Fallback strategies make for good governance. Or do they?

There have been several examples of fallback thinking in our UK leadership stories recently, including cases at The Royal Mail, The Treasury, and most recently at Liverpool Football club. We examine why developing a fallback strategy may be a matter of creative leadership

Every Military leader learns of the benefits of a fallback strategy. Lao Tse wrote of the merits of providing a fallback strategy for a defeated enemy, a golden bridge permitting an enemy to retreat thus avoiding the possible lose-lose outcomes of follow-up actions.

Business School cases are taught with a vocabulary of risk management, which is way of elevating fallback thinking to a management philosophy.

Engineers are familiar with the lugubrious message which passes for Murphy’s law, or Sod’s law (‘what might go wrong will go wrong’; ‘toast always falls with the buttered-side down and hitting the carpet’). Awareness helps them bear in mind what might be also called the worse case scenario.

So fallback thinking is always a good thing?

I am very much in favour of fallback thinking, but would like to explore its consequences a little more deeply.

Let’s agree that leaders benefit from facing up to unpleasant possibilities. It was the failure to face such realities that prompted Bob Woodward to label his work on the Bush Administration as an examination of a State of Denial. That example indicates the well-known human tendency to escapism, which can have serious consequences for leaders of all kinds. The Tavistock School and Clinic developed a whole social scientific model on such behaviours, which are related to the more popular concept Groupthink.

Then what’s the problem?

Real-life examples show that theory often fails to anticipate all the problems facing leaders in action. The most recent example is the case at Liverpool Football club and its American Owners.

Tony Barrett of the Liverpool Echo [Jan 14th 2008] broke the story.

Tom Hicks and George Gillett held a secret meeting with Jurgen Klinsmann to line him up as the next manager of Liverpool FC. Hicks today insisted the talks would not have resulted in the immediate dismissal of Rafael Benitez and that Klinsmann was only “an insurance policy.”
He told the [LIVERPOOL] ECHO: “We attempted to negotiate an option, as an insurance policy, to have him become manager if Rafa left for Real Madrid or other clubs that were rumoured in the UK press … Or in case our communication spiralled out of control for some reason.”

Sensible? I leave readers to decide. There was general consensus elsewhere by football commentators that the action had made things worse, and had undermined the position of the incumbent manager.

Then there’s the case of The Post Office, facing enormous challenges of change, and headed by a dynamic Chairman. Last year he was linked with stories of transferring his attentions to the possibility of becoming the new Chairman at Sainsburys. The government (at the time of Tony Blair’s premiership) drew up a fallback plan.

Robert Peston reported from unnamed sources that

The Government has appointed head hunters to find a new chairman. The search for a deputy chairman is regarded by some in government as insurance in case Mr Leighton decides to quit early. He is frustrated by ministers’ reluctance to transfer 20% of the business to Royal Mail staff.
“Allan Leighton is always threatening to resign and one day it might just happen” said a government source.

Insurance again.

I noted at the time

Suppose this is a game of three dimensional chess? Allen Leighton is leading the Government forces in a battle to implement its wishes. Those nasty forces resisting his attacks are led by the Union leaders. Leighton wants more help from the Government. He becomes powerful enough to be dangerous. What if he threatens to resign at the most telling moment to devote more time to other business interests? He has been associated with stories of his interest in acquiring Sainsbury’s for several years (and it seems the stories are coming to the boil again this month) … This is why it’s three dimensional chess.

Then there’s another recent story, concerning The Treasury’s fall back strategy of nationalizing Northern Rock. I argued that it was another example of a game of political chess.

… Mr Darling does not want to nationalize Northern Rock. Neither do the shareholders. But if The Chancellor can convince enough shareholders that he might be forced into a nationalization by their further opposition, it may help avoid the outcome none of the main players really wants.

Creative leadership issues

These recent cases suggest that leadership stories can be read and deconstructed in terms of the actions of those at the heart of the story to achieve goals, which might include actions to block the goals of others. In the vocabulary of creative leadership
the complex strategic ‘map’ can be explored as a series of desired actions or how to do’ statements. This will vary among stakeholders.

If we are examining the possible actions for the principals or owners, (be it Liverpool Football club or The Post Office) possible goals (How to ..) might be

‘How to protect my interests, if the leader quits’
Or ‘How to develop ‘insurance’ if the leader’ quits
Or ‘How to keep the leader in place’
Or ‘How to increase chances of a smooth leadership transition’
Or ‘How to have a back-up position’
Or ‘How to show [ ] that we are not bluffing.

The creative leader (according to this kind of approach) ‘searches widely and chooses wisely’. Searching widely avoids the trap of being locked into preconceptions. Choosing wisely commits to less obvious ideas and actions discovered in the search process.

Advertisement

The Post Office Saves the Day

The Post Office offers a Christmas savings scheme to meet the needs of savers damaged in last year’s Farepak crash. This is a financial services innovation which is welcome news to many of the most vulnerable families in the community. It also demonstrates that The Post Office may still be able to develop new strategic options for itself

The Post Office has been under threat for some time. It has hardly won accolades for its leadership, as competition increasingly invades once-protected markets. The Royal Mail group continues to present a beleaguered image. Its current news bulletin begins

We apologise to all of our customers for the inconvenience and disruption caused by the recent industrial action and are pleased to announce that there is no strike action currently taking place.

The announcement concludes in less than convincing style

We are pleased to confirm that the CWU EC has ratified the deal on pay and modernisation and that this acceptance of the proposal means that Royal Mail is now able to go ahead with plans to modernise the business and make it more flexible, efficient and able to compete more effectively. We are making sure that any changes we make will not cause any disruption to our customers and where we have mail for customers, deliveries will be made each day across the country.

The Post Office and Royal Mail

As its website indicates,

Post Office Ltd is a wholly owned subsidiary of Royal Mail Group Ltd and operates under the Post Office® brand. Managing a nationwide network of around 14,300 Post Office® branches, we are the largest Post Office network in Europe and the largest retail branch network in the UK handling more cash than any other business…

Post Office Ltd is one of the three arms that make up the Royal Mail Group, along with Royal Mail and Parcelforce Worldwide. Post Office Ltd’s Chief Executive and non-executive Chairman sit on the Group’s management board.

A leadership opportunity?

When are there leadership opportunities? At times of great threat. Why? Because there the obviousness of the threats will have encouraged considerations of what to do about them? Doing nothing may indeed by good for rather subtle reasons. This amount to ‘doing nothing in a calculative way’ rather than in a helpless way, the latter backed up by denial. Doing something can also be backed up by denial and by false calculation.

In other words, not acting is also a possibility. Acting or non-acting can be strategies. They can be considered strategies. They can be well considered and doubtfully considered. The circumstances surrounding threat at least may increase conscious efforts to do something better and different. Sometimes the strategy has been elevated to a leadership principle of masterful inactivity.

The opportunity in the threat

My unexpected conclusion is that the Post Office has a rare asset that it carries through the financial crisis, and which is one that most other financial institutes do not have. The asset lies in the confidence of customers that any deal offered will be as near as safe as any deal can be.

The implication is that the proposed savings product, although a relatively small one, could be an indicator of futher possibilities based along the same lines of guaranteed safe and regular savings. This was the strength of the home-savings schemes and of the offerings of the door-to-door insurance salesmen epitomized by The Man from the Pru. , The Pearl, The Refuge for a century or more.

The healthy option

If this is the case, it will be a healthy option that has emerged partly as a consequence of a breakdown of trust in the current business image of high street banks and their current accounts (no pun intended). Healthy, because the good old Post Office was hardly a considered option by many ordinary people who considered themselves to have more financial savvy than to follow the untutored practice of saving with the Post Office, or with the friendly societies.

The possibility is healthy because it is not dressed up in dubious marketing promises of foolishly attractive yields. What you are offered is what you will get. Maybe, just maybe, the simple promise can not easily be copied by competitors.

Straws in the wind?

The idea is based on several assumptions. First, that the various beffetings to the international and national financial systems are producing a shift in attitudes among members of the general public. These in effect result in beliefs that banks are no longer safe havens for money. In the UK this week, the missing computer records of thirty-five million members of the public may contribute to such atttitudes for some time to come. The second assumption is that the Post Office is, in contrast, safe. Not safer, but safe.

We will see.

With friend like these …Gordon and the Unions

The new Prime Minister faces the annual conference season. It will be a testing time for Gordon Brown during which we may learn a little more of his longer-term plans and short-term tactics related to industrial relations

This week, Bob Crow, leader of the RMT Union, brought his transport members out on a lightening strike, to the inconvenience of London’s commuters, and the fury of London’s mayor, Ken Livingstone.

‘Nobody loves us we don’t care’

I was reminded of Millwall’s football chant when I read that Bob Crow was a Millwall fan. According to a reliable source, the song can be read as postmodern irony associated with the defiance of Bermondsey’s dockland’s culture towards its detractors.

The song was a reaction to what the Millwall fans perceived to be sustained, exaggerated and unfair criticism of their behaviour by the press and the stereotypical image of all Millwall fans as hooligans, perpetuated by certain sections of the media in general.

I have heard it remarked that at Girton College before male students were admitted, the gals also had been known to chorus the Millwall anthem. Perhaps that was another postmodern gesture, indicating distain for the behaviors displayed towards Girton’s students by Oxford’s chauvinistic males.

But to return to our main story … This week, Bob’s actions brought his members out on strike, and dragged London Mayor Ken Livingstone into the dispute with a few far-from-brotherly remarks.

As the BBC put it

For Ken Livingstone, its decision was unfathomable.
“This must be the first time in history of a union going on strike when everyone has acceded to their demands,” he said.
Mr Livingstone added that he could not “explain the mindset” of the RMT

Bob Crow

To his many critics, Bob Crow is an unwanted throwback to the

worst excesses of 1970s union militancy… To his supporters, however, the 46-year-old leader of the Rail, Maritime and Transport Union is simply a resolute defender of workers’ rights.

RMT members may hold Mr Crow in great esteem, but he is certainly not liked by the Labour government, which has historically branded him “a wrecker” … Back in 2004 his hostility to the Labour came to a head when the RMT broke its ties with the party – a link which dated back to 1899 – following a row over the RMT’s decision to allow local branches to affiliate with other parties.

Bob and the Treaty

Mr Crow has also been in the headlines for his support to the movement calling for a referendum over the new EU treaty. We have commented on this in an earlier post, as had The BBC

The RMT’s motion asks the TUC to campaign for a “no” vote, if a referendum is held on whether to adopt the treaty. Its general secretary, Bob Crow, told the BBC: “They [the government] went to the British people on the promise there would be a referendum … What we want him [Gordon Brown] to do is implement what his manifesto was.”

What’s going on?

The reported stories indicate that the RMT union is embroiled in an industrial dispute. Also it is becoming involved in the wider debate on Britain’s role in the EU. It joins a rainbow alliance ranged against the Government in calling for a referendum.

Without more information we have to speculate on whether the two stories are interconnected. The imminence of the so-called (political) conference season suggests they are.

Whatever the intentions of Mr. Crow, the intentions of Mr. Brown and Mr. Cameron are clear. Both are seeking to hold on to their territory on Middle-earth, and perhaps expand it. But to do this, Mr. Brown was to reassure the inhabitants of Middle- earth that he is in no way in thrall to the dark forces, particularly those of the left. Mr. Cameron is also having to calm concerns that he is abandoning his allies from the right.

With these considerations in mind, neither Mr. Brown nor Mr. Cameron wants to be too friendly to Mr. Crow.

So that old refrain may well be rather apt. Nobody loves me and I don’t care, and I can be very difficult when I get upset.

Outcome. Skirmishes. Casualties mainly to the front-line troops caught up in a rather complicated set of political moves. Troops watch on sympathetically from the ranks of the Post Office workers. They are caught in a similar difficult position to defend.

Acknowlegement

Image is from Google, citing Ben Becker’s armies of painted warriors as a representation of a battle beween the Celts and the Romans.

Royal Mail: Lions led by donkeys?

A second one-day strike at Royal Mail is announced for Friday 13th of July. Letters are exchanged between the Union and Management. In that curious way of industrial disputes, the letters seem intended to avoid constructive dialog. The battle looks more and more like the Somme, or perhaps Little Big Horn and General Custer’s last stand.

Events at Royal Mail grind forward, painfully slowly. Billy Hayes and Dave Ward are in there somewhere battling for the Union side, Allan Leighton and Adam Crozier also somewhere for ‘Management’.

Sometimes the general shape of a battle-field has old warriors reminiscing of past triumphs and disasters. Two historic possibilities occur to me, one from The First World War, and one from the early days of American History.

Despite rumors to the contrary, I do not have first-hand experience of either, although my father survived the Somme, an experience that stayed with him for the rest of his life. He rarely talked about it. There were no real survivors. Poets and military historians give us a picture of the bloody futility of it all.

Appeals to Patriotism

The first world war was a war of patriotic slogans, sometimes wrapped up in the noble ancient language of the ruling class.. Dulce et decorum est, pro patria mori… Lions led by donkeys. Two or three generations later and there is cultural residue, a nagging awareness in Great Britain, going back to Dr Johnson’s maxim that patriotic rhetoric is the last resort of the scoundrel.

While patriotism remains more desirable and contested ground in the USA, two American journalists are worth mentioning for a modern gloss.

In Dr. Johnson’s famous dictionary, patriotism is defined as the last resort of a scoundrel. With all due respect to an enlightened but inferior lexicographer, I beg to submit that it is the first.”—Ambrose Bierce, The Devil’s Dictionary, at entry for patriotism, The Collected Writings of Ambrose Bierce, p. 323 (1946, reprinted 1973).

H. L. Mencken added this to Johnson’s dictum: “But there is something even worse: it is the first, last, and middle range of fools.”—The World, New York City, November 7, 1926, p. 3E.

Lions led by Donkeys

Historians argue over the origins of the term. Alan Clark wrote a book which helped popularize the expression. A reviewer noted:

The title comes from the German view of the English soldiers who charged into their machine guns and barbed wire: “Lions led by donkeys.” The donkeys were the professional officers of the British army which was destroyed in those battles, officers who were unable to adapt to the awful technology that changed the face of war forever

Back to the Royal Mail dispute

From the outside, events since the last one-day strike are baffling. Maybe they are as baffling on the inside as the battle orders were to the front-line troops on the Somme, or to General Custer’s men.

As the troops hunker down for the next planned push, the generals exchange letters. The tone of the letters is that of civilized beings engaged in diplomatic speak. Dear Allen, Dear Dave they begin.

But are the generals struggling and ‘unable to adapt to the awful technology’?

There is no alternative

Royal Mail claims it needs a billion pounds for the new technology, rather than meeting payclaims they compute as roughly the billion pounds for modernisation. There is no alternative. Or is there? It seems cruel to quote words associated with Margaret Thatcher, a general who waged war with another great Union two decades ago.

Today we have a new generation of political leaders. Dave the toff an open admirer of Tony Blair trying to drag the conservatives to a safe place for their political survival. Gord of the clunking fist is busy recruiting talented capitalist heroes to advise him.

Maybe the outcome will eventually attract more political attention. But for the moment, Dave and Gordon are united in their silence over the Royal Mail dispute. The BBC is curiously uninterested. The business has not yet cast any leader in a particularly heroic light. Creative leadership is at a premium.

The Postal Strike and the Horsemen of the Economic Apocalypse

The twenty-four hour postal strike in the UK is the type of ‘little local difficulty’ large enough to require an immediate response from a new political leader. Even with his formidable energy, Gordon Brown could do without confronting an industrial dispute so soon into his leadership. There are echoes of the Airbus conflicts that captured the attention of Nicholas Sarcozy in the first week of his Presidency.

Why strike? Why now?

The strike, which began at 3 am on Friday June 29th 2007, involved some 130,000 members of the Communication Workers Union who have issued the following statement

The CWU’s Negotiating Team met with the Royal Mail’s Chief Executive Adam Crozier, and his Senior Management Team yesterday. The CWU reiterated to Royal Mail that it was prepared to reach an agreement that would move forward both the Union and Royal Mail’s position … The CWU impressed upon the company that there was no possibility of Royal Mail management successfully transforming the business unless both parties could reach an agreement that galvanises the workforce too. During the course of the meeting the Union set out its position and expressed its genuine concern about Royal Mail’s business plan and how it would result in a spiral of decline for the company, and the workforce … The CWU reminded Royal Mail that the Union was not alone in severely criticising Royal Mail’s business plan. A recent all-party Select Committee criticised Royal Mail’s leadership for lacking vision.

Chief Executive Adam Crozier, responded by rehashing all of his previous statements and refused to enter into meaningful negotiations with the Union.

The strike on Friday 29th June 2007, will go ahead.

Technology and jobs

The old debate about technology and jobs continues. Innovation accompanies creative destruction, like Horsemen of the Economic Apocalypse. Maybe ultimately the job losses are compensated elsewhere. Which is no consolation to threatened workers. The perceived grievances of Royal Mail workers are easy to identify. As with Airbus, competitive pressures have triggered plans to reduce costs which threaten jobs.

The Royal Mail leadership team

Royal Mail has a high profile leadership team within the UK business world. Chairman Allan Leighton has been persistently linked with stories of his intention to head a lucrative buy-out initiative. In an earlier post I noted:

Allan Leighton has an appetite for self-publicity, as inspection of the Royal Mail website reveals. He presents himself as a dynamic (and somewhat terrifying) leader. In public he attempts to soften the image by implying he is very much one of a team, operating closely with CEO Adam Crozier.

Their styles remind me of an earlier high-profile double act, Lord King and Colin Marshall at British Airways. The pugnacious King had also been confronted with an ailing BA facing vigorous competition. Like Leighton, King presided over job cuts on a similar scale, and had serious internal morale issues and Union conflicts. Colin Marshall, like Adam Crozier, had a more urbane style.

Since his arrival, the Royal Mail has cut 30,000 jobs, shut thousands of post offices, and moved away from record annual losses that had reached £1bn. The various changes have been forced through against considerable opposition internally and externally.

The changes have not resolved the fundamental problems of the corporation which remains in dire financial circumstances. It recently announced that the gap in its pension funds would be tackled by ending the corporation’s final wage pension scheme, another unwelcome move and one described as unilateral bullying by its Union leaders.

Amazon and The Economist on-line

In preparing this post, I held off from ordering a book from that well-known e-business Amazon. It could wait. Co-incidentally, Amazon could not wait for a better deal from The Royal Mail, and has recently switched a lucrative contract away. If the management’s resolve needed stiffening, that would have done the trick.

Yesterday, those nice people from The Economist sent me an email. It apologized for any inconvenience caused by today’s postal strike, pointing out that I am eligible as a subscriber to access their on-line version, if I can’t wait for the delayed delivery through the Royal Mail.

Globalization as economic apocalypse

Royal Mail employees, like the rest of us, are facing an economic apocalypse. The current wisdom of the tribe is that we are seeing consequences of globalization. My examples illustrate some of the threats and opportunities cropping up, as the horsemen of the apocalypse gallop about, and technological changes sweep the countryside.

Card-carrying optimists hold to the view that the human spirit, creativity and morally-grounded leadership will help us through the crisis.

Dynamism means dangerous. Battle Royal at the Royal Mail

Allan Leighton, high profile leader of Royal Mail, seems likely to have his ambitious schemes blocked for turning round the company. He seems to be turning his attention to other challenges, while the Government is actively seeking his successor through a firm of headhunters. As a leader, Mr Leighton seems to be demonstrating the principle that dynamism means dangerous.

Update

The post is followed up with a report on events around the subsequent one-day strike in June 2007

The original post

Mr. Leighton is credited with turning round Royal Mail since becoming chairman in 2002. Since his arrival, the Royal Mail has cut 30,000 jobs, shut thousands of post offices, and moved away from record annual losses that had reached £1bn. The various changes have been forced through against considerable opposition internally and externally.

The changes have not resolved the fundamental problems of the corporation which remains in dire financial circumstances. It recently announced that the gap in its pension funds would be tackled by ending the corporation’s final wage pension scheme, another move described as unilateral bullying by its Union leaders.

Power to the workers – or another capitalist wheeze?
Further changes are likely to be needed. To achieve them, the Royal Mail board has been making the case for a share incentive scheme as a motivational lever. This was opposed by the Government. The scheme would have been difficult to implement for various reasons (How to assess share value when the company is technically still a bit of a financial basket case?). There was also ideological opposition from ‘old’ Labour MPs who saw the scheme not so much as akin to a shift towards the John Lewis partnership’s set up, as a shift toward privatization. Whatever, the scheme was turned down. At which point, the resourceful Mr. Leighton came up with the idea of phantom shares.

The Leighton-Crozier show

Allan Leighton has an appetite for self-publicity as inspection of the Royal Mail website reveals. He presents himself as a dynamic (and somewhat terrifying) leader. In public he attempts to soften the image by implying he is very much one of a team, operating closely with CEO Adam Crozier.

The styles of the two reminds me of an earlier high profile double act, Lord King and Colin Marshall at British Airways. The pugnacious King had also been confronted with an ailing BA facing vigorous competition. Like Leighton, King presided over job cuts on a similar scale, and had serious internal morale issues and Union conflicts. Colin Marshall, like Adam Crozier, had a more urbane style.

The rewards of forceful leadership

Royal Mail has a leader with ideas, and vision. So we might expect him to be appreciated by his masters, ultimately The Government. So what happens? He suffers the fate of many dynamic leaders. Robert Peston, the BBC’s Business Editor, claims that the Government has hired headhunters to find a successor to Allan Leighton

Dynamism means dangerous.

Suppose this is a game of three dimensional chess? Allen Leighton is leading the Government forces in a battle to implement its wishes. Those nasty forces resisting his attacks are led by the Union leaders. Leighton wants more help from the Government. He becomes powerful enough to be dangerous. What if he threatens to resign at the most telling moment to devote more time to other business interests? He has been associated with stories of his interest in acquiring Sainsbury’s for several years (and it seems the stories are coming to the boil again this month).

This is why it’s three dimensional chess.

As Chairman, Allan Leighton is not a full-time operational leader controlled by the Government. He has other and extensive business interests. At the time of writing, he has been the subject of increasing speculation that he has been active in takeover moves for the retailer Sainsburys, and would be interested in a major role in the acquired company.

Even in two dimensional Chess, according to the Nimzowitch principle, the threat is more dangerous than its execution. And that, I suggest, is why even a powerful leader is always battling on several fronts, which in a rather complex way why we get the leaders we deserve, in this case through the ballot box and then through the hired guns of our elected representatives.