HAMISH McRAE

What Works

Success in Stressful Times

To Frances, Izzy and Alex

List of Contents

Cover

Title Page

Dedication

Introduction

The UK and Ireland

1. Edinburgh Festival: the biggest arts festival of all

2. The City of London: the world’s international financial centre

3. The Celtic tiger: from boom to bust … to recovery

Continental Europe

4. Traffic management in Copenhagen: the car-free paradise

5. Zurich drug rehabilitation: teaching the world to kick the habit

6. The Mittelstand: Germany’s industrial powerhouse

7. IKEA: style at a price the world can afford

North America

8. New York philanthropy: the most generous people on Earth

9. Main Street America: core values for the world

10. Harvard: the world’s top university

11. Whistler: North America’s top ski-resort

Middle East

12. Property development in Dubai: the bumpy desert boom

Africa

13. Mobile telephony: changing the face of a continent

India

14. The slums of Mumbai: much more than Slumdog Millionaire

15. The high-tech industries of Bangalore: turning disadvantage to triumph

China

16. The municipality of Shanghai: driving the emerging financial capital

17. The Hong Kong Jockey Club: much more than gambling

Japan

18. Public safety in Tokyo: the world’s safest giant city

Australia

19. The great sporting nation: how Australia trains the world

Global

20. The International Baccalaureate: schooling the brightest kids

Conclusion

Acknowledgements

Notes and sources

Index

About the Author

Praise for What Works

Copyright

About the Publisher

Introduction
I. HOW THIS BOOK HAPPENED – AND HOW IT HAS CHANGED DURING THE WRITING

This is a book about success. It is about success in good times and bad. Its twenty examples come from every corner of the planet. It encompasses organizations and communities as diverse as the world’s best university and the world’s best slum. Of course, none of these stories is a tale of perfection and each example has flaws. But they are examples of collective human endeavour that I have found both humbling and inspiring and which I believe have powerful common messages for all of us. By understanding what works, we can make other things work better-the aspects of our daily life that we can improve. By any rational calculation the world is better placed now to make good choices about the future of our species and our planet. We are better educated than ever before; have better health and better information; technology continues to leap forward; and, of course, we are-notwithstanding the odd bump-richer than ever before. But if we are to face the many challenges we have to try to learn from each other. We all have to do it. It is the millions of acts by ordinary people that will eventually make a difference. In a modest way, it is to help us make a difference that I have tried to tell the stories in this book.

What Works has been more than a decade in gestation. In 1994–5 I published a book on the future of the global economy, The World in 2020. I then spent a huge amount of time travelling the world, talking about the future I had sketched with companies, academic institutions, management schools, professional bodies-and writing columns for The Independent newspaper in London all the while. The more I travelled, the more I began to marvel at the range of things I came across in every part of the globe that worked really well-success stories that deserved a wider audience.

So this book started as a desire to report, to share stories. But, of course, there have been many studies of success, particularly business books promoting apparently successful forms of organization, usually with an ideology attached. This study differs from those in that it does not aim to sell a theory-the notion that if companies or governments adopt this or that form of management theory or organization then they, too, will succeed. Actually they seldom do. You cannot, for example, transport the American corporate model to, say, India and expect every firm there to prosper. Besides, the shelf life of apparently great ideas is short indeed. Companies universally admired by one generation as models of managerial excellence are reviled by the next as failures. Government initiatives launched by one generation of ambitious politicians are quietly abandoned by the next. And economic principles embraced by one generation of academics are disputed by the next. After all, if financial markets were really as efficient as economic theory suggests, they would not have created two classic bubbles in the past decade: the internet craze and the dot-com crash; and the sub-prime boom and bust.

THE LESSONS

1 Optimism, balanced by realism: pessimism paralyses

2 Excellence, tempered by decency: if you neglect your wider responsibilities, you’re liable to end up in trouble when you meet headwinds

3 Community works, if it is allowed to: look at things from the ground level up and mobilize community

4 Government works too: compare like with like

5 Become a true magnet for talent: put out the welcome mat

6 Be honest about failure: keep learning, keep making mistakes

7 The need for humility: be as sensitive to success as you are to failure

8 Be nimble: make sure you are quick to adapt

9 Listen to the market: remember, it’s about more than money

10 Have a sense of mission: keep the long game in view and do right by those who share your objectives

So what does work? Instead of finding case studies to promote a theory, I worked from the other end. I observed success and tried to draw lessons from that. But the more I travelled, the more I became aware of different examples of successful organization, in different countries, on different continents, on different scales, and in a mixture of the public, private and voluntary sectors. The problem was not how to find case studies offering practical insights into what works-plenty of friends with whom I discussed the project offered candidates of their own-but how on earth to whittle them down to a manageable number.

More about this selection process in a moment. What became clear pretty early on was that for organizations to work really well, they needed to combine two features, the final two are noted opposite.

1 They had to have a deep-seated sense of mission-a vision, drive and commitment to do something that is worth doing even better. This sense of purpose could initially come from an individual but frequently it sprang from a group of like-minded people. Or it could develop from a general ethos accumulated over many years, so that no one could quite identify just who picked up the baton in the first place and who carried it forward at any particular time.

2 They had to be acutely sensitive to the market. They worked because they went with the grain of the market, listening to its signals and being guided by them, and applying its disciplines and adapting to whatever these required.

One without the other does not work. A plan or project that operates with a mission but fails to listen to the market may carry on for a while on a tide of early enthusiasm. But it cannot be sustained.

Pure market-driven endeavours can carry on for much longer. Most good businesses perform the essential task of seeking to fulfil people’s needs and desires, and if they do that competently, they make a solid contribution to the material world. However, they cannot change it. Market without mission can certainly help us get richer, improve our living standards and lead a materially better life. But add the sense of mission and you get something much more: a success that can be replicated and scaled.

Each case study in this book is a mix of these two attributes and each is tackled in the same sequence. First, I tell the story, explaining how I came to include this example and trying to capture and explain its special features. Then I seek to draw out some general lessons. Then, because nothing progresses in a straight line, I have to acknowledge what may go wrong and, in some instances, has already gone wrong.

Two other points emerged during the research and writing. One was that there has been a host of ‘near misses’-things that ought to work very well but have in some way fallen short. I considered trying to capture this because failure can sometimes carry more messages than success. History is littered with examples of clever and thoughtful people making huge errors, and of plans hatched by apparently very competent organizations resulting in disasters. The ‘best and the brightest’ get things wrong. In the end I rejected this approach because there were many different reasons for failure. There are common features to the successes but each failure failed in its own particular way. To give a flavour of this, I have sketched some of these near misses in the next part of this introduction.

The other point that became clear is that what happens in a global economic downturn is more interesting than what happens in the good times. Many of these case studies were researched and written in the boom years, with the result that the ‘what could go wrong’ section of some chapters has become more a tale of ‘what has gone wrong’.

I am not at all discouraged by this; indeed I am rather relieved. We are all in some measure prisoners of the moment, and while I was very conscious of the danger of writing a bull-market book, it was hard to lean against the prevailing wind. But a bear-market book, intoning that all is disaster, is not much use either. What Works has been completed during the downturn but it does, I hope, retain both its optimism and its perspective. If something does not work in tough times as well as easy ones, what is the point of examining it?

I have tried to look through the current difficulties evident in several of the case studies and make a judgement about the future. If I had not been confident, I would have dumped the example and chosen another. As it has turned out, I have not had to do this in any instance, for what seem to me to be sound reasons that I try to explain. Of course, I face the charge of being an eternal optimist, but I would rather answer to that than be a Dr Doom.

And so to those case studies. These are grouped geographically, partly for clarity but also because to look at the world this way emphasizes the message that really interesting things are happening in all corners of the planet. Some wider themes are drawn out in the final chapter.

It is a personal selection, of course, and it might be helpful next to describe quite how these choices came about.

2. WHY THESE CASE STUDIES WERE CHOSEN – AND A WORD ABOUT THE ONES THAT WERE LEFT OUT

Picking examples from the UK and Ireland was easy, for this is territory I know well. There are three, one each from England, Scotland and Ireland-apologies to Wales, though the country is host to administrative offices of another example, the International Baccalaureate. The English example, the financial services industry of the City of London, was almost too obvious because not only is commenting on it part of my day job, but I co-authored a book about it. Writing about the Irish economy, too, was easy: I know the story as I was brought up there and, as I acknowledge, I greatly admire the achievement. The question in both cases was whether-in the light of the economic downturn and the errors, individual and collective-they should stay in. Actually it was an easy decision, for the achievements have been far greater than the setbacks.

The reverses to the City are small in the context of the difficulties it has faced over the past century: after each of the two world wars its business was destroyed, and during the 1970s it was savaged by political and industrial strife in Britain as well as the greatest outbreak of global inflation the world has ever known.

As for Ireland, the clinching argument was put to me by one of its most senior bankers at a Trinity College Dublin meeting. ‘Look,’ he said. ‘We will go down 10 per cent, maybe a bit more, and that is dreadful. But in the previous fifteen or so years, we added 100 per cent to our GDP. And we will recover.’

One of the first examples I chose, though, was Scottish-and in particular what is by far the world’s largest collection of arts events, the Edinburgh Festival. Indeed its combination of a sense of collective mission over several generations and its status as a supreme marketplace for talent actually helped define the nature of the book. Is it particularly Scottish? Well, yes, in the sense that it could not happen without the support of Edinburgh’s citizens, who belie their reputation for being strait-laced in the way they relish the edgy stuff that is set out before them. But no in the sense that I am not trying to illustrate or praise national characteristics as such-simply to show what others can learn from undoubted success stories.

For continental Europe, the choices were harder. There are only four examples in this book and I wish I had more. A couple are stories I have wanted to tell for a long time. I have been an admirer of the German Mittelstand, the country’s collection of medium-sized companies, since my childhood, for reasons I explain in the text. And ever since I first went there, I have wanted to tell the story of how Copenhagen’s taming of the motor car has come to offer a lesson to the world. The other two were harder choices.

The only commercial company in the book is Sweden’s Ikea, chosen not because I am handy bolting together its flatpacked furniture or because it is particularly customer-friendly; quite the reverse-it is one of those companies that people love to hate. No, it was because its success goes beyond commerce in that it illustrates the sense of mission very well and also has something essentially Scandinavian about its ethos-a mix of style and equality-that was worth trying to bring to a wider audience.

The fourth European example is the drug-rehabilitation programme introduced in Zurich, and more specifically the rehabilitation of heroin users. I have to acknowledge that this scheme is not perfect; it just seems to have been more effective than any other. This study came about because Frances Cairncross, my spouse, visited its clinics when writing about drugs for The Economist magazine, and while the scheme has been imitated elsewhere and there have been some success stories, these have not been as numerous as I would have hoped. I think that is mostly because politics have got in the way, so if telling this tale helps push politics aside then it will have been a worthwhile exercise.

I am just as concerned, though, about the other stories that I would love to have included but have not. One huge success has been Finland’s primary and secondary education. According to an OECD study, the performance of Finnish students is quite outstanding. Would the Finnish ideas travel? Well, among the former Eastern bloc countries, Estonia has the best education outcomes. Why so? Officials there explained to me that they had adopted the Finnish model. Estonia is culturally very close to Finland so it is hard to gauge the potential reach of the ideas, but evidently they do have a bit of mileage in them.

There is nothing from France or Italy and, of course, there should be, for each has areas of outstanding excellence. The problem with France was finding examples capable of being replicated elsewhere. For example, the country leads the world in the proportion of its electricity generated by nuclear power stations. Those plants are reliable, efficient and, as far as one can judge, cost-effective. But it would not be easy to transplant a policy and a technology. In any case, a new plant in Finland, being built by a French company, has run into serious difficulties and is behind schedule and over budget.

Another example would be French healthcare, one of my original choices. It is still on balance one of the best systems in the world, if an expensive one, but it failed in the heatwave of August 2003. France had up to 20,000 more deaths than normal as a result of the soaring temperatures. Why? One reason seems to have been that August is the month-long holiday season there and most French doctors and other medical staff were off-duty.

One obvious Italian quality is its design talent, but that is hard to transfer to other countries. An example of excellence that has been imitated elsewhere is Italy’s ‘slow food’ movement-the emphasis on quality rather than quantity in food-which is a philosophy that encompasses other aspects of the Italian way. It would have been good to have included that as a means of examining how the country has managed to sustain one of the most-admired quality-of-life environments anywhere in the world. However, while other parts of the world have tried to copy some of these qualities, I felt the movement is so rooted in the history and culture of Italy that the lessons are limited.

One other European gap is Russia, where a candidate was the country’s technical education. This was clearly exceptional, though maybe less so now than a decade or more ago. Another potential case study was the vibrancy of Russian writing, also exceptional. But it was hard to bolt down excellence that could be transferred and so sadly the gap remains.

In North America the choices were extremely tough. I know and like America and have sought to understand it over many years, but choosing key messages for the world was difficult. An obvious area of excellence is in the business community and one of the original examples was General Electric, though I was more interested in it as a school for executives who then worked in other companies, rather than as a business itself. But this is a very well-travelled route and I was not sure I could add much value. I wanted to write about excellence in US healthcare, which at its best delivers a wonderful service. There have been many social initiatives, for example Milwaukee’s welfare reforms, which deserve a wider audience. I spent many hours researching, discussing and rejecting.

In the end I went back to a place that I knew and loved. Small towns in America have long fascinated me and having family in Montana has given me what I hope is a special insight into one medium-sized and successful town there, Billings.

Philanthropic New York was another choice, brought about by my affection for the city ever since my first visit in 1964, but also by a growing respect for the generosity of American people. The third US example, Harvard, was originally included not so much as a university but as a fund-management group. That was a bit too quirky and I had gone back to thinking about Harvard’s basic message of educational excellence even before the financial meltdown of late 2007 rather destroyed any idea about its special insights into fund management. My perspective has been one of a rival as my spouse is head of one of the oldest of the colleges at Oxford University, which has encouraged me to think a lot about what makes universities truly and lastingly great.

And then there is Whistler. There are many things about Canada to be admired but authors are allowed to be a bit self-indulgent: as a keen if not particularly skilled skier, and a correspondent on the sport, I did not see why I should not write about a ski-resort if I wanted to. More important, there is something especially and wonderfully Canadian about this tale, which I hope I have brought out.

The USA and Canada are covered but Latin America, I am afraid, is not. The only excuse, aside from the obvious one of a lack of space, is that I am not as familiar with the region as I am with most other parts of the world. I did, however, want very much to include a Brazilian tale and looked at several possibilities, an obvious one being the successful municipal government in the southern city of Curitiba. This is a great example of urban planning-a really well-run city. Another, somewhat more controversial example would have been Protestant churches, which have shot up from tiny beginnings a generation ago to become the fastest-growing Christian organizations in the world.

But the example that I most regret not examining is happiness in São Paulo. It is not that Brazil’s largest city is also its happiest but rather that, insofar as such an intangible can be measured, Brazilian people are among the happiest on earth. To some extent a sunny disposition goes with wealth; people in richer countries generally have more to smile about than those in poorer ones. But Brazil is an outlier. Its people are much happier than one might expect from the statistics, and where better to delve deeper into that than the country’s economic powerhouse, with all its energy and chaos? Maybe another book …

China and India both had to be included for obvious reasons. I have made several visits to both countries but, of course, I have only scratched the surface; no outsider from the West can ever feel they will understand countries with more than a billion citizens. In the case of China, however, one choice was easy: the Shanghai municipality. It is impossible not to be astounded, and at one level alarmed, by what has been achieved. The other choice, the Hong Kong Jockey Club, came about because some friends who live there suggested it. I had known Hong Kong ought to feature in the book somehow, but it was not until I researched the story that I realized this was an ideal way not just into gambling (though I enjoyed my day at the races) but also into a remarkable record in governance.

In India I had to write about the hi-tech industries of Bangalore; no one who goes there escapes unchanged by the experience. There are many other examples of hi-tech complexes in India-I could just as well have gone to Pune or Hyderabad-but Bangalore was where the dream first took root. The other choice, Dharavi in Mumbai, was more quirky, or at least it was until Slumdog Millionaire introduced Dharavi to millions of cinema-goers around the world. I hate the word ‘slum’ just as I hate the glamorizing of poverty. So the surprise there is not just that this community works but that it is an important economic powerhouse, generating a billion dollars of GDP each year.

There should, of course, have been other Asian examples, aside from the single Japanese tale-that of public safety in Tokyo. The great Japanese boom that lasted until 1990 brought the world such consumer triumphs as the Walkman and cars that did not break down. The world has certainly learnt from that, just as we have also learnt, less comfortably, about the threat of stagnation from what happened after 1990. (I co-authored a book, published only in Japanese, about the dangers of such stagnation to Japanese society and its influence in the world.) The example here, however, is not economic but social. It concerns how Tokyo, the largest agglomeration of humankind on the planet, is also the safest large city in the world, giving its citizens a greater degree of freedom to go about their daily lives than the people of any other city. Young women can return home on public transport late at night without any concern they might be attacked or hassled. Salarymen the worse for wear after an evening in the bars can do likewise.

I regret not including Singapore, for it is a fascinating experiment and a hugely successful one. Its attributes, however, are well known. There should be success stories from South-East Asia, for example from South Korea, Malaysia and Indonesia; my only defence is that you cannot cover everything.

The Middle East and Africa have each fielded a tale. I first visited Dubai at the height of the boom and decided there and then that this was a story demanding to be told. I next visited when it was rolling over towards the downturn and the question was whether to keep it in for by then it was clear that it would hit the buffers. Should the example be broadened more generally to the Gulf states, including Abu Dhabi, which has moved to rescue its fellow United Arab Emirates member, and also neighbouring Oman, which has been extraordinarily successful in creating a harmonious mix of ancient and modern? In the end I kept Dubai, partly because it is such an extreme example of property development but more because, for all its shortcomings, I believe it will maintain its role as a trading hub in the years ahead and succeed at it. Meanwhile, the lessons are obvious.

Africa was difficult because the continent is so diverse and its problems so challenging. Primary education in Ghana was one possibility, an example of public sector success under difficult circumstances. I would have liked to highlight the vibrancy of commerce in Nigeria, a success story against an even more difficult background. But in the end the obvious choice was surely the right one: mobile telephony. That is a great story in its own right but also illustrates some of the most remarkable features of the continent, including the ability of its people to adapt technologies to suit the special circumstances of Africa and the sheer commercial creativity of many societies there.

Australia provided an outstanding example, sports education, and even if it is an obvious one, I am happy with that. The message that it does this better than any place on earth has already transformed sports training in Britain, among other places, and in any case I think the story really should go beyond sport: governments can achieve in education if they are determined, set up and fund the project, and are clear about their objectives.

Finally, there is one non-geographical example, the International Baccalaureate. This is an education movement that is genuinely multinational: its legal headquarters are in Switzerland, it has an administrative base in Wales, its largest market is the USA and its fastest-growing areas of activity are in Asia. Schools all over the world are turning to the IB as a way not just to give their students a global academic credential, but much more to equip them to be good citizens of the world in their own individual way. I gave a talk about the changing world economy to a group of IB people and came away thrilled by what I learnt. Visiting schools in the UK, the USA and, by chance, Estonia totally confirmed this view. It is wonderful to know that the next generation of people who will be running the show is so good.

That brings me to the final point: the sense of a global community that came through strongly when I was researching and writing this book. Some general themes of What Works, together with the more specific takeaway lessons, are set out in the concluding chapter. Here are some thoughts about the global context of this book: how these stories exemplify a world where power is shifting and good ideas come from every quarter.

3. THE POWER OF GOOD IDEAS – AND THE VARIETY OF PLACES THEY COME FROM

The world is at one of those inflection points that historians will look back upon with awe. Economic power is rebalancing away from Europe and, to some extent, North America and principally towards Asia. It is the biggest shift of power since the Industrial Revolution, which enabled Europe and then North America to leap ahead of the more populous Asia. In 1820, by far the largest economies in the world were China and India. Fast forward and, within a generation, China seems set to overtake the USA as the largest-it probably overtook Japan to become the second biggest some time in 2009-while India is likely to move into the number three slot. Other countries, including Brazil and Russia, will not be far behind. Most people in the West are vaguely aware of the rising power of the so-called emerging economies, particularly of China, but have hardly begun to think through the consequences of this.

This shift is not just about economics; it is also about ideas. We are moving from a period when most of the ideas that have driven the world economy have come from the West, to one where many will come from the East-and the rest of the emerging world. For the moment the mixed-economy model of Europe, Japan and, in a slightly different form, the USA remains the one that is being adopted in the rest of the world. On the surface it looks as though a form of Western capitalism is being recreated in China and to some extent in India. In the summer of 2009 the Shanghai Stock Exchange became the second largest in the world after New York, in the sense that the value of the companies traded on it was second only to those traded on Wall Street. But that was in part because Chinese banks had adopted a different set of business practices to those of their US counterparts and it was in part, too, because the Chinese government had followed a totally different fiscal strategy from that of the USA or most European governments.

China and India, together with many other emerging nations, came out of the economic downturn in far better shape than the USA, Europe or Japan. On the face of it, the ideas of the emerging world look rather more effective than those of the West.

The purpose of this book is not to look at the future shape of the world, and the way it is changing, from a macro-economic perspective. That is what I spend much of my day job doing, and it was also the approach of The World in 2020. My aim here, in starting from a series of stories, is to illustrate how there are great ideas and innovations in Western societies but also similarly great ideas and innovations in the emerging world.

That surely is the future. Good ideas will increasingly come from anywhere and everywhere. We need to learn from each other. You cannot, of course, lift one way of doing things, transplant it to the other side of the earth and expect it to flourish. You could not create an Edinburgh Festival in China any more than you could make New York as safe as Tokyo. You could not build as good a university as Harvard even in Bangalore, or at least it would take several generations to do so. And you could not transport Hong Kong’s lean government to the welfare states of Western Europe, though there are some things we could learn from that. Indeed I hope we can all learn a bit from each of these stories, and try to apply some elements of their success. I’ve picked out three key lessons (bulleted) in each example and highlighted some further lessons in the conclusion.

We can also learn from the weaknesses. While every single example here is one of something that has been successful, every single story in some way encompasses threats that must be overcome or flaws that must be fixed. I have tried to highlight these for this is what makes the stories real. One of the great puzzles is the way in which clever, thoughtful and decent people can get things wrong.

What interests me most about these examples is partly the extent to which the baton of success can be passed on from one generation to another but it is also the extent to which an entity has the capacity to correct its course when the winds change.

As noted at the beginning of this introduction, the winds have changed sharply during the writing of this book. That makes for a much more interesting world, a much more challenging one, and one where we should dump ideological explanations and responses and simply build on ‘what works’. I hope you will enjoy the journey.

The UK and Ireland

CHAPTER ONE
I. WHAT IS THE STORY?

A shouted warning for the audience to stand back and a burst of fire from a human flame-thrower surges towards the crowd of onlookers on the Mound. A troupe in silver body-paint hands out leaflets for the night’s performance. Down the High Street, a jazz band bangs out the sounds of New Orleans. It is clamour, clamour-‘come and see us, the most brilliant act ever’-as every group of talent demands your attention. For it is August in Edinburgh and the prim grey capital of Scotland is once again home to the largest arts show in the world.

As the International Festival guide puts it: ‘There is no place on earth like Edinburgh in August.’

Nothing, but nothing, prepares the first-time visitor for the scale of what is on offer. You could in theory set to work every morning at ten, jam-pack the day with visits to shows and go all the way through the wee hours to 4 a.m.-and still see only a tiny fraction of what is available. There are more shows, more world premieres, more tickets, more new talent, more critics, more media moguls, more authors and playwrights-in short more talent on display-than at any other arts festival anywhere. What have Rupert Murdoch, Billy Connolly and J. K. Rowling got in common? They have all, in one way or another, appeared on a stage in Edinburgh in August.¹

In fact, so, too, has just about everyone involved in the British arts or media scene. Every student theatre troupe in the land wants to put something on there; a dear friend commissioned a new piano composition that had its world premiere there; other friends have done book readings or shows; one of my cousins puts on or acts in a play there most years. And my own modest contribution was once to go on stage as a panellist for a TV event.

There is a host of other arts festivals around the world but Edinburgh is three times the size of any of them.² It is an extraordinary, if improbable achievementxd-and one that many other cities would love to emulate. How has Edinburgh done it?

The short answer is slowly. This is not one festival but-depending what you include-ten. Each reinforces the others, giving the city an artistic critical mass that makes it impossible to topple.

There is the original arts festival,³ organized like so many others by the city authorities. There is a jazz and blues festival,⁴ Europe’s largest, bringing in groups from all over the world. There is the book fair,⁵ the largest of its kind on the planet. There is a film festival,⁶ the longest continually running one in the world, for Cannes had a break during the Second World War.⁷ There is a television festival.⁸ In 2003, a video games festival joined the clutch;⁹ Scotland is one of the key world centres for creating new video games.¹⁰ There is the Mela,¹¹ a celebration of life in the Indian sub-continent, run by Edinburgh’s Asian community. In 2004 the city added a visual art festival for the first time,¹² though actually modern visual arts had been celebrated since the early years, with local galleries putting on individual shows. In a slightly different category from all the rest, there is the Edinburgh Tattoo,¹³ where military musicians-again from all over the world-put on a show on the forecourt of Edinburgh Castle. The Tattoo is actually the second-largest of all the shows in terms of ticket sales, offering more than 200,000 seats through its three-week run, and military visitors come from all over the world to see how it is done.

And the biggest of all? That honour goes to the Fringe. Edinburgh’s special feature, the thing that distinguishes it from every other celebration of artistic endeavour, is the Fringe-the open access given by the city to the thousands of events that take place in August. Others have tried to copy it. None has really succeeded.

The story, though, offers a lesson for anyone wanting to run an arts event. Back in that drab aftermath of the Second World War, many cities sought to recapture the life and joy of pre-war Europe. Thus Cannes restarted its film festival-it had opened for just one night, on 1 September 1939, before Europe was plunged into war. In 1946 and 1947, respectively, Avignon¹⁴ and Edinburgh both started arts festivals¹⁵-the pattern being the classic one where a group of civil and artistic leaders invite companies to bring their acts, organize venues-and usually offer subsidies to get them to come. The original Edinburgh International Arts Festival was exactly that. But in the very first year something happened that changed Edinburgh and the arts world for ever.

Eight groups that had not been invited, six from Scotland and two from England, decided to gatecrash the show. They found their own venues, stumped up their own money and put on a performance.¹⁶ That first Fringe has defined the movement ever since: no performers are invited-there is complete open access; they use unconventional theatres; and they carry all the financial risks themselves. More came the following year and an Edinburgh journalist pointed out that interesting things were happening on the fringe of the main festival-and so coined that expression to describe them.¹⁷

Since then, the Fringe has gradually acquired a modest infrastructure. The first programme to bring the various independent acts under one loose umbrella, rather than have them compete against each other for spectators,¹⁸ was put together on the initiative of a local printer in 1954. A box office run by Edinburgh students followed in 1955 and the Festival Fringe Society in 1958.¹⁹ One of the key aims of the society was to help would-be performers put on shows, a theme that continues to today. The event became famous across the UK in 1960 after the success of the comedy show Beyond the Fringe²⁰ (ironically part of the main festival, not the Fringe), but the first full-time paid employee was not appointed until 1969.

The Fringe raced on, getting into the Guinness Book of Records as the globe’s largest arts festival in 1992 and becoming the first arts organization in the world to sell tickets online in real time in 2000. In 2009 an estimated 19,000 performers took part in more than 34,000 performances at more than 2,000 shows in 265 venues. Nearly 1.9 million tickets were sold and the event generated £75 million for the economy. Those figures beat all records by a huge margin. Indeed the Fringe had doubled in size over the previous six years.²¹

Then finally there are the shows that are literally ‘Beyond the Fringe’. The Fringe is an enabling organization that aims to help would-be performers. No one needs to use its services to put on a show, though, in practice, it makes life easier to go through the central ticket office and benefit from the publicity associated with the Fringe programme. But lots of performers simply turn up. Most busk in the High Street or on the Mound, the public space by the National Gallery of Scotland, but some simply put on a show in friends’ flats. You may not get noticed by the critics, but if you want the experience of performing before a huge and interested audience, Edinburgh provides the ultimate opportunity. Edinburgh in August is the world’s stage and anyone, but anyone, can be a player.

But how? How has one medium-sized city managed to achieve this position?²² To relate the chronology helps explain a little, for the burst of energy that the Fringe brought from day one has been the catalyst driving the growth of the other elements of the festival. Critical mass matters. Once the Fringe was established as the premier showcase for British, later world, theatrical talent, it was natural that Edinburgh in August should attract other festivals too. The market was largely ready-made, for people who are interested in new experimental theatre are probably also interested in more conventional drama, in classical music and jazz, in new books-in all the other experiences that Edinburgh offers. But Edinburgh is not just a retail show for interested individuals; it is a wholesale show for the different artistic trades. For a young performer to get noticed at Edinburgh can be a life-changing experience. Win one of the top awards and nothing will ever be the same again.

So for the (mostly) youthful performers and producers at the Fringe, it is a career tool. ‘I am here,’ a friend who put on a show there explained, ‘to invest in my future.’ And for the more mature critics and impresarios, as well as the ordinary punters, it is ‘the chance to see it before it happens’.

2. WHAT ARE THE LESSONS?

Edinburgh has long had a lot of things going for it-things that would naturally make it the ideal backdrop for an arts and entertainment festival. It is, physically, the most beautiful city in Britain, with its castle, its gardens, its medieval Old Town and its Georgian squares. It is a capital city and-important in the entertainment world-an English-speaking one. But none of this, of course, would have been enough. There are at least three special features about the Edinburgh Festival that carry a message for other cities seeking to develop their own special face to the world.

Lesson one is the willingness to create and permit a completely open marketplace. This means accepting that what happens cannot be controlled. Edinburgh has tended this marketplace wisely, not by piling in huge amounts of money or building infrastructure, but rather by clearing bureaucratic blockages that might stifle it. For example, one of the keys to the Fringe’s success is the use of unconventional performance spaces, often in old buildings designed for another purpose.²³ That means applying sensitive fire and access regulations-to make sure audiences really are safe-rather than insisting that venues fit box-ticking requirements.

It also means accepting that the city will, for one month, be a quite different place from what it is during the rest of the year. Residents and businesses alike in effect lose control of the centre of their city. It is business, of course, but it is also disruption. Were it badly managed, the disruption could damage the core activities that drive the city through the rest of the year. All tourist centres have to cope to some extent with surges of visitors with different values to the locals, but this is extreme stuff. The lesson therefore is not just to permit the creation of a market but also to relish it.

Lesson two is to blend top-down and bottom-up. There is no single mind planning what happens in Edinburgh; there are and always have been lots of minds, which work in different ways. Some of these, such as the director and governing body of the International Festival, have to exert a top-down discipline. The companies performing have to be invited. Funding has to be found, venues secured and the events publicized. To get the right mix, there has to be some artistic direction.

At the Fringe, by contrast, the minds have to focus almost exclusively on logistics. They do not concern themselves about the artistic merit of the performers; all they have to do is make sure that anyone who fills the basic requirements is able to set up a show, for this is entirely a bottom-up exercise. There is, however, one crucial function that the Fringe performs beyond logistics. This is teaching.

Every year it holds a series of seminars to show would-be performers and promoters how to put on a show. These include: how much the different venues will cost; how to manage publicity; the timescale for decisions; the need to go for as long a run as possible to cover costs, and so on. It is in the interests of everyone that people go into the project aware of the costs and how to budget for them. Even performers have to eat.

The trick, which the various organizers of the Edinburgh festivals have managed to pull off, is to achieve balance-to plan but not to over-plan, to lead but also to follow the demands of the market.

That leads to the third lesson: the need to listen. This has been central to Edinburgh’s development at three stages.

First, what started as a conventional arts festival, and might have remained so, was swiftly transformed by the demands of the market into something much bigger. Had there been no uninvited guests at the first party, the Fringe might never have taken off.

Second, in the middle years, Edinburgh allowed market forces to develop the Fringe, rather than trying to stifle it. Technically, the Fringe has become extremely innovative, from the first comprehensive programme to the centralized ticket office and, later, to internet booking.

Third, whenever a new festival wanted to tag along, it was welcomed. So films and TV, jazz and books were all grafted onto the official and Fringe core. This tradition continued into 2004 with the formal addition of the art festival-though as I noted earlier, the visual arts had been represented at Edinburgh for many years in an informal way.

By chance, on a visit to the festival in 2007, I met the key person in bringing modern visual arts to Edinburgh-a man called Richard Demarco,²⁴ who grabbed me by the arm and taught me something else. A tiny, mercurial Italian Scot in his late seventies, he had gone as a 17-year-old to the very first festival-and been so enchanted that he decided to devote his life to bringing art to Edinburgh.

And so over the years a string of European and Scottish artists had their works exhibited in Edinburgh at Richard Demarco’s gallery, and in 2007 his archive was put on display at the Scottish National Portrait Gallery in Queen Street. It was an amazing jumble of stuff, bringing together the work of renowned artists such as Joseph Beuys²⁵ and Richard Demarco’s role in the whole festival scene. (He had, for example, co-founded the Traverse Theatre²⁶ in 1963.)

As we talked, two things became clear-two things at the core of the spirit of Edinburgh. One is that it is vital for the different aspects of art to commingle; theatre should not be separate from the visual arts-it is all part of the whole. And, of course, Edinburgh mixes everything together. The other is that you need failure; people need to be free to fail. Richard Demarco himself always maintains that he set out on his career in the arts because he had failed his exams at school, but the point is much bigger.

What I think Edinburgh does is to create a platform not just where people can feel free to experiment but also one where they do not need to worry if it does not work. There is surely a wider message there: individual failure is an essential part of the wider success of almost all enterprises-and absolutely to a venture as huge and amorphous as the Edinburgh Festival.

•Create an open marketplace •Blend top-down and bottom-up •Listen-and accept failure as part of wider success

3. WHAT COULD GO WRONG?

Nothing is for ever but the sheer size and variety of the talent on display in Edinburgh gives it a stability that other arts festivals lack. Because it is market-driven, it cannot be snuffed out by a squeeze on funding; as long as it provides a useful showcase function for the entertainment industries, it will survive. If you were trying to create a new venue for putting talent in the shop window, you would not invent Edinburgh, but it is there, it is huge and it would be hard to displace. Critical mass matters.

But so, too, does efficiency. In 2008 the film festival moved its timing forward to May, thereby getting the city to itself. This decision was largely due to the global film calendar-a case of trying to fit in between Cannes, Venice and Toronto²⁷-but the sheer congestion of Edinburgh in August was apparently a factor too. That year the Fringe booking system broke down and ticket numbers were down year-on-year, though they recovered spectacularly in 2009.

Thus the main threat is not that all the new shows will suddenly up sticks and decamp to New York, London-or Hollywood, rather it is that the festival will become an inefficient showcase, making it hard for the talent-spotters to find what they want and for the best shows to gain their attention.

It may become too big for its own good. This is not principally a matter of logistics-though the city needs to think more innovatively about the way in which it manages the weight of visitors-but of marrying the needs of the ordinary public, who largely fund the whole show, with the needs of the industries that use it to show their wares. If it becomes inefficient for the professionals and they find other ways of locating the new performers, then the city loses a crucial element of its importance.

At a popular level that might hardly be noticed; the more punters who come, the more the market will create stuff to entertain them. The retail trade would continue unchecked, at least for a while. But if Edinburgh were ever to lose its edge-if, for example, the new comedians started to test their acts elsewhere-then after a while the public would begin to notice.

There is an element of danger about Edinburgh in August; not physical danger, of course, for there is remarkably little crime given the number of people. No, it is artistic danger. Alongside the possibility, even probability, of seeing the new stars before they are famous, there is the certainty of seeing some poor hopefuls tank, embarrass themselves and their audience, and disappear from the entertainment world for ever. From the point of view of the visitor, the cost is a wasted afternoon or evening of leisure time. From the point of view of the critic, the cost is higher: it is not seeing something of greater merit elsewhere. From the point of view of the performer, it may simply become better to bypass Edinburgh and find other ways of making your talent known.

There has been a little evidence of this in recent years. The danger sign is key critics not turning up or only going for a couple of days. This is not yet a serious problem but you can see some cracks in the facade. The number of tickets sold is wonderful but some say that the essential edge-the artistic danger-may not be quite as sharp as it used to be. The Fringe is the key here. If ever the word gets round that it is on the skids then, well, the festival could implode.

First, Edinburgh would cease to be as important as a trade fair, or rather a set of trade fairs. The professionals would no longer attend. Instead, they would find some other place where cutting-edge performers would test their acts on audiences and the critics could gauge their talents. Next, the public would become a different, less experimental audience, seeking entertainment that was more conventional, more ‘commercial’, more downmarket. Then after a while numbers both of performances and attendees would start to fall and the trouble would become obvious to the world.

Now I think this danger is quite small because every year the artistic focus shifts as demand for different types of artistic experience waxes and wanes. In recent years there has probably been an excess of stand-up comedians, as Richard Demarco complained, though that reflected a demand from the somewhat cynical early 2000s. But there were also a number of religious-themed events-something that reflects society’s changing values and would not have happened ten years earlier. There was much about Christianity, as you might expect from the home of the Church of Scotland, mostly questioning it but also celebrating its musical traditions. There was everything from early Christian music in pretty early Christian churches to the Soweto Gospel Choir. There were also a Yiddish song project, Buddhist tutorials and a small Islam festival, which featured Arab calligraphy, talks and music at the Edinburgh Central Mosque.

Edinburgh has a great plus in its organization in that there is not and never has been a single mind running the show. So there is little danger of the city taking a decision that would undermine the festival phenomenon. But this also means that were, for whatever reason, the movement to lose its edge, it would be hard for the city to do much to recover it. Edinburgh sings to Mao’s dictum ‘Let one thousand flowers bloom’, rather than his policy of Cultural Revolution. There is no mind to mess things up, but equally there is no mind to sort things out.

As well as being the biggest set of arts festivals in the world, Edinburgh is also the most commercial in two senses. One is that it receives less of a subsidy proportionate to its size than any festival anywhere;²⁸ arguably it subsidizes the city as a whole, for the additional revenue it brings in is far greater than the modest municipal contribution it receives. The other is that because it is completely open access, it gives an early signal of what the market for artistic or creative endeavour is seeking, hence the growth of religious events noted above. It has prospered because it both fills a market need and has a sense of mission to be the greatest show anywhere.

The chances are it will carry on doing so. However, tastes change in the worlds of arts and entertainment as much as in other areas of human endeavour.

So far, Edinburgh seems to have caught the fickle shifts of fashion and retained its lead. Long may it continue to do so. Meanwhile, anyone in the world who is interested in the arts should have at least one shot at braving the cacophony on the High Street of Edinburgh one August. Go to ten shows in a day and stagger back to the hotel battered and ready for some more tomorrow. Better still, put on one: back some students or even commission some music and give it a world premiere.

At some stage the ever-greater size of the festival will become a more serious obstacle. Maybe the re-timing of the film festival carries a warning here-it cannot go on growing for ever and the switch from its present very big bang to some sort of steady state will be tricky. But for years to come it will remain, quite simply, the greatest show on earth.

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