The Ballad of Northern Rock

November 26, 2007

pirates.jpg

Weap not for me my Darling
my days are not yet numbered
for Good Sir Richard comes for me
while all around him slumbered

Fear not for me my Darling
of any knavish plot.
Soon I shall be his virgin queen,
his court a Camelot

Rejoice with me my Darling
for this I’ll be remembered
I have survived the primal jeers
and shall not be dismembered

Prepare the house my Darling
order the bridal gown
for I shall be his Northern Rock
the jewel in his crown


Match of the day: Branson-Murdoch Round three

October 3, 2007

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The battles between BSkyB and Virgin Media continue. This round goes to Richard Branson, as the competition commission rules that the Murdoch move which acquired a stake in ITV was anti-competitive.

According to The Guardian

Sky could be forced to sell its 17.9% stake in ITV at a substantial loss after the Competition Commission said this morning that the holding restricts competition and is against the public interest … It is likely to please Sir Richard Branson, who last year attacked Sky’s “reckless and cynical attempts to stifle competition, and secure creeping control of the British media”.

In a provisional ruling, the commission said that the shareholding, which has been fiercely criticised by rivals, would allow the satellite broadcaster to weaken ITV or prevent it competing fully with BSkyB.

In an earlier post I noted that

Both companies have a capacity to damage the other’s competitive position. As a complete victory for one side seems unlikely, the organizations will have to find ways of co-existing and collaborating, as well of competing

That has not stopped a bitter feud deepening between both organizations.

Earlier in the year Virgin’s TV subscribers were caught in the crossfire. Virgin lost an estimated 40,000 of its 3 million-plus subscribers when BSkyB pulled the plug (or at least, the dispute resulted in loss of BSkyB content to Virgin subscribers.

Both parties have continued to react energetically in the fast-changing media market-place.

This week Richard Branson launched the new TV channel Virgin 1, which even if planned otherwise will now fill the gap left by the loss of the Sky channels.

A day before the competition ruling, BSkyB yesterday unveiled Picnic, a new subscription service for Freeview digital TV, which initially will offer three channels (Sky One, Sky Sports 1 and Sky Movies).

Setanta Sports, originally positioned as viewing for Irish ex-pats, has muscled itself into a more visible position in its advertising campaign for cheap monthly subsriptions. In the UK, the most recent sale of transmission rights of Football matches has illustrated how what’s right for the Competition Commission may not be right for viewers wanting to follow their favorite team, and who now have mind-boggling calculations to make in view of the multiple bundling possibilities on offer.

What’s going on?

Here we have a developing story of some appeal to wannabe leaders. Is it a war-game? Are there rival teams of grand-masters planning move and counter-move?

While my favorite notion of Chess as a source of strategy insights offers a starting insight to the complexities, maybe a deeper study is required. One colleague suggested the various theories of Industrial Organization economics. These are even more complicated than the Branson Murdoch battle. A nice introduction can be found in the review by Kathleen Conner. Although not covering more recent work, it explores various theories, with particular attention to the Resource Based View of the firm. This remains a way of understanding how a firm’s competitive position may defined by a “bundling” of unique resources.


The Apprentice

June 27, 2007

350px-tovenaarsleerling_s_barth.pngMy curmudgeonly view of The Apprentice is largely focused on the view that it presents a distorted and undesirable role model for would-be business leaders. However, it can be argued that the series exposes dubious business practices, and that subsequent debate can be healthy.

Why should the owner of a large corporation risk public ridicule while seeking high-profile visibility for himself? In the news at the moment has been Sir Alan Sugar, and his BBC TV show The Apprentice. That other knight, Sir Richard Branson, has an even longer tradition of self-publicity, and would probably also be tempted into TV stardom given the opportunity.

One difference may be that Sir Richard’s publicity stunts have, mostly, been associated with his beloved Virgin Brand. By and large, the restlessly innovative brand and the image of RB seem pretty compatible.

So what about Sir Alan and his business interests? He has stated that he is doing the show because he enjoys it, and because he thinks it worthwhile to communicate the excitement of the world of business.

I note this without recalling the original source, but I can’t recall that he says he is taking part because it’s good for his business interests. On the other hand, it’s a pretty safe bet he doesn’t consider it to be harming his commerical net value.

What’s happened to Amstrad?

AS a matter of record, as Sir Alan’s public visibility has grown, so has the share value of Amstrad. Significantly. Over six times their quoted value in early 2002.

So Sir Alan’s show has helped Amstrad?

Well … it’s not as clear-cut as all that. A few years ago in 2002, the shares had plummeted to a price of 20p, suggesting that the company was a near basket-case.

At present, financial analysts see Amstrad’s main business is in the highly competitive one of selling set-top TV boxes. There is no evidence of great growth there. The vitality and entrepreneurial flair brought to the company in its early days by Alan Sugar seems have disappeared. My scanning of the financial press suggests that the company’s future prospects are not rated highly. [This is a personal view, and not, repeat not advice from a successful share-tipster.]

As part of a strategic response to corporate difficulties, the TV exposure hasn’t worked.

Is The Apprentice a good showcase for business?

Sir Alan says so. The BBC have commissioned another two series, and have increasingly talked-up the status even of those would-be apprentices ejected from the house (I meant, those fired from the programme). As each is evicted (sorry, ‘fired’) he or she has another brief period of celebrity.

By and large a consensus seems to be emerging beyond the vested interests of the BBC that The Apprentice throws as much light on Business as earlier and better-scripted series such as Steptoe and Son, Are You being Served, and Only Fools and Horses.

One article highlighted some undesirable elements if the show was intended to mirror business life.

“I think I would be very uncomfortable being Sir Alan Sugar’s solicitor now,” says Nicholas Lakeland at London law firm Silverman Sherliker. “I wouldn’t say his approach is consistent with what employment lawyers would advise.”

Although at interview you are only protected against discrimination after a year at an office, you can claim constructive dismissal, and where bullying is really bad, protection from harassment. If Sir Alan behaves in his company like he does on TV, warns Lakeland, he could find himself in hot water.

Bullying can prove very expensive for businesses. Last year Deutsche Bank had to shell out £800,000 to workplace bullying victim Helen Green. In 2003 Steven Horkulak was awarded nearly £1m in damages by the courts after months of abuse by his boss, president of brokerage firm Cantor Fitzgerald International. Employers be warned.

My case is, that the omnipotent boss as acted out by Sir Alan Sugar in The Apprentice, is a poor role model for much of today’s business. He illustrates many of the characteristics that have helped him achieve success for a self-made multi-millionaire. The vital ingredients of determination, resourcefulness, energy, single-mindedness are not so obvious as a kind of unthinking and gratuitous bullying. The style is by no means universal among successful business leaders. I have suggested elsewhere that such tyrannical behaviors are most often found concentrated certain industries including the media.

These objections have been raised elsewhere.

Steve Carter, head of recruitment firm Nigel Lynn, condemns the unrealistic “brutality” of the show’s recruitment process. “The idea that people should set about stabbing each other in the back to succeed is not good business,” he says.

To that I would add another misgiving. The episodes are followed by tired radio productions which remind me particularly forceably of the culture of Celebrity Big Brother.

The Case for the Defence

I have been inclined to rant a bit about a programme which I have trouble watching for more than a few minutes. So let me have a go at defending The Apprentice. It has revealed one example of muscular leadership. Wannabe leaders can discuss what they have seen. In pubs and workplaces this is already producing discussion. Maybe this in turn will allow people to figure out ways of coping when they come under fire from a bullying boss. Even better, some bosses may perhaps review their own leadership behaviors towards employees, and consider alternative patterns.


The Branson Murdoch match: Round Two

May 25, 2007

James Murdoch for Sky TV and Richard Branson of Virgin Media continue to slug it out. Both companies have a capacity to damage the other’s competitive position. As a complete victory for one side seems unlikely, the organizations will have to find ways of co-existing and collaborating, as well of competing.

The dispute

The wider battle was explored by Jeremy Warner for The Independent in February.

It can be traced to the formation in April 2006 of Virgin Media, from the ailing NTL cable company. The move was presented as one which would offer a bundle of services to users. It brought the new company into more direct competition with Sky. Competition in this emerging multi-media context is intricately mixed up with inter-dependence, as services are shared and traded. Sky promptly acquiring a minority stake in ITV. This was seen as a protective strike, as ITV was a take-over target for the newly formed Virgin Media.

It is this move which led to complaints against Sky, and to the decision this week by Secretary of State Alistair Darling to refer the issue to the Competition Commission.

Background

In the last few months the dispute became serious when Sky and Virgin Media failed to resolve a dispute over re-negotiated charges requested by Sky. Customers of Virgin Media were deprived of the disputed bundle of Sky programmes previously accessed through the former NTL cable service.

It is tempting to portray the dispute as a battle between Richard Branson of Virgin Media and James Murdoch of Sky. We can predict Murdoch junior’s actions to some degree. He is unlikely to present himself as anything but the son of superdad Rupert. So tough and mean is likely to be the order of the day. Branson will continue to find ways of representing himself as a benign socially-caring figure.

Meanwhile, the dispute is a bit of a no-brainer. There’s evidence that the combatants have blundered into a messy situation which can turn out badly for all concerned. Corporate attention may be distracted from issues of running creative media organizations to political and legal efforts.

What happens next?

The least violent outcome is a period of increasing lack of progress, followed by some resolution, togther with a bit of cosmetic face-work for the weary warriors. There may even be some creative initiative accompanying restoration of Sky channels for Virgin Media subscribers.

More catastrophic solutions might include a regime change. But recent military history reminds us of the dangers of such a policy. Time-scale for significant developments? Weeks would be possible but unlikely. Months would be unfortunate, and not beyond the bounds of probability. But cash haemorrhaging is a condition which brings even the strongest of egos into line.


The Branson Murdoch match: Skirmishes in the opening rounds

April 13, 2007

Sky TV and Virgin Media head for the high court in the opening skirmishes of their contest. Young master Murdoch of Sky defends charges from the charismatic Richard Branson of Virgin Media. The battle will test the charge that BSkyB abused its market position in imposing new charges for some of its services to Virgin Media. The dispute has deprived customers of programmes, and is costing both companies in advertising revenues.

The wider battle can be traced to the relatively recent formation (in April 2006) of Virgin Media, from the ailing NTL cable company. The move was presented as a strategic one which would offer a bundle of services to users. It brought the new company into more direct competition with Sky. Competition in this emerging multi-media context is intricately mixed up with inter-dependence, as services are shared and traded.

Sky promptly acquiring a minority stake in ITV (November 2006). This was seen as a protective strike, as ITV was a take-over target for the newly formed Virgin Media. Branson mutters about spoiling tactics.

Claims and counter-claims followed. For viewers, the spat became serious when Sky and Virgin Media failed to resolve a dispute over re-negotiated charges requested by Sky. Customers of Virgin Media were deprived of the disputed bundle of Sky programmes previously accessed through the former NTL cable service.

Branson versus Murdoch?

It is tempting to portray the dispute as a strategic battle between Richard Branson of Virgin Media and James Murdoch of Sky. If so, the story inevitably presents James Murdoch as Rupert Murdoch’s son and heir apparent.

The reality is more complex. James is the youngest of three Murdoch offspring to a previous marriage. His sister Elisabeth seems the sparkiest of the three, but both she and brother Lachlan seem to have sought more independence, and have broken with promising roles within Murdoch’s media empire. But there may be other candidates to succeed father Rupert, who also has potential heirs from a more recent marriage.

Young James seems to have had a somewhat rumbustious time in his formative years (hardly surprising). His roles in the family firm have been conducted with inevitable publicity. Progress has been swift (hardly surprising). Results have been not totally convincing, but public skepticism has been somewhat weakened through his evidential touch in leading the BSkyB business.

And in the opposite corner …

Richard Branson. Media darling, celebrated entrepreneur, self-publicist, philanthropist , billionaire, business icon. If he wanted it, his catch-phrase for a TV series would be not ‘you’re fired’, but ‘hang around, there’s a party going on here’.

The battle would seem a non-contest, if we were not aware that young James still has his dad, that gnarled old warrior of a hundred successful battles, in his corner.

So what’s going to happen?

Financial sanity will prevail sooner or later. Any battle of the egos will have less ultimate significance than the realities of the bottom lines. The relatively narrow issue of the renegotiated charges for the Sky channels on Virgin Mobile will be resolved, perhaps by a creative bit of face-saving on both sides. Even in the jungle, most fights are biologically programmed so that there is no ultimate victor and fatally wounded loser.


Virgin rail crash is a leadership challenge for Richard Branson and John Armitt

February 25, 2007

220px-richardbranson.jpgA crisis brings its particular leadership challenges. The Cumbrian rail crash has revealed the various kinds of challenges for the emergency service teams, as well as for the roles demanded of leaders, such as Virgin head Richard Branson and Network Rail’s John Armitt

The London to Glasgow Pendolino train derailed in a remote region of Cumbria late in the evening of Saturday 24th February 2007, killing one passenger and injuring another two dozen. The majority of the 120 passengers were relatively unscathed. The high speed train with its innovative tilting technology had been introduced successfully over the last few years. The scale of human loss could have been far greater, and this appears to confirm the claimed robustness of the structural design of the train. Failures to the track-maintenance appear to be the likely immediate cause of the accident. In times of crisis we look for leadership. So what happened?

Leadership visibility and contributions

Leader of the main rail union Bob Crow was one of the first to get to the site of the accident, and provide a statement for his members and the wider public. He indicated the preliminary evidence as pointing to points failure. There was some mild criticism of him for the statement prior to a more detailed investigation. Crow’s information turned out to reflect accurately the focus of investigation subsequently.

Richard Branson was reported as having cut short a holiday to get back to England and the scene of the crash. He also visited casualties in hospital. His statements were widely reported, and he spoke eloquently about the heroism of ‘his’ driver, Iain Black who was among the injured, as well as of the human suffering. He also conveyed the message that the design of ‘his’ train had been a major factor in minimizing the scale of suffering that occurred.

If Branson is seen as an energetic, empathic, decisive leader, Bob Crow should also receive accolades. Their involvement compares favourably visibility, decisiveness and efforts of political figures, and (it must be said) with the efforts of John Armitt, chief executive of Network Rail. He eventually provided a statement acknowledging that the accident may have occurred ‘on our watch’. As far as I am aware he was not reported as visiting the scene of the crash, or the hospitals. Earlier ‘on his watch’ he drew praise for his leadership during the Potters’ Bar crash. Mr. Armitt has a track-record as an empathic and hands-on leader, but it may not be coincidence that his retirement date has already been set for later in the year.

Even Mr Armitt’s modest contribution stands out in comparison to those of politicians who have been jostling for media attention this week. Is this the result of a calculated decision to keep away from the whole business? We will probably learn more in the coming days as a report of the accident comes out.

The Role of leaders

According to Weber, leaders traditionally drew authority from their acceptance as intermediaries of transcendental forces. They were indeed the chosen ones, or the special ones. Later, the chosen ones became accepted as having unchallengeable rights as leaders of tribes and nations. Weber developed his theorizing of charisma around such ideas. One relevant aspect of his ideas is the role of the leader in a crisis to bring comfort and reassurance.

More recently, political and management scientists such as Alan Bryman have been working out a new leadership model. His earlier work has been updated recently in a chapter on the post-charismatic era of leadership.

Bryman, with co-author Ken Parry, have marshaled considerable evidence indicating the limitations of the long-familiar notion of leader as heroic figure. They also draw attention to the way leadership is more of a shared (distributed) effect than was previously realized.

We defer elaboration of this to future posts. However, we note that researchers have become more concerned with the way in which leaders influence intentionally or unintentionally the cultural agenda. In terms we have been using, this involves production and consumption of cultural messages.

Assessing the leadership contributions

Richard Branson behaved according to expectations for a charismatic leader. He was decisive, empathic, and provided powerful images through the media. Bob Crow had less access to the media, and his impact was accordingly diminished in the eyes of the public. John Armitt may have made a peripheral impact (although his admission of possible culpability within his organization was a cut above the more common PR-mediated messages often resorted to by leaders fearful of admitting liability or weakness).

Weber’s broad ideas of a leader offering solace at times of crisis seem more convincing than the 1990s models of ransformational leaders offering powerful and uplifting visionary guidance.

Clearly there need be no either-or. However, the role of ‘just being there’ may have been under-estimated, as has the damaging impact of ‘not being there’

Update

Update on Richard Branson planned for September 2014


The Greening of Marks and Spencer: An example of creative leadership

January 15, 2007

Stuart Rose announces a policy document that will anchor Marks and Spencer’s green credentials. It commits the retailer to a range of specific actions at an estimated cost of some £200 million over the next five years. The plan has been welcomed by a range of commentators. Yet, closer inspection suggests it is a shrewd concession to corporate responsibility rather than a radical move that might frighten traditional commercial investors. It can also be seen as an example of creative leadership.

In a flurry of personal interviews, Stuart Rose today announced a hundred-point, five year plan for M&S that aims at re-engineering the companies activities to meet a range of socially responsible goals from carbon neutrality, ethical-trading, sustainable-sourcing, and health-promoting products and projects.

He told the BBC that the company has estimated five year-costs of the plan to be in the region of £200 million pounds. In one interview, Green in his ‘show and tell’ mode had brought along plastic bottles and a coat (purporting to ) incorporate the plastic from similar bottles after recycling.

Don’t frighten the City

‘Dont frighten the city’. It is no bad rule for corporate leaders. So how to balance customer demand for greater corporate responsibility with shareholder pressure fo returns on investment? I would argue that the way forward is though creative leadership. When Richard Branson wanted to show his ethical credentials recently, he announced a redirection of research effort in a search for profitable innovations which would reduce global warming. Green’s estimates for ‘doing good’
seem likely to add no more that 0.5% to sales at the till. He also judges that less directly the strategy will add to the company’s competitiveness through consumers seeking to support ethical corporations.

There is no plan B

The company has labelled this Plan A. ‘Because there is no Plan B’. Echoes for other charismatic leadership assertions from the past: ‘no going back’ (Tony Blair), or ‘This baby’s not for turning’..(modifed from one of Margaret Thatcher’s speeches). Understandable, plan A is not being left to chance. An extensive marketing campaign to explain and promote its virtues is planned for later this Spring.

Questions worth asking

Isn’t it all just rhetoric? Aren’t private companies, including M&S still out to maximize profits? Or have the perceived values of consumers helped shape a greener corporate landscape and indirectly are helping create the (created and creative) leaders we deserve?


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