That was week ending 9th November 2012

Last week could be described as momentous, given that Barack Obama was elected for a second term as US President and the Chinese continue ponderously through their leadership change process. It is difficult to work out what is going on with this. However it seems pretty certain that one of the blokes in suits will become the new leader of China sometime soon.

This and some other stories from last week prompted me to think about the difference between “knowing what you are there for” and “knowing what you are there to do” and whether this difference matters. The connection is not immediately obvious between this and Presidential election and Chinese change of leadership, but bear with me.

Hurricane heroics

I am grateful for this story from my business partner in Melbourne, Barbara Craven. It concerns a US company called Squarespace who provide cloud based services including running hundreds of thousands of websites for customers. When hurricane Sandy struck their data centre in downtown Manhattan it suffered a total loss of power in spite of multiple levels of back up systems and resources. It took out much of the building services including fuel reserves for back up generators. And yet none of their customers experienced any down time as a result of the power outage!

How did they do it? For three days employees carried fuel manually up 17 flights of stairs to fuel the remaining back up generator. By day four they had installed a pump system to deliver fuel to the generator on the roof. They now have plenty of fuel on site and a further generator connected at street level but they are still not connected to the power grid. Yet the service to customers has never faltered.

This for me this is an example of people who know what they are there for, to serve their customers. So when struck by a disaster of such unprecedented proportions that they could not possibly have planned for it, they quickly worked out what they had to do. So maybe there is a difference and the difference can make a difference.

Obamarama

However a positive rather than negative “purpose” can, I believe, influence results. In the 2008 Presidential election much was made of Obama’s election machine, particularly that part of it that “got the vote out”. In 2012 the Republicans said they would match or even exceed this. However it looks as though they didn’t and that it was a crucial factor in their defeat. From what I have read it wasn’t about money or about the numbers of people involved. The Obama people just seemed to have the more positive sense of purpose which was to get their man elected. Consequently they had a very clear understanding of what they had to do, which was to find every single possible voter who might vote for Obama and make sure they voted. The Republicans on the other hand gave the impression that they were there to stop Obama being elected, rather than to get Romney elected. This showed on the ground in the lack of purpose, drive and resources they put into getting their vote out.

The lone voice

I came across an example of what happens when people are not clear what they are there for when talking last week with a friend of mine who works for a European manufacturer of capital goods. The company has brought in consultants to improve “sales” performance and they have introduced a sales performance management system. This requires everyone in the sales force to log every phone call, e-mail, meeting etc. and to carry out their sales activity in line with performance standards set by the system. Even though my friend has been the top sales person in Europe for most of the past fifteen years, they want him to conform to the new system as well. Their argument being that if he doesn’t do it then no one else will.

The company has also spent €35m “rationalising” its manufacturing facilities. Whilst this has produced cost savings, these have not been used to offer lower prices or even better delivery times to customers. My friend is clear on what he is there for, to sell machines to customers, but others don’t appear to share this view. They think they are there to tell others what to do and to micro manage them into doing it.

Whitehall revolving doors

However I also think you often need time and experience to understand what you are really there for. This is not surprising when most of our education and experience of work has been all about WHAT we must do rather then why we are doing it.

Regular readers of these articles will know that I regularly castigate government for its lack of competence and capability to deliver what the country needs. This week a report from the Better Government Initiative (BGI) will be published highlighting the shortcomings in government which have caused so many policy failures, including record levels of staff replacement in Whitehall.

Did any of us realise that staff turnover in the Treasury over the last two years has been 50% and the average age in the department is now well under 30?  High staff turnover is affecting all departments from the lowest to highest levels. Only 2 of Whitehall’s 16 departments have the same Permanent Secretary as they did two years ago. The Department of Transport is now on its fourth Permanent Secretary since the election. No wonder it screwed up the West Coast Mainline bid.

It seems that no one has given a thought as to whether this indicates a serious problem at the heart of government. With staff turnover at these levels people will hardly have time to figure out what they are there to do, never mind what they are there for.

China Syndrome

Judging by some of the rhetoric from the Chinese leadership last week they know what they are there for - to maintain one party government so as to keep the communist party in power in China. A key component of the strategy to maintain this political status quo is government control of state enterprises that dominate key areas of the economy. Many of these behemoths make huge losses and are a source of much of the corruption in the Chinese economic system.

However the other goal set is to double per capita income by 2020. This is an example of where what you have to do to achieve what you think you are there for is actually an obstacle to achieving your goals. I may be proved wrong, but in the last 100 years autocratic government with state control of the economy has not been a successful formula for delivering sustainable growth in prosperity for its citizens. This is because it favours the relatively few to the detriment of the many and always encourages corrupt practices by the few to maintain their privileges.

It’s all about outcomes

If you can set a clear outcome that both you and your people can relate to and find inspiring, then quite extraordinary things can happen. A positive outcome will nearly always beat a negative outcome. Focusing just on what people are there to do can make it really hard work to make anything happen at all. Even when you have set an outcome people need time and support to work out how they personally can relate to this and consequently what they are really there for. Finally if the outcomes you set are about you having your cake and eating it, this is likely to be self-defeating.

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.

That was week ending 2nd November 2012

My purpose in starting this series of weekly (well mostly weekly) articles is to take a different perspective on some of the news stories from the previous week to see what lessons might be learnt. However I am beginning to find that many of these lessons keep coming round again. So here is a quick canter through some of last week’s news stories with my take on the lessons they contain.

Barclays to slash pay – senior employees at Barclays are to have their pay cut by up to 50%, with the bank happy to take the risk that some will leave rather than accept this. This is one of the key outcomes of Project Mango, a three part review into the future of the former Barclays Capital. So it appears that reality does catch with everyone eventually and the longer you ignore it the bigger kick in the backside it gives you. The mystery that remains is why big corporates continue to give major projects such silly names.

BT Sports Channel – perhaps to its surprise BT came away with two of the seven Premier League broadcasting rights packages plus the rights to Premier League Rugby from next year. The idea behind this move is that it will enable BT to compete with Sky in offering bundled telephony, broadband and TV services. However it is unclear how BT will earn a return on the near £1bn of its shareholders money that it has spent so far when it doesn’t even have a sports channel yet.  The major impact so far is that BT’s entry into the bidding process forced Sky to pay 40% more than in previous Premier League auctions. Perhaps the lesson is be careful what you bid for, because you most likely will end up with some of it, having paid a lot more than you expected.

PPI miss-selling hits banks profits – one clue as to why Barclays and the other banks feel confident they can reduce the pay of their senior people without any mass exits is the scale of the financial headwinds facing all banks. In addition to PPI compensation, the consequences for interest rate swap miss-selling, HSBC’s money laundering and Libor rate manipulation have yet to be fully quantified. PPI compensation alone could top £12bn and be the biggest miss-selling scandal of all time. PPI miss-selling wasn’t just wide-spread; it had become a way of life. If it made money for the bank and for you, it was alright. The lesson is that these days HOW you make your money is just as important as how much you make. Dubious practices that society deems unacceptable will find you out and cost you dear.

Official, West Coast bid fiasco was a fiasco - a preliminary report on the investigation into this sorry saga has confirmed that the DfT’s part in the fiasco is every bit as bad as we thought. Officials in the department knew that they had neither the resources nor the expertise to manage the bid process effectively but they went ahead anyway. They even accepted the “risk of a challenge” from Virgin Rail Group. This wasn’t a risk; it was a cast iron certainty!

Given that rail is a key part of this country’s infrastructure and the DfT has a key role to play the least the government could do was to ensure it was up to its job. Right now it is the equivalent of sending a village football team with just seven players out to play Manchester United. The lesson for those of us in business is that we must demand that government massively improves its own competence and capability before it starts telling us how to run our businesses.

Hitachi buys in to UK nuclear – this Japanese white samurai came riding out of the sunset to buy up RWE and E.ON’s nuclear business in the UK. This is good news because before this the only nuclear game left in town was the Centrica/EDF joint venture. Hitachi has a record of building reactors on time and on budget which would make a welcome change if they could do this in the UK.

However major obstacles remain before this investment will become a reality, notably getting Hitachi’s Advanced Boiling Water Reactor licensed for use in the UK. This could take four years. Once again a key role is played by government, not just in the licensing process but in settling the price to be paid for electricity generated from the new plants. Get this wrong on the scale of the West Coast rail bid and we are in serious trouble.

The lesson is that when you have pulled a rabbit out of the hat, don’t then starve it to death.

Royal Mail delivers Parcels! – another bit of potentially good news was the announcement by Royal Mail that it is to invest £75m into a four year expansion programme that will fuel a decisive shift away from delivering letters to servicing online retailers instead.

Many of us can be forgiven for thinking about time too! To be fair Royal Mail has had a stack of legacy problems to deal with before they could get to a position where they have a chance of making this investment a success. Successive government indecision and general messing about with Royal Mail hasn’t helped. However the lesson is that when it’s obvious what you need to do, best get on and do it. You will be surprised by how often doing the bleeding obvious doesn’t get done.

And finally – I have a feeling in my water that overall things are starting to get better. This is not to do with last quarter’s growth figure, but just a general feeling in spite of all sorts of potential further difficulties that there are more signs pointing up rather than down. Two big events this week may turn out to be significant, namely the result (if we get one this week) of the US Presidential election and the change of government in China. In one millions of American voters will decide the result, in the other a few thousand people turn up in Beijing and put their hands up when they are told to. I am not sure which I find the scarier!

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.