A New Year Message for LWD Subscribers

The main New Year message to our subscribers is “Thanks For Your Continued Support”. Here are some of the ways you helped in 2011:

Susan and the bookshop

Throughout this year, Susan suggested posts and enhanced many of my more outrageous ideas often with a creative ‘yes and’.

Several fruitful meetings were held at Simply Books Bramhall, over a coffee.

The GEL leadership team

Another creative space was found in another coffee bar area at Manchester Business School. Thursday meetings with members of the Global Events and Leadership (GEL) tutors were regular sources of ideas for posts and for leadership insights

Alex and the subscribe button

Less than a year ago, the only way someone could subscribe to LWD was through their own skills at setting up the link. Then Alex Hough suggested the user benefits of the little button permitting easy join-up subscriptions. So a special thanks to Alex.

Dilemmas of Leadership (DOL)

Routledge produced an excellent 2nd edition of Dilemmas of Leadership in December. In 2012 LWD will be publishing more stories linked to leadership news stories linked to the content of DOL.

Thanks to authors and commentators

Thanks also to the subscribers who offered suggestions for posts, and sometimes wrote contributions themselves. Special thanks to participants in MBSW courses who put in additional (and ungraded) work to produce published posts.

Other honourable mentions go to those who joined on-line discussions. Most prolific subscribers in this respect have been and Samer al Sahai, and Jeff Schubert.

Don’t be shy

Another message is “don’t be worried that your comments will not be ‘good enough’. ” Your editor will help you reach the style and quality for a LWD posting.

Tell your friends and click the star

Other ways you can help influence LWD content: Recommend it to your associates. Also use the little star to vote for posts you particularly like. That helps publicise the post, and gives much-welcomed positive reinforcement.

The wisdom of John Cage

One of the last quotes I came across in 2011 was from the musician John Cage. It’s worth carrying over to the new year:

I can’t understand why people are frightened of new ideas. I’m frightened of the old ones.

Warmest regards for 2012

Tudor Rickards

Editor Leaders we deserve

Does Simon Cowell lack the X Factor? Seven Questions for Students of Leadership

Simon Cowell

Here’s a test which may be fun to try out on your under-graduate business students. Even if the challenge is too easy for discerning subscribers to Leaders We Deserve, you may like to pose it to a family member or friend

At very least it could add to one of those discussions around the TV beginning ‘That Simon Cowell might think he’s smart but…’

A Management Today article

Management Today helped themselves to this piece of marketing from a news agency.

IFF Research, which has sent the following over to us. According to the findings of its SME [Small Medium enterprize] Omnibus, just 5% of small business owners would choose Simon Cowell to be a consultant to their business.

Beard enthusiast Richard Branson raised few eyebrows by topping the list of the most desirable celebrity business consultant, with 34% opting for him – while 30% said they’d prefer the no-nonsense ministrations of professional finger pointer Lord Alan Sugar. Below them came Mary ‘Queen of Shops’ Portas, whose recent attempts to save the high street don’t seem to have garnered much love from business owners (she only got 5% of the vote), and Karren Brady who with another 5% of votes, is clearly getting into her role as Sugar’s sidekick on the Apprentice. Bringing up the rear were Cowell, who obviously doesn’t have the X Factor when it comes to popularity contests, and ‘city superwoman’ Nicola Horlick, with just 1%.

What’s slightly depressing is that just 20% of business owners picked women – even though Brady (for example) became the youngest-ever managing director of a UK plc at the age of just 23, while, having juggled six children and the running of an investment fund, Horlick could certainly show Branson a thing or two when it comes to multi-tasking. Sugar, on the other hand, has managed to build a reputation on crushing the hopes of young business wannabes. Which suggests, as IFF MD Mark Speed points out, that ‘there is more to be done if women are to be on an equal footing with men’.

The Leadership Challenge

The piece got me thinking about why the survey was carried out, and whether the results have much credibility. The best use for it I could think of was a way of encouraging ‘map-testing’ for students. So here’s my undergraduate test based on the news item.

Test the credibility of the survey along the following lines:

[1] What choices do you think were offered to the respondents to the survey?
[2] What proportion of respondents do you think were women?
[3] How might the answer to [2] influence the survey results?
[4] What proportions of respondents might have heard of each of the various candidates evaluated?
[5] How might the answer to [4] influence the survey results?
[6] What might explain Richard Branson’s popularity?
[7] Why might IFF Research have carried out this survey

A thought for Christmas: How Feedback loops work for your web traffic

Peter Senge

A Christmas message from Tudor Rickards

I noticed today how a decision I made had contributed to a little bit of web traffic (or lack of it), in the build-up to Christmas.

Over the last few days, [Dec 20th-23rd] visits to the Leaderswedeserve site have dropped roughly to half.

I might have become more active, but…

On discovering this, I might have become more active, tweeting furiously, or posting something from a small stock of draft posts kept in reserve for times when stories are hard to come by…

Instead

But instead, at first I took the view that if there’s not much traffic, there’s not much point in blogging.

Peter Senge’s feedback loops

It’s a nice example of one of Peter Senge’s feedback loops. A change in inputs lowers outputs which produces further change in inputs and so on. Business down, wait for better times, which (maybe) sends business down further …

Systems theory does work…

Systems theory does work. Although, sometimes action can ‘break the loop’. [Do I hear a faint cry of Bah Humbug from somewhere?. A Happy Christmas, everyone.]

But I did post this, didn’t I?

Well spotted (if there’s anyone out there spotting). Just let’s say it’s a triumph of optimism over rationality. And a way of [b]logging the idea about feedback loops.

Chief civil servant calls for creative leadership

The departing chief civil servant Sir Gus O’ Donnell calls for more creative leadership in public life in the UK

[Critique by LWD Editor and Creative Leadership advocate Tudor Rickards]

The creative Civil Servant

Creativity was hardly the first characteristic looked for in a career civil servant in the UK. I can recall when a feeble joke in Whitehall was to send a colleague a brochure for a course on creative thinking. But times change. More recently [from memory it was just before Alistair Darling’s arrival at the Treasury], there had been efforts involving testing approaches for stimulating the creative juices.

And now in one of his last public announcements as head of the Civil Service, Sir Gus o’ Donnell, argues for creative thinking as a way ahead for more innovative contributions in the future. This is what he wrote [sub-edited for LWD style. Sir Gus does not do sub-headings]:

Overcoming cultural inertia

It is not enough now for the Civil Service simply to respond to a dampened economic climate: it needs to become a central part of its recovery and growth. There is of course some cultural inertia to overcome, but there is a voracious appetite among departments to take on this challenge: to keep adapting, to think more creatively, to reach out to small and medium enterprises (SMEs), to find better ways to fulfil the duties of government without increasing the cost. We know we need to deliver better for less.

The Red Tape challenge

The Red Tape Challenge, an initiative set up by the Prime Minister to do away with unnecessary regulations, is my favourite case study. This is of interest to everybody, but of critical importance to SMEs, which are disproportionately affected by new rules and red tape.

Topic by topic, we have been through the book of regulations to ask whether each one is really needed and whether it still serves the purpose originally intended. Civil servants have proved themselves to be good at this: of the more than 1,200 regulations looked at so far, we have recommended scrapping over half of them.

Innovation not regulation

I was particularly happy to become involved in the Red Tape Challenge because I am an economist by trade. Indeed, I have been an economist longer than I have been a civil servant, and I believe successive governments have been far too quick to solve problems with regulation and legislation.

I understand why this is – all our ministers sit in one or other legislating chamber – but we must be more creative and innovative in the way we solve problems without always resorting to the creation of new rules.

A more grown-up approach to failure

We must also be prepared to take more risks. In a media environment where failure is punished much harder than success is celebrated, this is more difficult for ministers and civil servants than for our friends and colleagues in the private sector. There are some promising signs that we can, in fact, do this quite well, but taking risks means having a grown-up approach to failure. We should celebrate success and learn from failure.

The Civil Service is an engine for growth

The more we can innovate, the more we can find alternatives to legislation and regulation, and the more we can overcome our aversion to risk, the more we can help drive the economy and really ensure the Civil Service is an engine room for growth. I would be proud of that legacy.

Demob happy?

This is quite a remarkable document for a departing leader to produce. I’m not quite sure how to read it. The presentation of a Civil Service hungry for change seems rather unmeasured.

Much rejoicing

But advocates of creative leadership will rejoice at support from such a quarter. On a personal level I am delighted. The piece was published within a week of the second edition of Dilemmas of Leadership, with its one totally new chapter devoted to, you’ve guessed it, creative leadership.

Acknowledgement

A youthful Sir Gus O’Donnell pictured above is taken from the Leeds University Business School Web Site

Sir Martin Sorrell defends leaders’ pay rises

Sir Martin Sorrell has an impressive if sometimes controversial business career. His robust defense of his 70% pay rise captures his leadership style

Harvard educated Sir Martin Sorrell has been a candidate for a LWD leadership post for some while. He appeared on the radar screen again, as I caught the end of a BBC interview in which he justifies his most recent earnings rise of 70% last year.

His broadcast performance was consistent with that of an earlier interview [2009], suggesting a leader who was both tough and successful.

Sir Martin Sorrell is the chief executive of WPP, the company he founded in 1986, which is now the world’s largest group of advertising, marketing and communications companies. Widely regarded as one of the most important figures in his field, he recently joined Evan Davis on Radio 4’s business discussion programme The Bottom Line. He shared his vision about the future of advertising, the benefits of scale, why tough love means you sometimes have to bite the bullet and reduce your headcount, and how long the present financial crisis may last.

His 2009 predictions turned out to be rather refuted by events. However, that is largely true for other distinguished leaders in these turbulent times. There is an interesting parallel in his admiration of Rupert Murdoch with the comments made later by Tony Blair in his memoires. These endorsements of the tycoon’s achievements help us avoid the ‘hero to zero’ mentality which can be found in much of popular leadership narratives.

Furthermore, most pundits did not get close to anticipating the aftershocks of the credit crunch emerging in 2008.

Rupert understands…

Somebody like Rupert Murdoch understands that he’s not just in the TV business or the film business. He understands he’s in the communications business. Rather like Theodore Levitt used to talk about the buggy whip industry. They’re not in the horse and buggy industry. They’re in the transport industry. And when the railroads came in, they were threatened; but if you thought about it as being the transport industry, you won.
Rupert understands that. He’s in film, he’s in TV, he’s in outdoor sites in Russia. He’s spread his empire around the world.

“A recovery of sorts”

“The first half of 2009 will be very tough – I think the second half of 2009 will get relatively better. Relative to the first half.
And I think in 2010 we will get a recovery – what we called in a recent statement a recovery of sorts “.

Tough love

Sir Martin’s career has been hugely successful and his success has been rewarded with honours and wealth. He takes risks and cuts his losses when they occur. In the interview he also talked about ‘tough love’ and the benefits of ‘letting people go’ however painful the decision. (Although he didn’t seem too pained, it seemed to me).

The Daily Mail, a popularist tabloid newspaper, was unconvinced about Sir Martin’s case. In an article hostile to his lifestyle The Mail noted:

My pay is very low, moans advertising tycoon with a basic salary of £1 MILLION a year

Sir Martin, 66, said his bumper income, which rose by 83 per cent to £4.2million last year, was fully justified and was mostly linked to the firm’s performance. He added that he considered his basic salary, of just over £1million, to be ‘very low’.

The juicy details

The article also replicated much that can be found on wikipedia on juicy details of his high-profile divorce which has arguably contributed to his celebrity profile, albeit for non-business matters.

Acknowledgements

To the website Short Person’s Support for the image of Sir Martin. The site also offers the following quotable quote:

Aunt Vorthys: “A nice young man … A pity he’s so short.”
Lady Ekaterin: “He’s not so short … He’s just concentrated”

[Lois McMaster Bujold, in Komarr]

Which Business Leader Said…?

Which business leader said: “I’ve had no life for the past two years …”? George Bush? Tony Hayward? Or was it Lloyd’s CEO Antonio Horta Osorio? Or someone else?

The Quiz question

This is your LWD quiz question and puzzle for the festive season. Challenge yourself, or try it out on friends (or enemies, if you aren’t quite in the festive spirit).

The quote continued:

” …The past six months have been particularly lacking in quality of life. It has taken a huge toll on me, and it has taken a huge toll on those around me.”

So what do you think? Was it George, Tony, or Antonio?

Don’t be fooled

The quote may seem familiar, but don’t be fooled …

It wasn’t Tony Hayward

No, it wasn’t Tony Hayward of BP. Faced with the biggest crisis under his leadership, Hayward uttered words that were reported around the world, and were to later associated with his losing his job: “I want my life back back”.

It wasn’t George Bush

It wasn’t George Bush, pictured above. Don’t know what he’s up to, and he may indeed have more time for other things now such as watching President Obama struggle with the dilemmas of leadership…

And it wasn’t Antonio Horta Osarios

And it wasn’t Lloyds bank leader Mr Horta-Osório, who eventually returned to his post after eight days [November 2011] at The Priory medical clinic recovering from the effects of extreme sleep deprivation. According to The Telegraph,

The 47-year old Portuguese banker described the experience of being forced to relinquish his duties on October 31 as “humbling” and said he had to “rebalance” his life to ensure that he did not let things go “too far” again.

“With hindsight, I probably threw myself in too much. Focused too much, with too much intensity and I should have dealt with it differently. This was a humbling experience for me and I took the proper lessons from it. I will do things differently going forward.”

Another hint

Here’s another hint about the unnamed leader who was also reported as saying:

“It was like when the flutter of a wing of a butterfly in the Amazon causes a storm in Alaska,” recalls Mr ******.

The Leader was …?

Who is Mr ******

A special mention will be made of any reader who sends in the correct answer, together with a URL link [use the comments section below].

Special mentions also for creative guesses such as George Bush (pictured above). More about Mr ****** will be published for Christmas [Posting scheduled for December 24th, 2011]

Author’s Delight

Leaders We Deserve draws deeply on the textbook Dilemmas of Leadership. The author captures his feelings on the day the second edition was published

Reclaiming the town centre: The Mary Portas report and her magnets for change

Mary Porter presents her government-commissioned report to deal with the decline of inner city retailing. Has the Queen of Shops made a serious contribution to addressing the problems? And is there another story of her undeclared business interests?

Mary Porter has become a celebrity in the UK, thanks to her TV role as a trouble-shooter, specialising in fixing retailing businesses. As a late adaptor of such things myself, I had learned of her through my Business students and colleagues. She seems to have become something of a role-model, and worth scrutiny for her approaches dealing with leadership dilemmas

A confident message

On the day her report came out [Dec 13th 2011] she did the rounds of the media. I heard her on Radio 5 live. Her performance was impressive and confident. Her message clear. The traditional high street at risk from the giant retailers and the convenience of out-of-centre shopping.

An academic called in to comment would probably have gnawed away at the inexorable forces of change that have produced a dreary convergence of the shopping experience around the world (‘Mallification’ to coin a term for it).

Mary’s people magnets

Mary was upbeat and remarkably convincing. (“Sounds very charismatic”, I mused). She avoided almost all the usual business clichés of footfall, consumer value, visions, (not sure about visions, on reflection). Instead she offered ‘her’ map which has something to do with metaphoric ‘magnets’, which pulled people into spaces and places.

The old market-stalls were people magnets, and Mary wants more market stalls to help revive the high street by such forces of attraction.

The Indie trumps the BBC

I expected to find a rapid critique of the report from the BBC but found the most impressive summary in the Independent. It even managed to find a possible vested interests story which I will return to later

An Independent view

The recommendations of the report (with acknowledgement to the Independent) are as follows

1. New ‘National Market Day’ where budding shopkeepers can start a business.

Pro Those who can’t afford property costs will be able to give retail a try without the overheads.
Con Shoppers prefer the low cost but reliability of supermarkets and out-of-town shops. It will be difficult for a ‘Market Day’ to change this.

2. Local authorities to give business rates help to start-up retailers.

Pro Business rates is the great prohibition to start-up retailers, as rates are usually more than 40 per cent of the rental charge.
Con Cash-strapped councils will find it hard to reduce their rates bills, while established local independent retailers will claim an unfair advantage for new kids on the block.

3. Create disincentives for landlords to leave shops empty.

Pro Empty shops are the biggest blight to the high street.
Con Landlords are already struggling to find tenants for vacant shops and are already hit by the large cost of business rates for these empty shops

4. Introduce Secretary of State “exceptional sign off” for all new out-of-town developments.

Pro Could curtail, or lead to more suitable and controlled, developments on the edge of towns which complement high streets.
Con The horse has already bolted. The big four grocers plan to develop 19 million square feet of new space between 2010 and 2014.

5. Put in place a “Town Team” – an operational management team to deliver a vision for a high street. [Oops, there’s that vision thing at last: Ed LWD]

Pro Will allow stakeholders to collaborate and take responsibility for their high street.
Con Stakeholders are likely to have diverging views, and non-retailer and non-landlord participants may not have real clout.

How promising is the Portas plan?

Promising enough to trigger a national debate. Aligned enough to the Prime Minister’s enthusiasm for the Big Society to have his continuing support.

And the undeclared interests story?

The Independent also draws attention to unrevealed interests of Mary Porter:

The TV presenter Mary Portas … laid out her vision to rescue the UK’s ailing high streets but refused to answer questions about her PR company’s links to the big property developer Westfield and other retailers.

Shame. Just as I thought we could have an all-round feel-good story and a new charismatic hero[ine].

Acknowledgements
To the Independent for the précis of the Portas plan; the image of the Prime Minister and Mary Portas and their undeclared interest story. Also to my colleagues and students for introducing me to the Portas phenomenon.

Mothercare: Rumours of takeovers continue

Susan Moger & Tudor Rickards

Mothercare is a high profile brand in the UK which is struggling to become a successful global operation. It is also facing rumoured takeover bids

Recent rumours suggest that Mothercare is ‘ripe for a takeover’. These have been supported by speculative share purchases. Venture capitalist Cinven is currently [Dec 12th 2011] favourite to move for Mothercare.

Background

To the general British public, Mothercare has developed iconic status since its origins in the 1960s. In some ways it has the ‘much loved’ status of Woolworths. LWD subscribers will be familiar with the demise of “Woolies” adding to the gloom of last Christmas for its employees. In hard times, sentiment is a commodity that does not guarantee survival.

The Company was founded by Selim Zilkha and James Goldsmith in 1961. In 1982 it merged with Habitat to form Habitat Mothercare and in 1986 Habitat Mothercare merged with British Home Stores to form Storehouse. Mothercare also acquired the Early Learning Centre (ELC) in 2007.

Profits have been increasingly coming internationally, this year just about balancing losses in the UK. The financials suggest that a takeover by a venture capital organisation would result in more rapid and drastic actions to address UK losses.

The declining fortunes of Mothercare are indicated by a sequence of CEOs. Ben Gordon was the fifth in rapid succession four years ago. At first,his appointment was accompanied by a strong rise in share price which eventually reversed (until the recent takeover rumours)

Crisis actions

The firm has followed the well-known steps for businesses facing financial problems. In particular, there have been changes in leadership, and steps to reduce costs.

Any signs of rethinking its strategy?

Cost cutting has included announcements of reducing the number of stores in the UK as leases expire. Signs of rethinking strategy are less evident.

Alan Parker, executive chairman of Mothercare was quoted in The Telegraph [17th Nov 2011] as saying

“We have to rejuvenate the whole brand and offering. The competition in the UK is more intense than overseas. We need to review the format and location of our outlets in Britain.”

More than an economic downturn?

Matt Piner, at the retail consultancy Conlumino, said: “Mothercare has blamed its falling UK sales and profits on the economic environment, but in reality all this has done is expose the wider issues the retailer faces.

However, with consumers now increasingly confident using the internet and sites such as Mumsnet to educate themselves, the once habitual visit to Mothercare is becoming a thing of the past. Instead, consumers research what they need online and head to the cheapest retailers to buy it – which nowadays normally means one of the supermarkets.”

In addition, retailers such as Boots and Superdrug have made great efforts at providing advice as well as products for young families and with greater high-street footfalls.

Is the story straightforward?

Oner evaluation was less convinced about the non-UK business prospects.

Mothercare’s overseas growth has been hugely impressive. But despite the rapid growth in the international business over the past six years, the UK remains the driver (or not) of profits. For all the talk of reducing exposure to the UK market and restructuring the property portfolio, retail space in the UK actually grew last year.

Of course [Former Chairman] Peacock – and his chief executive Ben Gordon – would rather talk about Eastern Europe than the UK. International sales rose 15pc-plus, while the UK has seen sales fall 4.3pc, despite weak comparatives.

The retailer has made much of its international franchisee business in recent years, [flying out analysts and journalists] as far as India to see the business. But whatever the spin, Mothercare’s fortunes are still tied to the UK market. Last year the group sold £587m worth of baby stuff and toys to UK shoppers and £206.4m to its international franchisees. Mothercare – rather bizarrely in my view – prefers to highlight “network sales”, which include the international franchisees mark-up (of which Mothercare takes just a small “mid-single digit” cut).

EU Crisis Summit leaders take an historical step to reshaping the European Union

The Brussels summit avoided the disaster scenario of spooking the world’s financial markets. International reaction suggests a triumph for Angela Merkel, and more isolation for the UK’s position in Europe

In the UK, the story was presented as David Cameron heading to Brussels to fight (‘like a British Bulldog’ he assured his anti-European MPs) for British interests.

An internal dilemma

He is seen as struggling with a leadership dilemma of protecting his position against those in his own Party who would like radical moves to regain sovereignty from ‘Europe’

Foam-flecked warriors

His most vehement opponents to the European project are sometimes described as obsessive to the point of madness. A more balanced account of the anti-European perspective comes from the Right Wing Spectator under the title Dave’s big push.

The Mercozy plan

The entire crisis has been reduced in the UK to a story of one dominant leader, Angela Merkel imposing a German vision of the future of Europe achieving (perhaps reluctant) acceptance by Nicholas Sarcozy. This is the ‘Mercozy plan’ as it was being called this week.

The fall-back position

David Cameron arrived and opposed the plan seeking concessions. This seems to have been anticipated by the majority of other leaders. He was quickly rebuffed. A Press statement by Sarcozy made it clear that unanimity among all 27 leaders would be not necessary. Agreement within the 17 members of the Eurozone (countries with the Euro currency)would be possible, even if it meant excluding any of 10 additional members of the European Union who had not espoused the common currency. In the event, only Britain chose to be excluded.

The Wall Street Journal captures the story at the end of the first day [Friday 11th Dec 2011]

European Union leaders failed to get all of the bloc’s 27 members to back a change in the EU treaty to tighten their fiscal coordination as a decisive summit in Brussels ended its first day in the early hours Friday [Dec 9th 2011]. The leaders, who are still deeply divided over key elements of their crisis strategy, decided they would move to form a pact among at least 23 of the members to tighten rules on fiscal policies.

But details of the proposed treaty remained to be settled. The U.K. stood aside —after Prime Minister David Cameron failed with what officials said was a “shopping list of demands” designed among other things to protect national supervision of its banks—while Hungary, Sweden and the Czech Republic reserved their positions.

An Asian perspective suggested that the crisis in Europe had for the moment left China curiously more as a spectator than a major player in the economic outcome.

Debt-infested Europe

In India, a fall in its currency was attributed problems in the debt-infested region of Europe:

The Rupee ..was weighed down by pessimistic investor sentiments over growing concerns ahead of a summit later in the day to tackle the region’s festering debt crisis.

Decisions and outcomes

Exit David Cameron to polarized opinions in the UK. Within hours, the isolation of his position was clear as the leaders of the other 26 European countries of EU committed to action.

Immediate international reaction suggested that Angel Merkel’s view (even her ‘vision’) prevailed. The summit an agreement which at least averts the immediate fiscal chaos within the Eurozone.

Cameron’s ‘poor gamble’

The New York Times later evaluated the outcome as follows:

David Cameron [has been perceived as having] made a poor gamble in opposing the push by Mrs. Merkel and President Nicolas Sarkozy of France, embittering relations and possibly damaging his standing at home. Though some other countries, including Denmark and Hungary, initially shared Britain’s skepticism of the German-led agreement, only Britain ultimately rejected it.

To be continued…