In recent weeks, I have sat in on several meetings with heads of major European companies in which questions about American leadership have been raised. What's new, at least in my experience, is that the questions aren't confined to political leadership; those are perennial favorites among our European counterparts. Instead, the questions deal with issues of business leadership. They prompt the question of whether the highly-touted American style of management of the 90s is giving way to a new and different European style, just as Americans replaced Japanese management style as the sine qua non among the world's managers just a little more than a decade ago. In a word, the Europeans are acting as if they know something we in the U.S. don't.
What is it they claim to know and practice? Much of it is described in a new book by Will Hutton, titled The World We're In (Little, Brown, 2002), from which excerpts (emailed to me by a U.K. manager) were published in England's Guardian newspaper last month.
First, work less but work smarter. It's well known that the official workweek has been shortened to thirty-five hours. What has happened? Take France, for example. French productivity is up; some would claim it is now higher than the U.S., just as is productivity in The Netherlands, Belgium, and the former West Germany. For example, Volkswagen's market share is climbing even though its highly unionized, highly paid work force puts in an average workweek of 28.8 hours.
To this we could add a second and related practice: Balance work and personal life. Many would claim that the quality of life (bolstered even by traditional measures of standard of living) in Europe is much higher than in the U.S.
Third, to paraphrase Hutton, divert money that would otherwise be paid for management mega-salaries and mega-incentives to investments in technology. Of course, tax laws generally discourage the former in Europe anyway. But they seem to be providing the fuel to help Europeans work smarter.
Fourth, rely more heavily on operational improvements and the contributions of employees rather than mergers and acquisitions to build value. This philosophy seems to be gaining some credence in the U.S. as well, with recent research on the high proportion of U.S. merger and acquisition activity that has actually destroyed value.
Some of Hutton's examples, such as the ascendancy of Airbus vs. Boeing, will rekindle the controversy about the importance of state subsidies to each. But his arguments raise a number of useful questions. Do the Europeans have it right? In the long run, will their management philosophy produce superior results? Combining all this with what is now the world's second currency, the Euro, is the baton being passed from American to European management? What do you think?