The Royal Mail and its unions are at loggerheads. Again.

I moved to the UK in 1997 and like a letter that never reaches its final destination, turmoil in the organisation is one of the business stories that has been a constant throughout the time I have lived in the country.

Every year, it seems to have lurched from crisis to crisis: successive bosses have said that the service needs to modernise or die; unions and workers battle them back in negotiations, claiming that ‘modernisation’ is a code word for gutting the organisation, cutting jobs and reducing salaries to disastrous levels; and the government, publicly at least, seems keen to stay out of it as much as they can (though I have to say, Lord Mandelson’s statement on the decision by the CWU to strike - “Candidly, I think it is suicidal” - did strike me as extraordinarily strident).

Continue reading "The Royal Mail - the saga that never dies"

Optimism is the elixir that makes everything possible. It sparks confidence – and that fuels ambition, which in turn triggers action. It leads to new inventions, new companies, new jobs and a higher standard of living. Without this sense of hope in the future, life is a grim affair, a kind of regression back to the Dark Ages.

Continue reading "Accentuate the positive"

• Cabinet to slims down for Sarkozy - Lucy Kellaway wrote about the balance between private health and employers earlier this week, but I’m not sure how many managers can get away with this. I especially liked his apparent suggestions he “told at least one would-be appointee to drop some weight and change his hair style if he wanted the job”
• Google paid a $1bn premium for YouTube - an interesting admission from Eric Schmidt, CEO of Google, that the company paid $1bn more for YouTube than it was worth simply to make sure no one else could outbid it (Hat tip: The Browser)
• Success stories in bad times - Ok, so the headline writer employed a bit of hyperbole (do Twinkies qualify as a success?) and it’s a bit US focused but chocolate chip cookies are certainly a silver lining to any recession

I just spoke to a book publisher who gave an interesting insight into how the downturn is affecting their business. Because so many major book chains have made people redundant or laid them off, this pubilsher was having to factor in at least two extra weeks into their distribution schedules to getting titles on to shelves. There are all sorts of implications as a result of this - stock has to stay in the warehouse longer, it takes more time to start making money from them and so on.

If you haven’t seen it already, I would highly recommend our Future of Investing series. There are a lot of interesting contributions (yes, I would say that, but check out the list of people involved - Martin Wolf, Mohamed El-Erian, Andrew Lo, Gillian Tett, Robert Shiller etc - and tell me if I’m wrong) but especially good is today’s fascinating interview with the mathematician Benoit Mandelbrot, which considers why ‘efficient’ markets collapse and why we need some new theories on markets.

It’s also worth highlighting an article Prof Mandelbrot wrote with Black Swan author Nassim Nicholas Taleb three years ago, for the FT’s Mastering Uncertainty series. They argued that how business approached uncertainty was the wrong way round. Risk models focused too heavily on the norm rather than the exceptions. So, just because something is correct 95 per cent of the time doesn’t mean that should predominate when the remaining 5 per cent are important enough that they could bring down the whole system.

As you would expect, they explain it much better than I do.

Time magazine (and a number of its sister publications and websites within Time inc.) is running a year-long series on the future of Detroit.

There are few cities that have experienced as much change - not, it seems, for the better - as the result of the changing nature of business. While there may be a lot of popular anger at banker and their bonuses (in the UK at least), the decline of Detroit from being one of the biggest and most prosperous cities in the US into one of its most savaged.

A few statistics tell a grim story:

By any quantifiable standard, the city is on life support. Detroit’s treasury is $300 million short of the funds needed to provide the barest municipal services. The school system, which six years ago was compelled by the teachers’ union to reject a philanthropist’s offer of $200 million to build 15 small, independent charter high schools, is in receivership. The murder rate is soaring, and 7 out of 10 remain unsolved. Three years after Katrina devastated New Orleans, unemployment in that city hit a peak of 11%. In Detroit, the unemployment rate is 28.9%. That’s worth spelling out: twenty-eight point nine percent.

PS: For anyone who hasn’t seen it already, I would recommend rewatching Roger and Me, Michael Moore’s first film, which charted the decline of Flint, Michigan when GM closed its factory there.

If you haven’t seen it already, do check out “State of Play”, our excellent series of interviews with chief executives of some of the UK’s biggest companies.

Leaders so far: Francis Salway of Land Securities; Sir Martin Sorrell of WPP; Warren East, Arm Holdings; and Michael Smith of Mind Candy.

Tomorrow: Justin King of Sainsbury’s who has some interesting things to say on how consumer behaviour may well have changed for good as a result of the recession.

One year on from the fall of Lehman Brothers, the face of Dick Fuld, former chief executive, has been back on our television screens. Some of his greatest hits have received another airing. “When I find a short seller, I want to tear his heart out and eat it before his eyes while he’s still alive,” he declares in one clip.

Continue reading "Strengths become weaknesses"