http://blogs.birminghampost.co.uk/business/

February 2012 Archives

Yesterday, the issue of media standards finally jumped the shark. Or rather, it loaned the horse.

News International's former boss Rebekah Brooks, stunt double for Pixar's heroinein forthcoming movie 'Brave', was purportedly the recipient of a loaned police horse from Scotland Yard.


They say good things come in threes and I'm pleased to say that, for the West Midlands construction sector, 2012 kicked off with a trio of good news stories.

fbi.jpeg

Twenty-seven minutes before mainstream media broke the news of Whitney Houston's death last Saturday the story was on Twitter.

The news was first tweeted by @ajaDiorNavy, with a mere 14 followers at the time, who's "Aunt Tiffany", an employee of Whitney's, found the diva dead in her bath.  An hour later it had been re-tweeted 2.5m times.

andriod.jpeg

Tradition dictates, in my last missive of the year, that I review the technology predictions I made in my first post of January. Unfortunately, it seems to have been deleted, so I'll have to stick to what actually happened instead!

 

Spoilt for Choice?

By Andrew Whitehead on Feb 27, 12 09:15 AM in Law

I've recently found myself on first name terms with a couple of friendly folk at the call centre of my home energy supplier. And not because I'm tragically unable to turn off from the day job when I get home, or because I'm scraping the barrel to get the best out of my "friends and family" telecoms deal with BT.


This is an extended, updated blog version of my Post Column from two weeks ago.

There's been a clutch of forecasts out of late on the economy. One by BDO says we're heading for double dip, another, by the CBI, says we'll avoid it. And while the forward looking PMI figures on manufacturing and services started the year in better-than-expected shape, and may indeed hold out the hope that the UK could narrowly avoid an 'official' double-dip recession, at best all we can say is that the economy is still flatlining. Sadly, employers seem to be increasingly taking this on board in their hiring and firing decisions.

So much so that the UK's labour market faces its most difficult quarter since the recession, according to the Chartered Institute of Personnel and Development (CIPD) in its recent 'Labour Market Outlook'. Despite the government's hopes of a rebalancing from the public to private sector, the CPID in fact suggests that the private sector is shifting from a "wait and see" mode to one in which more employers lay off workers given anemic growth in the economy.

The Harvard Business Review published an article in December's edition by seminal author Gary Hamel titled 'First, let's fire all the managers'.

Hamel describes how Morning Star, a leading food processing company, has dispended with the traditional hierarchy that relies on top-down decision-making and power being vested in those who have seniority.

Instead, Morning Star has created an organisation that has a sense of flexibility and is customer-centric so that it can respond rapidly to any alterations in preferences exhibited by those who buy their product.

As Hamel argues, traditional hierarchy is wasteful in terms of money and effort.

Choosing a partner in business can be rather like choosing a partner in life.

Once off the ground, a business joint venture (JV) typically last less than 5-7 years in the form they were created, much like a "marriage of convenience".

After some time, the phenomenon of "same bed different dreams" starts to creep into the "marriage" and so the JV fail.

The term joint venture is often bandied about when companies talk about looking for partnering opportunities and it's surprising how loosely the term is used. In essence, a true joint venture in business terms is really an 'equity partnership' in which both parties share equity, knowledge, markets and profits.

The key to a successful JV is in the planning. Done correctly, the benefits for both parties can be enormous since both parties share resources to achieve a common goal.

One partner may bring the technology and the other knowledge, about the local market. Some of the benefits include - shortening the learning curve, enhancing capability, reducing cost and risk, speeding-up market entry, while building up credibility and competitive advantage.

But, don't rush - poorly planned and executed JVs can be doomed.


The Regional Growth Fund (RGF) was unveiled back in June 2010 with a wave of publicity. At the time, Deputy PM Nick Clegg argued that the RGF was going to 'create the conditions for growth and enterprise in the regions by stimulating investment and creating sustainable private sector jobs'.

On the same day it was announced that RDAs would be scrapped and replaced by Local Enterprise Partnerships (LEPs). The RGF was, in fact, an attempt by the government to show that it was responding to criticisms of the policy to scrap RDAs and that it had a plan for growth in England's regions outside London (the latter kept its RDA of course).

There is an adage that says you can make a small fortune out of football, provided you start with a large fortune. The recent announcement concerning Glasgow Football Club tells us many things about what is frequently referred to as 'the beautiful game'; not the least of which is that it is a sure fire way to lose money.

In this blog I want to make some comparisons between football, the future of the Economic Union and reform of the National Health Service. The connection, I suggest, is the dilemma that will inevitably occur between the desire to invest in the dream of success and the reality that a supply of funds is never limitless. Much as we want the best, we sometimes have to either compromise or, worse, stop spending and give up.

So in the case of football, success is simple. You secure the services of the best, and usually most expensive, players and, hey presto, you cannot fail. Try telling that to the Glasgow supporters. If a team as big as this can go into administration then so can any other. No football club has an automatic right to exist and, I fear, more will fail.

The Economic Union is qualitatively different to football. But, as a very recent blog explained, the objective was the creation of a collection of diverse countries collaborating in the pursuit of consistent economic objectives. With sufficient investment from the rich (largely northern countries such as Germany), poorer countries (mainly Mediterranean - Spain, Portugal and Greece) would achieve success.

Similar to investors in football clubs, those providing funds for the failing 'PIIGS' economies (Portugal, Italy, Ireland, Greece and Spain) are asking, 'What is the point?' A consensus is emerging that if the dream of a United States of Europe is to survive it would be better off without the likes of Greece.

Which brings us to the NHS? Under New Labour a tremendous amount of money was invested to create a 'world class' system of health provision. When times were good we could rack up increased debt due to this investment because, compared to GDP, which was growing, the ratio didn't appear to be a problem.

Since the global financial crisis, our economy has faltered. Our GDP is, at best, stagnant and could easily become negative. If we cannot create more growth through, for example, exports all that any Chancellor George can do is to cut expenditure on the public services such as the NHS; just like the Greeks are being asked to do - again!

So, like football clubs and bankrupt economies such as Greece, we may have to accept that idea that the NHS may no longer exist in the way that they were originally intended. Reform through rationalisation and inclusion of private providers is argued to be the only way to ensure that they survive.

The desire to reform the NHS is not new. New Labour tried and, in large part, failed. Given the size and complexity of the organisation this is not surprising. It size is staggering; it employs over 1.43 million people and has a budget in excess of £100 billion.

However, because of significant increases in the costs of providing free care to an ageing population it the HHS needs even more money to pursue the dream of eradicating illness in order to make us a much healthier nation.

The trouble is that we don't have the money and, instead it is expected to make savings of £20 billion by 2015 and increase productivity by 4% each year; something that it has never achieved. If it doesn't it will follow Glasgow FC and Greece and become so bankrupt that its continued existence is questioned.

So what to do? The trouble with the NHS is that the dream is still worth pursuing but that the strategy is incoherent. The NHS bill appears to be a hotch-potch of ill-considered plans to achieve efficiencies that may be, at best, illusory. For instance, take the reform of the railways in the 1990s.

Private providers do not automatically solve your problems and we are still trying to improve a system that, to be fair, seems to have worked in the nationalised British Rail days by a 'make do and mend' culture and dedication of employees who had a passion for the organisation.

The prevailing zeitgeist is austerity. However, if in the process of achieving survival we lose expertise and undermine professionalism then that potentially creates something worse and not necessarily any less expensive. It also may leave a legacy that subsequent generations will not thank us for.

The football players at Glasgow may be assets of the club to be sold to pay debts but they will not face poverty; unlike many Greeks. If the changes being made to the NHS mean we can continue to enjoy a level of service that means everyone is entitled to the service we have become accustomed to, especially those most in need (the poor), then that is laudable.

But once you start disentangling a system as complex as the NHS, you do so at your peril. Football clubs may come and go but no one will die as a result. Greece will survive though I have no doubt it will be tough for many of its people. The key question is what our NHS will look like in the future, and how much we as a nation are prepared to invest in it?

Business authors

David Bailey

David Bailey - Professor of Industrial Strategy at the Aston Business School, Birmingham
My postings | David Bailey's RSS feed My feed

Stuart Pemble

Stuart Pemble - Construction Lawyer, Mills & Reeve
My postings | Stuart Pemble's RSS feed My feed

John Clancy

John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
My postings | John Clancy's RSS feed My feed

John Samuels

John Samuels - Professor of Business Finance, Birmingham Business School
My postings | John Samuels's RSS feed My feed

Chris Tomlinson

Chris Tomlinson - Chris Tomlinson is the founder of social media and online PR agency Friend (frienddigital.com)
My postings | Chris Tomlinson's RSS feed My feed

Andrew Whitehead

Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
My postings | Andrew Whitehead's RSS feed My feed

Keith Gabriel

Keith Gabriel - A Birmingham-based PR Account Manager
My postings | Keith Gabriel's RSS feed My feed

Beverley Nielsen

Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
My postings  | Beverley Nielsen'a RSS feed My feed

Mike Loftus

Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
My postings | Mike Loftus's RSS feed My feed

Richard Halstead

Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
My postings | Richard Halstead's RSS feed My feed

Karl Edge

Karl Edge - partner at KPMG in Birmingham, specialising in automotive, manufacturing and house building sectors.
My postings | Karl Edge's RSS feed My feed

Peter Owen

Peter Owen - Managing director for construction firm Willmott Dixon Midlands.
My postings | Peter Owen's RSS feed My feed

Dr Steven McCabe

Dr Steven McCabe - director of research degrees for Birmingham City Business School.
My postings | Dr Steven McCabe's RSS feed My feed

Francis Greene

Francis Greene - Professor of Small Business and Entrepreneurship, at the University of Birmingham.
My postings

Alan Gilmour

Alan Gilmour - Director at Cogent Elliott, experienced in marketing, brand development and customer relationship management.
My postings

Paul Noon

Paul Noon - Paul Noon, OBE, West Midlands International Trade Director at UK Trade & Investment.
My postings

Latest Birmingham Post Lifestyle blog

Lifestyle Blog

Birmingham Post staff and guest bloggers from the midlands give you the lowdown on what's happening in your region and some musings on culture in the UK and beyond.

Latest Birmingham Post Sport blog

Keep up to date

Sponsored Links