Business lessons may not always apply to government

MANY PEOPLE have a favourite book that they like to hand out to friends and colleagues, ranging from Doris Lessings feminist bible The Golden Notebook to Ayn Rands libertarian saga The Fountainhead. The chosen tome of Dominic Cummings, a special adviser to Boris Johnson, Britains prime minister, is rather more specialist. It is High Output Management by Andrew Grove, the late chairman of Intel, a chipmaker.

As management books go, Mr Cummings made an excellent choiceGroves text is clear, practical and free of both pomposity and jargon. Any manager could benefit from his insights into issues such as planning and performance reviews. The book has been popular in Silicon Valley ever since it was first published in 1983.

But how much use will the book be to British civil servants, or indeed any government official? At Intel, Groves goals were clear: to produce the most powerful, reliable microprocessors at the lowest possible cost. The market reinforced efforts to meet these goals every day. A competitor might always produce a better, cheaper product (hence the title of another Grove book, Only the Paranoid Survive).

Even though they involve management, governments are not businesses. They are rarely engaged in manufacturing. The services they offer are not usually being provided in a competitive market. And the outputs they produce are notoriously hard to define.

Take the provision of welfare benefits. A government might choose to aim at a whole range of targets. The provision of benefits at the lowest administrative cost; ensuring that no genuine claimant goes without food or shelter; reducing fraud; making the application system as simple and transparent as possible; setting the level of benefits so that applicants are encouraged to seek work; and so on. Some of these targets might be incompatible with others. Politicians may choose to prioritise one but they will come under pressure if they fail to meet another: if fraud rises, say, or if claimants are left destitute. So civil servants may be forced to chase all the goals simultaneously (more like the modern-day notion of stakeholder capitalism than the shareholder focus Grove represents).

Nor can one rely on everyone to pursue the targets that politicians set. In the 1980s the British government changed the definition of unemployment in a number of ways that reduced the claimant count. But the result was a rise in the number of people on sickness benefit. The doctors who attested to the sickness claims were not under the direct control of ministers. Many were sympathetic to claimants at a time of rapidly rising joblessness.

The theme which runs through Groves book is the breakfast factory: a restaurant that serves the customer with an egg, toast and coffee in the most efficient fashion. But running a government is a lot more like operating a caf where some customers are vegan, others are gluten-intolerant, some want mint tea, and the staff treat the enterprise as a workers co-operative and (possibly to their bosss dismay) refuse to take money from patrons.

Where Grove does on occasion stray into public policy, it is easy to see where his approach falls short. He compares the way that American embassies assess visas with manufacturers testing components. The vast majority of visas are processed without fuss, so why not test a sample rather than every single application, and reduce the time wasted by staff and applicants? Politicians would be extremely reluctant to take such a line, in case a single terrorist entered the country on an unchecked visa. Groves analysis of Americas criminal-justice system suggests that the main constraint is a lack of prison places. At no point does he consider whether, in a country which has long locked up more people proportionately than anywhere else, prison is the most effective way of dealing with crime.

This does not mean that government can learn nothing from business. But the idea that businesspeople will automatically translate their success into government has been proved false by a host of examples, from Silvio Berlusconi in Italy to Rex Tillerson, head of ExxonMobil turned Americas secretary of state. They pull levers and find that nothing moves the way they expect.

It wont do civil servants any harm to read High Output Management. But it is not a road map for managing government. At least the officials can be grateful for small mercies: Mr Cummings isnt making them read The Fountainhead.

This article appeared in the Business section of the print edition under the headline "From the cradle to the Grove"

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From the cradle to the Grove - The Economist