28 May 2012

That was week ending 25th May 2012

I had intended that this week’s look at last week would focus on the more humorous side of business, the economy and politics.  However there have not been many stories to chuckle about.  Even those that contained some vaguely amusing aspects left me not knowing whether to laugh or cry.  So here are a few of last week’s stories that illustrate some interesting aspects of human behaviour.

Regan of the SFO

This is an extraordinary story.  The Serious Fraud Office’s pursuit of the Tchenguiz brothers is more like an episode of the Sweeny than a serious investigation. Last year the brothers were arrested in a dawn raid on their properties (screeching tyres and “go, go, go" no doubt). Whatever the SFO hoped to find clearly they didn’t as neither of the brothers have been charged and both continue to deny any wrongdoing.
Not finding evidence never seemed to bother the Sweeney and it doesn’t seem to bother the SFO either. They continue to pursue the case and are now threatening a high profile investigation lasting 5 to 10 years (which we would pay for) if the brothers don’t agree to a financial settlement. Not even being accused by a high court judge of “sheer incompetence” has deterred the SFO from blundering on. I don’t know whether the Tchenguiz brothers are laughing or crying but I do have this mental picture of senior SFO investigators snarling “shut it” at anyone who suggests they don’t have a case.

En garde c’est Lagarde

IMF director Christine Lagarde endorsed the coalition’s austerity policy as the right course for the UK. However she also warned that further measures were needed to get the economy growing again. So a sort of “has done well, but now must do better” school report from the economics mistress.
She also used a new term to describe austerity measures, “fiscal consolidation”. Amazingly no politician has picked up on this so far. It is difficult to get people to vote for austerity as we all know what that means. Or if we didn’t we do now. “Fiscal consolidation” on the other hand might just sound sufficiently nothing really to do with the rest of us to sneak under the radar.
Talking of politicians, the shadow chancellor Ed Balls leapt up to claim that Ms Lagarde was right because she was agreeing with him. In her statement “when trying to imagine what the situation would be like today of no such fiscal consolidation programme had been decided, I shiver” she was clearly talking about him, but not necessarily agreeing with him. When challenged in interview, Balls responded that where she did not agree with his views she was wrong. Right and wrong at the same time it seems.

Yell no more

I had thought that the most extreme example of pointless rebranding had been the renaming of Norwich Union, one of the most well established and trusted brand names in the financial services industry. This became subsumed into Aviva, which sounds like a cross between a bus company and a 1970’s Vauxhall.
However Yell have hilariously gone way beyond this and announced last week that the new name for the business will be, wait for it ….. “hibu”. Heavily in debt and making huge losses this is the best they can come up with. Mike Pocock, Chief Executive said that the company needed a new name because it was “viewed as a dinosaur”. Was he suggesting that if Tyrannosaurus Rex had changed its name this would have saved it from extinction? Another step down the road to extinction for Yell, sorry “HIBU”.

HP and Autonomy

HP announced 25,000 jobs cuts. It was going to be 24,999 but they decided to include Mike Lynch, CEO of Autonomy that HP had paid $10.3bn to acquire just seven months ago. “Licence revenue was disappointing, sales execution was a challenge and big deals were taking longer to close”, said HP’s finance director, Kathie Lesjak.
However long before the sale to HP UK stock market analysts were critical of Autonomy and advising investors to sell. Mike Lynch claimed these critics did not understand complex software businesses like his. Apart from one, the critics could not quite put their finger on what made them uncomfortable about Autonomy. The one who did was Marc Geall and he had actually worked for Autonomy for 2 years, before joining Deutche Bank in June 2010. Here are some extracts from a note Geall issued in October 2010.
“The management structure, control and systems at Autonomy are more representative of a start-up than a major global player … Autonomy's sales force are "hunters not farmers" …the investment in the business has lagged revenues ... [which] could affect customer satisfaction towards the product and value it delivers."
Most of the other analysts applied conventional analysis criteria to Autonomy. These were easily batted away by Lynch, who believed they did not really apply to his business. By contrast Geall comments on aspects of the core characteristics of Autonomy's organisational culture, how it thinks and behaves and how these could impact on future performance. You can read the full article we published in 2010 by clicking here.
Much is being made of the bureaucratic HP culture stifling the entrepreneurial spirit in Autonomy, with some justification. However what Geall’s analysis showed was that Autonomy’s culture which was once its strength was becoming its weakness and this has now manifested itself under HP’s ownership after just seven months.

So that was some of the week before this week. We hope you found some of the above thought provoking and useful for you and your business. We trust you had a good weekend and hope you have a great week this week.

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