MANAGEMENT HISTORY Loyalty Lost Management’s legacy of the ’70s

The 1970s were not vintage years for business in either the United States or comparative backwater like New Zealand. Conglomerates were big the previous decade, but now they came tumbling down. In few short years the heroes of conglomeration, like LTV’s James Ling and ITT’s Harold Geneen, became villains of the American business world. They were addicted to doing deals rather than running their increasing disparate companies and Wall Street finally came to its senses when growth slowed and then reversed as their deal-doing luck ran out.
At the beginning of the 1970s there was, in the United States, the end of long-time growth in real wages and productivity growth slowed. The oil embargos, Japanese and German competitiveness, the beginnings of the consumer and environmental movements and signs of stagflation all contributed to depressing and sterile decade for US business and managers.
The scene in New Zealand, with manufacturers caught in wage-cost-price spiral, was not much brighter, even if Britain’s final EEC negotiations were less damaging to the dairy and sheep meat trade than feared. The business buzzword was ‘change’, although there was some uncertainty about what and why.
There was certainly change at Management. The magazine’s January 1970 issue introduced new, larger and glossier A4 format. The more attractive covers featured the companies profiled in each issue’s ‘cover story’. An admirable idea, veritable catalogue of leading companies from B Consolidated to UEB were featured through the decade, except most stories were written by PR consultants, and contained more puffery than penetrating analysis.
Alvin Toffler’s Future Shock, published in 1970, was about “the dizzying disorientation and the breakdown of rational response that occur when people are overwhelmed by demands for rapid adaptation and by the premature arrival of the future”, as Gordon Rabey put it in his May 1971 review. It was sobering and sometimes prophetic introduction to the traumatic 1970s. Toffler writes about the constant changes to organisations as result of the growth of conglomerates and then the ‘de-mergers’ as they unravelled again. “Vast organizational structures are taken apart, bolted together again in new forms, then rearranged again,” he wrote. “Departments and divisions spring up overnight only to vanish in another, and yet another, reorganization.” In tandem with these developments the old loyalty felt by the organisation man was also fast disappearing. As one of Toffler’s interviewees put it: “The loyalty of the professional man is to his profession and not to the organization that may house him at any given moment.”
Robert Townsend’s infinitely more playful Up The Organisation was published the same year. It was much pithier, but no less insightful. Townsend on corporate reorganising: “Should be undergone about as often as major surgery. And should be as well planned and as swiftly executed.”
In opening an NZIM conference, ‘Challenge of Change’, in August 1972, the prime minister John Marshall said: “One of the interesting developments of our time is that organisations are becoming much less bureaucratic simply because they are having to concentrate more on solving problems and modifying their operations rather than simply administering established systems.
“This development has implications for the qualities which successful manager must have. He must certainly be adaptable. He will increasingly be professional, with trained mind. If he is an administrator he will need to be capable of grasping the ideas of specialists; if he is specialist he will need to be able to look at things in broad terms.”
Peter Hall, general manager of the NZ Motor Corporation, noted that New Zealand had moved from land of relatively small businesses to one which, with amalgamations and mergers, now had some very sizeable companies. “The whole question of financing these substantial industries has required considerable change in skills and in thinking,” he said. “One of the consequences is that New Zealand is desperately short of corporate managers at all levels and is likely to be so for some time.”
Headed by fined down and spruced up Norman Kirk, later in 1972, Labour replaced worn-out National administration. short-lived economic boom and the first ‘oil shock’ sent the inflation rate spiraling, but the new, short-lived government was increasingly pre-occupied by Kirk’s failing health and distracted by the bellicose opposition leader. Robert Muldoon, prime minister in late 1975, was to dominate Management’s ‘On The Hill’ column like he increasingly dominated New Zealand life, but his political confidence was not matched by economic performance. His mini-budgets looked like indecisive tinkering with economic difficulties that called for longer-term thinking and the considerable restructuring of vulnerable economy. The second ‘oil shock’ didn’t help, but it was mainly Muldoon’s ‘tough it out’ approach that contributed to high double digit inflation, nil economic growth, record internal/external deficits, the worst unemployment since the 1930s, and considerable industrial unrest.
Perhaps it was form of escapism, but the National Management Game was highly popular in New Zealand. Developed in Britain, it was computer-based contest in management skills and financial analysis of the affairs of an imaginary company making consumer durable and then selling it in competitive market. After several years in Britain there were 900 teams taking part; there were 360 entries in its first New Zealand year in 1972 and 507 year later. As Management reported: “Not only is the game obsessively enjoyable, but it is splendid training, excellent as an inter-departmental ice-breaker.”
The New Zealand Manager, one of the first books on the subject, was published in 1973.
Based on nearly 2500 responses, author George Hines wrote: “The New Zealand manager sees himself as optimistic, future-orientated, hardworking and independent… At the same time, he is conservative, and generally feels that his superiors do not adequately recognise the quality of his performance.”
It was the heyday of the mainframe computer; essential for business but far too expensive for most. In July 1973, Management reported, there were about 60 organisations in New Zealand offering computer bureau or service facilities. “The benefits of using bureau eliminate the need to purchase or lease expensive hardware and the employment of specialized staff.”
During the 1970s the advertising industry was in one of its re-invention phases, with the emphasis on ‘full-service’. Management reported in July 1973 how Dobbs-Wiggins-McCann-Erickson had formed separate companies to provide public relations, promotional and marketing services. The first two were provided by Extra Media Services “directed by Mrs Angela Austad, an associate director of DWMcE and one of the youngest (and prettiest) directors to sit on the board of New Zealand advertising agency”. Tony Eden headed the Marketing Services Division and its activities included: “… trade probes, product evaluations, consumer opinion probes, total market investigation, marketing intelligence, corporate identity programmes – the list has grown so fast that marketing jargon hasn’t been found to cover some of the things they can do.”
Direct mail became major marketing force in the United States in 1971/72. Direct marketing sold 80 percent of all watches, 400,000 electronic calculators and six million kitchen appliances there in 1972. In 1973, Management reported Christchurch-based Bowden Publicity Associates sold 91,412 separate items of merchandise – ranging in retail value from $1 to $40 – by mail order.
In June 1974 Management highlighted one ray of sunlight penetrating the prevailing economic gloom – the New Zealand-Australia Free Trade Agreement or NAFTA. It might have been free trade agreement in name only, but as Jim Cairns, Australian overseas trade minister, wrote: