Only a few pages into Lord Myners’ report on the UK Cooperative movement I had the feeling I had read this before.  Soon after I returned to Oxford University in 1996 Coopers and Lybrand (as they then were) prepared a report on the organisation of the University.  Much of what Myners wrote could have been taken straight from that document. Still, Lord Myners’ report is much better written. perhaps reflecting the author’s early career as a financial journalist

The purposes, origins and histories of the two  organisations could hardly be more different, but  the similarities are the common outcome of failed governance structures.  Multiple layers of authority overlap both horizontally (different people and committees engage with the same issue) and vertically (every decision is liable to review by some other body).  The lack of focus in decision making results in an absence of executive authority while professional management is subject to random amateur interference.  In consequence, able people are not easily attracted to management roles; and so the amateurs view the professionals with often justified  and  frequently reciprocated contempt.

With no defined power structure, the vacuum is filled by people who turn non-executive roles into a near full-time occupation.  Many such people are well intentioned, though some of them are obsessed with a single issue  – diversity, equality, fair trade, or the environment.  Others promote a sectional interest, which may simply be their own.   Petty politicians enjoy the feeling of being at the centre, and jostle for power:  the power they seek is not the ability to get things done, but the negative power that comes from ‘no decision without me’.  Secrecy about matters of no significance bolsters their sense of self importance.

       When  non-executives enjoy power without responsibility, the corollary is that executives suffer responsibility without power.  The organisation cannot pursue a consistent or coherent strategy, and may find it difficult to take any decisions at all.

The chaotic process is vigorously defended by claims of democratic legitimacy  and by reference to the traditions and distinctive values of the organisation. But the democracy is a sham, and the values and traditions – admirable if  different in both the Coop and Oxford– encourage a tendency to self congratulation immune to deficiencies in current performance.  The proud history also leads people mistakenly to blame organisational incapacity to  adapt on current individuals rather than inherited systems and structures.

Anyone with knowledge of a badly run not for profit organisation,  or a poorly functioning government department or agency, will find much that is familiar in this account.  Commercial organisations can suffer similar organisational failings.  You could tell a rather similar story about the decline of General Motors, and Alex Taylor’s book From Sixty to Zero does.   But in the private sector corrective mechanisms are usually faster to come into play. General Motors could experience gentle decline over several decades only because its entrenched incumbent position was so strong – and its past had left a legacy of liabilities which few predators wanted.

       The Coop, whose principal businesses have been in similar sustained decline, could remain in denial until mistakes in its banking subsidiary proved catastrophic.  The Coopers and Lybrand report on Oxford was safely buried: a distinguished cleric led his colleagues in denunciation of  the consultants for their ignorance of the unique characteristics  of the University. 

Commercial organisations are more vulnerable to the opposite governance failure – the domineering executive with a greatly exaggerated sense of his knowledge and competence, who rules by fear, and rejects dissenting voices and bad news. That is how Henry Ford’s eponymous company lost its market leading position to General Motors in the first place.  Royal Bank of Scotland is more typical of today’s corporate failure than General Motors, although there are plenty examples of both types –  contrast Fuld’s Lehman and Messier’s Vivendi with no-one’s Woolworths or United Steel.

Yet the basic principles of good governance are now well understood.  A collegiate but self-challenging executive team. Clear delegation of responsibility with strong accountability for outcomes.  Supervision by non executives who do not override executive responsibility, but have the experience and status to present effective challenge. and to displace underperforming management while upholding  the fundamental purposes and values of the organisation,  These principles are as relevant to a mutual as to a company, as necessary for a university as for a bank.