In a mature industry – as exemplified by the cult of the practical man at British Motor, or Henry Ford’s destruction of a prototype six-cylinder engine – internally focused beliefs deflect customer focus and kill innovation. The principle that familiarity with “the way we do things here” is an essential criterion for advancement is a sure sign of the failing organisation.
In the 1960s, MG, a division of British Motor Corporation, was experiencing problems with the harsh and uncomfortable ride of its cars. John Thornley, its chief executive for 17 years, described in the trade magazine Motor how the problem was solved.
He gave credit to Syd Enever, who had joined Morris Garages straight from school at the age of 14. Thornley recalled “finding Syd with a large book which he had drawn from the local library. It proved to have been published before the turn of the century and its subject was the suspension of railway locomotives. He had found in this the basic principles for which he sought, unclouded by all the high falutin’ clap-trap modern designers write”.
In the meantime, German and Japanese car manufacturers, with teams of skilled engineers, were setting new standards of quality and reliability in a developing global automobile market. Facing this competition, British Motor Corporation steadily declined. When Thornley wrote, the company enjoyed a dominant position in the UK. Two weeks ago, MG Rover, its successor, finally called in administrators. The British car industry flourishes today, but in foreign-owned companies and plants.
The title of Thornley’s account, Forever Abingdon, turned out not to be true. The plant closed 20 years ago, and of all Rover’s operations MG is the most likely to attract foreign bidders. The deadly combination of arrogance, incompetence and amateurism revealed in Forever Abingdon destroyed not only British Motor Corporation, but large swaths of British manufacturing industry.
The cult of the practical man, as in the lionisation of Syd Enever, was deeply entrenched in British Motor. William Morris, the company’s founder, had not only himself succeeded without formal education but blamed the failure of his first business on his partner, a university man. Thereafter, he refused to employ graduates. Paradoxically, he would, as Lord Nuffield, become a major benefactor of academic research, planning to inculcate practical knowledge in ivory towers but outmanoeuvred by wily academics who wanted his money but not his opinions.
Henry Ford was perhaps the greatest businessman of the 20th century but, like Morris, he prized worldly skills above book learning. By the end of his life his only confidante was his head of security and the company he had created was close to collapse. When his son took control of the company in 1946 he rapidly introduced professional management. He recruited the whiz-kids who had developed US naval logistics and hedged his bets by also hiring an experienced team from General Motors. Two decades later, when Thornley and Enever were in charge of MG and British Motor Corporation still proudly abstained from the “milk round” of graduate recruitment, Ford of Europe had a much admired scheme for management training and development. It is no accident that one company is still in business and the other is not.
Morris and Ford did not realise that greater social mobility in the 20th century meant that exceptional people like themselves were less likely to be on the shop floor and more likely to have attended university. Today, Morris would himself attend an Oxford college instead of repairing the bicycles of the dim but well-connected young men who did and Ford would hold a PhD from Massachusetts Institute of Technology. And they would need the knowledge thus acquired: modern automobile design requires advanced skills from many disciplines.
But Ford and Morris believed the main, even the only, source of business knowledge was already within their organisation. This may have been true when intuitive geniuses, like Morris and Ford, pioneered simpler products but innovative business leaders today, such as Sam Walton, Wal-Mart’s founder, and Steve Jobs of Apple Computer, need to buy the best available technology. And in a mature industry, such internally focused beliefs deflect customer focus and kill innovation – as exemplified by Ford’s famous insistence that customers could have any colour they liked so long as it was black and his notorious destruction of a prototype six-cylinder engine. The principle that familiarity with “the way we do things here” is an essential criterion for advancement is a sure sign of the failing organisation.