Latest

Lessons from a hospital turnaround chief executive

Queen's Medical Centre, Nottingham University Hospital
Queen’s Medical Centre, Nottingham University Hospital

I read an inspiring interview in Health Service Journal last week with the fairly recently appointed chief executive of a large NHS Trust facing a massive turnaround challenge.  Anthony May, recruited last year to Nottingham University Hospital following many years as a successful chief executive of a large local authority spoke of the importance of providing the organisation with “hope” and of his visibility throughout the Trust.  He also commented that the problems faced by the organisation had resulted in it spending too much time looking inwards and that it now had to rebuild relationships with its stakeholders.  This resonated with my experience chairing to two NHS organisations through turnaround where I worked in support of two outstanding chief executives.  A sense of hope and what I recall describing to colleagues as “something to believe in” is part of the “Dark Matter” that makes organisations more than the sum of their parts.  And these are things that can only be created and communicated by a leadership team who are highly visible.

It has taken a few days for me to find time to blog about the interview.  Returning to the on-line interview, I discover that it is now accompanied by a dozen or so comments from May’s colleagues.  They are all anonymous (which enhances rather than diminishes their credibility) and all clearly come from within NUH.  Some are very supportive.  All confirm the scale of the task confronting May and the Trust.  Some more sceptical, although they suggest an impatience in the delivery of the turnaround – but, as another comment points out, given the toxicity of the culture that May has come into it seems unreasonable to expect a turnaround to be completed overnight.  Other comments have descended into a mudslinging between front-line and support services staff, only confirming the cultural challenge.  Others display a degree of cynicism: one expresses this in a constructive tone, remarking “Always conscious a few quotes could be taken out of context but CEO needs to be careful here he doesn’t look to subscribe to the ‘great man/heroic leader’ school of management. Always implodes in due course.”

The commentators also remark on the intrinsic challenges that NUH faces because of its size, its spread across multiple sites, and its complexity.  They also comment on the distraction provided by past M&A activity, regrettably something that has been, and continues to be in fashion in the NHS (many years ago I undertook an analysis that suggested an inverse correlation between NHS trust size and both financial performance and quality of care), and is consistent with most of the work undertaken in the private sector suggesting value destruction from M&A).

The delay in writing this blog piece is fortuitous.  My enthusiasm for Anthony May’s comments is undiminished, but the comments highlight the challenge he faces and the need for him to sustain his effort and commitment as he has a long, hard road ahead.  I wish him well.

“If you read only one business book this year, read this”

Patrick Nash, author of Creating Social Enterprise
Patrick Nash, author of Creating Social Enterprise[1]
I knew very little about Patrick Nash when he joined me in 2019 as an angel investor and advisor at Tranquiliti, a start-up providing an innovative mobile phone app mental wellbeing tool for school students and their teachers.  I didn’t know much more when we were bought out in August last year by Tes Investments[2], other than what I gleaned from our monthly video call with George and Aaron, Tranquiliti’s founders, which was essentially that Patrick knows a thing or two about social enterprises.  He proved a source of sound advice to them and had a similar appetite for risk and the level of investment as me.

A couple of weeks ago, he invited me to a book launch in November.  I explained that I would be travelling to New York but promised to buy the book and read it on the plane.  Amazon already had “Creating Social Enterprise” in stock and a train journey created the opportunity to get stuck into it right away.  It proved hard to put down and I quickly concluded that it deserves the “If you read only one business book this year, read this” accolade. Scrutiny of the spine shows the publisher to be Patrick’s own company[3], so I doubt whether it will get the push (although it would from any self-respecting business book publisher) in the direction of the shortlisting for FT Book of the Year 2024 that it deserves .

While I was studying for an MBA at the Stanford University Graduate School of Business and serving my apprenticeship at McKinsey, Patrick was doing alternative stuff and getting his first taste of commercial life at Nova[4], a whole food co-operative in Bristol.  He drove the company van, turned the handle on the trail-mix mixer, learnt a range of valuable lessons about people, customers, marketing, margin management, cash-flow, risk, systems implementation – loads that you have still to learn when you graduate from Harvard, Wharton or LBS – and, importantly for his own development, undertook a crash course in double entry book-keeping (something I did learn in the first term at the GSB) from his father when the founder’s ill-health meant he had to step back from the business at short notice.

Scarred by the experience of putting Nova’s stock system onto computer (Patrick’s Learning#8 in the book is “Never Trust  ‘should’” as in “This should work” or “It should be ready by then”) and burnt out by three years without a holiday, he took a spell away from work.   A few months later, he discovered the Findhorn Community.  Most people are drawn to Findhorn in the search for a more spiritual focus to their lives but Patrick was sufficiently intrigued by a conversation with its finance director that he joined it to work in its accounting and finance department.  Rather than finding himself spiritually, he stayed on to lead the project to develop its Ecovillage (the first homes were built from giant whisky barrels), where he “learned much of the complexity of running organisations, raising funds, creating multiple corporate structures and leading teams”.  During his ten years with Findhorn, Patrick learned a lot more about running a successful business, not least about managing external and internal stakeholders.  He describes this time as a “significant phase in my social enterprise journey.  Many of the skills I have deployed as a social entrepreneur were developed there”.  But lessons and consequent skills are not just for the social entrepreneur, most of them translate into any enterprise, public or private, large or small, and independent of industrial sector.

Although Patrick has established twelve social enterprises, charities and values-driven businesses in all, his greatest achievement was establishing Connect Assist, a specialised 24/7, outsourced call centre supporting multiple clients from the public, private and third sectors (including Versus Arthritis where I spent 8 years as a trustee), employing over 450 people in a part of south Wales where employment has still not recovered from the demise of coal mining.  The third part of Creating Social Enterprise tells how Patrick developed a string of businesses that evolved into Connect Assist after first joining the Teachers’ Benevolent Fund, a charity operated for the teaching unions.  In this role he took the lead in some tough decisions, including closing TBF’s legacy residential homes for retired teachers (he is the first to call out the case for closing businesses that are loss making and no longer fulfil their purpose) and pivoting the organisation to become a telephone counselling service, setting him on the path towards establishing Connect Assist.

Patrick has great stories to tell, including how, along the way, he had the Dalai Llama as his boss when, for a few years in between the big projects that are the meat of Creating Social Enterprise, he was CEO of the Tibetan Relief Fund.  He tells tales of scrapes with the law as a twenty-something driving a whole-foods van around the country, when the grass roof of a house in the Ecovillage bursting into flames, and the thrill and relief at securing financing for assorted projects at the eleventh hour.  These come across with a freshness as though they only happened yesterday rather than ten, twenty, thirty or even forty years ago.

He has built the account of his career around no fewer than 44 learnings, drawn out at the end of each chapter and recapped at the end of each of the three major sections of Creating Social Enterprise.  Most, if not all, are relevant to anyone who picks up the book.  As someone who preaches the importance of purpose and values to a business (as part of the Dark Matter that makes organisations more than the sum of their parts) I turned the page corner down at Learning#3: Align values and commercial  interests.  I did the same at Learning#38: Empathy is the new superpower, as I have no doubt that being able “to understand another person’s thoughts and feeling is a situation from their point of view, rather than your own” is essential to effective leadership based on trust.  And his observance of the final sign-off learning, Learning#44: Moving on when it’s time to leave was the one that positioned Patrick for  life after Connect Assist where, from the comfort of home on the Pembrokeshire coast, he could join me in our support to the  young founders of Tranquiliti and find time to write Creating Social Enterprise.

 

 

[1] ISBN 978-1-3999-47-6  www.creatingsocialenterprise.o.uk

[2] Tes invests in fast-growing tech to transform pupil wellbeing | Tes

[3] Enterprise Values – Enterprise Values

[4] Still thriving: see Essential Trading Co-operative Ltd | Welcome (essential-trading.coop)

 

 

 

 

Secret sauce – or obfuscation discount?

19th century copybook example used by Wikipedia to illustrate Kipling's poem
19th century copybook example used by Wikipedia to illustrate Kipling’s poem

A headline in this morning’s FT – Secretive active ETFs[1] lose out to their fully transparent rivals – leapt out at me and put me in mind of Kipling’s October 1919 poem Gods of the Copybook Headings.

FT journalist Steve Johnson notes that “The new portfolio shielding models were expected to encourage actively managed funds to enter the ETF market, something many active managers had been reluctant to do because they feared daily holdings disclosures would reveal their “secret sauce” allowing other investors to front-run their funds and steal their intellectual property.”

The idea of some fund managers that they possess “secret sauce” suggests a dangerous hubris, redolent of aspiring Masters of Universe heading for a fall.  Even if some may develop some special insight or clever algorithm to give them a temporary lead until their competitors catch up or until their perceived advantage turns out to be no more than a couple of rolls of the dice falling their way, the underperformance and lack of appeal of the non-transparent ETFs to investors suggests that any perception of the existence of “secret sauce” is outweighed by the discount that investors apply because they can’t see what is going on.

My instant reaction to the story was “What Dummies?”.  While transparency of the composition and activity within an exchange traded fund may fall short of the “perfect information” ideal, investors in ETFs are a reasonably sophisticated bunch and will want the assurance that goes with transparency and be naturally suspicious of anything short of transparency.

Which brings me to Kipling’s poem.  It was written in the aftermath of the First World War, with Kipling expressing pessimism about the nostrums that he perceived taking hold at the time. The current edit of Wikipedia describes what is going better than I can: In the poem, Kipling’s narrator counterposes the “Gods” of the title, who embody eternal truths, against “the Gods of the Market-Place”, who represent an optimistic self-deception into which it supposes society has fallen in the early 20th century.  For my purpose, the believers in “secret sauce” are the God’s of the Market-Place, and the God’s of the Copybook Headings are the students who stayed awake during Economics 101[2] and acknowledge the existence of the obfuscation discount.

As I pass through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.

When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: “Stick to the Devil you know.” 

On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: “The Wages of Sin is Death.” 

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.” 

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more. 

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

 And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!

[1] Exchange Traded Funds

[2] I could equally have used this poem to illustrate the disastrous budget of Lizz Truss and Kwasi Kwateng and, who assumed office (briefly) as prime minister and chancellor of the exchequer exactly a year ago.

Governance failure at Countess of Chester Hospital and the British Museum

British Museum - stolen antiquities
British Museum – stolen antiquities
Countess of Chester - baby deaths
Countess of Chester – baby deaths

On 16th August, the British Museum issued a statement that it had identified that “items from the collection were found to be missing” (subsequently disclosed to be more than 2,000).  A member of staff (although apparently not the thief) had been dismissed and a criminal investigation was underway.

The director of the museum, Hartwig Fischer, said “This is a highly unusual incident. I know I speak for all colleagues when I say that we take the safeguarding of all the items in our care extremely seriously. The Museum apologises for what has happened, but we have now brought an end to this – and we are determined to put things right. We have already tightened our security arrangements and we are working alongside outside experts to complete a definitive account of what is missing, damaged and stolen. This will allow us to throw our efforts into the recovery of objects.” Fischer resigned on 25th August after it emerged that the museum had first been alerted to the theft in 2021 by a dealer in antiquities who had come across some of the items for sale online, but that Fischer claimed that all the items had been  accounted for.  The impression has emerged of an organisation with shortcomings in governance and lacking assurance about the security of the processes for protecting its collections and a degree of denial at multiple levels – but spectacularly among top executives – about the possibility that anything might be wrong.

On 18th August, the verdict was handed down in the case of Lucy Letby, a neonatal paediatric nurse working at Countess of Chester Hospital, found guilty of the murder of seven babies and the attempted murder of six others, in addition to which the jury were unable to reach a verdict on a six further attempted murder charges.  The incidents took place between June 2015 and July 2016 and the failure of the executive team to respond appropriately at this time has been greeted with justifiable outrage.  In particular, the paediatricians who first raised concerns about the pattern of baby deaths were first asked to apologise to Lucy Letby for bringing allegations against her, and it was only in July 2016 that she was removed from clinical duties.  On 3rd July 2018, Letby was arrested on suspicion of eight counts of murder and six of attempted murder after a twelve month police investigation.

The history of the case has raised major questions about the failure of the Countess of Chester Hospital, its management, and its board to scrutinising spikes in mortality in the neonatal unit, pay attention to concerns raised by clinicians, and take appropriate action.  Given the attention that I recall being given to mortality trends in NHS Trusts[1] at the time of the incidents, I find it remarkable that the board appeared to pay so little attention to the data.  Much has been made of the failure of the board to respond to the concerns raised by the paediatric consultants.  The inquiry due to be commissioned may shed light on this, but I suspect that interprofessional cultural issues may have contributed: between the doctors flagging concerns and executive directors with a nursing  background (chief executive, director of nursing and, I understand but can’t confirm, director of operations); or even between the medical director, who I understand to have been a surgeon, and the paediatricians.  If so, where was the chairman and where were the non-executives?  Not only does it appear with hindsight that they displayed insufficient curiosity to what was going on, but they should have been calling out interprofessional cultural issues if there were any, and assisting in their resolution.  Given that the chair of Countess of Chester was a former chief executive of the NHS Management Executive, lack of experience can’t be the explanation.

I became aware of the case at some point in 2019.  I believe I saw papers relating to Letby’s referral to the Nursing and Midwifery Council (where I chaired Fitness to Practise interim order hearings) and recall saying to a colleague on the panel that her case had similarities with that of Beverley Allitt[2] .  I don’t think that the case was heard by my panel , rather that we were asked to consider it when another panel was struggling to complete its agenda.  Hovever, it turned out that we did not hear it, either because we had insufficient time ourselves or that original panel was able to conisder the case after all.  Given that Letby did not receive an interim suspension order from the NMC until March 2020 when she charged with the murders, I assume that the papers I saw related to a review of an existing conditions of practice order.  This probably restricted her to working only at Countess of Chester Hospital, who should have been fully sighted on the concerns at the time and able to take actions to protect patients while the case was being investigated.  This was our normal approach to an interim order when a nurse remained in employment but their case was still under investigation and charges had not yet be brought by the Crown Prosecution Service.  Given the shortcomings in the management of this case by Countess of Chester Hospital, I am not sure that this was necessarily the right approach by panels such as mine.  But I always took the view, as a serving Trust chair myself, that I and my board would have been adequately sighted and my professional reputation was at stake if I was not assured that my executive colleagues were not managing such a case safely, and consequently the Trust employing a nurse was better placed than the Nursing and Midwifery Council to manage a case safely and proportionately.

Both the British Museum and the Countess of Chester cases raise major concerns about the possibility that senior executives and boards adopt a culture of complacency and denial, that board members lack cultural sensitivity and fail to triangulate what they are told and read in their papers with sufficeint engagement with the front line (which I have described as “kicking the tyres”), and, above all, fail to employ enough curiosity in relation to both data and to “soft intelligence”.

I am grateful to Elizabeth Rantzen, my former deputy and then successor as Chair of West London NHS Trust for her insight into the juxtaposition of these  incidents coming to light in the same week.

[1] I was chair at West Middlesex University Hospital 2010 – 2015, and West London NHS trust 2015 – 2023

[2] a nurse convicted of the  murder of four infants, attempted murder of three, and gross bodily harm to another six in 1991

Diversity on boards is more than just DEI and EDI

Is there enough cognitive diversity at the top of UK government?
Does visible diversity equal cognitive diversity?

I have long argued that the most important aspect of board diversity is ensuring diversity of thinking around the board table.  The public debate about DEI in the United States (Diversity, Equity and Inclusion) and EDI in the United Kingdom (Equality, Diversity and Inclusion) is much more about the optics of the mix of people around the table.

The message communicated to an organisation’s stakeholders by a visibly heterogenous leadership roster is important.  This demonstrates the commitment of the organisation to being inclusive, treating people equitably and equally.  I have assembled boards that have been broadly representative, in terms of gender, sexual orientation, ethnicity and disability, both of the customers we served and the people we employed. This has to be more than cosmetic and must be carried through into the way that the organisation conducts itself.

Important though the optics and the carry through into corporate conduct are for an organisation’s marketing to all its stakeholders and for its internal operation, this aspect of DEI/EDI is not enough to ensure the diversity of thinking required for high quality governance.  Three of the four major officeholders in UK government are from ethnic minorities and the 30% female representation of women in the cabinet is broadly in line with 34% for the House of Commons as a whole.  But the cabinet is remarkably homogenous in terms of experience and academic background, with a predominance of lawyers and graduates in PPE or one of its constituent subjects, and only two (Kemi Badenoch and Thérèse Coffey) with degrees in STEM subjects. A prime minister will always face the challenge of balancing the opinions from different wings in his party, but does Rishi Sunak have enough cognitive diversity within his cabinet (allowing for them all being from the same political party) for good quality decision taking?

Two emails appeared in my inbox calling for divergent thinking on boards.  One was from the Good Governance Institute (a consultancy that works with boards in the National Health Service).  The other was a first-class thought piece from the KPMG Board Leadership Centre (KPMG Embracing Cognitive Diversity in the Board Room)  that reminds us of the UK Corporate Governance Code stipulation appointments should “promote diversity of gender, social backgrounds, cognitive and personal strengths”.  Its authors observe:

“Perhaps the benefits of diversity have been somewhat ‘mis-sold’ with the presumption that hiring people from historically excluded groups will automatically result in increased performance.  But for these efforts to be truly effective and ‘bear fruit’, board diversity will require a different approach and skillset.”

KPMG commissioned Leeds University to undertake a literate review of cognitive diversity and concluded that recruiting for diversity based on protected characteristics alone is not enough and, furthermore, that chairs have a critical role in ensuring that the benefits of cognitive diversity are realised.  The KPMG report’s authors argue for personality profiling to inform recruitment for diversity, for example, to actively develop a mix in terms of risk appetite, ability to focus on big picture or detail, be informed by heart or head, and be task-oriented of people-oriented – albeit (thinking about this from the perspective of a serial chair) recognising the management challenge that this creates for the person chairing such a board.

I’m inclined to take this further, and actively seek diversity of experience, professional background and academic training, which provide proxies for cognitive approach.  Back in the 1990s, I undertook research with the Ashridge Strategic Management Centre into the strategy development processes of 30 companies in the FTSE 100 and was struck by comments from consultants and planning directors working with some of the chief executives about the different styles of thinking of their clients and bosses, and how this appeared to reflect their academic backgrounds.  This resonates with me at a personal level – my wife, a former general counsel, approaches problems in ways that reflect her legal training and are completely different to me with an academic background as historian and business economist.  With many years’ experience of boards in healthcare organisations, I have observed the variation in the thinking styles of different health professions and, among doctors, how within the specialities within medicine.

How not to run utilities

Joseph Bazalgetter the Great Sewer
Joseph Bazalgette inspects the Great Sewer

Were the FT journalists consciously punning when they wrote this morning about Assured Guaranty (a US insurer reported to have more than $10 billion of exposure to some of the most indebted UK water utilities) “agreeing to provide liquidity facilities to Yorkshire Water”?

The long running problems with the financial management and governance of Britain’s water companies have come to a head with the crisis at Thames Water.  The company has been at the heart of allegations about releasing sewage into water courses.  The company is struggling with rising interest payments on $14 billion of debt.  Sarah Bentley, chief executive has resigned.  Along with the UK’s other water companies, who also face criticism for releasing untreated sewerage and collectively waste 20% through leaks of the water treated and ready for consumption, it faces public pressure for renationalisation.  This sentiment is shared by Conservative Party voters who, according to a YouGov poll last year, are 58% in favour of a return to public ownership.

Before delving into the questions about governance, funding and risk bearing on the water industry, it is important to note the context.  The water companies (and Thames Water in particular) operate a system that includes extensive very old and infrastructure (similar issues affect the UK’s railway system) that need maintaining, repairing and replacing, and face increasing demand from consumers and cope with the consequences of climate change – the paradoxical combination of longer periods of drought and increased frequency of incidences of torrential rain that exceeds the capacity of drains and sewers.  This is well illustrated by the Thames Tideway Tunnel project, the £4.3 billion, 16 mile long “super sewer” nearing completion to replace Victorian sewerage system built under the direction of Sir Joseph Bazalgette between 1861 and 1875 and intended to reduce the number of “Combined Sewer Overflow” discharges into the Thames in London from an average of 60 a year to fewer than five.

But who is to pay, who should be running the show, and who should bear the risk when things go wrong?  Ultimately the customer will pay, whether charges for domestic consumption are averaged out on a per household basis prior to water metering being rolled out or, as is now generally the case, based on the water you use (and is drained away on your behalf using water consumption as a proxy for sewerage generation)?  (In a country with bountiful rainfall, the public struggle to understand why they should pay for something that falls from the sky, without understanding what is involved in getting potable water to them).  When addressing the investment required for new reservoirs (noting that Portsmouth Water’s new reservoir in Havant will be the first in the past forty years despite at 21% growth in population) or schemes like the Thames Tideway Tunnel, capital needs to come from somewhere (whether from shareholder, lenders or government (either taxpayers or, more likely, investors in government debt, aka lenders) and then needs to be serviced until the cost can be recovered from the customer.

Since the regional water boards (responsible for both water supply and wastewater disposal – noting that thirteen smaller water supply only companies – generally former municipal businesses remain, albeit also now in private ownership), were privatised in 1989, they have geared up with substantial amounts of debt.  Critics allege that this has released cash to pay over £60 billion in dividends to investors since privatisation, almost half the sum invested addressing the leaks and the sewer overflow discharges and increasing capacity.  A further criticism of the companies is that the interest burden reduces the corporation tax paid by the water utilities, with the result that in 2021-2022 only South West Water reported a profit after tax, with Thames Water in the spotlight for losing £973 million.

Would nationalisation solve any of these problems?  As a member of a sailing club that opened in 1979 on one of severally new reservoirs to the west of London, I am a beneficiary of the investment in water supply capacity by the nationalised water industry prior to 1980.  I am not in a position to take a view on whether adequate maintenance or investment in distribution and disposal infrastructure took place prior to privatisation but I recall burst water mains and pollution of rivers and beaches in my childhood, so suspect that the nationalised industry underperformed on this count.   The industry today has an economic regulator, the Water Services Regulation Authority, and is policed by the Environment Agency, both of whom have their critics.  As Dieter Helm wrote in the Financial Times on 2nd July, the problems in the water industry demonstrate a prima facie case that the regulators have failed to use their powers adequately and that they should been given more teeth.  But the problems identified do not make the case for replacing regulated privately owned companies with stronger governaance with a system of direct accountability for the management to ministers and civil servants in Whitehall, and financial accountability – including for access to capital for investment – to HM Treasury?

Who is selling what to whom?

One of the Elzabeth Frink stratues that used to greet salesmen visiting the WH Smith Retail Head Office in the 1980s
One of the Elzabeth Frink statues that  greeted salesmen visitng WH Smith Retail in the 1980s

I led a very successful team of retail buyers in the 1980s.  In only three years they improved our margins by over 3.5% of the retail selling price.

The salespeople we dealt with didn’t stand a chance.  As we were the market leader in most of our product categories, we were always looked after by the senior national accounts manager or the sales director – more often the latter, or that is what their business card said – whose status meant they were generally well into middle age.  They would arrive in their Ford Scorpios, which would always be reversed into a parking space so no-one could see whether they had the top of the range model or vanilla version without the bells and whistles.  In a less equal and inclusive age, they were almost universally male. In common with most people working in sales functions at the time, they were outwardly sociable types – you need to be comfortable with people if you are engaged in face-to-face selling – but whose roles condemned them to spend most of their time away from close colleagues, sitting in alone in a car as they headed off to schmooze their customers.  More than anything else, they needed to be liked and to please people.

Our buyers were almost the opposite. Sure, they were great colleagues and a privilege to work with, but they didn’t need to be liked.  They were the gate-keepers to some of the most profitable shelf space on the high street, and had a clear view of how they were going to make that space generate profit for the company.  They were highflyers who had been recruited into sought-after graduate jobs and were still in their twenties and early thirties, were mostly female and often blonde, and tough as nails.  Although we visited our suppliers’ factories and warehouses from time to time to understand their business, most of the key meetings took place on our turf.  And if all this had not already put the buyers on the front foot when it came to seeking discounts from the (remember, generally male and middle aged) salespeople, their adversaries in the negotiation had been unmanned on arrival by having to drive past four well-endowed nude male sculptures commissioned by the company’s chairman from Elizabeth Frink (subsequently sold by a successor lacking any insight into the commercial benefit they provided).

On a recent visit to New York, I recounted this to a Wall Street banker who deals in fixed interest securities, “selling” (his words) to large corporate customers (again, his words) who are raising debt.  He questioned my description of salespeople as needing to be liked. I had to explain that, although he was competing with other banks for the business of the big corporations, it was much less clear in his world who was doing the selling than when I was working for a market-leading high street retailer.  I have not worked as Chief Financial Officer or head of treasury in a big corporate, but I spent a significant amount of time trying to raise money from private equity investors and from suppliers of senior debt (to provide financial leverage for the ventures that I hoped would make my fortune). It was very clear who was selling what to whom – I had the investment opportunity and was trying to sell this to the people with the cash.  I wanted to be liked (or at least for them to like the risk-reward opportunity that I was pitching).  Although, subsequently, I found myself counselling entrepreneurs entertaining offers from venture capital firms that they should look beyond the cash that was on the table and to understand that the investor needed to demonstrate whether they would be attractive people to work with and add value to the business they were “buying” into (ie do a bit of selling), most of the time, the people with the cash needed persuading to buy the opportunity.

The Escondido Framework posits that all commercial transactions (and this spills over into non-commercial transactions – such as those in politics) involve both parties selling and both parties buying[1], albeit with the balance of power (particularly informed by competitive considerations and the availability of alternatives for one or other party to the transactions) influencing the degree it feels to the parties as though they are buying or selling.   This, of course, feeds through to what sort of people you need to charge with leading the transactions with the other party, how they should work, and what tools they need to do the job well.

 

[1] I have written elsewhere about the experience early in my career as strategic planning manager for WHSmith, working with WHSmith Wholesale, which was the dominant player in the UK distribution of newspapers and magazines.  The business thought of itself as having retail newsagents as its customers and newspaper and magazine publishers as its suppliers.  But, as evidenced by the way that the industry subsequently developed (all this, prior to emergence of on-line channels for news and for magazine content), the core role of the business was to provide a distribution service to the publishers, who were buying the distribution service rather than selling newspapers and magazines to a wholesaler.

 

So, what would a fair society look like? Daniel Chandler’s “Free and Equal”

What Would Rawls Do?
What Would Rawls Do?

Daniel Chandler was introduced to John Rawls’ Theory of Justice during his history degree at Cambridge.  Although I was encouraged to write a dissertation on Les événements de mai 1968 while studying for the same degree thirty or more years earlier, Theory of Justice, only published in 1971, hadn’t made it into Quentin Skinner’s “History of Political Thought” lectures when I attended them in 1976.  Instead, my introduction came at Stanford University’s Graduate School of Business a few years later.  By the time that I was involved in the Britain’s short-lived Social Democratic Party in the 1980s, Rawls’ theories, particularly his rationale for a just society being one which offers the most for the least well off in society, provided a philosophical justification those who defected to the SDP from a Labour Party wedded to “Clause 4” socialism.

Chandler and I share a huge respect for Rawls.  Chandler takes this to the extent that Rawls’ theories become his lodestone for examining public policy.  In the first half of his book, Free and Equal: what would a fair society look like?[1] Chandler performs a valuable service by providing a readable and accessible summary of John Rawls’ famously turgid and impenetrable book, along with an account and rebuttal of Rawls’ critics and of those such as Amartya Sen (a hero and, apparently, mentor to Chandler) who have built on Rawls’ foundations.  But the second half of the book, which justifies the sub-title , leaves me imagining that Chandler either wears a leather bracelet imprinted with WWRD (like members of some Christian youth groups wearing one for “What Would Jesus Do”) or lives under a banner like that raised by members of the Occupy Movement at St Pauls Cathedral in 2011.

Chandler works his way through a wide range of public policy issues, trying to apply Rawls’s view of what constitutes social justice by setting out a collection of prescriptions for addressing social and global problems, such as income and wealth distribution, the environment, and distribution of power in the workplace.  The attempt is admirable, but disappointing.  While conveying the impression that emotionally he is politically on the left, he is resolutely a centrist and not afraid to challenge traditional leftist positions, probably reflecting his academic move from history to politics and philosophy, so less a slave to dogma that some who take on this challenge.

His cv includes Harvard and the LSE, the UK Prime Minister’s Policy Unit, the Resolution Foundation and the Institute for Fiscal Studies, but his prescriptions and supporting accounts lack grounding, are uniformly derivative, and feel embarrassingly like the work I was turning out as a student politician and parliamentary researcher in my late teens and early twenties.  Given his background, he can’t be blamed lacking the grounding in the real world that might have informed an approach that would be both more nuanced and insightful.  His account of ownership and power in the context of the firm is particularly disappointing and falls into the trap of believing that the shareholders generally hold the power rather than the managers, and the power of different stakeholders depending on the characteristics of the particular markets in which the firm operates, may have more or less power[2].  The consequence is a very simplistic set of prescriptions, with nothing particuarly original.

I briefly found myself bothered by the utopianism that underlies the ambition for the second half of the book, but then cames across his own apology for this and explanation of the need for ambition to make the world a better place, and the value of Rawls’ ideas about justice in thinking about what constitutes “better”.  I was then reminded of Lenin, writing in the fifth chapter of What is to be done? Where he cites 19th Russian nihilist Pisarev

 “the rift between dreams and reality causes no harm if only the person dreaming believes seriously in his dream, if he attentively observes life, compares his observations with his castles in the air, and if, generally speaking, he works conscientiously for the achievement of his fantasies. If there is some connection between dreams and life then all is well.”

before then observing

Of this kind of dreaming there is unfortunately too little in our movement.[3]

So, full marks to Chandler for his account of Rawls, and also the aspiration to frame practical solutions in light of Rawls theory, even if he falls well short in his prescriptions and how be presents them.

 

 

[1] Chandler, D. (2023). Free and Equal. Penguin UK

[2] Ironically, I read his objection (page 262) to John Lewis Partnership being viewed as a co-operative “because workers do not exercise full control over management” on the very day that the John Lewis staff chairman Dame Sharon White lost a vote of confidence in her past performance from the Partnership Council although she received support for her future leadership going forward.

[3] Wikipedia. (2023). Dmitry Pisarev. [online] Available at: https://en.wikipedia.org/wiki/Dmitry_Pisarev [Accessed 10 May 2023].

Dame Edna Everage and the Future of Soft Power

Dame Edna - soft power at work?
Dame Edna – soft power at work?

I can’t be sure whether Janan Ganesh has lapsed unintentionally into pompous portentousness in the opening paragraph of his column in today’s Financial Times or whether he is reaching out to fans of the late Housewife Global Megastar by writing in her style: “The omni-talented presenter Barry Humphries died over the weekend.  On Monday, his native Australia announced a new and enhanced defence posture.  One way of engaging with the world as a middle power is fading.  Another has just started”.

Either way, the different ways in which a nation engages with the rest of the world are important.  Further, from the perspective of the Escondido Framework, the article illustrates the different ways in which power can be exercised, fleshing out the “three currencies” (cash, influence and force).  However, his core argument, as captured in the last two of the italicized sentences above, feels overstated.  Soft power – an important contributor to influence – hasn’t gone away and remains important.  The role and presence of force in the business of nations hasn’t change, but it’s a lot more visible at present and creating a greater challenge and threat.

Ganesh refers to the increasing salience of South Korean culture in the West as an example of soft power.  Sharing a home with a “K Drama” addict and having visited the Victoria and Albert Museum “The Korean Wave” last weekend, I am in no doubt about the role of Korean cultural exports in changing my perception of the country and helping me identify with its citizens as “people like us”, much in the way that Ukrainians have evoked sympathy with fellow following Russia’s invasion.  It doesn’t mean that Koreans do not reasonably have raised anxieties about Chinese naval exercises or the efforts of their north neighbour to develop nuclear missile capability.  It does, however, decrease the proportion of the populations of the West who think of South Korea as “a faraway country of which we know little”.

Far from discounting the value of soft power, the rising tensions that have led governments to consider whether they should increase their levels of military investment (some of this forced on them by the need to replenish stocks having supplied materiel to Ukraine) only increase the need for countries to invest in soft power to underpin potential military alliances and reduce the risk of losing influence in political non-aligned nations.

Lessons for leaders from a front-line healthcare team

CIS Team Charter

I couldn’t fail to be impressed by a slide in a recent presentation by the community health director at the NHS Trust that I have chaired for the past eight years.  It described the Team Charter developed in a programme of mutually agreed behaviour workshops in the Hammersmith & Fulham Community Independence Service in which community nurses, occupational therapists, physiotherapists, and care workers support patients to keep them out of hospital.  They are a high performing team delivering a great service, facing challenging demands, working with constrained resources, juggling priorities, and taking difficult decisions.  The Team Charter illustrated above speaks for itself.  It may look like a “motherhood and apple pie” recipe, but it is no worse for that.  And, what’s more, it provides a lesson for teams and their leaders everywhere.

A “Big Read” feature in the Financial Times recently (23rd February 2023) described how the isolation of Vladimir Putin within the Kremlin and narrowness of the circle he consults contributed to his disastrous decision to invade Ukraine and subsequent conduct of the “special military operation”.  Pictures can paint many thousands of words, but if there was anything to illustrate the need for the Kremlin to take a lesson from the healthcare workers of Hammersmith & Fulham, the photograph below, used by the FT to accompany its article, does the job.

Putin with foreign minister Sergei Lavrov - a clue to why we're in the mess we're in?
Putin with foreign minister Sergei Lavrov – would they benefit from a team charter?