Tuesday, 11 March 2014

Leading to disaster

Today's post is prompted by the news that Euan Sutherland, the Chief Executive of the Co-op Group, has resigned after just 10 months in the post, saying that the Group was ‘ungovernable’. This appeared to be a reference to the unwillingness of the group to accept the more ‘commercial’ approach he advocated. Much attention has focussed on the fact that Mr Sutherland was paid £3.7M a year, more than twice that of his predecessor. To me what is more interesting (though no doubt related) is the fact that his background was in commercial retailing, his previous post having been as head of B&Q, a large DIY chain.

The roots of the Co-op group are in the co-operative movement and ultimately go back to the 1844 Rochdale Pioneers, so it was animated by a different set of concerns than those of pure commercialism. It emerged from a Victorian tradition of working class self-help that also created mutual building societies and friendly societies, as well as mechanics’ institutes and similar institutions. Most of these have now ceased to exist or changed unrecognizably in form. The fate of mutual building societies is especially poignant: as I noted on p.119 of my book, all those which de-mutualised following deregulation in the 1980s have since failed to survive as independent entities or even to survive at all, most notoriously in the case of Northern Rock which was at the centre of the British end of the 2008 financial crisis. They were done for by precisely the adoption of a conventional commercial approach.

It seems as if there was an obvious mismatch between the Co-op and its now ex-CEO but his appointment reflected one of the central tenets of managerialism (or, perhaps, ‘leaderism’): that management and leadership are generic skills applicable in any and every setting. The same kind of idea informs the recent appointment of the ex-boss of Marks & Spencer to review and advise on management in the NHS.

What is bizarre is that leadership theory since at least the 1970s has recognized what common sense might also suggest: that the effectiveness of leadership is intimately related to and contingent upon ‘situation’ or context. We wouldn’t expect a successful military leader to run an advertising agency well, or vice versa. More recently, it has been suggested that what matters is the complex relationship between leadership and followership. But, somehow, it is imagined by the supposedly hard-headed that leaders from one kind of organization can be transplanted seamlessly into a completely different setting and flourish. The inadequacies of that belief are well-illustrated by the Co-op debacle. 

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