MANAGEMENT THEORY is in a dismal state. The theory that dominated business thinking from the late 1970s onwards — call it neo-liberalism for short — lies in ruins thanks to Enron and the global financial crisis. But the the-ory that replaced it — stakeholder capitalism for short — is proving no better.

Stakeholder capitalism depends on the idea that companies should consider the interests of a wider range of people than shareholders. But what successful company fails to consider the interests of workers or customers? And how does this so-called theory help you to choose one set of priorities over another? Prioritizing all stakeholders means having no priorities and no focus. The main tenets of this theory are collapsing. Engaging in politically progressive causes? Google recently sacked 28 employees who held a sit-in against a company contract with the Israeli government. Bringing your whole self to work? Try sticking a Hamas flag on your desk if Hamas is your thing. Paying obeisance to the rules of ESG and DEI? Conservative legislatures are up in arms about both ideas while serious academics are unstitching the DEI-ESG tapestry.

What’s needed is a new management theory that avoids both the deceptive certainties of neoliberalism and the equally deceptive vagaries of stakeholder capitalism. But where can we find the material for such a rethinking? Not in the great US business schools, which are either stuck on hold in stakeholder land or determined to replace the vague rhetoric of stakeholder capitalism with the even vaguer rhetoric of “corporate purpose.” Not in management consul-tancies such as McKinsey, which is engaged in a vast exercise in woke-washing over its role in corporate scandals. And not in the great US IT companies, which operate according to the idiosyncratic rules of the information economy (give away services to your users while selling user information to advertisers). Instead, I am increasingly persuaded that the answer lies in talking to hard-headed CEOs who run first-class companies in unglamorous bits of the real economy.

Xavier Huillard, the chairman and CEO of Vinci SA, tells me, in a very French way, that “I am not a businessman. I am a philosopher. I am a chemist of human beings.” Yet he is a philosopher with a very practical bent. Vinci is one of the world’s leading construction and concession groups. The group’s portfolio includes more than 50% of France’s tolled motorways; airports that process 210 million passengers a year, including those of ANA in Portugal and Gatwick in England; and a host of energy companies. It recently announced a deal to purchase a majority stake in Edinburgh Airport. In 2023 the group’s revenues rose by 11.6%. Some 78% of the company’s revenues are derived from Europe and 43% from France. Vinci played a leading role in building Paris’ corporate district, La Défense, and owns the Stade de France, the stadium where the Olympics are about to be held. But, ominously for its home country and continent, the company is looking outside the European Union for future growth, a habit that the French finance minister, Bruno Le Maire, is likely to encourage with his decision to tax the “excess profits” of French toll road operators in the 2024 budget.

Huillard has construction in his blood. His father built much of the infrastructure of the Ivory Coast after independence, including the giant Basilica of Our Lady of Peace, modeled on St. Peter’s in Rome, as chief contractor to Félix Houphouët-Boigny (aka “the old one”), the country’s first president from 1960 to his death in 1993. He himself gravitated back to the construction and contracting world after a brief spell in the civil service, first working for Sogea SA, “a sort of mini-Vinci,” then moving to Vinci. He has been CEO since 2006, after a boardroom struggle with the previous CEO who tried to sack him and ended up being sacked himself, and chairman since 2010. During his time at the top of the company, he has developed striking solutions to three of the biggest problems facing contemporary management.

The first problem is top-down management. A double curse, top-down management leads to the multiplication of levels of control while also transferring decision-making power from the people who have the most practical knowledge to the people who have the least. This is a problem the world over: US companies are becoming more top-heavy despite all the rhetoric about flat management. Gary Hamel and Michele Zanini calculate that the average US company with more than 5,000 employees has eight levels of managers sitting on top of frontline workers. Huillard argues that it is a particular problem in France. The French see the world from Paris outward and from the top down. They also fetishize academic intelligence rather than practical knowledge. The instinctive French view is that power should be handed to brilliant meritocrats, and the horny-handed sons of toil should simply implement their ideas. This French problem is magnified by the European Union’s tendency to follow France down the road to over-centralization and over-regulation.

Huillard’s solution to the problem is to “invert the pyramid”: Break the company into individual business units, sub-contract decision-making to the lowest possible level and keep the headquarters as lean as possible. (Huillard is par-ticularly proud that the headquarters of Vinci Energies is only about 60-strong, the same as it was a decade ago.) The company is divided into some 5,000 business units largely in charge of their own affairs. The heads of the business units essentially run their own mini-firms, he argues. Only local managers can understand the local regulatory environment, which varies enormously from country to country and even region to region. What is right for Lyon is not nec-essarily right for Edinburgh. Managers work their way up from the localities rather than being parachuted in from Paris. How do you prevent a decentralized company from fragmenting into little pieces? This question is rendered more urgent by Vinci’s acquisitions of some 40 to 50 new companies a year, some of them, such as Edinburgh airport, quite big.

Huillard points to the importance of two things: a common management culture and employee shareholding. Vinci is united by a collective management philosophy which emphasizes devolution and empowerment. Whether that philosophy can be deployed to potential acquisitions is an important consideration in deciding whether to buy them. Some 84% of the company’s employees in France hold shares in the Group and 80% of employees are eligi-ble to become shareholders. “That changes everything,” he says: It strengthens loyalty to the company and helps people to understand the overall strategy.

But the company is also held together by a further force: the will of the boss. The chairman likes to point to the paradox of French history: The French are both regicides and royalists. No sooner have they killed their kings (or presidents) than they create new ones. Huillard points out that his seat in the company boardroom is the only one with two buttons — one to speak, and an extra one that he can press to shut off anybody who he thinks is talking for too long (and, one gets the sense from the twinkle in his eye, perhaps saying the wrong thing).

The second big problem Huillard has tackled is short-term thinking. Both governments and public intellectuals have got into the habit of criticizing capital markets for encouraging short-term thinking. Huillard argues that this argument does not apply to all companies. Some companies are built to last — Vinci is a 125-year-old company that deals in the long-cycles of infrastructure projects. And managers can guard against short-term pressures by institutionalizing a long-term focus. Huillard does this by choosing his investors carefully, screening out opportunists, reserving the largest block of shares, 12%, for employees. “Great companies should choose their sharehold-ers rather than shareholders choosing great companies,” he says, because the critical shortage in the world is not money but ideas.

He adds that politicians are even more preoccupied by the short-term than the worst sort of companies. During the 30 glorious years that followed the Second World War, politicians focused on long-term projects such as nuclear power, high-speed rail, and human capital. Now, thanks in part to social media, they live for the moment, chasing popularity or treating companies as cash cows or otherwise putting their immediate survival above the long-term good of the economy.

European politicians combine this obsession with the short-term with a commitment to top-down management. France is more centralized now than it was five years ago; the EU is more regulation-obsessed; and the economy is more sluggish. Huillard rails against “the bureaucratic hydra” of the European ruling class that is killing the entrepreneurial spirit and consigning the continent to the slow lane. (Reminded of the British term “the blob,” he repeats it with Gallic enunciation and enthusiasm but adds that America is far better at pursuing free-market capitalism than Britain.) The result is that Vinci is being “encouraged out of Europe” — into Australia, New Zealand, and the United States.

Many American CEOs in the energy sector, not least Charles Koch, link this hostility to government regulation with skepticism about green philosophy. Not so Huillard. He worries about global warming and environmental damage. He weaves environmental considerations into everything that Vinci does, not least its system of rewards and promotion. He also regards environmentalism as a vital tool for generating corporate loyalty. “The state of the planet’s health has led a growing number of talented young people to give up hope and abandon belief in our history, future or scientific progress,” he says, but if you can demonstrate that the company is solving the plan-et’s problems you can turn despair into hope and social angst into corporate energy.

The French boardroom is full of big figures such as Jean-Paul Agon, the chairman of L’Oréal SA, and Maurice Lévy, the chairman of the Publicis Groupe SA, who manage their companies for the long-term. But Huillard is unusual in his willingness to distill his ideas into a theory: Devolve power to frontline workers and expect long-term thinking to come from business rather than politics. And in a country that remains bewitched by the wisdom of the state, he is unusual in being willing to tell government what to do rather than to bow the knee to France’s self-appointed guardians, the Énarques (or graduates of the ENA school).

Share decision-making with other creative forces in society rather than pretending that the state is omnicompetent, he says. Decentralize decision-making as far as possible: “Decentralization is the mother of reforms.” Think in the long-term rather than respond to immediate crises. The only way to solve the decarbonization problem is to build 20 new nuclear power stations, whatever the anti-nuclear lobby says. Replace industrial-era thinking with something more flexible and open. The same advice applies to both political and business leaders the world over.

BLOOMBERG OPINION