business changes

The giants. They have lost the effortless supremacy - based on global spread, unlimited wealth, invincible brands and touchingly loyal customers - which they once so richly enjoyed.

Instead, they must battle to defend their markets and their margins against pressures, including new competition, over which they have no control. Some resort to mergers and acquisitions in self-defence, which may well double their trouble. Some seek to transform their creaking empires into powerhouses of modern management, at which most fail lamentably. Why do these once-mighty management machines find it so desperately difficult to extricate themselves from stagnation?

One reason is the depth of the holes that they and/or their predecessors have dug. Kodak's loss of market share to Fuji, and its failure to develop powerful new businesses, turned it, perhaps permanently, from leader to follower; sales fell by a quarter over the Nineties. The hole-diggers customarily ignore the shifting earth beneath their feet

Senior managers customarily complain about resistance to change among the lowest orders. In fact, resistance among middle managers is both stronger and harder to eradicate.

Many are wedded to the post and fearful for their jobs (often with reason). But their conservatism is generally outdone by their seniors. Top executives not only lived under the previous dispensation: they created it. Even Tony Blair, vaguely admitting responsibility for the Dome, is a model of outspoken self-criticism compared to the self-delusion of the typical authors of corporate failure.

The problem with denial is that it delays response - and slow reactions invariably make bad much worse. That is why the over-familiar Supertanker Myth is so dangerous. Corporate captains like to compare their vessels with bulk oil carriers that can only turn at lugubrious speeds. That misses the crucial point. The transformation they need changes the supertanker into a fleet of smaller, fast-moving (and fast-turning) motor boats.

This metaphor was actually used by Heinrich von Pierer, CEO of Siemens, to explain his plans for corporate revolution. Three years on, his flotilla is no more impressive than the supertanker it supposedly replaced, earning half of Hewlett-Packard's profits on 50% more sales. As the Siemens example shows, the groaning of the greats is heard in high technology as well as low, and for the same basic reason. Speedboats and supertankers need wholly different crews.

What can GM shareholders expect from a new CEO, G.Richard Wagoner, who is a 23-year veteran? What can Wagoner expect when he calls on other veteran managers to 'shake off GM's complacent, cautious traditions and take more risks'? You can only sympathise with the analyst who told the Wall Street Journal that, without someone to pressurise slow-moving management, 'there's no such thing as a p/e too low for a company [GM] with these kinds of characteristics'.

Speed is of the essence. Yet the departed CEO of P&G was berated for trying to force through too much change too fast. His company's 'restructuring' programme, however, is a five-year marathon - excessively long in any era, but an eternity in the Age of the Internet. Unless change comes fast and runs swift and deep, mega-companies will go on limping from one stage of underperformance to the next.

The purple passages in-between serve only to delude. Restructuring, the euphemism for closures, cutbacks and lay-offs, always pays dividends in the short to medium-term. True transformation, however, will not be achieved unless everybody in all the businesses supports the strategy and its purpose, and is fully and personally involved in its execution - from bottom to top. Note the inversion. At the top, those who have the power are powerless to create change, except by genuinely devolving and sharing that power. Mostly they won't.

Twenty years ago, Jack Welch started turning General Electric round with remarkable speed and legendary success, only to conclude that he should have moved faster still.