FT : The Age Of Wholesale Renewal Is Upon Us
Friday, March 19, 2010
I think the most important word this decade will be reinvention. Be it companies, careers, institutions, public services – you name it, wholesale renewal is required. The dislocation from such a transformation will be uncomfortable for many, but the outcome will prove invigorating. And the alternative of just carrying on as normal will ultimately prove far more painful. In fields as diverse as state education, book publishing, retailing and financial services, brand new ways of doing things must be found. The old models are mostly failing. Gentle evolution is always nicer than a radical overhaul, but when systems are obviously broken, small steps do not work. So bad schools should be shut and new ones opened; book publishing must embrace electronic media; traditional retailers must dump most of their physical shops and go online; and financial service companies must slash their bloated costs, reduce their fees and rebuild the reputation of their profession. The causes of all this upheaval are multifarious: the economic downturn, an ageing population, the digital revolution, the rise of Asia and environmental issues – among others. Some reasons, like the recession, are shorter term and temporary; others, like the ascent of China, are longer term and permanent. Either way, the challenges must be addressed, and realism rather than spin should be adopted by business and political leaders – starting immediately.
In recent times, America and much of Europe have floated upwards on a sea of debt – personal, corporate and governmental. The tide has now ebbed, and is unlikely to return for the foreseeable future. This liquidity encouraged an illusion of almost limitless prosperity, which led to all manner of foolishness – property mania, early retirement, lavish public spending, a culture of entitlement, banking excesses, corporate over-ambition and so on. That era is dead. As a society we must now be more ingenious and industrious. Job creation must be stimulated, practical learning encouraged, productivity increased, resources preserved and borrowings repaid. All these initiatives should be undertaken simultaneously: not an easy task. When organising a turnround, almost the only golden rule is to remove the management who were in charge when the company collapsed. In similar vein, most of the current establishment should be cleared out, and new champions appointed – because the old guard can never admit that their policies were misguided. Japan failed to recruit fresh blood to positions of power, and so stagnated after its “lost decade” of the 1990s. Shareholders, the electorate and individuals in the west should rise up and demand reform. We need to become economically fitter if we are to compete in the 21st century, and we should learn to do more with less. This is not simply about cost-cutting, but about working smarter, managing more efficiently – and delivering rather than posturing. Bureaucracy should be eliminated and technology embraced to accelerate the development of everything from better transport to new energy sources.
A spirit of enterprise and modern technology can achieve remarkable things if accompanied with sufficient discipline. After all, we are not starting from scratch – there are tremendous tangible and intangible assets to revive: plant, infrastructure, intellectual property, brands and networks. But to succeed, such efforts need a willingness to experiment, to adopt revolutionary policies occasionally, and a self-confidence that is scarce. Whenever I feel in need of encouragement over current circumstances, I turn to Franklin Delano Roosevelt’s inaugural speech, delivered in 1933, during the darkest days of the Great Depression. He talked about how national recovery was dependent on the “permanently important manifestation of the American spirit of the pioneer” and the “stern performance of duty”; how “happiness lies not in the mere possession of money, it lies in the joy of achievement, in the thrill of creative effort”. I endorse his sentiments. He understood the need for firm leadership and bold moves, and the importance of dramatic steps to reorganise industry and national life.