What Works: Success in Stressful Times

I. HOW THIS BOOK HAPPENED – AND HOW IT HAS CHANGED DURING THE WRITING

This is a book about success. It is about success in good times and bad. Its twenty examples come from every corner of the planet. It encompasses organizations and communities as diverse as the world’s best university and the world’s best slum. Of course, none of these stories is a tale of perfection and each example has flaws. But they are examples of collective human endeavour that I have found both humbling and inspiring and which I believe have powerful common messages for all of us. By understanding what works, we can make other things work better-the aspects of our daily life that we can improve. By any rational calculation the world is better placed now to make good choices about the future of our species and our planet. We are better educated than ever before; have better health and better information; technology continues to leap forward; and, of course, we are-notwithstanding the odd bump-richer than ever before. But if we are to face the many challenges we have to try to learn from each other. We all have to do it. It is the millions of acts by ordinary people that will eventually make a difference. In a modest way, it is to help us make a difference that I have tried to tell the stories in this book.

What Works has been more than a decade in gestation. In 1994–5 I published a book on the future of the global economy, The World in 2020. I then spent a huge amount of time travelling the world, talking about the future I had sketched with companies, academic institutions, management schools, professional bodies-and writing columns for The Independent newspaper in London all the while. The more I travelled, the more I began to marvel at the range of things I came across in every part of the globe that worked really well-success stories that deserved a wider audience.

So this book started as a desire to report, to share stories. But, of course, there have been many studies of success, particularly business books promoting apparently successful forms of organization, usually with an ideology attached. This study differs from those in that it does not aim to sell a theory-the notion that if companies or governments adopt this or that form of management theory or organization then they, too, will succeed. Actually they seldom do. You cannot, for example, transport the American corporate model to, say, India and expect every firm there to prosper. Besides, the shelf life of apparently great ideas is short indeed. Companies universally admired by one generation as models of managerial excellence are reviled by the next as failures. Government initiatives launched by one generation of ambitious politicians are quietly abandoned by the next. And economic principles embraced by one generation of academics are disputed by the next. After all, if financial markets were really as efficient as economic theory suggests, they would not have created two classic bubbles in the past decade: the internet craze and the dot-com crash; and the sub-prime boom and bust.

THE LESSONS

1 Optimism, balanced by realism: pessimism paralyses

2 Excellence, tempered by decency: if you neglect your wider responsibilities, you’re liable to end up in trouble when you meet headwinds

3 Community works, if it is allowed to: look at things from the ground level up and mobilize community

4 Government works too: compare like with like

5 Become a true magnet for talent: put out the welcome mat

6 Be honest about failure: keep learning, keep making mistakes

7 The need for humility: be as sensitive to success as you are to failure

8 Be nimble: make sure you are quick to adapt

9 Listen to the market: remember, it’s about more than money

10 Have a sense of mission: keep the long game in view and do right by those who share your objectives

So what does work? Instead of finding case studies to promote a theory, I worked from the other end. I observed success and tried to draw lessons from that. But the more I travelled, the more I became aware of different examples of successful organization, in different countries, on different continents, on different scales, and in a mixture of the public, private and voluntary sectors. The problem was not how to find case studies offering practical insights into what works-plenty of friends with whom I discussed the project offered candidates of their own-but how on earth to whittle them down to a manageable number.

More about this selection process in a moment. What became clear pretty early on was that for organizations to work really well, they needed to combine two features, the final two are noted opposite.

1 They had to have a deep-seated sense of mission-a vision, drive and commitment to do something that is worth doing even better. This sense of purpose could initially come from an individual but frequently it sprang from a group of like-minded people. Or it could develop from a general ethos accumulated over many years, so that no one could quite identify just who picked up the baton in the first place and who carried it forward at any particular time.

2 They had to be acutely sensitive to the market. They worked because they went with the grain of the market, listening to its signals and being guided by them, and applying its disciplines and adapting to whatever these required.

One without the other does not work. A plan or project that operates with a mission but fails to listen to the market may carry on for a while on a tide of early enthusiasm. But it cannot be sustained.

Pure market-driven endeavours can carry on for much longer. Most good businesses perform the essential task of seeking to fulfil people’s needs and desires, and if they do that competently, they make a solid contribution to the material world. However, they cannot change it. Market without mission can certainly help us get richer, improve our living standards and lead a materially better life. But add the sense of mission and you get something much more: a success that can be replicated and scaled.

Each case study in this book is a mix of these two attributes and each is tackled in the same sequence. First, I tell the story, explaining how I came to include this example and trying to capture and explain its special features. Then I seek to draw out some general lessons. Then, because nothing progresses in a straight line, I have to acknowledge what may go wrong and, in some instances, has already gone wrong.

Two other points emerged during the research and writing. One was that there has been a host of ‘near misses’-things that ought to work very well but have in some way fallen short. I considered trying to capture this because failure can sometimes carry more messages than success. History is littered with examples of clever and thoughtful people making huge errors, and of plans hatched by apparently very competent organizations resulting in disasters. The ‘best and the brightest’ get things wrong. In the end I rejected this approach because there were many different reasons for failure. There are common features to the successes but each failure failed in its own particular way. To give a flavour of this, I have sketched some of these near misses in the next part of this introduction.

The other point that became clear is that what happens in a global economic downturn is more interesting than what happens in the good times. Many of these case studies were researched and written in the boom years, with the result that the ‘what could go wrong’ section of some chapters has become more a tale of ‘what has gone wrong’.

I am not at all discouraged by this; indeed I am rather relieved. We are all in some measure prisoners of the moment, and while I was very conscious of the danger of writing a bull-market book, it was hard to lean against the prevailing wind. But a bear-market book, intoning that all is disaster, is not much use either. What Works has been completed during the downturn but it does, I hope, retain both its optimism and its perspective. If something does not work in tough times as well as easy ones, what is the point of examining it?

I have tried to look through the current difficulties evident in several of the case studies and make a judgement about the future. If I had not been confident, I would have dumped the example and chosen another. As it has turned out, I have not had to do this in any instance, for what seem to me to be sound reasons that I try to explain. Of course, I face the charge of being an eternal optimist, but I would rather answer to that than be a Dr Doom.

And so to those case studies. These are grouped geographically, partly for clarity but also because to look at the world this way emphasizes the message that really interesting things are happening in all corners of the planet. Some wider themes are drawn out in the final chapter.

It is a personal selection, of course, and it might be helpful next to describe quite how these choices came about.

2. WHY THESE CASE STUDIES WERE CHOSEN – AND A WORD ABOUT THE ONES THAT WERE LEFT OUT

Picking examples from the UK and Ireland was easy, for this is territory I know well. There are three, one each from England, Scotland and Ireland-apologies to Wales, though the country is host to administrative offices of another example, the International Baccalaureate. The English example, the financial services industry of the City of London, was almost too obvious because not only is commenting on it part of my day job, but I co-authored a book about it. Writing about the Irish economy, too, was easy: I know the story as I was brought up there and, as I acknowledge, I greatly admire the achievement. The question in both cases was whether-in the light of the economic downturn and the errors, individual and collective-they should stay in. Actually it was an easy decision, for the achievements have been far greater than the setbacks.

The reverses to the City are small in the context of the difficulties it has faced over the past century: after each of the two world wars its business was destroyed, and during the 1970s it was savaged by political and industrial strife in Britain as well as the greatest outbreak of global inflation the world has ever known.

As for Ireland, the clinching argument was put to me by one of its most senior bankers at a Trinity College Dublin meeting. ‘Look,’ he said. ‘We will go down 10 per cent, maybe a bit more, and that is dreadful. But in the previous fifteen or so years, we added 100 per cent to our GDP. And we will recover.’

One of the first examples I chose, though, was Scottish-and in particular what is by far the world’s largest collection of arts events, the Edinburgh Festival. Indeed its combination of a sense of collective mission over several generations and its status as a supreme marketplace for talent actually helped define the nature of the book. Is it particularly Scottish? Well, yes, in the sense that it could not happen without the support of Edinburgh’s citizens, who belie their reputation for being strait-laced in the way they relish the edgy stuff that is set out before them. But no in the sense that I am not trying to illustrate or praise national characteristics as such-simply to show what others can learn from undoubted success stories.

For continental Europe, the choices were harder. There are only four examples in this book and I wish I had more. A couple are stories I have wanted to tell for a long time. I have been an admirer of the German Mittelstand, the country’s collection of medium-sized companies, since my childhood, for reasons I explain in the text. And ever since I first went there, I have wanted to tell the story of how Copenhagen’s taming of the motor car has come to offer a lesson to the world. The other two were harder choices.

The only commercial company in the book is Sweden’s Ikea, chosen not because I am handy bolting together its flatpacked furniture or because it is particularly customer-friendly; quite the reverse-it is one of those companies that people love to hate. No, it was because its success goes beyond commerce in that it illustrates the sense of mission very well and also has something essentially Scandinavian about its ethos-a mix of style and equality-that was worth trying to bring to a wider audience.

The fourth European example is the drug-rehabilitation programme introduced in Zurich, and more specifically the rehabilitation of heroin users. I have to acknowledge that this scheme is not perfect; it just seems to have been more effective than any other. This study came about because Frances Cairncross, my spouse, visited its clinics when writing about drugs for The Economist magazine, and while the scheme has been imitated elsewhere and there have been some success stories, these have not been as numerous as I would have hoped. I think that is mostly because politics have got in the way, so if telling this tale helps push politics aside then it will have been a worthwhile exercise.

I am just as concerned, though, about the other stories that I would love to have included but have not. One huge success has been Finland’s primary and secondary education. According to an OECD study, the performance of Finnish students is quite outstanding. Would the Finnish ideas travel? Well, among the former Eastern bloc countries, Estonia has the best education outcomes. Why so? Officials there explained to me that they had adopted the Finnish model. Estonia is culturally very close to Finland so it is hard to gauge the potential reach of the ideas, but evidently they do have a bit of mileage in them.

There is nothing from France or Italy and, of course, there should be, for each has areas of outstanding excellence. The problem with France was finding examples capable of being replicated elsewhere. For example, the country leads the world in the proportion of its electricity generated by nuclear power stations. Those plants are reliable, efficient and, as far as one can judge, cost-effective. But it would not be easy to transplant a policy and a technology. In any case, a new plant in Finland, being built by a French company, has run into serious difficulties and is behind schedule and over budget.

Another example would be French healthcare, one of my original choices. It is still on balance one of the best systems in the world, if an expensive one, but it failed in the heatwave of August 2003. France had up to 20,000 more deaths than normal as a result of the soaring temperatures. Why? One reason seems to have been that August is the month-long holiday season there and most French doctors and other medical staff were off-duty.

One obvious Italian quality is its design talent, but that is hard to transfer to other countries. An example of excellence that has been imitated elsewhere is Italy’s ‘slow food’ movement-the emphasis on quality rather than quantity in food-which is a philosophy that encompasses other aspects of the Italian way. It would have been good to have included that as a means of examining how the country has managed to sustain one of the most-admired quality-of-life environments anywhere in the world. However, while other parts of the world have tried to copy some of these qualities, I felt the movement is so rooted in the history and culture of Italy that the lessons are limited.

One other European gap is Russia, where a candidate was the country’s technical education. This was clearly exceptional, though maybe less so now than a decade or more ago. Another potential case study was the vibrancy of Russian writing, also exceptional. But it was hard to bolt down excellence that could be transferred and so sadly the gap remains.

In North America the choices were extremely tough. I know and like America and have sought to understand it over many years, but choosing key messages for the world was difficult. An obvious area of excellence is in the business community and one of the original examples was General Electric, though I was more interested in it as a school for executives who then worked in other companies, rather than as a business itself. But this is a very well-travelled route and I was not sure I could add much value. I wanted to write about excellence in US healthcare, which at its best delivers a wonderful service. There have been many social initiatives, for example Milwaukee’s welfare reforms, which deserve a wider audience. I spent many hours researching, discussing and rejecting.

In the end I went back to a place that I knew and loved. Small towns in America have long fascinated me and having family in Montana has given me what I hope is a special insight into one medium-sized and successful town there, Billings.

Philanthropic New York was another choice, brought about by my affection for the city ever since my first visit in 1964, but also by a growing respect for the generosity of American people. The third US example, Harvard, was originally included not so much as a university but as a fund-management group. That was a bit too quirky and I had gone back to thinking about Harvard’s basic message of educational excellence even before the financial meltdown of late 2007 rather destroyed any idea about its special insights into fund management. My perspective has been one of a rival as my spouse is head of one of the oldest of the colleges at Oxford University, which has encouraged me to think a lot about what makes universities truly and lastingly great.

And then there is Whistler. There are many things about Canada to be admired but authors are allowed to be a bit self-indulgent: as a keen if not particularly skilled skier, and a correspondent on the sport, I did not see why I should not write about a ski-resort if I wanted to. More important, there is something especially and wonderfully Canadian about this tale, which I hope I have brought out.

The USA and Canada are covered but Latin America, I am afraid, is not. The only excuse, aside from the obvious one of a lack of space, is that I am not as familiar with the region as I am with most other parts of the world. I did, however, want very much to include a Brazilian tale and looked at several possibilities, an obvious one being the successful municipal government in the southern city of Curitiba. This is a great example of urban planning-a really well-run city. Another, somewhat more controversial example would have been Protestant churches, which have shot up from tiny beginnings a generation ago to become the fastest-growing Christian organizations in the world.

But the example that I most regret not examining is happiness in São Paulo. It is not that Brazil’s largest city is also its happiest but rather that, insofar as such an intangible can be measured, Brazilian people are among the happiest on earth. To some extent a sunny disposition goes with wealth; people in richer countries generally have more to smile about than those in poorer ones. But Brazil is an outlier. Its people are much happier than one might expect from the statistics, and where better to delve deeper into that than the country’s economic powerhouse, with all its energy and chaos? Maybe another book …

China and India both had to be included for obvious reasons. I have made several visits to both countries but, of course, I have only scratched the surface; no outsider from the West can ever feel they will understand countries with more than a billion citizens. In the case of China, however, one choice was easy: the Shanghai municipality. It is impossible not to be astounded, and at one level alarmed, by what has been achieved. The other choice, the Hong Kong Jockey Club, came about because some friends who live there suggested it. I had known Hong Kong ought to feature in the book somehow, but it was not until I researched the story that I realized this was an ideal way not just into gambling (though I enjoyed my day at the races) but also into a remarkable record in governance.

In India I had to write about the hi-tech industries of Bangalore; no one who goes there escapes unchanged by the experience. There are many other examples of hi-tech complexes in India-I could just as well have gone to Pune or Hyderabad-but Bangalore was where the dream first took root. The other choice, Dharavi in Mumbai, was more quirky, or at least it was until Slumdog Millionaire introduced Dharavi to millions of cinema-goers around the world. I hate the word ‘slum’ just as I hate the glamorizing of poverty. So the surprise there is not just that this community works but that it is an important economic powerhouse, generating a billion dollars of GDP each year.

There should, of course, have been other Asian examples, aside from the single Japanese tale-that of public safety in Tokyo. The great Japanese boom that lasted until 1990 brought the world such consumer triumphs as the Walkman and cars that did not break down. The world has certainly learnt from that, just as we have also learnt, less comfortably, about the threat of stagnation from what happened after 1990. (I co-authored a book, published only in Japanese, about the dangers of such stagnation to Japanese society and its influence in the world.) The example here, however, is not economic but social. It concerns how Tokyo, the largest agglomeration of humankind on the planet, is also the safest large city in the world, giving its citizens a greater degree of freedom to go about their daily lives than the people of any other city. Young women can return home on public transport late at night without any concern they might be attacked or hassled. Salarymen the worse for wear after an evening in the bars can do likewise.