aligns the interests of owners and managers, improves efficiency and productivity, and unlocks hundreds of billions of dollars of shareholder value?’ enthused Michael Jensen in a 1989 HBR article. Or is it a monster, an evil mutant draining the life and livelihoods out of companies, communities, workers and customers?

Prompting the question is the transformation that has swept global capital markets since the Great Crash of 2008. Although the decade and a half of zero interest rates that has just ended did little to stimulate wage growth or productivity, it was viagra for financial assets.

And it wasn’t just public stock indices that soared. Less well appreciated is the explosive rise of the unregulated private markets – private equity, hedge funds, venture capital and the shadow lenders that fuel them with credit. In the US and UK, the number of publicly-listed companies has halved this century while money has surged into PE like an incoming spring tide. Global stock market capitalization still dwarfs private equity. But the latter is growing much faster: in the same timeframe PE has mushroomed more than sixfold, with assets under management now standing at $12.7tr, according to McKinsey. More firms are owned by PE than are quoted on the New York Stock Exchange, and PE-owned companies now employ 11 million Americans,  up by one-third on four years ago. Accounting for around 7 per cent of the mighty US economy, PE is now firmly mainstream.

Could the uncomfortable reason be that private equity is, in fact, the superior way of managing that boosters claim? Investors certainly have drunk the Kool Aid. With interest rates effectively at zero, the promise of yield, even at the cost of locking up an investment for the seven or 10 years of a fund’s life, has been catnip to investment managers. Following Harvard and others, university and other endowment and pension funds have poured cash into PE – including pension funds for whose members Jensen’s ‘improving efficiency’ frequently translates as reduced pay, worse conditions and lost jobs, nor only intentionally: PE-owned companies are 20 per cent more likely to fail than publicly-owned counterparts. 

This contradiction has been brushed aside during the apparently good times for investors – ‘apparently’, because lack of transparency makes the claimed superiority of PE’s returns over the long term moot. (Berkshire Hathaway’s Warren Buffett and the late Charlie Munger are/were notable sceptics.) But it is one that will get more glaring as today’s challenging conditions bring PE’s ugly side into full view. And ugly means repellent. Two recent books about private equity with tellingly similar titles (Plunder: PE’s Plan to Pillage America, by Brendan Ballou, and These Are The Plunderers: How Private Equity Runs – and Wrecks – America, by Gretchen Morgenstern and Joshua Rosner) spell it out without compromise. 

Over a wide spectrum of industries, they charge, PE firms have played out repeated variations on the same theme: debt-propelled acquisitions and restructurings that strip companies of their assets, load them with debt and prioritise profits over people. Workers and customers bear the brunt of operational cost-cutting as product and service quality plunges. Healthcare, a sector favoured by PE for its assured payments and the reluctance of customers to complain, has been particularly corrupted: the imposition of ‘surprise’ billings as different services – emergency rooms, for example – are hived off into separate ownership has become notorious, while the ‘carnage’ in US care-homes during the pandemic is put down to perfunctory or sometimess non-existent care in short-staffed and ill-equipped PE-owned units. Meanwhile, ‘activist’ hedge and PE funds have taken to targeting companies with extensive CSR programmes that can be repurposed into dividends and stock buybacks. Others have no hesitation in buying out orphaned fossil-fuel companies and running them at full tilt, while also investing in environmental clean-up specialists. 

Another tactic under fire is the PE ‘rollup’, an under-the-radar way canny funds create local or regional monopolies by buying up and merging dozens of standalone businesses in the same industry (funeral homes, hospitals, caravan parks, GP and veterinary practices, care homes, local press, even garage doors..). They then run through the monopolist’s playbook, hiking prices, reducing choice and imposinge drastic conditions on users. Not before time, rollups are now attracting the attention of regulators. The FTC is currently investigating a cluster of transactions and wants to reform antitrust laws to make it easier to challenge other anticompetitive mergers and acquisitions.

Of course, not all private equity is totally vile, just as public corporations aren’t exclusively run by saints. While PE’s record in the UK is by no means glorious (care homes, water companies…), as usual it is a pale shadow ot its counterpart in the US. But there’s no doubt that PE’s combination of disproportionate personal gain and lack of scrutiny has attracted individuals whose greed, lack of scruple and recklessness might make the original robber barons flinch. Thanks to the ‘insanity of 2&20’ (as Roger Martin described the infamous PE and hedge fund charging formula¹) private markets have become ‘flat out… the greatest wealth producer of our lifetime’. In the current Forbes 400 rich list, 69 are PE or hedge fund executives, with a combined net worth of an eye-popping $465.7bn. The seven highest-paid PE executives currently pocket (I can’t bring myself to use the word ‘earn’) more than $1bn a year under a ‘heads-I-win-tails-I-don’t-lose’ formula for a job that generates little or no net value for society at large.   

What do we make of all this? One conclusion might be, yes, PE is a purer form of capitalism – if ‘pure’ is relieved of any connotation of virtue and taken to mean business stripped back to the single-minded pursuit of profit without acknowlegement of the existence, let alone claim, of any other stakeholder, unrestrained by regulation or public scrutiny. This is management as Friedman’s ‘business of business is business’ on steroids, treating the company as an abstract ‘nexus of contracts’ and people as rational utility maximisers motivated only by self-interest, both of them vehicles for and instruments of the sole end of short-term financial gain. Greed rules, absolutely.

Cynics believe that PE’s share of the investment – and management – markets will continue to grow regardless – a chilling prospect. For now, though, interest rates at a 20-year high have put the funds on the back foot. Headlines calling ‘the end of an era’ and ‘a reckoning for PE’ are a daily occurrence in the financial press, as several things have become clear through the clouds of hype: many firms overpaid for targets, appetite for IPOs has dwwindled, and panicky investors are beginning to head for the exits, even at a discount. At the same time, refinancing debt in portfolio companies at vastly higher interest rates is driving managers to all manner of esoteric, not to say dubious and certainly riskier forms of financing. As noted, US regulators are hovering in the wings.

What might stir them into action is a crash triggered by defaults rippling out from the unregulated non-bank lenders where PE increasingly raises its money – many of them owned by those same PE outfits. That is a distinct possibility: currently no one knows the extent of the loans or how they are connected to the real economy. If that house of cards collapsed all bets would be off – indeed, it is currently the only realistic route to bringing the funds to heel. The cost of a PE-induced crunch would be high, and it’s a racing certainty that, as in the 2008 crisis, none of the real perpetrators would go to jail. But everyone else in the world would still have good cause to cheer.

1. The 2 of 2&20 is a fixed annual management fee of 2 per cent charged on the assets under management. The 20 is the 20 per cent share – known as ‘carried interest’ or just ‘the carry’ – levied on any profits made on the capital (a charge that is taxed at the lower rate of capital rather than income). ↩︎

It seems funny, until it isn’t. It was while reading a recent FT article about a bed, sorry, ‘sleep instrument’, costing $660,000 (yep), that I realised that the very rich don’t need a ticket on one of Elon Musk’s rockets to Mars – they are already living on a different planet. The feeling is swiftly confirmed by a glance at the same paper’s How To Spend It supplement, full of hideously expensive stuff that no one residing on planet earth would would give house room to, followed by a quick check on the internet of some of the other things that the seriously wealthy shell out for: at random, a £25,000-a-night hotel room, a bottle of Domaine de la Romanée-Conti 2019 at £23,939, a Chanel handbag £3,000, or a ticket for a 2024 Taylor Swift concert costing an astonishing $58,195. WTF? 

But addiction to bling in dubious taste is the least disturbing effect of extreme wealth. In a July New York Times  piece headed ‘The Rich are Crazier than You and Me’, economist Paul Krugman noted the growing propensity of Silicon Valley’s billionaire tech bros to disappear down weird internet rabbit holes of their own making. 

Take the sudden Valley enthusiasm for Robert Kennedy Jr as Democratic presidential candidate. Along with one or two vaguely progressive ideas (not all the suspects are far right, though many are), Kennedy harbours an impressive tally of public-health related conspiracy theories, including about Anthony Fauci and vaccines, HIV/Aids, the idea that gender dysphoria can be picked up from the water and that Prozac causes mass shootings. Jack Dorsey, founder of the app formerly known as Twitter, has endorsed him. Dorsey’s successor Musk has given him a platform on X, and others have hosted fund raisers in his name.

Another trend is what Krugman calls ‘recession and inflation trutherism’ – dogged assertion that even mildly positive news about the US economy is fake, invented to conceal the alternative reality of deepening recession. Dorsey (again) declared hyperinflationary disaster in 2021 and others, egged on by Musk, accuse the government of cooking jobs and other numbers and then quietly adjusting them downwards when no one is looking.

Where do these ideas come from? Anil Dash, himself a Silicon Valley entrepreneur and commentator, is in no doubt. ‘It’s impossible to overstate the degree to which many big tech CEOs and venture capitalists are being radicalized by living within their own cultural and social bubble’, he writes. ‘Their level of paranoia and contrived self-victimization is off the charts, and is getting worse now that they increasingly only consume media that they have funded, created by their own acolytes’.

Extreme wealth plays an essential, justificatory part in this radicalisation – and, counterintuitively, renders them as manipulable as the ordinary dudes they think they no longer are. ‘Because their entire careers have been predicated on the idea that they’re genius outliers who can see things others can’t, and that their wealth is a reward for that imagined merit,’ they push each other further and further into extreme contrarian ideas, says Dash. 

In this perspective, otherwise off-the-wall ideas such as the quest for immortality, Mark Zuckerberg’s metaverse, Musk’s space colonisation ambitions, Peter Thiel’s Seasteading Institute, transhumanism and other manifestations of techno-utopianism take on a kind of mad logic – one of exceptionalism, impatience with restrictions on freedom to move fast and smash things, and desire for a separate world over which they can exert absolute control. It also makes sense of some apparent contradictions. Instead of preaching free markets and small government, Thiel, who passes for the billionaires’ intellectual, sees monopoly as the entrepreneur’s just reward (‘Competition is for losers’), while freedom paradoxically requires an authoritarian Trump-type state to banish liberal wokery and other tiresome hindrances to thinking the unthinkable (‘I no longer believe that freedom and democracy are compatible’).

Dangerous in themselves, such beliefs have the side effect of rendering the holders liable to the ‘dictator’s dilemma’. Authoritarian regimes find it hard to generate reliable data. Like all targets-derived info, data that’s politically sensitive (ie livelihoods depend on it) will be reliably worthless (Goodhart’s Law). Censoring people, eg on social media, further obscures what’s really going on, leading to situations where accumulating discontents can erupt without warning (the Arab Spring or East Germany in 1989). As for an expression free-for-all, Musk’s X shitshow is proof that the last thing it produces is trustworthy information – and as we know from events at the Capitol on 6 January 2021, untrustworthy information in overexcitable hands is a potentially lethal weapon.

Jumpy authoritarians may be rubbing their hands at the prospect of using AI to sort the wheat from the chaff – and indeed, in combination with all-seeing surveillance, to concentrate information and power in one place in a way that dictators have always dreamed of. This is what AI pessimists like Yuval Harari believe the end of humanity looks like. Others argue strongly that that’s wrong – although their alternative outcome is not unequivocally a more positive one.

In a word, the issue is bias. AI’s ability to come up with roughly ‘right’ answers ultimately depends on having absorbed a foundation of ‘probably approximately correct knowledge’ – and that can only be produced by – yes – human beings working together in scientific or other trusted institutional endeavour. Unfortunately, rather than using curated data, large language models learn from information scraped from the entire internet, bots, trolls, fake news factories and all. Then, when people (dictators or not) start believing and acting on findings that are already unreliable, they inject a whole new level of uncertainty – ‘garbage in, garbage out’ becomes ‘garbage in, garbage out, garbage back in again’. Or, in the colourful words of activist author Cory Doctorow, ‘Algorithms are to bias what centrifuges are to radioactive ore: a way to turn minute amounts of bias into pluripotent, indestructible toxic waste’.

As the internet fills up with the resulting junk, approximately correct knowledge becomes an endangered species. In the torrents of manipulative fakery generated by the current surveillance capitalism regime, is it possible even to preserve the human capacity to create it? Political scientist Henry Farrell evokes a nightmare scenario in which, as software eats the world, it also consumes the structures that generate reliable human knowledge – excreting more toxic waste in its place.

If that turns out to be the case, don’t expect improvement in the terrible taste of the excessively rich any time soon. Or in their conspiracy theories and dangerous politics based on them. Or their plans for the rest of us, still living on planet earth.

One revealing way of looking at the UK is through the lens of its distorted labour market. Like a car with a Bentley body and a Ford Anglia engine, it struggles to keep up appearances as an advanced nation, with an economy that is permanently stuck in a low-wage, low-skills gear. The labour shortages that opened up in care homes, warehouses and other essential services during during the pandemic have gone on swelling ever since  – current vacancies stand at nearly 1.1m – initially in the Great Resignation as thousands deserted pittance-paid jobs in retail, hospitality and care; then in a wave of public-sector walkouts, stoked by inflation and a crippling cost of living crisis; and finally an epidemic of work-induced burn-out and long-term illness that has removed a stunning 2.5m, often the lower-paid, from the workforce altogether. In a deep political irony, it is this seized-up commodity labour market that is driving record immigration figures as farmers, restaurateurs and care homes wrestle with brutal post-Brexit realities. Thus do the UK’s dysfunctional employment patterns shape much of its social, economic and political life.

Low pay is a scourge and a national shame. It cripples lives and economies, leading to poverty, inequality and financial insecurity, and often poor physical and mental health. Low wages mean that despite the political rhetoric employment is no longer a sure route out of poverty, often necessitating taxpayer subsidies in the shape of supplementary state benefits. Across a range of sectors it feeds low productivity through poor work outcomes – for the blindingly obvious reason that it’s hard to concentrate on your job, particularly an unfulfilling and prospectless one, if you are depressed, out of breath or worried sick about whether you’ll make it to the end of the month financially. 

Senior executives generally give short shrift to complaints about low pay. ‘I’m running a public company, not a charity’, or, ‘Some jobs are too menial to justify higher pay’, are stock responses. But they betray a dispiriting lack of imagination. There is actually a straightforward way out of the UK’s low-pay bind: pay more. Unfortunately it requires something that we don’t currently have, at least in the necessary quantity, which is competent management. 

This is the message that emerges clearly from The Case for Good Jobs, a new book by academic-turned jobs activist Zeynep Ton. She demonstrates that low pay as practised particularly in the Anglosphere, is not an inevitability but a choice – a choice made by managers who don’t realise there is one, nor the consequences of poverty pay for their workers. She recalls the shock of a senior PayPal (she names names) executive who on a visit to a soup kitchen in a town where the company had a large call centre was told that a substantial proportion of the facility’s users were PayPal employees. As she records, such ingnorance is a far from uncommon phenomenon.

Yet the case for good jobs, she insists, rests not on HR wokery but strictly operational considerations. She sees low pay as both symptom and cause of what she calls the ‘bad jobs’ model, which is based on the plausible but blinkered assumption that the only way to compete on low prices is to minimize input costs, especially labour. ‘The playbook is simple,’ writes Ton. ‘Pay as little as you can, make the job as easy as you can, and hire anyone who is willing to work under those circumstances’. Companies using it accept the concomitant high employee turnover (up to 120 per cent a year), whose high cost is balanced by minimal expenditure on training and (less frequently acknowledged) management competence – which is one important reason why the model is so prevalent. 

Precisely because it is so simple, it can work, up to a point, and for a time – but only because most competitors are using the same bug-ridden cost-minimization model that, unseen by managers, drives a ‘vicious cycle’ of underachievement and poor customer service. Yet the hidden cost of low pay is extremely high. Most companies and managers have no idea how mediocre their operations are. A 2017 HBR article entitled ‘Why Do We Undervalue Competent Management?’ reports that of 12,000 companies surveyed across 30 countries, just one in 10 was excellent or good operationally, against nine in 10 that were mediocre or worse – figures reflected in other measures such as productivity, innovation and growth. Like drivers and poker players, interviewees consistently overestimated their strengths and underestimated their performance weaknesses.

Bluntly, low pay is incompatible with good management. As we should know by now from John Seddon’s work, managing cost drives costs up, not down. Ton shows that that’s particularly the case for labour, because, again unimaginably to most managers, the upside of investing in the front-line is so high. Ask Toyota and Buurtzorg, as well as US retailers such as Costco, Sam’s Club and others that Ton cites. Treating labour as a cost ignores this potential, banishing trust, learning and empowerment and condemning the labour contribution to the barest minimum.

The exceptions, then, operate the opposing front-line and customer-focused ‘good jobs’ model. This, as Ton insists, is a system, in which higher pay is just one element. It must also be front-line and customer-focused because that is the locus of the interactions that determine service quality and customer satisfaction, and dictate the other system elements: an offer that meets customer demands as economically as possible, and training that enables the workforce not only to fulfill but also improve it, thus justifying the higher pay and setting in motion a virtuous cycle to replace the vicious one.

Ton’s first convert was herself. Originally an academic researcher at MIT into operations analytics and science, she was far removed from any real workplace. But when she came to study how the latest management and scheduling software was working in practice, she discovered it was so disconnected from the often chaotic realities of the existing front line that instead of improving performance it made it worse. (Now where have we heard that before?) 

From that experience came her first book, The Good Jobs Strategy, in 2014, which triggered such corporate interest that in 2017 she left her tenured job to co-found the non-profit Good Jobs Institute Of course, Ton would be first to admit that what she is saying is not all new. Seddon, Pfeffer, Hamel, Gallup and indeed all really well managed companies would share her foundational principle that front-line employees ‘aren’t a drag on the bottom line – they are where the bottom line comes from’, and treat them accordingly.

But The Case for Good Jobs is a forceful and timely restatement of a management philosophy that, properly applied, can realistically promise to make companies simultaneously ‘more competitive, more resilient and more humane’. Its urgent relevance to the UK is obvious, for both hard-pressed companies and an economy that without London would be less well off than the US’s poorest state, Mississippi. As Ton has pointed out, a tight market with employees switching jobs for a few pounds extra a week is exactly the time to overhaul employment policies as a system – since you’ll probably have to pay more anyway, make it into a source of competitive advantage rather than reverse. And a push for good jobs policy at national level, starting with the benighted public sector, would be a practical starting point for tackling some of the UK’s deep-seated supply-side issues of productivity, innovation and awful citizen service, as well as serving to mitigate the mounting cost-of-living crisis and address those chronic labour shortages. As ever, if we’re talking supply side, it’s ****ing managment, stupid!

This is what it feels like to live through a change of the world order. Empty shelves and soaring prices in the shops, rage at work and mounting mortgage worries at one end of the scale; uncontrollable interest rates and skittish markets, extreme nature and vicious domestic and foreign politics at the other, all given a vigorous stir by conspiracy theories and fake news fanned by social and other media. There are words a-plenty, but from small boats to hospital waiting lists to war in Europe and a burning planet, seemingly no levers to pull on. Everything once taken for granted is now a source of friction, aggro and deep unease. 

Some of today’s crises are shared. The downsides of globalisation and financialisation were too long brushed aside, and the financial crisis and the faux boom of the following era of cheap money rubbed the noses of the casualties in it even more insultingly. It took Brexit, Trump and the fractures of the pandemic and subsequent Great Resignation, still playing out, to bring to the surface the depth of the disenchantment. At the same time the Russian invasion of Ukraine revealed the dangers of overdependence and the frightening fragility of many international supply chains. 

To which of course the UK has added its own grotesque missteps and failings. Brexit, obviously, is a unique case of wilful self-harm, a major economic and political fracture in its own right. But the current sense of hopelessness – the ‘impossibility of everyday life’, in the phrase of one commentator – has been much longer in the making. Cameron and Osborne’s brutal austerity is part of the story. Looming out of an even more distant past, Thatcher’s chickens are now coming to roost: the deliberate deindustrialisation that sucked the heart out of many industrial communities; the sell-off of social housing, never replaced, that is a big factor in today’s housing crisis; the privatisations whose failings have left these islands surrounded by sewage visible from space, a train service (some of it in companies nationalised by a Conservative government) that is an international joke and a supremely dysfunctional energy market; and crucially the hollowing out of the state, recently detailed by Mariana Mazzucato and Rosie Collington in The Big Con, with the thinking as well as operational capabilities outsourced to a small group of major consultancies incentivised to sell ministers precisely what they want to hear.

This process has left a vacuum where the heart of a government should beat, while politics, further destabilised by the antics of Johnson et al, has been reduced to a contest of broad narratives (growth, anti-woke, culture wars, small boats on one side, NHS, cost of living, levelling up on the other), neither of which, detached from reality as they are, can be delivered. Just when green technologies, overstretched supply chains and, less positively, military conflict, have launched a new industrial arms race with the potential to bring much needed investment, productivity and jobs to some of the UK’s most flattened areas – there is no strategic state to react creatively to the unlooked-for economic reset. As Diane Coyle recently remarked in the FT, the one player not bothering to play the industrial policy game is bound to lose. 

Nor, meanwhile, is there the organisational capacity to deliver, well, almost anything. Never mind the waffle about a ‘scientific superpower’: a more telling symbol of the state of the UK economy is the becalmed HS2, where eight years work has failed to produce a definitive plan for the Euston terminus or even what it is supposed to achieve, and to which trains from the north won’t now run until the 2040s; while the condition of our political democracy can be resumed in the endless indecision over what to do about the crumbling Houses of Parliament, estimates for the fixing of which are now up to £13bn and counting.

All this constitutes a mighty and daunting challenge for the next government. Yet to employ the habitual cliche (sorry) it also represents a huge opportunity, both to craft a new way of communicating with an alienated electorate and to begin to rebuild the capacity to actually do things. Think of it as a ‘modern supply side’ approach – taking in not just the public sector but also the machinery of government and (the elephant in the room) the private sector too. One of the biggest disappointments of the New Labour Blair-Brown regime was the timid capitulation to the City over the initial intention to reform company law to allott a bigger place to social purpose and the common good. Twenty-five years and multiple financial scandals and crises later, all caused by out-of-control financial greed, Will Hutton cautiously relaunched the idea in an important recent piece on the water companies in The Observer. 

Hutton’s broad point is that the task of UK infrastructure reconstruction is so colossal that it can’t be envisaged without the engagement of a vigorous and committed private sector. Water isn’t the only sector in dire need of investment: decarbonisation, levelling up and bringing schools, hospitals, transport and local services up to scratch will cost at least £2.5tr over the next decades. I’d put it the other way round: while Hutton isn’t wrong, the necessary outcomes can’t be achieved with a private sector that too often is actually at war with the common good. Think of water and care homes owned by private equity whose business model is to pile on debt and bleed every last penny from their acquisitions before selling on their hollowed-out shells, hedge firms that create no net value for society and have an interest in promoting the market volatility that they alone profit from, and more generally CEOs who cynically use the shareholder value credo to feed their own greed.

But the world really has changed. As these examples suggest, the externalities of our enslavement to shareholder value are now so obvious and extreme that the planet can no longer afford them. Change won’t be less contested than in 1997, and in some ways, given the dense ecosystem of vested interest that has accrued around it and the disturbing hard right rhetoric in the US equating ESG with communism or Nazis, may be even more so. But it’s now difficult to believe that the world can survive much longer when society’s interests and economic incentives are so wildly misaligned. It seems likely that the next UK government will be Labour. Whatever else, it should take up the meta-management challenge it flunked the last time and redeem itself by showing the world the way forward.

The possibility that AI will outsmart, and eventually outlive, humanity is real, if distant, and it is right to be thinking hard about it now. But media hooha over a speculative future should not deflect attention from the changes already surging through the world of work resulting from the introduction of the burgeoning array of first-generation generative AI apps.

BT recently announced that AI would soon replace 10,000 of its customer service jobs, while adland’s Sir Martin Sorrell went one further by calling time on the call centre, full stop. Wall Street is said to be using AI to rewire the business of finance, hiring as well as firing. The CEO of high-riding chipmaker Nvidia, Jensen Huang, sees the arrival of the new apps as the ‘tipping point of a new computer era… Everyone is a coder now. You just have to say something to the computer.’

Let’s step back a bit. 

Like any other technology, of itself AI is neither good nor bad. It can be used for both. But AI is also not like any other technology, for at least two reasons. One is its combination of potency and breakneck speed of uptake, the fastest  ever – and currently far outpacing the speed of regulatory thought. And the second is the juncture at which it arrives, marked by a technological and economic determinism that threatens to make the outcome overdetermined.

At its simplest, AI presents us with a choice. In the deceptively simple words of the distinguished MIT Prof Erik Brynjolfsson, a signatory of the most recent open statement of alarm over the direction AI is taking, will it be used to augment or automate human labour? 

For there is a vast and much overlooked difference between the two. While automation is often billed as the most important technological advance since the industrial era, it is actually augmentation that delivered the major productivity and market-creation gains of the past. A moment’s thought tells you why: humans plus technology are capable of vastly more than humans on their own. Think skyscrapers, modern medicine, air and space travel, the Toyota Production System. In combination they create new industries and markets, and crucially the benefits have traditionally been shared through jobs. A crane operator is more productive, more skilled and better paid than a bloke with a wheelbarrow, a radiographer than a barefoot doctor, a jet pilot than a carrier with a horse and cart.

But the reverse side of this coin is that, also counterintuitively, pursuing human-like AI as Holy Grail, as researchers and technologists have done and still do, is a trap. While ‘augmenting humans with technology opens an endless frontier of new abilities and opportunities’ (Brynjolfsson), the more AI mimics the human, the greater the temptation to use automation to carry out the tasks that people already do, only faster and (at best) more cheaply. 

That’s what is happening now, and it is doubly perverse. Getting technology to do things that humans have evolved to do easily – how long since we were promised driverless cars? – is both harder and less valuable than making it do the tough and boring stuff, such as instant complex calculations or holding unlimited numbers of things in memory at the same time, that deflect humans from using their ingenuity to make the counterintuitive leaps that trigger the most productive innovation.

Spare no tears for the call centre, a previous misbegotten attempt to use technology to solve customer problems that are better dealt with by people. But if BT simply automates unsatisfactory existing processes without rethinking them first – the classic digitisation investment mistake – it will compound the error, neither improving dismal customer service nor saving cost. 

This kind of automation creates little or no value for anyone except execs and shareholders. For employees, whose value resided in knowledge that is now codified and turned into capital, it is entirely negative. Not only that, the advent of AI, with its growing ability to monitor and micromanage work, effectively kills off the idea of the job as the primary distribution mechanism of the benefits of technology at work, throwing a whole system into crisis. An increasing number of companies no longer have any interest in humans as labour, only employing them as a last resort.  

This gets to the heart of the matter. Ironically, the driver of this kind of valueless automation – think self-service and contactless supermarket checkouts, digital-only services of all kinds – is the ultimate example of Brynjolfsson’s human-plus-technology augmentation: what we now call surveillance capitalism. The unholy alliance of internet, algorithms and advertising, surveillance capitalism deploys human-focused technology to bolster corporate and shareholder interests through tracking and targeted advertising. In the surveillance business model that has now captured almost all companies, humans remain their greatest asset: but as the source of raw material to be exploited and sold as information to others, not as workers.

Prevailing economic discourse around AI displays a kind of studied fatalism. ‘Of course, advancing technology means jobs will go. But in the long term it will create new types of better work that haven’t been imagined yet, as it has done in the past. If not, then government will need to provide.’ This is pure bad faith. Technology isn’t destiny. As Daron Acemoglu and Simon Johnson, as MIT professors hardly technophobes, spell out in their new book Power and Progress, there is nothing automatic about such outcomes. How technology plays out in the workplace has always depended on choices made in boardrooms and finance departments (or sometimes throne-rooms or lordly mansions), which in turn reflect power, material incentives and evolving social norms as embodied in legislation and regulation. Positive outcomes, they make clear, have to be fought for.

Realistically, it’s clear that AI, or machine learning as it is useful to call it from time to time, is a general purpose technology that will end up everywhere. There are dozens of apps available already, with multiple new ones coming to an app store near you every day. AI will eat many jobs and create some new ones, although probably fewer than we would wish.

Equally clear is that without intervention AI will do little to counter the major social problems we are currently struggling with – particularly the inequalities that fuel discontent, social and extreme populist politics – since it comes from the exact same parentage. Bryjolfsson argues that business, technologists and policymakers have all put too much emphasis on automating rather than augmenting labour, and the first imperative is to eliminate or reverse the tax and other incentives that favour it. Acemoglu and Johnson propose a range of other measures, ranging from breaking up Big Tech and removing its immunity to prosecution for the content it carries to boosting countervailing forces, abolishing patent proection for surveillance technologies and imposing a digital advertising tax.

If some of this had been enacted the first time round, particularly measures affecting advertising and surveillance, the new AI apps wouldn’t seem such a frightening prospect. But for once, wiser from experience, we have a second chance. Ths time we had better take it.

Last year Stuart Kirk upset his bosses and then quit his job as head of responsible investing at HSBC Asset Management after advising investors to stop fretting about climate change since human ingenuity would probably cope with it.

In a recent column in the FT he was at it again. Another thing investors didn’t need to pay much attention to, he suggested, was corporate performance. 

Eh? 

Well, he said, consider that in the US over the last century the average real rate of stockmarket returns has stayed subbornly at 6.7 per cent. Then add that profitability over the very term appears to revert to the mean; and finally – the killer – that since 1926 all net US stock exchange wealth has been created by just 4 per cent of quoted companies. That’s right: 96 per cent of companies generated none at all – and that in a period during the latter half of which managers were explicitly pursuing a policy of maximising value for shareholders. 

As Kirk indicates, that raises some interesting questions. Why, he asks, ‘are there so many poor-performing shares when 250,000 students are enrolled as masters of business administration each year? And what’s been gained from the almost trillion dollars per annum spent on consultancies worldwide?’ Or, we might add, from the multibillion-dollar global leadership industry, not to mention the undergraduate business degrees awarded to more students around the world than in any other subject?

It’s a good question. So, if overall they don’t do much for investors, are CEOs with MBAs good for business? As it happens, that’s the question the very serious MIT researchers Daron Acemoglu and collaborators sought to answer in a study looking at what happened when companies replaced a CEO without an MBA or business degree with one with such a qualification. The answer: not much. There was no evidence that business graduates increased sales, productivity, investment or exports. What they did do was reduce pay growth for the workforce and increase the take of shareholders and managers. This boosted the share price in the short term – but the authors speculate that over time it could damage profitability: there was no increase in investment allocations, and higher-skilled employees were more inclined to leave after their relative pay cut.

Meanwhile, more and more day-to-day management is being carried out by algorithms and AI rather than humans. For example, Uber now knows enough about individual habits and preferences to offer the same job at varying prices to different drivers according to the behaviours they want to evoke; or to ‘deactivate’ them, sometimes permanently, without human intervention (the company denies this). Companies routinely use technology to surveil and control their workers – chaplains, funeral directors and care workers as well as telephone agents and clerks and almost anyone working from home – much more closely than human managers ever did before. And with the arrival of ever more capable AI software – decision aids, for instance – the proportion of jobs it could credibly eat expands as fast as America’s waistlines.

You might see where this is leading. If CEOs as a group, whether qualified or not, are not very good at either benefiting the investors they are supposed to be acting for or boosting business performance; and if for this unstellar performance they are currently in the biggest US firms taking home 399 times as much as the average worker – and in the case of Amazon’s Andy Jassy’s staggering 2021 stipend of $213m, 6,472 times – isn’t there a case for at least thinking about letting software eat them too?

Some are already doing so. In 2015, Devin Fidler of the Institute of the Future described a rudimentary virtual ‘iCEO’ that had been programmed to automate complex management activities by breaking them into smaller chunks. Reporting ‘amazing’ initial results, he warned senior managers who assumed they were immune to substitution to think again: ‘It will not be possible to hide in the C-Suite for much longer. The same cost/benefit analyses performed by shareholders against line workers and office managers will soon be applied to executives and their generous salaries’, he predicted.

Eight years later, I can’t find a mention of ICEO on the IF’s current website. But lo and behold, Fidler’s prediction is coming to pass. Last year a Hong Kong firm, NetDragon Websoft, replaced its CEO not with an MBA but an AI-powered ‘virtual humanoid robot’ it named Tang Yu. No experimental startup, NetDragon Websoft is a $2bn, 3,300 person quoted firm in ‘massively multiplayer online gaming’ – which peresumably it a head, or brain, start with AI. And so far Ms Yu is doing a creditable job. As of March 2023 Netdragon was outperforming Hong Kong’s Hang Seng index by 18 per cent. 

Tantalisingly, we don’t know much more than that. And six months is clearly too soon for definitive conclusions. But some ideas suggest themselves. On the one hand, CEOs are unlikely go without a fight. On the other, given that most senior executives accept that their companies make bad decisions at least as often as good ones, and no amount of trying has yet established a correlation between CEO pay and corporate performance, activist and other primarily stock-market-driven investors may well start to take a dimmer view of the returns they are getting from the human CEO’s salary millions. What’s more, with the rapid advance of AI, Ms Yu 1.0 is liable to be succeeded by versions 2.0 and 3.0 in short order, and probably in a number of competing flavours: hardcore, B-Corp, and virtual Elon Musk, say. In other words, while NetDragon Websoft may be the first substantial firm to be managed by wire, it will almost certainly not be the last.

As for the rest of us, the implications aren’t entirely comforting. True, when I asked Bard, Google’s large language chatbot, if maximising shareholder value was a good corporate strategy, it replied cautiously that while it might be in some circumstances, strategy should also take into account the needs of other stakeholders. So far so good. But models ‘learn’, and if they learn as Acemoglu’s MBAs do, that leaves plenty of opportunity for the development of self-fulfilling prophecies resulting in less balanced outcomes. As Stanford’s Bob Sutton put it in an entertaining recent discussion with Rita McGrath, ‘[What my engineering colleagues] teach me is that AI algorithms are just a function of the human being who writes them. So maybe we just have to have fewer assholes writing algorithms’. Well, yes – but that hardly seems the stoutest defence against the robots now beginning to mass at the gate.

The suicide of head teacher Ruth Perry is a terrible reminder that there is even worse than burnout at work. Perry took her own life on learning that Ofsted, the schools regulator, was about to downgrade her Reading primary school from ‘outstanding’ to ‘inadequate’, potentially ending an exemplary 30-year career. 

In a grotesque irony, the one thing the happy and popular school was marked down on was safeguarding. No one would downplay the importance of keeping children safe, but doing so by endangering those who look after them is a contradiction that seems to have passed by the regulator, whose response to the ensuing outcry has been to plough on with its inspections exactly as before.

The episode is triply scandalous – a graphic example of everything that’s wrong with our system of regulation. 

The first is that, as with burnout, the brutality of the method fails the first test of the ‘no asshole rule’ famously defined by Stanford professor Bob Sutton: it’s plain wrong, and inexcusable even if it worked. ‘If performance is your only dependent variable, the human race is not in great shape,’ Sutton reflected recently on wholesale sackings by Big Tech. A place should be found for dignity, he added, ‘and sometimes it even helps’.

The second scandal is that it’s counterproductive, both for regulation’s own aims – improving lives by raising education and care standards for children – and the country’s wider economic objectives.

Like health workers, teachers, particularly heads, have had no let-up from the enormous pressures of the last three years, facing first Covid and now the need to make up for the life-affecting disruptions that have held back learning and development. Accepting the need to put children first, an expression of support somewhere in Ofted’s dry-as-dust statement of principle, values and strategies would have been a better reset than springing a new round of unannounced, even more stringent inspections on an exhausted workforce.

The Ofsted affair comes at a critical time for the profession. The UK is suffering a national shortage of teachers. Vacancies are running at twice pre-Covid levels; nearly half of current teachers, ground down by workloads that have already brought them out on strike, say they plan to quit in the next five years. To many, the inspection crisis is ‘the last straw’. A few years ago, at a routine check-up, my GP greeted me with the news that she had just resigned, a decade early, the day after a bruising inspection that had reduced her as head of the practice to tears and her husband to such rage that he had to be deterred from tracking the chief inspector to his office to punch him in the face. My doctor’s reaction was less extreme than Perry’s, but the result is the same: one professional the less to do an essential job for the community at a time of acute labour shortage – a stupid self-inflicted wound.

As for the economy as a whole, the chancellor’s recent autumn statement made much of the need to coax back to work as many as possible of the 700,000 workers over 55 who have vanished from the national workforce since the pandemic. Casting light on the missing elders, and underlining the previous point, LBS’s Lynda Gratton recently noted her research finding that reluctant returners split more or less evenly between the sick, carers for others and those who would rather retire early even on a lower income than go back to work that they detest. Piling fresh pressure on already stressful occupations is not an obvious way of persuading them to change their minds.

The third scandal is that after all that, regulation in its current form doesn’t work. If it did, we wouldn’t live on an island surrounded by sewage, where a substantial proportion of trains simply don’t turn up at the platform each day and in which almost the first action of every incoming government is to set up a ‘better regulation’ taskforce, with results that are always as disappointing as the last one. 

Politicians are right that regulation needs reform, but they have no idea how unfit for purpose it actually is. Current regulation doesn’t prevent scandals – witness the emerging horrors in the police and fire and rescue services, the dysfunctional energy market and the water and rail disasters mentioned above. Its interventions don’t have a good record of improving performance for the user, quite often the reverse. And nor does it satisfy the politicians supposedly in charge who are perplexed by the regularity with which supposedly ‘outstanding’ establishments are later revealed to be scandalously bad, and by the discovery that the figures the assessments are based on are hopelessly unreliable. 

This is because regulators make the cardinal error of mandating the how – methods and measures – rather than the what, desired outcomes relating to purpose. At a stroke, innovation is killed stone dead as managers learn that it’s not pleasing parents or patients that win them an ‘outstanding’ label but complying with the edicts of inspectors and regulators. Too often, they find themselves locked into practices and processes, often involving costly digital-first ‘solutions’, that reflect today’s faulty management assumptions instead of challenging them. The result is schools that are Gradgrind on steroids.

This needs to be reversed. A good head teacher’s job is to figure out how to create a happy, inclusive and caring school where teachers can carry out the job they joined the profession to do, not a joyless exam factory that boasts of checking all the safeguarding tick-boxes. Trial by ordeal has no place in government policy or on a list of acceptable management practices.