Managers and Mantras: One Company’s Struggle for Simplicity

Citation

O’Regan, D. (2000), "Managers and Mantras: One Company’s Struggle for Simplicity", Managerial Auditing Journal, Vol. 15 No. 5, pp. 253-255. https://doi.org/10.1108/maj.2000.15.5.253.1

Butler and Keary’s absorbing history of the Inchcape Group recounts the tale of a unique organisation. It is a story of inspiration, genius, folly and error. The study has qualities rare in business literature: it is elegantly written, and healthily critical of the ambitions of management gurus. The latter trait is admirable given that one of the authors is an INSEAD researcher, the other a management consultant and former Inchcape director. The authors identify three “villains” in the Inchcape story – business schools, management consultants, and City pressure for short‐term share price performance. These three hazards coalesce into a “Bermuda triangle into which a company’s sense of its own capability and best interests could disappear”.

The book recounts the intriguing origins of Inchcape, that was firmly in a tradition sometimes referred to as the marriage of the thistle and the lotus: the remarkable development of Scottish‐Asian business concerns during the British Empire (one thinks of Jardine Matheson, for example). The first Lord Inchcape – an expatriate Scot in late nineteenth‐century Calcutta – laid the foundations for a multinational conglomerate on top of an unremarkable Indo‐British transport company heavily dependent on the opium trade. The publicly quoted business group that eventually emerged in the twentieth century absorbed the Inchcape family’s world‐wide investments in interests ranging from tea to insurance, and from refrigerated meat to textile mills. The first Lord Inchcape appears in these pages as part businessman, part imperial colossus, whose merchant shipping strength contributed significantly to the Empire’s success in the two world wars. His political prestige was such that consideration of him as a potential Viceroy of India seemed plausible at the time.

The next leap forward in the Inchcape story came under the leadership of another outstanding member of the clan. The third Lord Inchcape turned what was still essentially a collection of family businesses into a recognisably modern, global concern. While the first Lord Inchcape had benefited from an imperial structure, his descendent had to perform on a more hostile, decolonised world stage. The numerous private businesses and partnerships within the sprawling organisation were pulled together into a public limited company with a (rather shaky) degree of centralised control. In 1957 the Inchcape Group was launched on the London Stock Exchange.

After the Second World War, the third Lord Inchcape had presciently shifted the group’s geographical centre of gravity from the Indian subcontinent to other parts of Asia, notably the Pacific Rim. This was a wise move, given the differing economic trajectory of these two regions: the now‐evident contrast between the rise of the Tiger economies and India’s economic stagnation under Nehruvian socialism was not foreseen by everyone at that time.

The firm was being slowly transformed from an anachronistic colonial dinosaur into a modern business conglomerate, but it had been badly bitten by the management mantra bug. When the received ideas of corporate management tended towards simplicity and focus in the 1980s, Inchcape’s management tried to slim down and make sense of their sprawling, complex group. An inner circle of senior managers spent much of the 1980s knee‐deep in acronyms at corporate headquarters, performing strategic reviews whose findings were inadequately disseminated to operational levels. Meanwhile, as the planners and thinkers immersed themselves in graphs and charts, the real world started to reassert itself. The group’s Thai subsidiary notoriously shocked management (and the Stock Exchange) by racking up mind‐boggling losses through, among other things, the unchecked granting of credit. This disaster did not lead to a retreat from managerial faddism, but rather fuelled a stream of expensive consultants in search of corporate nirvana. Cathartic management courses in Europe seemed to have been more a social event and whisky‐consuming exercise that a means of adding real value. Murky areas of strategy were never fully cleared up: for example, was the business to be managed geographically, or by activity stream, or by a combination of both?

One major cultural change was effected during the post‐war years. The old Inchcape – Scottish, imperial, built on school and regimental networks – was steadily eroded. The break with the past was cemented following the appointment of an outsider, George Turnbull, to lead the Group. Under Turnbull, a motors man, the automobile distribution business inevitably became the backbone of the group. Turnbull improved corporate performance, his vision of a more streamlined and focussed organisation driving profits and the share price upwards. In 1991 the company entered the hallowed FTSE‐100. Later in the 1990s, Charles Mackay took Turnbull’s ambitions even further, setting out to “conquer the world” through acquisitions and internal growth. But at the time of publication of Butler and Keary’s study, Inchcape was out of favour with the City, its share price in the doldrums.

This book illustrates both the strengths and weaknesses of modern business writing. The book’s merits include a refreshingly sceptical approach to the ugly reductivism of management guru posturing. It also benefits from a fluid, elegant and often witty style, and it recounts a complex corporate history in a lucid manner. Footnotes are tucked away unobtrusively in a final section for those who wish to refer to them, leaving the main text uncluttered by references.

However, the book does have a number of weaknesses. First, it is deficient in atmosphere, rather surprising given the authors’ strong credentials (Butler, for example, is a researcher at the Euro‐Asia centre at INSEAD). The authors write as if they have always been office‐bound, and have never hailed a taxi in downtown Kuala Lumpur, nor sat at a business meeting in a Delhi restaurant. This lack of flavour is disappointing, given the Asian emphasis in the history of Inchcape, from the company’s origins in Victorian Calcutta to the soaring skylines of the present‐day Pacific Rim.

It is also regrettable that the authors do not draw any wider parallels between the trajectory of the history of Inchcape – in origin, the quintessential imperial organisation – and the decline of British political power in the twentieth century. The authors do not explore links between excessive managerialism and wider cultural decline, nor do they commit themselves to which type of organisation they believe has a sounder basis (whether for Inchcape or other corporations). A pragmatic, entrepreneurial, decentralised, risk‐taking and informal structure? Or a corporate machine which kow‐tows to a centralised bureaucracy that manages by numbers and frowns on risk‐taking?

Amid these unanswered questions, however, the reader of this fascinating book may be left with a final reflection. It is not just management theory that falls victim to the vicissitudes of time. As John Harvey‐Jones suggested in Making It Happen (1988), industry is “the most ephemeral of all institutions”. In this perspective, the longevity of Inchcape may be seen as a modern miracle, and the internal dynamism of the organisation’s culture may yet see a future renaissance in its fortunes.

Butler and Keary’s book does not explicitly address audit issues, yet descriptions of the control environment make fascinating reading for anyone interested in the audit of multinational organisations. Reading between the lines of the authors’ account, one is tempted to conclude that doses of straightforward commonsense at various stages of the company’s history would have been sufficient to identify appropriate control improvements. Overall, the case study of Inchcape is a worthwhile read for the modern auditor.