US fear of failure can spur measures for UK success

Are scoreboards any good? Industry now has three to turn to should it wish to find out who is where in terms of capital investment, R&D spending or investment in training. The problem with scoreboards is that they only offer snapshots of performance using measures that can be wildly different. Often they make it difficult […]

Are scoreboards any good? Industry now has three to turn to should it wish to find out who is where in terms of capital investment, R&D spending or investment in training.

The problem with scoreboards is that they only offer snapshots of performance using measures that can be wildly different. Often they make it difficult to compare one company to another.

Just as school league tables can ignore the concept of value added by a school, so these raw figures of investment in capital, people or R&D tend to skate over what is really happening within individual companies.

The Government is keen to remind us of the productivity gap we face with regard to US competitors. But ask US manufacturers how their industry has got so good, and they’ll usually tell you it was because of investment made in the past 20 years simply to avoid being squeezed out of the market. You get a strong feeling that for US companies, fear of failure was the biggest motivation.

Rather than league tables, US manufacturers have been keen to use more sophisticated benchmarking tools to record basic, clearly defined and easily measured areas of business behaviour and compare them to the market leaders. The figures that really matter in this respect (like stockturn, capital utilisation and so on) tend to be figures not readily available for public consumption.

In this respect, the Fit for the Future campaign being launched in December, with the focus on benchmarking, is clearly on the right lines. The mistake that is waiting to be made is for companies to assume that changing themselves will be cheap or easy. Once you know your weak points, it will take a high degree of motivation to force through changes. As the Americans found, fear of failure may become the only route to success.