Laughing or Crying

We have read several stories in the financial and business press recently to which our reaction was "you're having a laugh!"

Promethean promitheth much but deliverth leth

Promethean World an educational technology company floated on the stock exchange in March at 200p. Last week the shares were down to 52 pence after warning that full year results would be below market expectations, just 5 weeks after the CEO said he was confident of delivering results in line with market expectations. Shareholders who were persuaded to support the IPO are nursing a £291m loss.

Promethean make and sell "interactive learning technology", electronic whiteboards and the like. Now it doesn't take a genius to work out that its sales revenues are highly dependant on the education sector. So with governments everywhere cutting expenditure it also doesn't take a genius to conclude this was likely to be a highly risky investment and probably one to avoid. Not a view shared by the clever people investing our pension savings it seems. To quote one major institutional investor "This sort of thing just shouldn't happen. It is just giving IPOs a bad name". You're having a laugh mate, it gives you a bad name. You are the prat who will invest our money in any dog of an investment that big investment banks (in this case Goldman Sachs and JP Morgan Cazenove) wave in front of you.

Incidentally of £104m new money raised £90m paid off loans from private equity firm Apax partners plus £8.5m fees to the two banks. Time to laugh or cry?

Wot no bonus!

A survey of finance sector pay rates published last week found that the average salary for junior staff at London Investment banks will be around £97,500 this year. This is a 20% increase caused by employers replacing bonuses with higher basic salaries. However the survey also found that these staff were not fully aware that the salary increases would have an adverse effect on their annual bonuses. In other words they are expecting the salary increase AND the same level of bonus as before. You're having a laugh, just how stupid are these people. Stupid enough to buy shares in IPOs like Promethean World apparently.

FSA still SFA

Readers of the articles in this series will recall that we have applied the acronym SFA to the Financial Services Authority because that sums up their achievements to date. There have been some signs of life but the refusal to publish the report on the near collapse of RBS shows that nothing has changed. The FSA claims it is prevented from publishing by section 348 of the Financial Services Act which say that "confidential information must not be disclosed". With the taxpayer the largest shareholder in RBS only the FSA would find this a justification for doing nothing. Or are they afraid of what the report will reveal about its own non performance in the whole affair?

At the same time we have the collapse of Crown Currency Exchange. This currency trader was FSA registered and carried the logo on its website. However Peter Benstead its CE has a string of failed businesses on his record and was banned by the DTI as director in 1998. He was actually convicted of theft in 1980 so technically should not have been able to be a director of an Unregulated Small Payments Institution, which is how Crown Currency operated. Read more about this in Jonathan Russell's and Annie Shaw's article in the Sunday Telegraph at http://bit.ly/dWBHuO .

So FSA? You're having a laugh, still SFA.

Thanks but no thanks Natwest

Finally did you see the advertisements from NatWest at the weekend? Headed "We're here to help whatever the weather" the new customer caring NatWest with its shiny new customer charter is offering to increase overdraft facilities for customers whose cashflow may have been impacted by the weather conditions. Looks good doesn't it? A bank actually thinking about its customers' problems and offering to help. Well not quite. The interest rate they will charge is 19.89% EAR, that's 39 times the BoE base rate. You can find credit cards that will charge you less than that.

"Here to help" you're having a laugh, here to help yourself more like.

Business Bloop Award is brought to you by Steve Goodman and Tony Ericson of Business Breakthrough Coaching. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Exceeding Expectations," "Business Bloop Award" and "Capitalism or ... Common Sense".

Outrage at Public Waste of Money?

Sandwell councillors, educationalists and their supporters angrily confronted Michael Gove, the Education Secretary, in outrage at his cancellation of the Building Schools for The Future programme and their 9 school projects. After the meeting, a Sandwell Council spokesman told television news, “We have spent £20 million on preparatory work and that will now all go to waste. This Tory Minister is responsible for an outrageous waste of Public Money..”

We gather that the Building Schools for The Future programme was cancelled because of the staggering proportion of funds that had not been spent on building schools. The extreme outrage at Sandwell is because their schools were cancelled after, apparently, being given the all clear by the Minister, advised by the Partnership for Schools quango that has turned out not to know what it was doing – with vast amounts of public money.

We draw your attention to the comment, “We have spent £20 million on preparatory work and that will all go to waste.”

How can anyone spend £20 million on only 9 projects in “preparatory work”? Even allowing for over inflated public sector pay, that looks like 40 man years of activity that has produced nothing. 40 man years!

Was the Sandwell spokesman was suggesting that the cancellation of their projects should be reversed just because they had already spent an enormous amount achieving nothing?

You’re having a laugh … seriously?

Gordon Brown spent 13 years building massively complex organisational structures employing tens of thousands of bureaucrats to spend vast amounts of public money (that we could not afford) in order to build his own political power and “to create employment”. We showed you how he was doing it, and how stupefying wasteful it was, in this blog in June 2009.

The Coalition now faces the task of dismantling these labyrinths of wasters. Building Schools for The Future is just the first and a vivid illustration of what needs to be done. How many more tens of thousands of man years of unproductive activity are yet to be uncovered?

“Massive reductions in public spending are not possible without cutting front line services”, alleged the failed Labour government. This example shows that massive cuts in public spending are the only way to deliver front line services without absurdly wasteful bureaucracy.

This is the first sign of the different way of thinking that will enable a different way of acting that will deliver the different results that our economy so badly needs.

One of the first things you must do with something that is not working and out of control is to stop it. Good on you, Govey, you got this first step right!

Do you know what do next though, because that is what you will ultimately be judged on?

"You're having a laugh ... seriously" is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog uses a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs at "Exceeding Expectations" ,"Business Bloop of the Month Award", "Capitalism or ... Common Sense" .

Would you unbelieve it!

This article is a message to the leaderships of Britain’s banks, many of whom attended last week’s annual conference of the British Bankers Association. Several aspects of this made me wonder “are you having a laugh, or are you serious?”

First not a single speaker could be described as a bank customer or even as representing customers. Lord Turner, Chairman of the FSA, even though I suspect he has a bank account does not really count. Is this an oversight, or do you think you can do without customer input just when society is questioning the whole purpose of the very existence of banks in their present form? So are you serious about serving the customer and through them society as a whole or are you just having a laugh?

Next Stephen Hester, Chief Exec at RBS was expected to say that the publicly owned bank is putting being “socially useful” at the heart of its operations. The reports on his speech however don’t seem to quite reflect this expectation, although he did call for “reform”. However being socially useful appears to be reflected in NatWest’s ad campaign where bank staff dressed as airline cabin crew for some reason (overdrafts to manual) are seen doing nice things for customers and communities. As a NatWest customer myself I was intrigued by a “customer charter” apparently being signed by staff. I have yet to see this charter; though a copy may have been included in the recent mailing I received telling me they will no longer pay interest on my current account. So Mr Hester are you having a laugh or are you serious?

Then Angela Knight Chief Exec of the BBA prior to the conference told the Sunday Telegraph that there was a perception among the public that “everything the banks do is wrong” and that “We feel unbelieved when we tell the truth”. My first thought was how do they feel when they don’t tell the truth? My second was “she’s having a laugh … no I think she is serious!”

Ms Knight has highlighted the really serious problem here without understanding what the problem and its implications really are. This is that most of us simply don’t trust the banks anymore, anything they do or anything they say. Ms Knight’s statement implies that this is somehow “not fair” on the banks and that consequently it is up to the rest of us to change our perceptions. It does not work that way round.

How it actually works was defined by Robert Buzzell & Bradley Gale whose work on the Profit Impact of Market Strategies identified the crucial importance of Relative Perceived Quality by the customer as a key driver of profitability, described in their book the PIMS Principles. One of their key conclusions was that “… quality is whatever the customer says it is, and the quality of a particular product or service is whatever the customer perceives it to be”.

It is the banks that have created these perceptions amongst the rest of us resulting in a potentially damaging loss of our trust and confidence. However it is not up to us to change our perception of the banks. It is down to the banks to change these perceptions, not because “it is their fault” but because, as Buzzell and Gale demonstrated from their research, that’s the only way round they can be changed.

For this to happen banks have to start behaving visibly and radically different. Just tinkering around won’t do it, in fact it will make it worse. Inviting representatives of their customers to tell it like it is at their annual conferences and actually being “socially useful” as opposed to just running ad campaigns about it would be a start.

What is absolutely certain is that until we see visible evidence of radically different attitudes and behaviours, I’m sorry Angela but we are just going to continue to “unbelieve you”. That’s not good for any of us as it will inhibit the banks from playing an effective role with the rest of us in securing the economic recovery of our country. So please take this seriously.

There are many really great people working for our banks who want to give the customer and through them society as whole the very best service and assistance. What they need is a clear and unequivocal direction from their leaderships to do this. Perhaps this quote from Siegmund Warburg founder of SG Warburg merchant bank can provide some direction. “The reputation of a banking firm for integrity, generosity and thorough service is its most important asset, more important than any financial item and has to be taken care of incessantly”.

"You're having a laugh ... seriously" is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog uses a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs at "Exceeding Expectations" ,Business Bloop of the Month Award", "Capitalism or ... Common Sense" .

Ding Dong the Bludge is Gone – Fable’s End

In June 2009, we told the tale of how Grand Vizier Bludge schemed to replace the Emperor Blarr by the manipulation of the public assets. Then how, as Emperor Bludge, he created a network of elaborate and wasteful enforcement systems to increase his power. How the public commissioners learned to focus only on their hand outs from Bludge and not on their duty to the people of the land, and of how the fatal consequences were explained away by yet another intellectually corrupt argument.

In our November foot note, we were reminded of how the myth of the Emperor Bludge’s self advertised economic expertise was based on the deliberate use of a private language and logic set which he said only he could understand. We have a shorthand phrase for that – you know it well – “Bullsh*t Baffles Brains”. But so many fell for it.

At last, the people of the land have spoken. They have cast out Bludge, his sinister familiar Mandelbritt (the master of twists upon twists into infinity), and all his satraps. They have suspended the Emperorship and brought in The Most Heavenly Conjoined Cleggeron, a new and alien species not seen in the land for over 50 years.

We commended you all to be ready to clear out the Bludged Up thinking from your business, and from public life. Well, the time is now, the opportunity is here, now.

We repeat our questions for you at this moment of maximum opportunity.

§ Are you really thinking clearly?

§ Are you really thinking hard about how you want your business world to be, and how your company will need to be within it, now the new administration is here?

§ Can you spell out what you want this new government to bring to you and your organisation so that you can make sure you get it?

§ Don't forget that to wait will be to be too late. Do it to them before they do it to you!

Can the Comparative Competitive Strength point of view assist you to achieve the clarity of purpose and the incisiveness of argument that is needed, now more than ever?

You want to know more? We are here.

We add a further question -

Now you can cast aside what we described as the misleading miasma of Bludged up thinking that permeated, complicated, delayed and diluted the interface between business and government

Our economic and political world has changed, fundamentally –

Man's mind, stretched by a new idea, never goes back to its original dimensions.

(Oliver Wendell Holmes)

Are you ready and able to think and act completely differently? Is your business truly flexible, fleet and fighting fit?

Can Coaching for Change assist you to achieve the direction, the innovation, the courage, the determination and to maintain the focus that is needed, now more than ever?

You want to know more? We are here.

"You're having a laugh ... seriously" is brought to you by Steve Goodman and Tony Ericson. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. Each blog uses a recent business/financial topic to highlight different perspectives and conclusions from those obtained using conventional thinking and techniques. You can read the other three blogs at "Exceeding Expectations" ,Business Bloop of the Month Award", "Capitalism or ... Common Sense" .