WHY ARE OUR SUPPLY CHAINS QUITE SO COMPLEX?

For years guided by MBAs and McKinsey we’ve been persuaded to “think global,” construct complex supply chains, offshore production and cut cost. Our world we believed was driven by price and the need to be lowest cost producer. Which was fine when globalisation was the thing and Asia was to the place to get things made.

Covid has changed a lot of things not least the increasing belief driven by the vaccine contretemps with the EU and post Brexit complications that domestic production is the safest strategy for many industries.

Currently my underpants come from Bangladesh, my jacket and my socks from China, my sweater from Cambodia and my T-shirt from America. Over 50% of what I eat and drink comes from outside the UK – from Holland, France, Peru and Spain.

This is not the ranting of a xenophobe. If we’ve learnt nothing else over the past 14 months its been that the old rules don’t apply. The rebellion started with “America First” and then the bizarre decision to exit the EU. No more frictionless travel. No more working across the EU using the business lingua franca – English – to do business. Two years ago I visited seven different EU countries in as many weeks in co-ordinating a project. That won’t happen again. 

Now perhaps for the first time I’ve begun to wonder about whether I’d want to remain in the EU after the shabby performance of Ursula Van Der Leyen over the EU’s failed procurement of vaccine. I’ve been shocked that the EU, rule maker and follower of rules is now a rulebreaker, with member countries off doing their own thing. The irony of their demanding more Astra Zeneca vaccine even as they withdrew permission for its use was eye-wateringly comic.

In a crisis we retreat to localism. The Covid crisis will change many things but the most significant thing will be the pressure to grow and make our own. Small businesses will be created doing what previously bankrupted businesses did until globalisation became the hot, new thing. 

Except there‘ll be a difference. These new businesses will be better run, with electric speed delivery, concern for climate change and with brilliant customer service. We bought a new car recently . The whole process took less than a week. It used to take forever. Thanks to Amazon and the growth of online our expectations have been transformed. Old fashioned standards are dead. Our world is a better place in which (blame it on the ‘elf and safety woke-culture’ in fact) workplace deaths and injuries have plummeted in the past few years.

Our ability to transform our economy  will be driven by the astonishingly interventionalist strategies of the least conservative government we’ve ever had. Once they realised that people must be paid when, through no fault of their own, they can’t work, then the realisation that inspiring and incentivising new businesses that usefully employ people makes economic sense, can’t be far behind.

But the small is beautiful argument always seemed weird to me especially when small as in pubs, shops and roads often meant rotten and inefficient. Equally the argument for scale falls on stony ground. The NHS we’ve been proudly told is globally the biggest employer after the Indian Rail Service and the Chinese Army. Why is that good?

If we want to stop just being a “nation of shopkeepers” as Napoleon scornfully described us we need to start being producers as well. We’re actually rather good at it. Films, gaming, pharmaceuticals, software, cars and shoes – yes, my shoes are all made in Britain.

  

BEING CRAZY CAN HELP

Ricardo is a name I’m often called by friends and the name I use in Venice (Venetians find Richard Hall – ‘Risher Hore’ – an unpalatable  mouthful). 

Ricardo is a good name. I like it. So does Ricardo Semler – founder of Semco the Brazilian conglomerate – who was on TED Talks recently  and was once again a source of great inspiration. He’s 61 now and has been “running” the company since he was 21. He took over from his father when Semco was mainly a failing shipbuilding business. Ricardo who constantly rowed with his autocratic father prior to taking over was given the reins and his father retired to avoid having Ricardo storm out. His father’s move, as it transpires, was very shrewd.

Unlike his father Ricardo wanted to diversify and break the company into self- governing satellites. He also wanted to liberalise the management style. But first the executioner. In his first week he fired 60 % of the top management. This is what others have called the “permafrost” in an atrophied business. 

He then worked like crazy nearly killing himself. His moment of epiphany, his “why do we exist?” moment came as he lay on a hospital bed. This led him to create an organization culture which exhibits a unique form of participative management. There are no set timings of work, employees decide their productivity targets, they decide on who their boss will be, they decide on what they should be paid, holidays can be taken at will and so on. By any MBA standards utterly crazy. 

Today the company spans environmental consultancy, facilities management, real estate brokerage and inventory support. It’s products include rocket fuel, cooling towers and a world famous teak sealer. It’s very diverse. By any MBA standards utterly crazy.

Ricardo’s come-to-Jesus-moment was as he lay on that hospital bed 36 years ago but his feelings about taking a new look at life and work is intensifying. A small example was him saying: 

“Working through a weekend to get a task completed is one thing but the real sign of growing up is going to the cinema on Monday afternoon.”

The people you should want to hire and work with need all the classic characteristics – energy, enthusiasm and expertise – but they also need to be cool, thoughtful and balanced. But most of all they need to be a little crazy sometimes. If we believe creativity matters and makes a difference we shan’t find that in people who are bored and boring, people who relish crisis above taking a break to replenish the mind. 

Our biggest problem today is the pace at which everything happens, is reported and which, apparently, requires action to be taken. This leads to bad decisions being taken without enough data or thought. 

The most striking thing about Ricardo is his sheer joy in life and his relaxed  view of life. His management style and view of leadership as he himself concedes in his 1988 book “Maverick”  is out of the ordinary and somewhat eccentric. His 2003 book “The Seven Day Weekend” goes further. But his philosophy is intensely human and as such intensely appealing.

As I listened to him I recognised in his words a burning sense of a strategist. Whilst most people in business are focused on the next quarters earnings or today's crisis (and if there isn’t one looming creating one) he’s taking a long view of what will be a short career – most of us only have jobs for only 40 or so years.

So why do we exist? We exist to enjoy life, to help others enjoy it, to make the world a better place (often in just in a small way) and to celebrate the magic and majesty of existence.

Crazy stuff existence. Make the most of it.

FASTER

“You’ve got to be faster, cheaper and better” - but the greatest of these is faster

In the world in which we live this mantra has the joint distinction of being both true and fantastically annoying. It’s on the lips of all Management Consultants and MBAs. Because in 2017 tortoises don’t win; they get run over.

But speed contains its own perils like prosecution, fatal collisions and blinding headaches. In Britain, as we are demonstrating in our preparation for Brexit, speed is not our priority because when we attempt to rev up we become like Lord Ronald in Stephen Leacock’s “Gertrude the Governess” - one of his Nonsense Novels:

“Lord Ronald said nothing; he flung himself from the room, flung himself upon his horse and rode madly off in all directions.”

Our great trophy - HS2 - will cost £56 billion give or take and save 30 minutes on the journey time to Birmingham. If the money were spend instead on increasing broadband speeds and improving mobile reception this would improve our lives and the speed at which we operated in a much more relevant way. What sort of country Lord Ronald, we ask, do you want Britain to be? Currently we are 31st for broadband speed in the Global League Table. 17 of the EU countries come ahead of us. But (zut alors) we come ahead of France on whose slow broadband we contemptuously spit.

Presuming that we wish in our post Brexit lives to remain a green and pleasant land but also be supremely fit for international business for the next generation, speed in the right area rather than on a slightly quicker trip up north would seem the smart thing to do. But presumably we’ll push on with HS2 because we said we would.

Our second mission in speeding up our lives is to stop wasting our time. I have had a run-in with BT (yes them again) for several months over our defective landline. It hasn’t worked except for odd moments. Dealing with them is made harder by most of the conversations irritatingly being online or with a computer. Worst of all I’m wasting your time by telling you all this. (Breaking news…..Trevor from BT just fixed it and was mystified it had taken so long…)

By trying to make things simpler we’ve complicated processes so trying to fix anything takes a very long time. Today it took a very accomplished workman 3 ½ hours to fix one kitchen tap and conclude that another one was defective. The way they were assembled made this process incredibly longwinded.

We have too much bad design, too much choice, too many applications. We are wasting our energy being busy. In the recent Great British Menu one of the contestants produced a brilliantly complicated confection. The judges started at it and concluded “There’s a lot going on here…far too much”

So the greatest word is not faster.

It’s simpler.

Being less elaborate and more effective should be our mantra.

IN PRAISE OF OCCASIONAL AIMLESSNESS

MBA courses and politicians hectoring businessmen for their poor productivity, all demand that we focus. As with the poor schoolchild a failure to pay attention is a detention-able offence. (Incidentally, demonstrating my own lack of focus and tendency to take detours, did you see the news item about a school advertising a role for Head of Detentions and Isolation? That’ll teach them - not).

My current aimlessness started with my going to watch a cricket match which, to those unfamiliar with this “art form,” lasts four days.  It’s the paradigm for sunlit wandering.  Yet Lord’s is a beautiful place to watch athletes in a temperature of 35 degrees C (95F) and to have roving conversations not focused presentations -  about all sorts of things including the joys of lunch.  It was there, whilst actually lunching, that I reflected on the benefits of a good aimless, talk-filled lunch and that in my life that there should have been some 15,000 creative opportunities for these already.

 

It continued on Friday as I wandered through “The Country Brocante” in Cowdray Park  which included  a surprising collection of Sussex craftsmen. The bric-a-brac stalls matched my bric-a-brac mind. There I saw a baby kestrel nesting in a ruined mediaeval tower peering down with bleating mews of mystification and hunger. I’ve never seen one that close before - praise be to aimlessness.  On I went, talking about wine-making and the peril of air frosts; about perfume creation and the way different scents open  gateways to different moods (in my case dilettante flaneurie); about using soya in candle production to achieve a long-lasting clean, fragrant flame and about how to conjure a broad bean hummus of exceptionally hedonistic sweetness.

Amidst all this riff-raff of thoughts, tastes and smells with my mind like a lazily fluttering butterfly doing little to solve the ills of the world, there is a serious point I want to make.

In our lives, at work and especially in education we are losing the ability to let our minds wander.  If you believe (as I do) that our future will be more fruitfully developed through creativity than just through productivity then, occasionally, going for a bit of a ramble physically and mentally is essential. Artists, it’s been said, perform best when up against a deadline in a freezing garret. They should also foster a suicidal depression and drink heavily. A la Bohème? What utter tosh!

Creativity instead is enhanced by having the time, space and frame of mind to notice what is going on around you and to let connections happen. As in sport let the ball come to you or (better) as the ice hockey genius Wayne Gretzky said:  “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

You won’t do that by being stressfully focused on the present but by letting your thoughts go on a stroll uncertain quite where they’re aiming but enjoying the journey.
 

LET YOURSELF GO. THINK.

I hate what the MBA culture has done to Daniel Kahneman’s calls System One, which others call the right brain and normal people call instinct and impulse. I hate business plans which, for the most part are bigger works of fiction than Harry Potter. I hate the endless piles of paper, spreadsheets, analyses and self-serving reports. A friend said “paper plans or paper planes” - right on.

In his brilliant book “Blink” Malcolm Gladwell describes the magnificently effective tool a well-trained gut is. The expert on art who can intuitively smell a fake because “something feels wrong”; the professional card player whose playing behaviour changes before his rational brain notices his impulse to have done so sensing that the cards are stacked; our first impressions which are sometimes but seldom wrong.

All this suggests our desire to balance rationality and intuition, which is (if you think about it) perfectly rational, is entirely wrong. It belongs to the same school of thought that suggests you must dumb down the brilliant to accommodate the mediocre.

Intuition allowed free rein may lead us somewhat astray sometimes and can earn us the reputation of shooting from the hip but our gut feel and our ability to hone it and develop it is our magic bonus.
Where human ingenuity comes in lies  in our ability to think hard about whether the instinct that is so strong can make sense and isn’t simply a prejudice or a prejudgement based on previously good experiences. In a word we have great instincts but we are also smart. And we are smart enough to listen and learn. Our skill in learning up to the moment of death is impressively distinctive.

But when they insist you read all that data because therein lies the answer,  first of all ask them what they really think about the problem.

How to solve problems and make brilliant decisions. (Business Thinking Skills that really work) published by Pearson is coming out on November 7th 2014

WHY UNDERDOGS START AS FAVOURITES

In the middle of the punishingly deep pile of books I got for Christmas is Malcolm Gladwell’s latest offering “David and Goliath – underdogs, misfits and the art of battling giants”. Ever since his first book “Tipping Point” I’ve enjoyed his ironic, inquisitive style and his ability to spot the counter-intuitive. His best insight to date was of the company which spent more time and money than anyone else recruiting the best talent from the MBAs in the USA.

That company (outright victor in the war for talent) was Enron.

This book first of all describes why David, armed with the pre BCE equivalent of a .44 Magnum (his lethal sling) was the guy to bet on when faced by an overweight clown armed with sword and spear. (Even I would take on Mike Tyson if I had a gun and he didn’t.) His point is that size is not everything.  Yet all the accepted wisdom is power comes from scale. Not if you’re Indiana Jones of course…

Ask little Aldi –grocer of the year for the second year running with sales up 31.5% year on year with car parks resembling that of a posh funeral, as they themselves ironically observe, as they count the tills being filled by their middle class conquests. They and Waitrose are close contenders for the best outfit.  Their trick? Price… yes but quality too. They keep on outscoring the others for taste and quality – sixteen gold medals from the Grocer Magazine - but they’re not so good on what David Cameron, allegedly, called “green crap.” They are on the verge of doing a David on the Goliaths –Tesco/Aldi. They also have the best advertising – check it out.

It must be hateful to fight the Vietnamese and Taleban when all you have are costly tanks and stuff with your soldiers away from home when your opponents have improvised explosive devices and motor bikes so they can get home for tea.  The key words are improvisation and home.

One of his other points is the law of diminishing returns. He cites alcohol. Most doctors will tell you a glass or two of claret a day is good for you. Friends of mine have taken this advice to heart and, just to be on the safe side, have doubled the dose - to nil beneficial effect.  But carry on to a bottle or so a day and the effects are detrimental. More of the same is not a recipe for success. Balance is the key.

Back to scale.  The thought that bigger organisations are ipso facto better is what’s troubled me for ages. Our inbuilt instinct for M&As and “buy-and-build” are plain daft as anyone sitting on an ailing out of town superstore will admit. This inbuilt instinct allied to the desire consultants have to apply old business models to new situations. (Well it worked for RBS ….QED.)

That’s something fast-on-his-feet David didn’t do.

THE OUTSOURCING MYTH

For years MBAs have been preaching the virtues of outsourcing. But the Asian temptress has started getting a bit expensive with wages going up currently in China by well over 20% a year.

Alix Partners, the global consulting firm, said in the Economist in March that if China's currency and shipping costs were to rise by 5% annually and wages were to go up by 30% a year, by 2015 it would be just as cheap to make things in North America as to make them in China and ship them there.

Trouble is the jobs and skills have been largely turned off in the States as not needed.

They will be soon.

But this week I saw some good news from Stoke-on-Trent. Burleigh Pottery is alive and well at last and across Staffordshire, pottery businesses are beginning to revive. Businesses like Emma Bridgewater whose owner laments the outsourcing trend which led to losing touch with buyers, customers and quality control.

A few years ago I was talking to a Chinese apparatchik from Sichuan who confessed that Chinese quality was a problem. He said workers set off focused but then got bored and standards slipped. In fact in China the trick has been increasingly to invest in state of the art machinery not skilled labour and this by definition levels the cost playing field. But the potential plus that manufacturing here has is the existence still of some skilled workers.

Look at the automotive business in the UK. Look especially at the triumph at Jaguar given proper levels of investment in plant.

The flight from manufacture came in part from a generation of graduates and MBAs who preferred spread sheets to factories and who, quite simply didn’t want to get their hands dirty. The ideology went rather further than that. Provenance of manufacturer was judged unimportant or an issue for marketing to solve. Why should champagne come from Epernay (or even from France) or whisky from Scotland or our organic food from Britain or anything from here apart from apps and computer games?

It may very seductive to hear our future lies in the knowledge economy and that farming, manufacture and added-value-stuff are redundant to our needs but it isn’t true.

The moment of truth is approaching.

Making stuff matters and where it’s made matters too.

Alfred Brown makers of worsted cloth from Leeds are more and more visible in M&S and Charles Tyrwhitt.

From Brown to Bridgewater Britain is changing.