The first I heard of The Puritan Gift: Reclaiming the American Dream Amidst Global Financial Chaos by Kenneth and William Hopper was when the marvellous Peter Day featured it on his BBC radio programme In Business (this is a recent programme – he devoted a whole episode to it in 2009 but that podcast isn't available). It sounded terrific but somehow I didn't get round to buying it until I was browsing last week around the Norrington Room in Blackwell's Bookshop in Oxford.
The book lives up to the glowing praise it has received. I enjoyed it on several levels. For one thing, it's history of American business full of fascinating new facts. “Did you know….,” I kept exclaiming to my long-suffering husband.
The argument of the book is that the mid-20th century strength of American business, and the prosperity and cultural confidence that created, was due to key characteristics inherited from the country's founding fathers, the Puritan dissenters, and reinforced by many of the subsequent waves of immigrants. The Hopper brothers list these characteristics as: a sense of moral purpose in life; a liking and aptitude for mechanical skills; collegiality, giving the group priority over individual interests; and organizational ability. As they sum up: “The Puritan Gift is a rare ability to create organizations that serve a useful purpose, and to manage them well.”
The book falls into three parts. The first is a history of the early days and heyday of US corporations, which they start with Colonel Roswell Lee's Armory in Springfield, Massachussetts. It demonstrated to many subsequent businesses the importance of technical know-how, it was innovative organisationally, it was an enlightened employer, and was collegial – including outside the boundaries of the Armory itself, sharing know-how and best practice with other gun-makers. One fascinating chapter describes the transplantation of this American approach to Japanese business through the actions of three communications engineers employed in the MacArthur occupation. The Japanese communications and electronics industry was remade in the image of the best of America, and the Hoppers attribute the success of the consumer electronics industry to the adoption of these management practices. A war-destroyed, impoverished country became the world's second biggest economy in the space of three decades.
Decay set in early, however, and the Hoppers' first villain is Frederick W Taylor. He started the process of turning efficient organisational structures into social hierarchies, with top managers increasingly less likely to be engineers or technicians working their way up from the shop floor. Business schools continued this evisceration of the actual process of business, creating a professional cadre of managers, superior in status in pay, and with purely financial and abstract knowledge in place of the tacit skills and experience previously displayed by management cohorts. The downfall was completed by the steadily increasing celebration of greed, sucking the moral heart out of American capitalism.
It's hard to disagree with the outlines of this argument, harder to know what to do about it. The final part of the book is a brief attempt to suggest some ideas, with a list of 25 principles of Puritan management. Most of these seem very sensible without setting the heart racing. The key aspect of the Puritan Gift, it seems to me, is the sense of purpose. As John Kay has argued (in The Foundations of Corporate Success), a good business is one with a clear sense of purpose. The profits are a by-product, but without the core purpose there is no hope of sustained profitability. This is why I don't like the term 'social enterprise'. Any good business is a social enterprise.
Perhaps a benefit of the crisis is that the penny has dropped with some business leaders. Of course all too many are still driven by short-term financial engineering and their own bonus, linked to the share price. But it could be changing. One encouraging straw in the wind was the declaration recently by Paul Polman, chief executive of Unilever, that shareholders after the next quarterly profit were not welcome:
“Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value creation model, which is sustainable, then come and invest with us. If you don't buy into this, then I respect you as a human being, but don't put your money in our company.”
(Quoted by Michael Skapinker, FT, 24/11/10)
The importance of companies as economic institutions which convey long-term values and build a sustainable future is a theme of my forthcoming book, The Economics of Enough: How to Run the Economy as if the Future Matters . The role of organisations of all kinds, including businesses, is often overlooked in abstract debates about the role of the market versus the state.
Meanwhile, The Puritan Gift is an absorbing and uplifting account of what good management looks like, and a depressing tale of where it all went wrong in the last decades of the 20th century. I hope the Hoppers are right that the current crisis will prove an opportunity to recreate that all-important sense of purpose in business.
