From backroom boy to leading light

At first glance, this work may appear irrelevant to academics, except in business schools. Yet management consultants say that people in organisations often find it easier - because it is less threatening - to learn from organisations other than their own. From Followers to Leaders is a valuable addition to management literature and is aimed at deepening the understanding of government officials and businessmen and women with roles in national catch-up programmes. But perhaps others can usefully eavesdrop.

Those who do will find Naushad Forbes and David Wield reporting on ideas developed over a decade but originating from a programme that they ran at Stanford University in 1990. Its distinguishing feature was that it looked at national economic progress as the outcome of innovation in individual firms, not of aggregate movements in national economies. The volume's central argument is that "follower" businesses can innovate by learning from leading companies, moving towards matching their performance and even overtaking them.

As an organising device, the authors work from three perspectives. First, against the backdrop of the developing world, especially India and Asia, they consider the contribution that national governments can and cannot make to national industrial development. Second, they look practically at the kinds of innovation that follower companies need to make to catch up with leading businesses. Third, case studies from five continents, 12 countries and diverse industrial sectors indicate ways in which businesses have tackled the process of catch-up.

The first perspective allows the authors to re-evaluate the role of government policies in industrialising countries. They look at myths about the nature of technology and its contribution to development, and at the value of policies such as export orientation, import substitution and picking winners - or losers!

They conclude that the mythology is too simplistic. Today's context for policy-making - for example, the degree of homogeneity between national cultures - often varies too much for the same approach to work well in different countries. And the policy mix used by a government is more crucial than individual policies in that mix.

Important though government policy is, the second perspective of the book - on innovation in follower firms - rightly dominates it, because that is where change happens. The authors believe that, in the early stages of an effort to catch up, innovation must be concentrated on the shop floor or in the office and must focus on changing operational procedures and structures in down-to-earth ways. In manufacturing, Forbes and Wield call this "hard slog" innovation, emphasising that in a developing country, "competition is not simply with firms from Japan, the US and Europe, but also from Brazil or China". Even low-cost firms in developing countries meet lower-cost competition.

To develop the follower company further, innovation has to move up the value chain, and the authors go carefully through the main steps, helpfully interspersing their analysis with case studies and check lists.

Similarly, research and development skills must be developed first to solve shop-floor technical problems. The sophistication of R&D must then increase, ideally supported by gaining access to work by technology leaders. A case study shows how Hewlett-Packard Singapore moved beyond advanced manufacturing to world-class R&D.

The authors insist on the need for follower companies to make their designs more innovative, seeing this as part of a development by which the firm's culture changes from one created to permit the exploitation of existing knowledge to one searching creatively for ways to support innovation.

This summary shows just how much understanding of business civil servants need if they are to be able to give genuine help to follower companies. In the UK especially, but also overseas, they need the benefit of this volume as much as any businessman or woman. A telling example shows how governments can fail to learn from the best in the world. After India's 2001 earthquake, several cities established new building codes to prevent serious loss of life in future. Yet, say the authors, "there has been no attempt to learn from the successful codes in Japan and California".

This book's greatest strengths are its factual detail and challenging analysis. Yet they could also prove its greatest weakness. Only a few readers are likely to work their way conscientiously through it. A volume bursting with wisdom may prove off-putting to precisely the practical people who could use it best. This is a book for collective use.

I hope business-school programmes will prove powerful in spreading its message, but that is not enough. In businesses, the development and implementation of the authors' ideas would often be most effectively achieved as an in-house project of the top management team, leading to practical outcomes in the organisation. Team thinking, talking and implementation are most likely to carry through a process such as this.

A final point. At times, the authors appear so carried away with the importance of followers supplanting leaders that they imply that this is their entire concern. This cannot be their intention. Leaders and potential leaders are relatively few compared with the huge number of companies around the world whose only realistic role can and should be to become better followers. This book can help them and deserves the subtitle: "The better follower's vade mecum ."

Sir Douglas Hague is associate fellow of Templeton College, Oxford, and honorary visiting professor, Manchester Business School.