Maurice Zinkin on Big Industry
The Itt,ggernattis Graham Bannock (Weidenfeld and Nicolsort £3.25) British industry has no luck. There was Mr Wedgwood Benn, and he loved bigness. Now there is Mr Bannock, and he hates it. Mr Henn had the vaguest reasons for his preference. Mr Bannock has a selection of quotations for his.
Mr Bannock does some things very well. He is easy to read. He does not load the reader with facts. His quotations nearly always contain a telling phrase. He knows a great deal about motor-car engineering. He is very good at the brief summary; he describes what operations research has achieved so far in a few lines. He can be admirably negative; he tells us what corporate planning has not achieved in a minimum of pages.
He also, however, has his prejudices. He does not like American motor-car styling or conventional car engines. He does like unconventional car engines and the Volkswagen body design.-These are perfectly permissible predilections. What is tiresome is his tendency to write as if anyone who does not share them must have been brainwashed by Detroit. Personally, I like to have some options on the colour of my car, or the number of its doors, and am totally unin- terested in the conventionality or otherwise of its engine, so long as it works; and I do not even read motor advertisements. Mr Bannock also does not like sensitivity training; he sees in it all sorts of sinister possibilites of manipulation. I have been on a sensitivity training course and found it useful; but I Must confess I have not found my powers of sinister manipulation in any Way improved. Finally, he is suspicious of Organisation Man. Yet he does not quote his own experience, though he has worked for both Ford and Roger; instead he gives us a long description of um, whose inspirational song is more than usually bathetic. Again, however, my own experience is that the managers of large corporations are neither more nor less conformist than civil servants or academics, though the pattern to which they do (or do not) conform is naturally somewhat different.
Mr Bannock is a fair-minded man. He is rarely straightforWardly polemical. The result is that one very often does not have a clear idea of what he is getting at. For ex- ample, he tells us several times that acquiring companies (whom he calls masculine in a Way that makes one sympathise with Women's Lib) impose their managements on the acquired companies; he then tells us how the top managements of Standard-Triumph and, to a lesser extent, of Rover were disposed of by Leyland. only to add a foot- note that most of the replacements came, not from Leyland, but from Standard-Triumph and Rover. Again, he tells us at. some length the Rank-De La Rue story; but it is not clear what point he is making beyond the rather obvious one that the Monopolies Com- mission was somewhat confused.
One can grant him some of his con- tentions. The great corporations have not been responsible for major scientific ad- vances; none of them has ever, in fact, claimed to have produced a Rutherford or an Einstein; what they are good at is ap- plication, though Mr Bannock does not even give them that. They are keen on cost reduc- tion—but one would have thought that was a Point in their favour, and indeed in one place he admits that it frequently is. They do con- trol a large part of manufacturing, though not on the whole of services; and services are around half of the economies of most developed countries. Their profits are not particularly high; but since their cost of capital is relatively low, and they are very vulnerable to government attack, that is what one would expect. The economies of scale are difficult to quantify, and do not go on for ever, But Mr Bannock himself esti- mates the economies of scale in the motor- car industry as considerable—up to 500.000 cars a year; and that gives one quite a big company. Big businesses do have manage- ment problems, and do lack the intimacy and flexibility which are possible in little ones; but they also usually lack the personal auto- cracy of many small firms, and they find it much easier to attract the specialist and the graduate.
Beyond that, it is very, difficult to go with Mr Bannock. He asserts regularly that the giant corporation debases quality, though he admits that there is a minimum below which they will not go. But his evidence for this key contention is casual and anecdotal in the ex- treme, and it is inherently unlikely. Profit comes from providing the public with the quality it wants, provided the public will pay thz price for it.
What upsets him most, however, is the reduction in variety which he thinks the giant corporation brings about. He believes that the corporations get rid of all real differences between products and create instead distinctions which are not really differences. For this belief he provides singularly little proof, though he does at various places list the motor companies which have gone out of business. Indeed, the latest fashionable theory in the corporations is that markets are segmenting, and the pro- per way to approach them is to try and pro- vide something suitable for each segment. They do not always succeed. It is fairly easy to use marketing research to test an idea a company has already had. It is very difficult to use it, or any other method, to find out
what the public really would like. People are too indefinite about their desires, not good .enough at articulating them. That is why the marketing man's job is so difficult.
Mr Bannock has no remedies for the pro- blems he sees except more consumer in- formation and a tougher merger policy. The consumer information would probably help. A tougher merger policy would probably do more harm than good. Shareholders and directors may sometimes make the wrong decisions; there is no reason to think ministers and monopoly commissions will make better ones.
Maurice Zinkin is Head of the Economics and Statistics Department at Unilever and visiting Professor of Management Studies at Bradford University
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