by Mark Tully
A former railway minister told me the story of the Chattisgarh express in central India. It was said to be the slowest express in India, so he decided to speed it up by cutting out some of the stops. After taking that momentous decision, he went abroad for two weeks. By the time he came back, the MPs of all the constituencies where the service had been cut had seen to it that their stations had been restored to the Chattisgarh express timetable. With the railways carrying more than 5,000 million passengers every year, any minister attempting drastic measures such as cutting staff, jacking up fares, cancelling uneconomic services or closing branch lines would do so at the risk of being thrown out by the voters. The most that could be hoped for was that the railways would somehow muddle through in India’s own peculiar way.
However, in July 2001 an expert group headed by one of India’s leading economists warned that the national railways were about to hit the buffers. They were facing what the group termed ‘a terminal debt trap’. And, indeed, in 2001 the railways failed to pay a dividend to the government. Then, to the surprise of everyone, there came a turn-around. Within four years of the group’s report, the railways were generating a handsome profit. This hadn’t been achieved by increasing fares or the charges for carrying freight; it had been achieved by improved use of the railways’ capacity. More passengers were carried by making the trains longer – the more popular trains are now nearly three quarters of a kilometre in length, which is not always good news for those at the back of the train as many platforms are not long enough to accommodate them. Reducing some fares also helped to increase the number of passengers. Freight was increased by allowing wagons to carry heavier loads. And, rather than telling freight customers to take it or leave it, railway bosses made a concerted effort to offer services that were tailored more closely to the needs of manufacturers and other business proprietors.
Some of the cobwebs left behind by the British Raj were swept away at last. The nineteenth-century list of freight tariffs, voluminous enough in itself but also complicated by a mountain of corrections that had piled up over more than one hundred years, was reduced to a few pages. The timetable bequeathed by the Raj had only ever been tinkered with in the past, but now wholesale change is afoot to create more efficient and faster trains. As an example of this, when I first came to India it took twenty-four hours to travel from Delhi to Mumbai or Kolkata, but soon I will be able to get into a comfortable sleeper after office hours in Delhi and reach either of those cities before offices open the next day. There are to be new tracks dedicated to freight trains, which will more than double their average speed. At present, ‘crawl’ would be an appropriate word for their average speed, which is eighteen miles an hour.
The revolution in the railways could not have been achieved by anyone but a politician who understood that normal profit calculations, cost-cutting and measures to increase efficiency would not work in such a politically sensitive public sector undertaking. What’s more, that politician had to be a populist in order to sell the reforms to the public.
The reforming minister in question, Lalu Prasad, was certainly a populist, and was renowned for his rustic wit, but he was equally notorious for the inefficiency of his administration in Bihar, the state he and then his wife had presided over as Chief Minister. When his party lost the state election in Bihar, Lalu was given the railways ministry in the central government as a compensation prize, and it appeared that, with his appointment, the railways were being saddled yet again with a minister who would treat them as a milch cow. But Lalu, who came from a farming caste, had different ideas about cows. He told the senior management of the railways that ‘if you don’t milk the cow fully it falls sick’. Metaphorically speaking, the railways are now yielding more milk than before because they are making better use of their capacity. Lalu observed, ‘The wagon is the bread-earning horse of the railways; load it adequately. Make it run and don’t stable it.’ Wagon turn-around time has decreased markedly. Lalu rejected the standard management strategy of downsizing, saying, ‘It may make Indian railways thinner but not necessarily healthier.’ And, indeed, the Indian railways are now not much thinner than they were, but they are more healthy. Still, it remains to be seen whether the momentum generated by Lalu will be maintained by his successors.
It seems to me that one of the weaknesses of the business culture and its ‘management sciences’ is that it is too certain; it doesn’t allow for questioning, and it often ignores the voice of experience. That is not to say that experience necessarily means accepting the status quo, but those who have learnt from experience often have as much to say that is relevant as those who have acquired their knowledge from text books and college courses. All need to be heard and all need to be taken into account if the way any company, institution or service is managed is to improve in a manner that takes into account broader considerations than the narrowly defined efficiency of the business world. This was the nub of my argument when, in 1993, I found myself challenging the best known British high priest of business methods, John Birt (now Lord John Birt), then the Director General of the BBC.
John Birt’s message to Britain was straightforward: there was absolutely nothing positive to be said for the BBC’s system of management, even though it had evolved out of years and years of experience. The Corporation, he asserted, was a ‘bloated, bureaucratic monolith’ and it was ‘wasting licence payers’ money on a massive scale’.
To add weight to his argument that the BBC needed radical changes, he also attacked its output, and in particular its journalism. In his autobiography, he describes the way he felt about BBC journalists:
[they were] … a huge cohort – chiefly in their forties or fifties – for whom news and current affairs were a process. They covered and responded to events. They were competent and experienced, but they had long since ceased to think enquiringly. They were in a groove, serving time. They were mostly male and macho, and drink played an important part in their lives. The place was awash with Australian Chardonnay.
There were, according to Birt, many bright lights in this darkness, some ‘glorious individual exceptions’ who were ‘generally in their twenties and thirties’. Arguably ageism and, the other side of that coin, adulation of youth, appeared to be very much part of the management doctrine at the time and many of the older staff were let go. One of the most respected elder statesmen among BBC journalists, the former political editor John Cole, spoke of ‘a prodigal erosion of staff loyalty resulting from early retirements and redundancies’.
The market was to be at the centre of the new BBC. In his autobiography, Birt says he converted the BBC from ‘a command economy’ to a ‘trading institution’. Command economies are usually associated with Soviet-style central planning, trading institutions with market capitalism. By his own admission he had gone from one extreme to the other.
Controversy raged in the press. At one stage, six of the best-paid BBC journalists, some of whom had been brought into the Corporation by John Birt, wrote a letter to the Times in which they said, ‘So far within the BBC many of the voices of those hostile to John Birt, too cowardly to give their names, have been anonymously quoted in the press. We feel it is time for some of us to offer our public support for John Birt and for the difficult and radical changes he is making.’
At the time I had been asked to give the main lecture at the annual meeting of the Radio Academy, one of the major events of the year for radio in Britain. I had been given a platform to stand on at the very moment when the charges against John Birt’s critics needed to be challenged, so – with my belief in karma – it seemed to me that I had to stand on that platform and mount that challenge. Maybe this was presumptuous thinking on my part, but it seemed obvious at the time.
Indeed, some of my critics did think I was presumptuous, arguing that, as Delhi correspondent, I was out of touch with what was taking place. But when I decided to make the speech, I naturally spoke to many other members of staff, and a group of advisors soon formed who help
ed me to shape it. We were so up-to-date on what was happening in the BBC that, as we were putting the final touches to my speech, we managed to get a copy of the one that John Birt was intending to give at the Radio Academy meeting the day after mine.
Because of my Indian-style belief in balance, the theme of my speech was ‘evolution is better than revolution’. For me, evolution means seeking for balance between tradition and change, whereas revolution means tearing up the past. I maintained that John Birt’s revolution was doctrinaire and that the doctrine was being applied too rigidly.
In my view an internal market called ‘Producer’s Choice’ was one of the main planks of John Birt’s sweeping changes. It was a system designed to make producers and their bosses aware of all the costs they incurred and to give them the freedom to buy in services from outside if necessary, instead of using BBC facilities. Everything a producer did, including borrowing a book from the library or consulting the pronunciation unit, had to be costed and charged to his or her budget. In my speech, I said that, although it was too early to judge Producer’s Choice, the system had started badly. Indeed, I argued, had Birt been more flexible, had he listened more to his staff, Producer’s Choice might not now be largely discarded as part of a new ‘common sense’ approach to managing the BBC’s finances. Zarin Patel, the BBC’s Group Finance Director, said that the new approach was all about ‘changing the culture and enabling the BBC to spend less on bureaucracy and processes and more on content and output’. She described some of the practices Producer’s Choice involved as ridiculous, and wanted staff to ‘focus on the things that really matter and not have to think about signing for fifty pounds here and fifty pounds there.’
I admit that some of the worst fears I and others expressed at the time of my speech were not subsequently realised. The BBC has since survived John Birt and, indeed, there are some ways in which it is a stronger organisation after him. I’m quite envious of the BBC journalists today who have benefited from the money Birt put into news and, in particular, his belief in the importance of foreign news. All the time I was with the BBC in Delhi, little or no money was spent on our equipment. These days, the BBC’s Delhi offices and studios are as well equipped as any in London.
On the debit side, I still believe that my basic criticisms were justified. In his autobiography, John Birt says that when the governors came to choose his successor they felt ‘the BBC needed cheering up’. That seems to me to be an admittance that there was concern at the highest level about staff morale. Perhaps because he seemed to be so certain he knew best, John Birt lost some of his most senior colleagues during his time as Director General. Even Marmaduke Hussey, the Chairman of the Board of Governors who backed Bird through all the controversies surrounding him until almost the end, eventually fell out with him.
All that is in the past now. I remain grateful to John Birt for the generous way he referred to me in his autobiography. And I am also grateful to him for not standing in the way of my doing some work for the BBC when I resigned my contract a year after my speech.
So if all this is in the past, why write about it now? One reason is that it was those events at the BBC which first made me realise that Indian thought, of which my understanding was growing, might have something useful to say about the business culture that was sweeping Britain at the time. India had taught me to be increasingly suspicious of certainties and wary of an unflinching commitment to any point of view.
For me, John Birt stood for the opposite of India’s open-mindedness, and he revealed as much by his reaction to my speech. In his autobiography, he said that I had opposed even the notion that any significant change was needed. Yet I had acknowledged the need for change more than once and even ended my speech by saying, ‘We in the BBC must demonstrate that we are willing to change.’ To Birt, it seemed anyone who questioned the way he was changing the BBC was opposed to change, full stop. It was a black and white issue.
In these pages, I’m arguing for the need for balance, and it seems to me that Birt did not balance tradition with change. In his enthusiasm for change, did he denigrate the ethos and traditions of the BBC, which had gained it the reputation of being the best broadcasting organisation in the world? In his enthusiasm for management, did he give a higher priority to making the BBC the best managed broadcasting organisation than to making it the best broadcaster? Early in his BBC career he told the Royal Television Society that ‘the BBC should never be the prisoner of fashionable thought’, but was he himself a prisoner of fashionable management?
Birt’s doctrinaire approach to running the BBC so delighted the management consultants McKinsey’s that they appointed him as an adviser to their global media practice when he left the Corporation. While he was Director General, the BBC had spent large sums of money buying advice from McKinsey’s.
As I have said before, India’s Unending Journey is also a book about humility and nowhere in his autobiography does John Birt appear to question himself.
But then John Birt is not alone in his self-confidence. It comes from the culture he embraced. It is a culture that believes business is a science whose findings are as conclusive as those of the physical sciences and therefore, like them, should not be questioned. In their book The Puritan Gift: Triumph, Collapse and Revival of an American Dream, brothers Ken and Will Hopper are critical of the concept that running a business is a science. While Ken Hopper has extensive experience of manufacturing, Will is in the financial world. The two are scathing about the MBA degrees awarded to students of management, and attribute many current ills in society to the teaching in business schools. They point out that even some leading business school professors express doubts about the value of the degrees they offer. For example, they quote Henry Mintzberg, a professor at McGill, as believing that ‘all MBA graduates should have a skull and crossbones on their foreheads along with warnings that they are not fit to manage’. Similarly, after retiring, Russell L. Ackoff, who had been a professor at Wharton, describes the principal achievements of a business school education as:
First, to equip students with a vocabulary that enabled them to talk authoritatively about subjects they did not understand. Second, to give students the ability to withstand any amount of disconfirming evidence. Third, to give students a ticket of admission to a job where they could learn something about management.
This is not to argue that there is no point in a business education; rather it is to warn that an MBA doesn’t know everything that there is to know about business, that everything he or she does know is not applicable in all situations, and that the voice of experience is sometimes worth listening to.
Among the outcomes of the business school culture listed by the Hopper brothers are collegiality being replaced by the worship of an all powerful Chief Executive; rounded experienced managers being replaced by money managers; and so-called management science driving out ‘implicit management’, which takes account of past experience.
Business and market economics go hand in hand in exalting competition above all other virtues, but, curiously, competition often reduces competition, with big fish swallowing the smaller ones. However, this is not always so. A minnow of a one-man operation took on the whales of the detergent market in India – the multinationals Unilever and Procter and Gamble – and grew rapidly into the multi-million pound company Nirma, which now employs some 14,000 people.
These days, businesses don’t believe only in the benefits of competition with their rivals. Internal competition too has become a key component of corporate culture. Just as external competition keeps companies on their toes, internal competition keeps the staff on their toes – or so the received wisdom goes. ‘Never let the staff feel secure’ seems to be the motto. So short-term contracts replace staff jobs, lest security should make staff lazy. The threat of redundancy also hangs over employees. Whenever savings are to be made – and it’s naturally part of corporate lore that every manager should be ‘making savings’ – employees are usually among the f
irst costs to be cut. Often only the most senior managers are able to buy their security through contracts that guarantee they’ll be richly rewarded even if asked to leave the company.
Staff assessments sound great in theory – and of course management has a duty to keep an eye on its staff. In theory, there is nothing wrong with relating pay rises to employees’ performance. But who makes those assessments and by what standards are the staff judged? To my mind, both questions were answered succinctly by a BBC journalist attending a meeting about the introduction of performance-related pay. He said, ‘As far as I can see, this is a charter for sycophancy.’
At the other extreme, the Indian government is a patent example of an employer who appears to be unable to make any meaningful assessment of its staff. Government departments, institutions and nationalised companies would all benefit from an element of competition among employees, along with some threats to their security to prevent them becoming complacent. As it is, the laziest clerk can climb to the top grade of his cadre, and the most corrupt policeman can be reasonably certain that he will reach retirement.
The farmers’ leader from Uttar Pradesh (UP), Charan Singh, became Home Minister in the government that came to power after Indira Gandhi’s defeat in 1977. A strictly honest man himself, the prevention of corruption was one of his hobbyhorses. He once complained to me that it was very difficult to discipline a corrupt officer of the Delhi Police, who were administered by his ministry. ‘I can’t dismiss him,’ he sighed. ‘All I can do is transfer him. That was some sort of punishment when I was Chief Minister of UP, because it’s a huge state and I could transfer an officer from the very hot south to the cold remote Himalayas in the north or from the borders of Delhi to a really rural district on the border with Bihar. In Delhi what can I do? Transfer an officer from central to south Delhi, and what meaning will that have?’
