The Economist UK - 27.07.2019

The EconomistJuly 27th 2019 Business 55

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Bartleby The curse of efficiency

Economist.com/blogs/bartleby

C

harles handyhas been through a

lot of challenges in a long career as a

manager at Royal Dutch Shell, an oil

giant, followed by a spell in academia

and acclaim as a business writer champi-

oning more flexible, less hierarchical

organisations. His latest battle is with his

health. Earlier this year, the then 86-year-

old Irishman suffered a stroke which

meant that he had to learn to walk, talk

and even swallow all over again. True to

his reputation as a business guru, the

experience taught him a valuable lesson,

as he explained to Bartleby in a recent

interview.

As far as Mr Handy was concerned,

the point of his hospital stay was to allow

him to recover as fully as possible. That

meant he needed to be up and about. In

the view of the nurses, that was a poten-

tial problem; he might fall and hurt

himself. Their priority was to keep him

safe. In practice, that required him to stay

in bed and keep out of trouble.

The experience led him to reflect on

the “curse of efficiency”. Organisations

focus so much on efficiency that they fail

to be effective. Instead of concentrating

on their core goal, they pay attention to

narrower measures like cutting costs, or

reducing the inconvenience suffered by

their staff. Examples of the problem can

be found in many places. The purpose of

education is to prepare children for later

life, but all too often the focus is on

getting the children to pass exams.

The drive for efficiency can also seem

callous. Mr Handy argues that managers

tend to like things more than they like

people. If all the staff were replaced by

robots, he says, running a business

would be a lot easier. As it is, there is a

temptation to try to turn people into

things by calling them “human re-

sources”. Call someone a resource, and it

is a small step to assuming that they can be

treated like a thing, subject to being con-

trolled and, ultimately, dispensed with

when surplus to requirements.

Perhaps Mr Handy’s philosophy is best

summed up as “what do they know of

business who only business know?” Before

his stroke he wrote a book, “21 Letters On

Life And Its Challenges”, which takes the

form of advice passed on to his grand-

children. The focus is more on gentle

wisdom than on management theory.

Indeed, Mr Handy argues that most organ-

isations whose principal assets are skilled

people, such as universities or law firms,

tend not to use the term “manager”. Those

in charge of them are called deans, direc-

tors or partners. Their real job is best de-

scribed as leadership rather than manage-

ment. And one of the primary functions of

leadership is setting the right purpose for

an organisation.

Leadership also involves letting sub-

ordinates learn for themselves. When he

started work for Shell, he was running the

firm’s oil business in Sarawak, Malaysia.

He had studied Greek and Latin at univer-

sity and knew nothing about business or

energy. There was no telephone link to

the regional office in Singapore, and

letters took weeks to arrive. No senior

manager felt inclined to visit.

Mr Handy says this gave him the

opportunity to learn from his mistakes

in private. He argues that “education is

an experience understood in tranquillity.

You look back and see where you went

wrong.”

Because of this, he thinks that busi-

ness schools need to change. What they

tend to do at the moment is encapsulate

the best practices of current businesses,

codify them and pass them on. But the

real challenge that business-school

graduates will face is dealing with the

unexpected. That cannot be taught in the

classroom but needs to be experienced in

the outside world. So students should

spend time at small businesses or com-

munity projects, and then write a report

on how they coped.

Furthermore, if these students aspire

to be leaders, they need the ability to tell

stories and create a culture. That requires

broader knowledge than studying only

balance-sheets and sales projections.

Appropriately enough, Mr Handy has

hopes of writing yet another book, based

on the Bible, which he says is an excel-

lent case study of storytelling. Clearly, he

refuses to let illness hold him back.

Looking back over his career, he believes

that teaching and writing is all about

creating the “Aha!” moment. That occurs

when people realise that an idea the

teacher or writer has advanced is both

useful and something they already knew

but had not articulated. Bartleby hopes

that Mr Handy’s readers will be saying

“Aha!” for some time to come.

Reflections of a business guru

At his confirmation hearings he agreed

with a senator who said that “dominant Sil-

icon Valley firms could use their market

power...to discriminate against rival pro-

ducts, services or viewpoints.”

This last point in particular worries Re-

publicans. They view these giants as liberal

bastions, which will discriminate against

right-wing views in efforts to rid their plat-

forms of extreme and hateful content. This

month President Donald Trump held a “So-

cial Media Summit” where right-wing

bloggers aired their grievances. In a sign of

how far critics will go, Peter Thiel, a suc-

cessful tech investor and sometime de-

fender of Mr Trump, recently speculated

that Google had been “infiltrated” by Chi-

nese intelligence services (despite a Trump

tweet promising to “take a look”, his ad-

ministration later dismissed the idea).

Whether these are just acts of intimida-

tion ahead of presidential elections next

year remains to be seen. If Facebook’s set-

tlement with the ftcis any guide, Big Tech

could still emerge mostly unscathed. The

large fine and its new privacy bureaucracy

notwithstanding, Facebook does not have

to change its data-collection practices and

is off the hook for any more claims that it

violated the previous ftc settlement.

In a twist, Microsoft, the world’s most

valuable listed firm, with a market capital-

isation of over $1trn, has hardly been

touched by the techlash. It has learned hard

lessons from going through the regulatory

wringer at the turn of the century: look be-

yond the cash cow (Windows); rapacious-

ness ultimately does not pay; and work

with regulators. Another Hemingway

quote is less well-known among geeks:

“The world breaks everyone and afterward

many are strong at the broken places.” 7