Burberry, Treorchi: Do not go gentle into that good night

March 30, 2007

Burberry announces the closure of a factory manufacturing its polo shirts. The story has familiar features to it. The factory is the main source of jobs in the former mining village of Treorchi, in South Wales. The company is pursuing a globalization strategy. After a local campaign which attracted celebrity support, the factory closes.


Today a local community completed the first stage of its grieving over the loss of the Burberry manufacturing site. The march by the workers from the gates of the factory was accompanied by many from the community and the internationally celebrated choir associated with the village. The action was in the first instance for those directly affected, and caught out the media circus that had pitched up to witness the event.

Not for the first time, I remember lines from Dylan Thomas

Do not gentle into that good night..
Rage, rage against the dying of the light

The Original post

A month ago I wrote how the closure came as a shock to the community. The high-profile company had been recording successful financial returns, and had been expanding internationally. A well-organized campaign seeks to reverse the company’s closure decision.

Burburry has been around for a century and a half, during which time its products have become associated with a special aspect of British cultural life, the Establishment as fashion- setters. Its high profile brand image and its luxury clothes and accessories can be found wherever celebrities and gentry gather together. Even its recent embrace by members of that recently identified sociological group the chavs seems somehow an inevitable if unhelpful endorsement of its essential Britishness.

Over the last few months, a high-publicity story has developed after the company announcing its intentions of closing its factory manufacturing polo shirts, in South Wales, with the intention to shift manufacturing to China. The reaction against the decision quickly grew, and gained support from a range of celebrity figures (with rumours that a certain member of he Royal Family with Welsh connections was far from pleased with the decision).

To assess the developing story, a little history will not go amiss. Burberry was founded in 1856 by the young Thomas Burberry, an ambitious Draper’s assistant. By the 1870s the firm had specialized in clothing for outdoor pursuits catering to the well-off to such good effect that its wares became increasingly fashionable. Thomas strengthened his reputation through his invention and patenting of gabardine with its unique characteristics of water resistance and yet moisture permeability. By the turn of the century Burberry was providing extreme climate gear for intrepid Arctic and Antarctic explorers. In the First World War, the thriving firm supplied British Officers with trench coats, an item that has been reinvented as a fashion item ever since. The famous Nova plaid pattern arrived in the 1930s, emerging from its discrete location as a lining for those elegant military trench coats.

In 1955, the firm was acquired by Great Universal Stores, the conglomerate that had developed from the Manchester based mail-order business of Abraham and George Rose founded in 1900, and transformed since the 1930s, by Isaac Wolfson into one of the great British institutions and the source of wealth of the Wolfson foundation.

For several decades Burberry retained its increasingly plaid and staid image until the late 1990s with the arrival of a dynamic American fashion expert. Rose Marie Bravo had been a well-regarded President of the Saks Fifth Avenue fashion outfit, having worked her way up the firm. She brought additional wide fashion experience to Burberry, and and succeeded in transforming the brand using top models such as Kate Moss, and Footballer David Beckham. Fashion insiders considered that another important factor was the contributions from the top fashion designer Christopher Bailey whom she head hunted from Gucci in 2001. Share value was to increase eightfold in five years.

Corporate Governance at Burberry

In 2003, one of the earliest of shareholder protests in the UK was led by The National Association of Pension Funds (a pressure group) against the financial package agreed by Burberry with its American CEO. The arrangement would have paid her in excess of £13 million on dismissal. The NAPF made it clear that they had no concerns about Bravo’s remuneration, and her high worth to the company. Their concern was the lack of performance incentives in the overall package. Bravo was clearly an extremely valued asset to the company. In retaining their prize asset, Chairman John Peace said at the time that the group was aware that some aspects of its executive pay policy “might be construed not as best practice from a UK perspective”.

The Difference for Treorchi

By that time, there had been repeated stories that GUS (as it had renamed itself) was preparing Burberry for its sale. And so the spin-off from GUS took place, in late 2005, followed by the decision to close the Treorchi factory.

The economic argument was made that the Polo shirts produced in Wales were costing nearly three times as much as they would if manufactured in China. This has been a familiar story as countless manufacturing jobs have been lost to the Far East over the last decades. Why should this be different?

Several factors are deployed by the vigorous campaign against the decision, which attracted widespread celebrity support and which spread internationally. First, the firm continued to report growing profits, and the Factory in Wales could not be shown to be making a loss for the group. That alone has not protected units from dismemberment within a company under pressures to achieve ‘the numbers’. Here, however, the Company brand rests on its unique heritage, the quality of its goods, and their Britishness. Will this brand image survive a campaign pointing to the willingness of the Company to source overseas? M&S grasped that nettle some years ago, and the decision may or may not have contributed to its subsequent bumpy financial ride.

Corporate social responsibility

In reading the current report from Burberry I was struck by the Corporate effort to address matters of Corporate responsibility. It has strengthened its executive efforts in this area. The Keep Burberry British campaign on its home webpage simply let the Burberry statement on Corporate Responsibility speak for itself.

‘ For Burberry, corporate social responsibility (“CSR”) involves considering those social, environmental and ethical issues that if managed improperly could pose a threat to the Group’s assets, reputation and the Burberry brand.. Michael Mahony, the Company Secretary, is responsible for CSR matters and chairs the CSR committee which meets regularly ..[The company is dedicated to] maintaining acceptable labour, environmental and social practices in the Group’s supply chain, and to providing a working environment that is conducive to the recruitment and retention of the widest possible range of talented staff, and which is a safe and healthy place to work …New members of the CSR committee in 2005 include a dedicated CSR Manager, focused on ethical supply chain issues, the Director of Audit and Risk Assurance and a Quality Assurance and Supply Operations Manager. The Group continues to draw support from a team of external CSR advisers’.

A critical theory perspective

Reading the company report I had been struck by the corporate claims of social responsibility. Many social scientists are turning to critical theory to explain such behaviour. Writers such as David Collins and David Boje would have a field day starting from an examination of the Burberry CSR statement. It struck me as one that will require a great deal of explaining by the Corporate PR agents (and its leaders). a web-based issue of campaigning interest, has drawn public attention to the story.

Do not gentle into that good night…
Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light


The Apprentice: Is Sir Alan Sugar acting out the Frankenstein myth?

March 29, 2007

_42740811_gorilla.jpgIn the third series of The Apprentice, Sir Alan Sugar further develops his iconic status as business leader and TV celebrity. But is he acting out the Frankenstein myth, and will he be remembered only for the monster he created?

Update (April 24th 2007)

Dan, and others suggested (in the comments) the possibility of a ‘turned table’ game in which Alan Sugar and others are successively fired. The application of avatars also cropped up in a blog by Paul Carruthers.

4 pm Wednesday March 28th. Message from the pink one. Would I be willing to give a telephone interview about The Apprentice? Do Bears trade in the markets? Yes, I would be willing to give an interview.

This is how it works. The Business Journalist has a list of contacts, and calls around for a few comments that can be knitted together for an article. Mostly the journalist wants to embellish a story-line. Is Alan Sugar a good role model? Is the series just another version of reality TV? Is reality TV unreality TV? The bulk of the final article may well have been assembled – perhaps in an earlier face-to-face interview, or developed from a pre-view of a TV show. The conversation between journo and quote-provider is usually quite pleasant. The discussion may even respect the convention that you are been offered a chance to express your views to a mass audience. Later you will find whether you supplied the sort of quote that the interviewer was looking for.

In pre-blog days, the rest of the discussion would never have been reported. But that was then. Here’s what I would have liked to seen published in a fully reported interview. My reasonably crafted replies here are of course far more coherent than the spluttering efforts I might have made at the time.

Journalist: The Apprentice is starting another series tonight. I’m writing a piece for the Financial Tube and wondered if you had any comment about the programme

Self: Yes. I’m with Digby Jones on this one. He thinks Alan Sugar is a bad role model for a business leader. So do I.

Journalist: Why do you think that?

Self: Alan Sugar is a successful businessman. But the structure of the programme gives a false one-dimensional picture of him acting as an old-fashioned alpha-male ..

[Journalist asks another question but I go on with the earlier answer]

.. He has to act as he does. There are the scenes where people are sycophantic about him, then they get the victim part in the scene where he has do his catch phrase ‘you’re fired’.

Journalist: [possibly asking the question again. The one I hadn’t answered]: What do you mean by an old-fashioned alpha male? Isn’t he typical of successful business leaders:

Self: There are still successful alpha-male leaders. They are increasingly being compared unfavourably for similarities with violent animal group behaviors such as the so-called Mandrill Management. You find them particularly in certain jungle industries. Media – film tycoons, barrow-boys. [And newspaper magnates, but I might not have mentioned that. I have in the past, a few times. If the journalists get it, they don’t publish it. Can’t think why.] But we need to show other models of business leaders. People who can help in tricky negotiations – get our people out of Iran at present, get politicians around a table in Northern Ireland.

Journalist: Have you ever seen the programme?

Self: A few times. But I’ve stopped now. I can watch kids behaving badly in my day job. I don’t want to switch on and watch a phonier version of business dynamics at night.

I respect Sir Alan’s business success. But that’s something else. He’s been sucked into a different game here. There is every chance that he will eventually be remembered by a catch-phrase ‘you’re fired’. I’m not bothered about that.

We ban violence from our screens on the assumption it leads to copycat behaviour. I’m not for taking our TV without Sugar, but I don’t like the way it reinforces the idea that a successful boss has to be a bully. Is this the image of the charismatic leader we aspire to? The leaders we help create and deserve?

War and Piëch at Volkswagen

March 29, 2007

Porsche makes a bid for VW. But it’s an offer they want shareholders to refuse. It may be a bid to secure VW for the Porche family through VW’s ex-CEO Ferdinand Piëch. Confused? It so, you may thinking competitive not collaborative strategy.

This week, the financial press reported that Porsche had made a bid for Volkswagen. But the bid was accompanied by a statement that the company intended to exercise its options to acquire a slightly larger stake in the company which would push its shares to the level where it was legally obliged to offer to make an offer for all VW shares. Porsche went so far as to indicate that their bid price under-valued the shares. Even if, for some reason, there were to be an offloading, the shares would be put back on the market.


Volkswagen has been protected from a hostile takeover by a little piece of German legislation that has become known as the Volkswagen law. But recently, rulings in Germany indicate that the Law violates EU principles, and is likely to be rescinded.

This has opened the way to moves from overseas bidders. German auto manufacturers dusted-down Plan B.

This is where a little background on the complicated inter-relationship of German firms and government interests helps. Porsche has enjoyed a long and collaborative relationship with Volswagen. Its first models drew extensively from the engineering technology developed down the years at VW. Today it is considered to be VW’s closest busness partner.

VW chairman is Ferdinand Piëch, one of the legendary figures of modern German industry. Piëch is the grandson of Ferdinand Porsche. He was formerly chairman and CEO, noted for his aggressive (‘proactive’) leadership style. He was to be credited with developing the brands of Audi and VW, and reversed the fortunes of VW in America, although his moves for Bentley and Rolls Royce were less successful.

One source of his wealth is the 13% share of Porsche. Under that corporation’s rules, he is barred from a directorship as a member of the family. Although no longer CEO, he has enormous influence at VW, and is still chairman of its supervisory board.

AS we noted in an earlier posts, VW has suffered a number of bloody battles over its leadership recently. After several departures following corporate misbehaviors, chief executive, Bernd Pischetsrieder, brought Mr. Bernhard, a former executive at DaimlerChrysler, into Volkswagen in October 2004 as part of his plan to cut costs at the automaker. Mr. Bernhard pushed through plans, cut 20,000 jobs and extended working hours during the course of 2006. This upset the powerful Volkswagen union, IG Metall, which is also closely allied with Volkswagen’s chairman, Ferdinand Piëch. In Novemember 2006, Mr. Piëch, together with Porsche, a major Volkswagen shareholder, pushed out Mr. Pischetsrieder in favor of Mr. Winterkorn.

So what’s going on?

If we take Der Spiegel’s line, we have just witnessed one more chess move in the game billionaire Piëch is playing to secure the future of VW with himself in change.

Pischetsrieder hadn’t posed any significant obstacle in Piech’s path towards taking power at VW. But he was an inconvenience … Shortly after Porsche’s entry as a shareholder, the VW boss commissioned J.P. Morgan to provide an expert opinion as to whether it could lead to a conflict of interests if Piech, as a co-owner at Porsche, would look to promote the interests of the sports car company as a member of the VW board. The investment bankers recommended that Piëch resign. Pischetsrieder submitted this advice to the board. And with that, his fate was more or less sealed.

So there we have it. The septuagenarian Piëch still has an undiminished appetite for a ‘friendly’ fight. Remember the cuckoo in the nest principle noted at Alliance Boots?

There are also the unheard melodies. Chess moves considered and eventually rejected. These include the possibility of VW bidding for the increasingly vulnerable Chrysler business from Mercedes.

Meanwhile, globally the next generation of global giants in the auto-industry are emerging. Will they eventually replace the increasingly vulnerable American and European dynasties?

A political triumph for deadline busters in Northern Ireland

March 27, 2007

_42185224_adamspaisleynew_203.jpgTwo men are photographed seated together. The world of Northern Ireland politics applauded the fact that DUP leader Ian Paisley had consented to sit in the same room with Sinn Fein leader Gerry Adams.

I am reminded of a handshake between Israeli and Palestinian leaders all those years ago at Camp David. The handshake was grudging. The world applauded the fact that it had taken place. Yesterday, the body language was no more comfortable. Nick Robinson, that most urbane of political correspondents, hailed the momentous nature of the event.

My diary notes for Saturday March 24th:

Ahern: Either – Or
Hain: Find some wriggle-room
Blair: Legacy? Avoids commenting
Brown: Offers another £1 billion to NI if deadline holds.
Paisley: Don’t bully us
Adams: DUP frustrating the will of the people
Leaders we Deserve: Deadline threat is a weak ultimatum. Everyone expected delays to the last moment. Where’s the Golden Bridge? Is a deadline a good idea?

The Golden Bridge

This is leadership folk-lore. A military leader I know likes to quote Lao Tse. The great leader leaves a golden bridge over which enemies can retreat. An unneccessary battle with desperate foes will be more costly than a more merciful strategy, not just as a matter of moral imperative, but of longer-term self-interest. Annihilation of an enemy force leaves too much of a legacy, and is a weak option, not a sign of strength. That’s what I meant by ‘Where’s the golden bridge?’

The Dynamics of Deadlines

In general, in leadership studies, the dynamics of deadlines has not received the attention it deserves. In some contrast, it is a topic of great interest to decision analysts, economists, and project managers.

I had returned to the recent cultural whipping-boy, Game Theory, earlier castigated in The Trap.

Researchers into economic rationality term the key issue that of the Principal/Agent problem. This quickly gets complex enough even when working with the start-up case of a single ‘boss’ or Principal, and a single employee or agent. In his Theory of Optimal Deadlines, Flavio Toxvaerd demonstrates the complexities even when dealing with the simple case (rather than the political situation with several Principals and Agents).

To summarize, Principal Agent theory begins (as the Trap indicates) with the assumption that Agent and Principal will always act to protect their own self-interests. The theory builds in information asymmetry and the universal temptation of the Agent to avoid unpleasant actions even if this leads to ‘moral hazard’.

While agents may appear to be irrational, this may be explained in various ways. Some of the irrationalities may be minimised by the contractual introduction of incentives for aligning the wishes of Boss and agent. However, as Toxvaerd reminds us, estimates of deadlines are notoriously bad in practice. His theorizing suggests that contracts too often fail to offer sufficient incentives for the agent.

In other words?

If you impose deadlines for some action to be completed, make sure the payoffs are as far as possible aligned with the interests of the agent. Extrapolating to the political case, try to find an alignment of the interests of the major players. What non-economists call win-win outcomes. These ideas suggest that change is more likely if deadlines are consensual rather than imposed.

The story will also be remembered for the common enemy identified by Paisley and Adams. It turned out to be a threatened Water Tax, brandished by Peter Hain as a bit of legislation from the European Parliament. (Trickle-down economics indeed). And maybe, just maybe, the deadline was quite a good idea, in order to provide something to be challenged and defeated by the Northern Ireland leadership.

As of today, political progress seems to have been taking place, and been seen to have been taking place in Northern Ireland. Less than a month ago he talk was of ‘a battle a day’. Now, ‘the audacity of hope’ is a little more on the agenda.

The Strength of weak tries: The Northern Ireland deadline dance

March 26, 2007

Politicians in Northern Ireland approach the most recent deadline in the protracted peace process. The leadership battles are expected to continue up to the deadline after which the fragile power-sharing arrangement faces the threat of being dismantled, and being replaced by direct rule from Whitehall. We examine the nature of deadlines, and the limitations of coercion on leaders in apparently weak negotiating positions.

15th May last year the Stormont assembly met for the first time since its suspension in 2002. British and Irish Premiers assert that 24th November 2006 is the ultimate deadline for the politicians to agree to some format of power-sharing. Multi-party talks begin in October, (with the DUP still unwilling to meet in same room as representatives they believe to be former terrorists). Late January, Sinn Fein accepts policing arrangements (a potential sticking point for them). Elections are announced for the new assembly and these take place on 7th March 2007.

Ian Paisley’s Democratic Unionist Party emerges as the largest party, and will hold 36 of the seats under the proportional representation method in place. Sinn Fein with 28 seats. Are the Ulster Unionists with 18 seats are the next largest parties at the new assembly.

Last week, the elected members signed up for the new assembly, facing another ‘final’ deadline: Peter Hain, the Northern Ireland Secretary reminds them that the assembly will be dissolved, if the parties do not sign up to power-sharing before the March 26th deadline agreed jointly by the Governments of Great Britain and of Ireland.

Mr Paisley was reported by the BBC as saying that the election success

.. allowed him to move forward, despite the fact that he had been
“severely criticized by various people .. Some of them are my personal friends but they don’t agree with what I’ve done, [but] the electorate fortunately has agreed.. It has strengthened my hand – I can afford to go further forward now with things, because I am confident that the people are with me.”

Last Friday, Dr Paisley was seeking last-minute concessions from the British Government in advance of the 26th of March deadline. However, these introduce an economic rationale to his actions. Previously his words and actions appeared to be a continuation of his ‘no surrender’ posture, and refusal to accept the legitimacy of Sinn Fein as political partners.

On deadlines, and the strength of weak positions

We may think of deadlines as all the same. Deadlines are deadlines. But the evidence is that deadlines come in several different shapes. For example, they may be imposed or mutually agreed. Each of these can be more of the so-called absolute sort or the sort that turns out to be more arbitrary. [I leave those with that sort of interest to explore the ‘two by two matrix’ I’ve suggested]

Hostage situations begin with a demand linked with an imposed and absolute deadline. Resolution tends to require movement towards agreement, and movement away from the absolute nature of the deadline and the demands. What begins as an ultimatum, shifts towards a situation of mutual give and take.

Often the ultimatum may be the response of a leader (or more broadly an individual) in a relatively weak negotiating situation. The ultimatum may include a threat of self-harm (‘Don’t come any closer or I’ll jump from this window-ledge’).

This one has been agreed at one level (inter-governmental) and imposed at another level (on the political parties by the Irish and British Governments).

We can also see how deadlines may be presented as immutable when they are actually rather arbitrary. Immutable deadlines would include those when the missing one triggers off other very serious consequences, which can be legal, economic, technological, or medical. Other deadlines seem more arbitrary, for example, when accompanying efforts to achieve movement in political negotiating processes.

This one seems to be an imposed and somewhat arbitrary deadline disguised as an agreed and ultimate one. Dr Paisley on behalf of the DUP places himself in the relatively weak position of opposition to the trajectory of power-sharing. However, he is at the same time a strong position for arriving at some concessions and some wriggle room. There has already been a possibility of a billion pound offer in what appears to be a negotiating chip from Westminster this week. Such negotiating gains may just about permit Dr Paisley to do what he has repeatedly insisted he would never do, and sit down with those with connections with terrorist acts of violence. And to do it without losing political credibility to others who would follow his earlier ‘no surrender’ rhetoric.

It looks as if the ‘final deadline’ will turn out to be a more arbitrary one. Dr Paisley may hold his first-ever meeting with Gerry Adams, later today. The latest events more tortuous process towards peace in Northern Ireland since the time of the Good Friday agreement. It may have reinforced the belief that politicians often say one thing and mean another. Sadly, it will also reinforce the more dispairing beliefs of those who believe that politicians are always duplicitous, and never to be trusted. Which was one of the messages in the recent TV series about the traps to personal freedom.

The Trap: TV series models the leaders we deserve

March 24, 2007

the_trap_screenshot.pngThe Trap explores the impact of game theory on contemporary life. It suggests how such social beliefs and actions may be helping create the leaders we deserve.

The BBC TV series, The Trap, promises to become a cultish success. Before its first broadcast, web-surfers were alerting their networks to its importance.

Part 1 of 3, F**k You Buddy: A series of films by BAFTA-winning producer Adam Curtis that tells the story of the rise of today’s narrow idea of freedom. It will show how a simplistic model of human beings as self-seeking, almost robotic, creatures led to today’s idea of freedom. This model was derived from ideas and techniques developed by nuclear strategists during the Cold War. It was then taken up by genetic biologists, anthropologists, radical psychiatrists and free market economists, until it became a new system of invisible control.

Lumbering along after the trend-setters, I caught up with the second episode last Sunday. Curtis offers his thesis in a way that is likely to promote discussion.

The web community offers its increasingly significant early indications of beliefs and arguments. Discussion has tended to polarise, with contrarians positive towards the programme for its revelation of the dystopian conditions in a globalizing culture.

In the UK, The Guardian offered about as thorough a critique as could be hoped for. Sometimes the blogging discussions transcend the traditional efforts of journalists, but Oliver Burkeman’s piece is a hard act to follow.

An audacious hypothesis

The trap according to Burkeman offers an audacious hypothesis whereby:

the paranoid theories hatched during the cold war would come to inspire a peculiar, cold-hearted idea of personal freedom – one that helps explain everything from the rise of Prozac and Viagra to Labour’s obsession with healthcare targets, from the military crusades of George Bush and the rise of the Iraqi insurgency to the rampant diagnosis of attention deficit disorder in children.

Burkeman captures one strong concern of some bloggers subsequently, that Curtis engages in ‘conceptual long-jumping’. He, like the bloggers, picks up on Curtis’ treatment of the beliefs of radical psychiatrists. The Trap presents R D Laing as contributing to the belief that madness is totally a socially constructed phenomenon. This may, or may not be what Curtis believes. His approach permits him to present himself as committed to a defense of individual freedom and leaving the viewers to take the debate forward.

As he tells Burkeman:

If there’s one thing that links all I do, it’s trying to make people pull back, look at their time

To which, Burkeman, who is largely sympathetic to the project, comments tartly that

The Trap occasionally feels as if it is stepping a little too far back, wrapping the whole past half-century into a single argument

The Trap and Leadership

I take Burkeman’s point, while feeling (in common with a view expressed in other blogs about the programme) that the Curtis perspectice can not be completely dismissed. Critical theorists such as Gibson Burrell and David Collins have been plugging away in a similar vein in their examination of received wisdom of leadership and organizational studies. They argue that the dominant paradigm severely distorts and diminishes the complexities of human beings engaged in working and organizing.

Judging from the comments they have provoked, the programmes have succeeded in helping (making?) people ‘pull back’, the better to reflect on wide social trends. They may also help us reflect on cherished notions of leadership.
The broad thrust of the argument is that an influential intellectual movement has, for several decades, reduced human behaviour to a kind of Hobbesian self-interested scrabble. From such a perspective, leadership is a construct of social control, cynically espoused for self-interested motives. It aligns with the theoretical perspective that all politicians are ‘only out for themselves’, and that claims to be acting out of a ‘higher’ sense of duty are efforts to manipulate.

This is in precise opposition to the humanistic psychologists such as Abe Maslow and Carl Rogers.

In an earlier blog I suggested that the ideas of Carl Rogers provided a rationale for trust-based leadership. I could have added that humanistic psychology also lies at the heart of the new leadership paradigm, and the idea of the transformational leader, elevating the moral and social sensitivities of the wider social group.

From a Hobbesian or Rogerian perspective we end up with leaders we trust. Hobbesians expect and respect one kind of ‘strong’ leader for exercising social control; Rogerians another frespected for removing impediments to moral development.

In either case, we end up with leaders we create, sustain, and deserve.

The Budget, and the Battle: Which leader will create the more powerful myth?

March 22, 2007

Gordon Brown’s eleventh budget has been widely assumed to be his last, and an opportunity to indicate his credentials as a future Prime Minister. Its presentation permits a comparison of the leadership images or myths which he and David Cameron are concerned to project.

Gordon Brown makes his eleventh Budget speech. The prelude had been inauspicious. The Turnbull story has persisted, mainly as evidence corroborating Brown’s image as an arrogant control freak. A few journalists suggested that the story might be taken as more positive for Brown, and evidence of a leader unprepared to suffer fools gladly.

I listened to the budget speech while driving from a late-morning meeting. Brown constructs speeches like the Germans build luxury cars and compose classical Operas. The products are impressively. Purposively designed, and fit for purpose. This one was no exception.

A leitmotif recurred by way of ‘then and now’ theme, ‘then, being was 1997 when the Conservatives were last in power.. ‘now after nearly ten years of economic success under New Labour’. This device was interspersed with a more complex yet related theme around ‘past present and future’ conditions.

The delivery was in an appropriately major key. The effect was that of a series of percussion blows.

The speech was well up the scale on information, and down on rhetorical flourishes. It put each of its items in that ‘then and now context’: inflation then, inflation now: investment then, investment now, unemployment then, and so on. Current Conservative counter-proposals were swatted aside, as a sorrowful head teacher might summarize and correct errors encountered while assessing homework assignments.

The speech appeared to be reaching its predestined conclusion. Maybe some listeners were waiting for the unexpected. The Chancellor has been known to conjure up a surprise. He had me fooled, at least. As he was appearing to beat out the appropriate magisterial last few chords, he produced a startling finale. Perhaps I had bought too much into the stereotype of the humorless Chancellor. Even as he was signaling the end of his last speech, literally gathering together his folio of notes, he added a coda:

To reward work, to ensure working families are better off, and to make the tax system fairer, I will from next April cut the basic rate of income tax from 22p down to 20p. The lowest basic rate for 75 years.

Cut basic tax! Surprise and delight on the Labour benches. Mr Brown had stolen the clothes that Conservative traditionalists worried that David Cameron had discarded.

Later, I caught up on the spectacular visual impact the ending produced on the House. David Cameron takes the floor. Despite valiant efforts, he was unable to build on the weapons provide the previous day by Lord Turnbull’s reported remarks. Just you wait, he seemed to be saying, you and your gang will get it for your sneaky ways. You’ll see. If not now, after School is over.

His sallies sounded even less effective as he redirected them towards more junior members of the Government team, such as the even younger Boy David, the Secretary of State for Environment, Food and Rural Affairs. David Miliband winced as if embarrassed by such an expression of poor form. Why pick on the first-formers? [You can see David Miliband’s youthful features on his very own blog, which he seems to have built using his very own pocket money].

I have scanned newspaper headlines, followed the debate conducted in political blogs, and listened to a fair sample of callers to phone-in broadcasts. The Basic rate cut does grab headlines, with appropriate contextualization. Right-leaning papers echo the Conservatives (‘It’s a con … all smoke and mirrors’). The Guardian, the paper that has been reporting Gordon Brown’s unpopularity in predictive polls in recent months, is warm in its praise.

The Institute of Fiscal studies considers that around 20% of families will lose out, spread rather widely across the spectrum of incomes. Bloggers and callers to phone-in programmes have tended to be driven by motives of disappointment. I’d estimate that more than 80% of responses have come from those unhappy with what they have received (or not received) from the Chancellor.

Real biz or showbiz?

The Game’s afoot. The Boy David suffers a setback, as his opponent girds himself not so much in the armor of righteousness as in the magical powers of transmogrification and cross-dressing. But this is no more than a skirmish.
Maybe it indicates the perils of charismatic leadership. David Cameron has been relying very much on a high-profile leadership style. The credibility of his messages is very much bound up in the credibility of his public image. This makes a delicious contrast with Gordon Brown’s style. If that’s not enough interest, we will from time to time be surprised by behaviours when one or the other moves outside the simplified stereotypes we might hold of them.

Which myths will matter more?

According to leadership theorists, the budget presentations are opportunities for leaders to consolidate the story they wish to be remembered by. This is a partly deliberate process of myth-making.

Until now, Gordon Brown has operated strictly in the mode of the rational manager par excellence. In contrast, David Cameron has been energetic in presenting himself as a Charismatic leader. But success and power can result in even rational managers acquiring the mystique of charisma. If David seems to tick the boxes for one kind of charismatic, Gordon may tick the boxes for another. One typology (by Will McWhinny) would probably locate David as an idealistic or prophetic entrepreneur such as Anita Roddick. And Gordon would be closer to rational geek as wunderkind such as Bill Gates.

So there we have it. The battle will be between the leadership appeal of an Anita Roddick, or a Bill Gates. But if this were to become a party game, would we necessarily place them at the head of the Conservative and Labour parties? And who would be better placed to attract the voters?

Talk tough, act tough at the BBC

March 20, 2007

The BBC suffers from revelations of dodgy financial practices in phone-in shows. Meanwhile its leadership talks about taking tough measures after its licence fee settlement with the Government. But will the tough talk lead to tough actions?

At the moment, the corporation, affectionately known as Auntie, is struggling to shape its future in one of the most highly competitive of business markets. Events of the last few months illustrate the leadership challenges it faces. Let’s see how the leadership has responded.

In January, Tessa Jowell announced the news of the licence fee agreement providing a 3% rise for each of the next two years.

BBC director-general Mark Thompson was reported as saying

“It’s a disappointing settlement. It doesn’t mean we can’t carry on with our exciting plans for the future, but it means we face some quite tough choices”

One such tough choice, hinted at during the fee negotiations, was funding the proposed move of some services to Salford, in Greater Manchester. In her statement Tessa Jowell had made it clear that the fee would allow the planned move of key departments to Salford. The newly constituted BBC trust (Board of Governors) confirmed this to be the case

What are the tough choices?
Two months later, this week, the DG was interviewed again. I didn’t see the TV broadcast on Sunday AM today so I have to reply on the BBC’s own report. The dodgy phone-in tactics earned a contrite apology. He went on the muse on consequences of the new license fee on the Corporation’s plans.

“Having a licence fee at the level that’s been set means we will have to make some tough choices …I don’t believe that you’re going to see a sudden burst of repeats on BBC1. We know that the public expect outstanding, original programmes on our main television networks … On the other hand, we are going to have to make some difficult choices about where to put our priorities”

Yes, George, you said that in January.

The compiler of this report struggled as well, noting:

While Mr Thompson did not say what “tough decisions” the corporation may face, experts suggest it could lead to the BBC cutting back on many of its plans for the future. Among them is the switch-over from analogue to digital television and the move of many staff and programmes to Salford in Greater Manchester.

Let’s see if we’ve got it right

Tessa Jowell says in January that the licence fee rise will permit the key strategic initiatives that the BBC were planning. The Board of the BBC agrees. The DG says there will have to be tough choices made.

Two months later in March the DG makes the easy choice and apologizes for dodgy phone-in tactics on his watch. Then, looking ahead, he repeats the January message, returning to the need for tough decisions.

The BBC reporter suggested that the tough decisions included impementing the move to Salford. Assuming the reporter was capturing current beliefs at the BBC, (even if they are just picked up from the grapevine), there has been no resolution of the tough decisions mentioned in interviews by the DG.

Leadership implications

It’s easier to talk tough than act tough. Saying you are going to get tough is even less convincing if you have to repeat it without further embellishment. Having to decide what to decide is not a nice place for a leader to be.

The Turnbull attack : A big clunking blow for Gordon Brown?

March 20, 2007

Is it not curious that the former head of the civil service should launch a fierce attack on the Chancellor in an interview that appeared in the Financial Times two days before his budget speech? Might the article illustrate wider leadership issues, as Tony Blair prepares to relinquish the Premiership? To what degree might Lord Turnbull and the FT be seen as engaging in political skirmishes?

An article in the Financial Times yesterday made wider headlines today. The headline seems slightly more strident than those we are accustomed to from the Pink Lady of financial journalism. Former Whitehall chief slams ‘Stalinist’ Brown’it almost shouted.

The Former Whitehall chief is Andrew Lord Turnbull, now a cross-bench peer. His political contributions in that role have recently been confined to three measured speeches, one on proposed reform of Government statistics, and the other two on the Turner report. In one of the Pension speeches he informed the house of his interests, not just as a novice pensioner, but as an advisor to the consulting firm Booze Allen Hamilton, and a wannabe man from the Pru.

In an earlier role he had spent four years as Permanent Secretary to the Treasury working with (to, for, or on behalf of) Gordon Brown. In the FT article, he assessed Gordon as exhibiting

“Stalinist ruthlessness… There has been an absolute ruthlessness with which Gordon has played the denial of information as an instrument of power.”

The interview makes good reading as ammunition in the forthcoming Cameron-Brown battles for the Premiership. These matches are being set up as a two-team tussle between gifted and flexible David, and Powerful but dour Gordon. You might think this resembles another Premiership battle between Manchester United and Chelsea Football clubs. I couldn’t possibly comment.

An unnoticed possibility

The BBC reporting this morning suggested an analysis that had not extended to a close reading of the original FT article. A discussion (on BBC five live) sounded as if it was a little chat, based on the Corporation’s own synoptic news summary of the FT story. It was suggested that the Noble Lord may be so worried about a Gordon Brown Premiership that he had felt compelled to make a calculated statement to the Press at an appropriately damaging moment.

I have been unable to find the answer to an important question. When did the interview take place? The on-line FT version does not tell us. The critical scene-setting sentence ran

‘In an interview with the Financial Times, Lord Turnbull said …’ But was it said ‘In an interview yesterday..’, or was it said ‘In an interview for our post-Budget retrospective on Gordon’s ten years as Chancellor, to appear on Thursday..’

This opens up possibilities beyond the BBC’s suggestion. The FT might have gone for two bites of the cherry, created a pithy and newsworthy story within a background interview for a broader historical analysis of Gordon Brown’s record as Chancellor.

Does this matter?

Only to the extent in which it might help us understand why a vivid description of leadership style appears as a new story. Its novelty lies in the messenger rather than the message, which is pretty much the line being taken by Gordon’s political foes – on both sides of the House.

Sainsburys: A good leader in a bad place?

March 19, 2007

Predators advance on UK retailer J Sainsbury. The Private Equity army is on the march again. Commentators are already comparing the coming battle to the famous Green/Rose contests for Marks & Spencers. But who is playing the Philip Green role? Will Justin King star as Stuart Rose? Will leaders be seen as making any difference, or will the financials decide the ultimate fate of the retailer?

The City is expecting imminent news of a takeover bid for the retailer Sainsbury’s. Trading levels in its shares have been at roughly triple last year’s average levels over the last six weeks. Names such as KKR (if not Kohlberg Kravis Roberts) are becoming more familiar, even to folk who are not regular readers of financial blogs or pink newspapers. The UK takeover watchdog has set a deadline of April 13th for a formal bid by a consortium of four such financial hunters including KKR.

The BBC’s business editor Robert Peston is blogger and super-sleuth. He was ahead of the journalistic pack over the proposed Cadburys split earlier this week. And he takes an interesting line of the current Sainsbury story, finding parallels with Philip Green’s abortive bid for Marks & Spencers.

He points out that Green’s bid was heavily influenced by the M&S pension funding arrangements. The same now applies to any bid for Sainsbury’s. Peston shows that the critical pre-battle negotiations may be between the Private Equity consortium and the company’s pension fund trustees. He shows that the figures involved could be enough to hike the offer price beyond acceptable risk-limits, within a bid which would load debt on the company against its realizable (‘strippable’) assets. The point is a cogent one.

The Sainsbury story

John James Sainsbury and his wife Mary Ann opened a grocery story in Drury Lane London in 1869, and founded a dynasty which was to become the UK’s leading grocers

For much of the twentieth century Sainsbury’s was the market leader. Much of the credit in the years of growth occurred under the leadership of John Sainsbury. Its subsequent misfortunes took place under subsequent leadership, including his nephew David, and Peter Davis. Lord David was to quit industry retaining his political and charitable interests.

The decline of the group in the 1990s was during the spectacular ascent of Tesco. Then in 2003 it also dropped behind the Walmart-backed Asda, a marker that probably contributed to the boardroom moves in 2004 which saw the arrival of CEO Justin King, and Chairman Philip Hampton. Since their arrival, the company has initiated a range of moves to reverse its decline,

Justifying Justin

Leadership theorists (there are a still a few around) still acknowledge that there are uncertainties over how, when and to what degree a leader makes a difference in any specific situation. This justifies interest in new leadership stories, and in the search for comparisons with earlier cases. In the battles for Marks and Spencers, the story was as much as a clash of leadership wills as of financial ratios. M&S acted by bringing in a leader to help the company fight off the bid.

Sainsbury’s acted to bring in a strong leadership team in 2004 (or anyway, to replace a team considered to have been off the pace). Comparisons between Justin King and Stuart Rose were, perhaps, inevitable. Terms such as dynamic, youthful, able, well-qualified, appear in press reports. He ticked his CV boxes even including time spent at M&S, in his previous appointment, where he had been Director of Food. Since arriving at Sainsbury’s he has been active and visible in efforts to strengthen the company’s market position.

You can look at the progress of the company in two different ways. The company has reported modest but repeated growth in quarterly sales. Significant improvements have been made in logistics. Customers appear to like the affirmation of the company’s interests in supporting a healthy and ethical lifestyle.

But the killer facts remain. The supermarket chain that had held the number one position in the UK has dropped far behind beyond the mighty Tesco, and has failed to close the gap on second place to Asda. Even on his appointment, there were takeover rumours surrounding Sainsbury’s future. Allan Leighton, the current Royal Mail chairman was particularly mentioned. Coincidentally, Leighton was King’s mentor during their time at Asda. The rumours resurfaced recently.

On being a good leader in a bad place

In a leadership story, the company can’t play the move of switching from Justin King. Indeed we can make the case that Justin King was already brought in to Sainsbury in 2004, in a Rose-type move to protect the company from predators. Nor is it obvious what he might do to change the course of events once a bid has been made.

The King may rest uneasy, but on this analysis, it may be seen as a case of a good leader being stuck in a bad place.