Monday, July 22, 2013

NHS: Business Model? Spare Us Please!!!

As many in our government were bent on changing the NHS, should we not take a step back after the apocalyptic disaster in the financial world of 2008 and ask the simple question: Can we continue to trust and pay financiers and consultants to run our banks and other institutions and even our NHS?

Ahead of the Curve/Philip Delves Broughton

I was reading a book by Philip Delves Broughton on Harvard Business School (HBS): Ahead of the Curve.

He may not be the first to observe that HBS loves Marines, Mormons and Mckinsey. Kim Clark  must indeed be the most famous sons of The Church of Latter Day Saints and PDB’s article in The Sunday Times: “Harvard’s masters of the apocalypse” may indeed be aptly titled.

He opened with:

If his fellow Harvard MBAs are all so clever, how come so many are now in disgrace?

From Royal Bank of Scotland to Merrill Lynch, from HBOS to Lehman Brothers, the Masters of Disaster have their fingerprints on every recent financial fiasco.

We MBAs are haunted by the thought that the tag really stands for: Mediocre But Arrogant, Mighty Big Attitude, Me Before Anyone and Management By Accident. For today’s purposes, perhaps it should be Masters of the Business Apocalypse.

Harvard Business School alumni include Stan O’Neal and John Thain, the last two heads of Merrill Lynch, plus Andy Hornby, former chief executive of HBOS, who graduated top of his class. And then of course, there’s George W Bush, Hank Paulson, the former US Treasury secretary, and Christopher Cox, the former chairman of the Securities and Exchange Commission (SEC), a remarkable trinity who more than fulfilled the mission of their alma mater: “To educate leaders who make a difference in the world.”

It just wasn’t the difference the school had hoped for.

Business schools have shown a remarkable ability to miss the economic catastrophes unfolding before their eyes.

In the late 1990s, their faculties rushed to write paeans to Enron, the firm of the future, the new economic paradigm. The admiration was mutual: Enron was stuffed with Harvard Business School alumni, from Jeff Skilling, the chief executive, down. When Enron, rotten to the core, collapsed, the old case studies were thrust in a closet and removed from the syllabus, and new ones were promptly written about the ethical and accounting issues posed by Enron’s misadventures.

Let us stay with the UK:

Much the same appears to have happened with Royal Bank of Scotland.

When I was a student at Harvard Business School, between 2004 and 2006, I recall a distinguished professor of organisational behaviour, Joel Podolny, telling us proudly of his work with Fred Goodwin at RBS. At the time, RBS looked like a corporate supermodel and Podolny was keen to trumpet his role in its transformation. A Harvard Business School case study of the firm entitled The Royal Bank of Scotland: Masters of Integration, written in 2003, began with a quote from the man we now know as Fred the Shred or the World’s Worst Banker: “Hard work, focus, discipline and concentrating on what our customers need. It’s quite a simple formula really, but we’ve just been very, very consistent with it.”

The authors of the case, two Harvard Business School professors, described the “new architecture” formed by RBS after its acquisition of NatWest, the clusters of customer-facing units, the successful “buy-in” by employees. Goodwin came across as a management master, saying: “A leader’s job is to create the conditions that enable people to believe, in their hearts and minds, in the value of what they are doing.”

Then just last December, Harvard Business School revised and republished another homage to RBS – The Royal Bank of Scotland Group: The Human Capital Strategy.

It is tragic to read now of all the effort put in by those under Goodwin, from “pulse surveys” to track employee performance to “the big thank you”, a website where managers could recognise individual excellence in customer service.

Every trendy business school idea was being implemented, it seemed, while what really mattered – the bank’s risk assessment, cash flow and capital structure – was going to hell. To be fair, neither Podolny nor the authors of the case studies were finance professors, but it’s still pretty shocking that a school that purports to teach general management should fail to see the gaping problems at a firm they studied in such depth.

Last October, Harvard Business School celebrated its 100th birthday with a global summit in Boston. While Wall Street and Washington descended into an economic inferno, Jay Light, the dean of the school and a board member at the Black-stone private equity group, opened the festivities by shrugging off any responsibility.

“We all failed to understand how much [the financial system] had changed in the past 15 years or so, and how fragile it might be because of increased leverage, decreased transparency and decreased liquidity: three of the crucial things in the world of financial markets,” he said.

“We all failed to understand how that fragility could evidence itself in a frozen short-term credit system, something that hadn’t really happened since 1907. We also probably overestimated the ability of the political process to deal with the realities of what could happen if real trouble developed.

“What we have witnessed is a stunning and sobering failure of financial safeguards, of financial markets, of financial institutions and mostly of leadership at many levels. We will leave the talk of fixing the blame to others. That is not very interesting. But we must be involved in fact in fixing the problem.”

You would think after failing on so many levels, the school that provides more business leaders than any other might feel some remorse. Not in the least. It’s onwards and upwards, with the very people who blew apart the world’s financial plumbing now demanding to fix the leak.

Given the present chaos, shouldn’t we be asking if business education is not just a waste of time, but actually damaging to our economic health?

If doctors or lawyers wreaked such havoc in their own professions, we would certainly reconsider what is being taught at medical and law schools.

He said of Light’s statement:

He was like a drunk driver emerging from a wreck asking for the keys to the police car so he could drive home. Don’t worry about who’s to blame, let’s just all run along, shall we?

Light, told his audience in October: “The need for leadership in the world today is at least as great as it has ever been. The need for what we do is at least as great as it has ever been.”

A bold claim to which many might say:

“Please, spare us.”

A fairly straightforward book to read with real names and real people that one reads about in the business section of the major papers and often in the front pages too.

What is happening now in the US is very frightening: at the top some very rich CEOs and below them a highly dispensable workforce. The book talked about 30 million. No more job security for these.

If we are not careful, the NHS will move towards the same model of NHS Trusts and PCTs with highly paid CEOs and their management staff. Below them a number of highly dispensable doctors, nurses and other workers. Firing of staff is the norm to balance the books in the NHS.

Look at what happened to Out Of Hours service and hospital weekend and holiday manpower levels and you will know what I am talking about.

Unfortunately, it may be too late to try and bring back the good will that has kept the OLD NHS going for so many years. The good will that was slowly destroyed by modern management ways and silly Pavlovian bonus culture.  

“Please, spare us.”


Dr Am Ang Zhang is the author of The Cockroach Catcher.

Grand Rounds: M D Whistleblower

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