Uncommon Sense, Common Nonsense by Jules Goddard and
THE book's focus is corporate performance and it identifies
the difference between winners and losers as lying in what they believe. There
are beliefs, prevalent in business, which are antiquated and harmful and yet
are allowed to direct activity only because they are so commonly accepted.
This is the "common nonsense" of the title and
why, the authors contend, there are so many poorly performing companies.
The "uncommon sense" of the title refers to the
asymmetric knowledge a company possesses, that is the knowledge they have that
others do not and that gives then the winning edge.
A strong strategy is always "uncommon sense".
Strategy can never be the application of a formula and there are no generic
As such a winning strategy is a unique understanding of the
situation, it is a discovery. To quote the American biochemist, Szent-Gyorgy:
"Discovery consists in seeing what everyone has seen and thinking what
nobody has thought."
Clearly being different is not a guarantee of success, it is
a necessary, if not a sufficient condition for success.
Think of strategy as a competitive sport or game where
winning is never a function of playing the "right" way - there is no
standard way of winning at chess. The point of the game is to test your
intelligence in the clash with your opponents.
The default position of so many corporate strategies is the
intention to be better than the competition, delivering higher quality goods or
providing better service. The only result of this misunderstanding of what is
required of a strategy would be the convergence to the same solutions from all
Using the motor industry as an example, Goddard and Eccles
point to two winning strategies, one based on the uniqueness of the product and
the other based on the uniqueness of the manufacturing process.
Porsche is an example of a unique product with a high unit
cost of production, but able to command a high unit price. Honda and Toyota are
examples of unique manufacturing processes with low unit costs and low unit
Both of these are winning strategies.
Stuck in the middle are the "plagiarists" Ford,
GM, VW, with unit prices as low as Honda and Toyota, but with unit costs higher
than Honda and Toyota, but not as high as Porsche. The plagiarists are always
poorly performing companies.
This "stuck in the middle" position is favoured by
CEOs who feel most comfortable with compliance, control and
Goddard and Eccles note that the price these CEOs pay is
always high as they are presiding over a failing firm.
It is the same group of CEOs who see "best
practices" as an aspiration. Goddard and Eccles hold that this must be
"the most value destroying idea to come out of business schools and
management consultancies over the past 20 years".
All best practice can achieves is catching up with the herd.
Toyota didn't outperform GM by emulating GM practices; it reinvented
The day that Google starts to take an interest in competency
profiling or balanced scorecards is the day, the authors suggest, that you
should sell their shares.
Just as there is the strategic "common nonsense",
so too is there operational "common nonsense". An example is the
widely held view that corporate winners are motivated by meeting a financial
target, when in fact they are motivated by meeting a need.
This is a function on the oblique principle – you don't
become happy by pursuing happiness, rather happiness ensues from the pursuit of
Winners, they point out, have discovered that the best way
to increase shareholder value is by satisfying a need and creating value for
Similarly, financial measures of performance are a poor way
to motivate employees. People go to work to express their talents, earn a
living, socialise with colleagues, participate in interesting projects and,
perhaps, make a difference in the world.
Winning organisations play to this by trying to fulfil not
only these motives, but also the higher needs of their employees. This is the
oblique way of ensuring compliance, diligence and passion.
What echoes through the book is the notion that success is
about unique practices, not best practices. Strategy is that uncommon skill of
staying one inventive step ahead so that the firm does not have to compete on
When management's focus turns to "taking costs
out" or "downsizing" instead of the wealth creating activities
of innovation, differentiation and entrepreneurship, it is a sign they have
lost their nerve or have run out of ideas.
The practice of management requires the focus on two
conflicting matters – control and innovation. Where the emphasis lies should be
determined by the current needs of the organisation.
Today, these are more likely to be the need for innovation
rather than the need for control. Most firms are better at control than
There are tell-tale symptoms of a company's bias in favour
of control rather than innovation, and the authors' description of these
provides a fine illustration of the tone of the book:
benchmarking – plagiarism run riot;
- Performance targets
– insults for the conscientious;
- Shared values – the
extinction of individualism;
- Balanced scorecards
– the bureaucrat's revenge; and
- Best practice – the
recipe for formulaic sameness.
The book is a collection of contrarian views and innovative
ideas, some of which are original. There are errors in their attribution of
ideas and comments, but none detract from the value of this this easy to read
book about running a corporation.
This is a valuable tool for both executives and managers.
Readability: Light --+-- Serious
*Ian Mann of Gateways consults internationally on leadership
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