leadership skill

A new set of business heroes is in the making - the super-managers whose supreme efforts will turn round suffering mega-companies. There is abounding opportunity. Hardly a day goes by without another giant tumbling out of bed.

The mega-managers have a superb excuse. In the hallowed Clintonian phrase, 'it's the economy, stupid'. Toshiba wouldn't be laying off (i.e, sacking) thousands of people world-wide, or Ford planning further European comebacks, if the wonderful Greenspan boom hadn't developed into a semi-bust whose contagion is spreading worldwide.

Give managers an excuse, and they'll take it, good or bad. But they can't have it both ways. If the economic downside is responsible for their sorrows, the previous upside - and not any miracles of marketing, innovation, man management, strategic wisdom, or dynamic investment - must also explain much of the earlier success. Except that, for many great companies, there wasn't any.

Marks & Spencer's phenomenal achievement in turning a silk purse into a sow's ear was executed against the background of soaring consumer demand. BT tumbled from grace while, to all intents and purposes, the telecoms sector (with its virtual UK monopoly) was still generating healthy growth and profits. Hewlett-Packard was left stranded by market and technological upheaval well before the Greenspan hiccough (or worse).

The list of lagging leaders could go on and on. It prompts two wry and related thoughts. First, that the reputations of star managements often (perhaps generally) bear little relation to their actual abilities and achievements. Second, that, in any event, top managers in established companies have far less influence on events, even within their own corporate walls, than is commonly supposed.

The argument may sound strange, but it embodies a long-held (indeed, conventional) view about large companies, let alone mega ones. Like boxers, the bigger they are, the harder they fall - because they are harder to move, motivate and, in short, manage. Size imposes a formidable need for control, at which the giants have consequently developed relative expertise. But this very success militates against progressive brilliance.

The prolific routines that administer, coordinate, measure, monitor, discipline and organize form high barriers to the much trickier requirements of innovation, fast reaction, flexibility, experiment, and creativity. LBS professor and strategic thinker Gary Hamel has written about 'a dirty little secret' which lurks at the heart of this corporate dilemma: 'We haven't the faintest idea of how to invent a strategic notion'.

To put it crudely, mega-managers often can't see the trees for the wood. Self-imprisoned in their ivory-and-glass towers, they easily become inbred. The bulk of their overpaid time is not spent with customers, still less the troops, but with each other. Discussing, arguing, jockeying (for power and pay), deciding (more often, failing to decide), appointing and disappointing, the head office inhabitants are far removed from the real action in the trees.

That would matter less if the chieftains had a better, smarter, more powerful view of the wood. Enter another well-aired defect of the large firms operating in large businesses. They tend to move, or stumble, in step. The Gadarene rush of the telecoms companies to pay grotesque prices for third generation licenses is only part of a pattern - overspending on capacity and connections that could never be recovered from falling prices.