The triumph of common sense; John Harvey-Jones and ICI.

by | 22 Nov 2009 | Business & Leadership

One of the most disturbing things about getting older is that it creeps up on you.  Things that seem fresh in the memory turn out to have happened decades earlier.

John Harvey-Jones is a case in point for me. I remember his BBC TV series, Troubleshooter, very clearly. This large, apparently bumbling and rather avuncular chap, with a distinctly nineteen-seventies’ hair cut descending over the ears from an extremely high forehead, turned out – surprisingly to the casual viewer – to have a business mind like a steel trap. Faced with an array of real problems across a wide range of businesses around the world, Harvey-Jones would get straight to the heart of the matter. He would chat to the protagonists in a casual and friendly manner, assess the issues at hand – and then deliver a text-book solution in a rather casual and understated manner. But (and this is the joy of it) Harvey-Jones’s solutions always sounded just like common sense. A highly-informed and deeply perceptive form of common sense built on years of hands-on military and industrial management experience, but common sense (and nothing but common sense) nevertheless. Why hadn’t we seen that apparently obvious and pragmatic solution for ourselves?

Submarine commander, spy and young industrialist.

Harvey-Jones joined the navy as a midshipman at the age of sixteen, surviving the sinking by enemy action of the first two ships on which he served. He received his first naval command, in the submarine service, at the age of twenty-four.

After the war, he studied Russian at Cambridge and joined Naval Intelligence, serving as part of the ‘British Baltic Fishery Protection Service’; a very transparent cover for spying on the Soviet Baltic Fleet. Harvey-Jones was awarded an MBE in 1952 for his services to Naval Intelligence. He resigned his commission in 1956, having been refused permission for more flexible working arrangements that would allow him to spend more time with his family after his daughter had been diagnosed with polio. He joined ICI as a junior manager in the same year.

His rise through the company ranks was steady but, as was common at the time, not meteoric. He was forty-nine when he joined the main board of directors and fifty-eight when he became chairman in 1982. He set about restructuring the massive company, closing down or selling off loss-making divisions or those that he felt did not fit with ICI’s core business. One is reminded of Jack Welch’s mantra of ‘Fix, sell or close.’ (Welch was chairman and CEO of General Electric from 1981 to 2001.)

In less than three years, having laid off a third of the workforce and reorganised the chemicals giant from top to bottom, Harvey-Jones had turned ICI’s bottom line from a loss into a £1 billion profit and doubled ICI’s share price.  He was awarded a knighthood and voted Britain’s Industrialist of the Year for three years in a row.

John and Jack: the more human face of success?

There are many similarities between Jack Welch and Sir John Harvey-Jones – they both ran huge corporations with many divisions and spent nearly all of their time as chairmen closing, selling, merging or fixing large divisions. Big business doesn’t get any bigger than this.  John and Jack were not so much running companies as running whole industries. Or several industries.

But, whereas Jack Welch’s unstoppable drive for success seemed (in my mind) to leave behind some desirable human qualities, Harvey-Jones’s management philosophy remained human, inclusive, tolerant and humane.

When Jack Welch was made CEO of General Electric in 1981, he soon came to the same realisation as every other leader of a large organisation: this is a huge job; he can’t do it all by himself; he is entirely reliant on the calibre of his management team.

Jack’s response to this was to develop his famous (or infamous) technique of ‘differentiation’.  Every year, Jack’s top team managers were called upon to assess their own teams and to divide them into the top 20 percent, the middle 70 percent, and the bottom 10 percent. The bottom ten percent had to go. Every year.

This drives excellence, says Jack, and it is a false kindness to keep on somebody who will not grow and prosper in the company.

Well, yes. But what if, through clever recruitment, motivation and continual assessment, you really do have a first rate team. From top to bottom. Some stars, everyone solid and contributing, but no failures?

Doesn’t happen, says Jack.  Just try harder, and the weaknesses of the bottom 10 percent will be revealed. Then they can be cast into the burning fiery pit. Do the words ‘witch hunt’ spring to anybody else’s mind? Or, chillingly, the word ‘quota?’  What, indeed, is wrong with your recruitment procedures if you are not merely resigned to, but actually insist on, losing ten percent of your top people every year?

Here’s what old dodgy hair-style Harvey-Jones has to say on the subject of working, for example, with a new board of directors. This quote comes at the end of a long and thoughtful piece on the ideal composition of a board of directors.

‘One may feel, at the end of this formidable list of the things which are ideally looked for in the selection of one’s board, that the task itself is impossible, especially bearing in mind that you start from a particular position, with particular people already developed or on the board. This is not actually true, and the converse, that one is starting with a totally green field, is also incorrect. The good leader is not the man who merely selects the team of whiz kids, but rather the man who gets extraordinary results out of those people he already has, and you can be quite sure that the members of the board of any large organisation have already achieved a great deal in order to hold their present positions.’

What Sir John is not saying is that a leader should accept the team that they are given and try to make the best job of it. He makes the sensible point that, even in apparently perfect circumstances,  key members of one’s carefully selected team move on to other opportunities or become ill. And some members, indeed, do not contribute in the way that one had hoped and have to seek their futures elsewhere.

What Sir John is saying is that the obsession with recruiting some ‘dream team’ is doomed to failure, and that starting with the people who have already risen to the top of the pile is not necessarily a stupid idea. I like to believe that Sir John would also argue that the implacable culling of ten percent of management each year is not,  in fact, a guaranteed route to the perfect composition of future top teams.

Lego, team-building and the occasional necessity of visiting bars

Sir John’s preoccupations always seem to reflect a healthy consideration for respecting the contributions of others and for the absolutely central skill of being able to work together as a team.  He tells a nice story about attending one of those rather pointless-seeming leadership and team-building exercises. This particular exercise involved building a structure from a limited number of pieces of Lego.  A construction engineer within the team studied the task and declared it to be impossible.  There were not enough pieces of Lego. A works foreman, several rungs further down the hierarchical ladder, believed that the task was possible, but his contribution was ignored. The team began to debate the philosophical meaning of the task: Was it actually an impossible task? Would the recognition that it was impossible be the correct answer? The foreman, in a huff,  took himself off and began to work with the Lego on his own.

The foreman produced the winning piece of work. The team crowded around him, belatedly applauding his efforts and sharing in his unexpected glory, and the engineer stormed off in a huff.

At this point, the point of the exercise dawned on HJ. As a group, they had failed dismally.

‘In the nick of time a couple of us rushed out, grabbed a taxi, hurried to the railway station and were just in time to haul the still-smouldering construction engineer from the train. In order to persuade him to stay it was necessary to stop at several bars on the way, but eventually we got him back to the group.’

The simple exercise, concluded Sir John, was an object lesson in teamwork, involvement, mutuality of respect and the ability to recognise the value of contributions from any member of the team, no matter how senior or junior.

Harvey-Jones is a man whose main interest throughout a long and distinguished career had been to consider how people behaved in a variety of different work situations and to figure out how to get the best out of them; a man who believed, with refreshing candour, that it was virtually impossible to teach an adult anything at all. ‘My own experience of trying to train and teach managers is that it is extremely difficult to teach grown-up people anything. It is, however, relatively easy to create conditions under which people will teach themselves.’

Harvey-Jones believed in getting the best out of people; in bringing together teams of people who understand the objective, have grasped what the problem is, and who are motivated to solve that problem together. He is very funny on the subject of different corporate cultures (all instantly recognisable) which are not, as he rightly says, conducive to genuine communal effort.

‘(In one division) everything was meant to have been thought out and planned, and woe betide any signs of undue excitement or stress. (In another) the form was to rush to the boss, roll on the carpet, explain excitedly the catastrophe one was faced with, and rush out again. Some hours later one returned and claimed, modestly, that one’s own efforts alone had won the day, and the crisis had been averted.’

Neither of these cultures is actually succeeding in the real world, says Harvey-Jones. ‘Such organisations look inward rather than outward. Customers, or suppliers, or competitors, or even what is going on in the outside world, seem of far less importance than the endless struggle to achieve and operate the perfect bureaucracy. [. . .] All the concentration is on political in-fighting, and only the bare minimum on the actual achievement of a competitive advantage in the real world outside.’

But my all-time favourite Harvey-Jones idea is his ‘bonfire of the control systems’.

A series of unlikely events

Harvey-Jones is a true democrat.  He wants teams of people to have the freedom to find their own solutions to the challenges that face them – making mistakes as they go along, and learning from them every time.  Bosses, says H-J, have a delusion that they will be able to legislate against mistakes. Every time a mistake gets made, a procedure is put in place to prevent it happening again. But, of course, the same thing never does quite happen again. Something else a bit different happens, and then has to be legislated against all over again . . .

‘You then enter what I have termed the cycle of increasing authoritarianism, or the cycle of increasing centralisation. A business mistake is made, and it is assumed that the mistake would have been avoided if somebody at a higher position in the organisation had known about it, or had intervened. The assumption itself may patently be wrong, but nevertheless it is difficult for people in superior positions to realise that they are just as fallible as those below. A power that had been delegated previously is therefore removed, usually in quite a small way, by an instruction that in such and such a case the matter is to be referred upwards. Of course exactly that case never occurs, or if it does it occurs in such a way that it is not recognised as being a repeat run of the previous bitter experience. You therefore get an increasing tangle of bureaucratic instructions which seek to legislate for an endless series of unlikely events which have occurred at some time in the organisation’s past. Unless there is a really determined effort to ‘burn the books’, and reduce this tangle of bureaucracy, the people at the bottom of the organisation on whom everything depends feel an increasing lack of responsibility for the achievement of the objective. Success in the organisation becomes a matter of following the rules, and it is much easier to obtain advancement and favour but avoiding mistakes, than it is by actually achieving the goals so vital for business success.’

What Sir John put in place was a ‘a bonfire of our control systems.’  The main board now sought to control only ‘profit, cash and broadstrategic direction.’  They also sought, of course, to influence divisional boards in other areas, but they did not dictate.

‘We (had) sought, irrespective of the relevance to the particular concern, to measure improvements in the use of energy the productivity of capital, the number employed and the improvement in productivity and so on. The point is that many of these specific areas of functional excellence are not independent of each other and improvement in one area may be at the cost of worsening in another. What matters is the ultimate profit, and if it can be increased by employing some more salesmen, so be it, even if the numbers go the wrong way.  Such judgements, however, are best made as close to the action as possible, rather than on a theoretical basis a long way away.’

Keep the operational decision-making a close as possible to the action.  Give the people who are close to that action the freedom to make decisions that are compatible with the strategic direction and the overriding constraints of profit and cash.  Sounds good to me.

‘An increasing tangle of bureaucratic instructions which seek to legislate for an endless series of unlikely events which have occurred at some time in the organisation’s past . . .’

Well – I’m sure that doesn’t happen in your organisation, but I do have some friends who would recognise that corporate culture . . .

 Source: John Harvey-Jones, Making it Happen: reflections on leadership, William Collins, London, 1988


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