Heading for a fall? (photo David Watts)

There are four types of people in the world:

Landowners:  who control the world’s assets

Farmers:  who are appointed by landowners to tend and maximize their assets

Sheepdogs:  the trusted and loyal adjutant of farmers that tear around with tireless energy snapping at the sheep, keeping them under control and bending them to the will of the farmer.

Sheep:  who bleat a lot but usually end up following the crowd and doing as they are told.

You can see this play out perfectly in the recent BP oil spill off the coast of America.

The Landowners       – for BP: the shareholders 

                                    -  for USA Inc: voters who own assets affected by spill

                                    -  for GB PLC: the voters with assets tied to BP (pension funds                                           etc.)

According to Christopher Helman, a Houston-based editor with Forbes, the Gulf Oil Spill will cost BP more than $60 billion: $20 billion into the BP Trust Fund (recently set up after a lot of arm twisting from the Obama administration) $22bn in clean-up costs (two years at $30.6 million a day) and $20bn in penalties (and lawsuits) 

It is clear to any financial analyst that such numbers seriously call into question BP’s ability to remain solvent.  Were the company to liquidate, the shareholder – our landowners – would stand to lose $236bn in assets.  Naturally, they will fight to stop this from happening.  US asset owners don’t want this to happen either unless it gives them the best chance of the biggest payout in restitution.  GB PLC cannot afford for this revenue stream to disappear as it  receive $5.6bn a year from BP in income tax, national insurance contributions, fuel duty and VAT.  To see BP go under has long-term far reaching consequences for all the landowners. 

The Farmers –  for BP: Chairman, Carl-Henric Svanberg and CEO, Tony Hayward

                        -  for USA Inc: President Barak Obama

                        -  for GB PLC: Prime Minister David Cameron 

Whenever there is trouble on the farm, the farmer has to take the flak and all four are under immense pressure from their lords and masters it makes sense to come up with a deal between them. 

The additional problem for Obama and Cameron is they are the appointed farmer for many landowners, some with conflicting requirements.  Both heads of state are starting to realize they cannot please all their masters all the time.  For Obama, he has the local population hit by the disaster desperate for restitution and punishment.  They want to see the company brought to its knees and yet 40% of BP shareholders are members of USA Inc.  Pensions, investment funds, and personal savings would all be dramatically hit.  Meanwhile, ExxonMobil would love to get their hands on those $236bn in BP assets for a knockdown price.  Cameron, meanwhile, was on the campaign trail when the disaster struck and has to get up to speed quickly and defend his revenue stream and one of the few remaining UK global corporations.

The Sheepdogs – The PR men

This is trial by media and so any good farmer will have some loyal and efficient sheepdogs rounding up the press and controlling public opinion.  Obama’s team were the first to coral them, demanding summits and capturing the green moral high ground.  They  positioned BP as ‘the evil baddy’ in the story, negligent and uncaring and put a white Stetson firmly onto Obama’s head. 

Cameron was yet to walk through the door of Number 10 so could do little without a clear mandate to act.

Unfortunately, Tony Hayward’s sheepdogs watched the sheep wander all over the place and in irritation started snapping at the heels of the flock leaders.  Despite spending $50m on PR, his team made a series of gaffes, including:

• initially saying the impact would be ‘very modest’(enraging Gulf coast landowners and US politicians).
• going sailing while the disaster was at its height
• pledging on a nationally broadcast TV advertisement that “We will make this right.”
• posting a public apology for the oil spill on the BP website and promising to clean up every drop of oil and “restore the shoreline to its original state”.
• telling the people in Louisiana, where oil had begun to reach parts of the state’s south-eastern marshes,.  “We’re sorry for the massive disruption it’s caused their lives. There’s no one who wants this over more than I do. I would like my life back.”   The statement was particularly criticized given that eleven people died in the drilling platform explosion that caused the spill.
• stating in an interview with Sky News that he was  not overly concerned by the amount of oil flowing into the Gulf of Mexico. “I think the environmental impact of this disaster is likely to be very, very modest.”
• insisting to a Guardian reporter that the leaked oil and the dispersant being released into the sea should be put in context: “The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”
• telling NBC that BP was not at fault for the explosion on the Deepwater Horizon or the subsequent oil spill. “The drilling rig was a Transocean drilling rig. It was their rig and their equipment that failed, run by their people and their processes
• advertising on the web for any ideas on how to stop the oil leak
• spending the $50m on these statements – allowing Obama to cry  ”What I don’t wanna hear is when they’re spending that kind of money on their shareholders and spending that kind of money on TV advertising that they’re nickel and diming fishermen.”  It also allowed Obama’s chief of White House staff and loyal right-hand sheep dog to chime in and say Mr. Hayward “wouldn’t be working for me after any of those statements”.

A sheepdog that doesn’t round up sheep is not a sheepdog.

The Sheep – all the stakeholders living on the farm

Life as a sheep is ultimately one of powerless frustration.  Their world is filled with death, suffering and devastation but what to do?  The sheep have every right to be incredulous.  They are suffering but they are also just playing the game.

The solution is also not simple.  You try just tightening a nut with a robot, with no purchase, 1,500 metres below the surface of the ocean.  While the sheep make suggestions to stop the leak (ranging from ice plugs to nuclear weapons) they are powerless to act.

The sad thing in all of this is that had BP cut the riser during the first week and installed a second blowout preventer, a massively heavy stack the size of a five story building, then we may have been applauding Hayward for averting an horrific natural disaster.

What pains the sheep the most is it is their lives that are ruined and can do little to avert the problem.  Big problems are generated by big entities and in many cases these corporate entities are bigger and more powerful than governments.  They, therefore, are the only ones capable of solving the problems that they make.

The suspicion is that the BP landowners and farmers are in a collusion of greed.  They ignored the signs that their golden goose was sick and, instead of paying for a vet, decided to simply shoved their arm inside the bird to pull out whatever gold they could lay their hands on.

Modern day landowners are short term.  They want their jam and bread today.  They are not interested in handing over the assets to future generations but surely global companies are one day going to realize – no globe, no company.

It is time for shareholders to think bigger and longer and appoint farmers who think the same rather than maximizing their exit after three years of starving the golden goose.

So if you are a landowner or farmer, be wary for being too judgmental of Mr. Hayward.  Everyone from railway companies to airlines, from pharmaceutical companies to utilities are cutting corners and the farmers that are appointed are the ones who turn a blind eye.

If you are a head of state like GB Inc you will see that selling off all your land leaves you at their beck and call.  You will never be more than their hired hand.

As for the rest of us, the sheep, what to do?  We appoint farmers who have sold all our assets to  wealthy corporate landowners and plunged us deep into debt.  Shall we just bleat?.  Are we just going meekly like lambs to the slaughter or is it time to ensure that the meek truly inherit the earth and build some new assets for us all?

It seems strange to me, therefore, that two thousand five hundred and twenty years later, 36,000 would want to follow in his footsteps by entering the London Marathon.  Admittedly, Pheidippides collapsed because it was his second event in as many days, having run previously to Sparta to ask for help, only to arrive on a bank holiday and find it was not forthcoming.  However, he was a professional.  He did it for a living and with a decent pair of Nike sandals could probably have matched Kenyan Samuel Wanjiru’s amazing time of 2hrs 5mins 10secs.  In London, the vast majority are amateurs busting their heart and lungs for fun – and for charities.

There is still an element of competition within in the amateur ranks for fastest ever cartoon character (David Ross, 42, from Sutton dressed as Fred Flintstone and carrying an inflatable club throughout his three hours and seven minutes of purgatory), fastest leprechaun (Ben Afforselles from Kent) and fastest animal (Kevin Robins also from Kent), dressed as a tiger, who said he was racing against a lobster that
was also going for the record.

Indeed, Jill Christie, 27 from West London, the fastest female superhero says, “I recommend dressing in a costume because you get so much encouragement,”

Comedian Russell Howard disagreed.  He said he would “definitely not” run another marathon, because he had “a running duel with a man dressed as a banana for 20 miles and eventually he beat me,” Could have been the fastest fruit ever?  No, that was Sally Orange (real name) last year.

The main element, though, that lifts the event out of the ordinary are the thousands that punish themselves to raise money for charities.  This esprit de corps, altruism and caring is what lifts the event above the mundane and makes The London Marathon so special, yet here a dark cloud hangs over the great event.

Former Army Major Phil Packer, who sustained serious spinal cord injuries in 2008, battled his injuries and took 14 days to complete the course last year to help several charities.  In 2010 he took 26 hours and raised £1.3m for charity.

And here lies the rub.  While Phil and thousands like him give their all to help the less fortunate, the organizers seem to be pocketing millions.  In 2009, the London Marathon raised a phenomenal £47 million, cementing the Marathon’s place as the biggest one-day fundraising event in the world.

Yet journalist Ben Laurance in his TV documentary for Dispatches on Channel Four, discovered that hundreds of desperate charities are denied a place in Britain’s biggest fundraising event and of the $27 million raised in donations during the 2009 marathon less than $7 million was actually distributed to worthy causes.  So where does all the money go?

London Marathon Limited is the company responsible for organizing the event and accumulating the funds before sending them through to the London Marathon Charitable Trust. They claimed the $20m shortfall goes on staging the event but after revealing staffing costs are just $2.1m they have failed to identify where the other $18m is spent, refusing to publish their accounts publicly, citing the information as ‘highly confidential and commercially sensitive’.

Meanwhile:

• an estimated 100,000 people apply to run but only 20,000 are accepted with no refund given to those who are rejected.
• 700 Golden Bond tickets are allocated to specific leading charities while over 500 smaller foundations are denied entry
• 550 silver bond places are offered providing one place every five years, which is also ridiculously over subscribed.
• London Marathon Limited use offers of gold-dust places to seduce sponsors, an act regarded as scandalous by some charities precluded from the biggest fund raising opportunity of the year
• The £150,000 spent on travel to bring the leading athletes to the event would run most of the precluded charities for between six months and a year.

No-one doubts that the late Chris Brasher deserves to be a millionaire for bringing the Marathon to London in 1981 and taking a budget of just £100k spent on foil blankets, cups, toilets etc. to create one of the Big 5 world-events.  What people do object to, however, are directors of a company misleading its stakeholders by masquerading as a charitable people’s event before lining their own pockets.

The London Marathon is a great event so why don’t Chairman John Spurling, the trustees and the directors divulge the truth and provide the transparency their stakeholders so richly deserve?  With the livelihoods of so many charities at stake, it would be a travesty for the London Marathon to become a sporting Enron, tarnished by duplicity and deceit from those in charge

Jeff Bezos founded Amazon, the publishing and on-line retailing giant, in that same year and has been working for the last six  perfecting Kindle, the company’s small portable e-book reader.  Unit sales are supposed to be around the 500,000 mark, though no-one knows for sure.  Jeff is playing the numbers close to his chest, some say because they are falling way below expectation.  Citibank estimated sales of 500,000 Kindles in 2008, rising to over a million units by 2009 with revenues in excess of $1.2 billion by 2010.

My guess is ‘no way’.  Why do a say that?  Because I don’t want one.  Or at least I didn’t until last week.

Jeff Bezos told Daniel Lyons of Newsweek the three reasons why Amazon was so successful:

1. “We start with the customer and we work backward. We learn whatever skills we need to service the customer. We build whatever technology we need to service the customer.”
2. “We are inventors, so you won’t see us focusing on “me too” areas. We like to go down unexplored alleys and see what’s at the end. Sometimes they’re dead ends. Sometimes they open up into broad avenues and we find something really exciting.”
3. “We’re willing to be long-term-oriented, which I think is one of the rarest characteristics. If you look at the corporate world, a genuine focus on the long term is not that common. But a lot of the most important things we’ve done have taken a long time.”

There is genius in these words. This approach revolutionized retail and now publishing.  I think he has revolutionized marketing, also.

Firstly, like every good marketer, Jeff starts with the customer – but nowhere does he say he gives them ‘what they want’  He isn’t necessarily even anticipating what they want. The problem with the marketing process in the 21^st century is customers cannot begin to articulate what they want – other than the same as before delivered faster, simpler, cheaper etc.  There are no new wants under the sun.  They remain the same – inspire me, help me travel, keep me warm, keep me safe, entertain me – the trick is to find a new way to do that.

Secondly, Jeff is not afraid to experiment.  He knows not everything works – particularly if you are creating new.  You may be ahead of your time and hence his third point – you have to be patient. 

Van Gogh created some of the most innovative, well-loved and reassuringly expensive paintings of the 20^th century but managed to sell only one in his lifetime – and that to his brother.  If you are going to be innovative and creative you have to be patient and wait for your customer to catch up.

Corporate patience is a rare item.  Most senior CEOs work for three years, cutting costs, raising the share price and exiting with their seven-figure bonus.  As a creator, one has to look long-term, beyond the horizons of the City Analysts.  Jeff has always managed to achieve this magic.  It took Amazon seven years to post its first profit on revenue of $1.2bn in the final quarter of 2001.  The profit was a penny a share.  He has persuaded his shareholders that patience is a virtue and that one day the customer will get it.

Certainly, I never wanted Kindle.  I like to hold a dead tree.  It is traditional and tactile.  I can drop it in the bath or the pool. I want coloured illustrations that leap off the page.  I want interaction, highlighting, annotating, and adding notes to the margin. 

I don’t want to re-purchase my entire library (which I did with my music collection – twice) and I don’t want to carry another mains adapter in my bag.  But guess what?.  Jeff’s patience has worn me down.  I have been through my denial phase (it will never catch on), my anger (at him sounding the death knell of the printed page), my bargaining stage(I might buy when it goes colour) and slowly heading towards acceptance.  The clincher was Jeff’s notion of service and a chance meeting at Gatwick Airport with a lady executive from New York.  Like me she is a dead-tree-book lover) but she converted  me.  Here is what she said:

‘The Kindle is a godsend if you travel. Scores of books at a fraction of the weight – and you can put anything you want on it.

‘It looks great and feels great.  The build quality and interface is great.

‘You can obtain almost any book at almost any time – within seconds.

‘It is more robust than you think and can, apparently, handle the humid jungles of Mexico, the snow in Canada and the desert of Arizona, no problem.

‘The bookmarking and highlighting systems are vastly improved.

‘The dictionary is now in-line and the illustrations almost legible – greyscale still, but legible’

She even gave me the downside:

‘It is not great for research or for study

‘It felt fragile.  One day, I know I’ll be holding a dead Kindle in my hand, screaming ‘Speak to me!  Speak to me!’  (All PC users know what she means).

‘Sometimes the net connection does not work.

‘Sometimes I forget the battery can go dead.  No charger?  No book.

All great to know but the reason it works well for me and offers terrific service?  Because,  I had forgotten my glasses and though I could not read the menu in front of me, I could read her Kindle at the next table.  You can make the print bigger!?!?!?  Deal done.  Jeff, you son of a gun, you waited until my eyesight gave out.  Nice one.

With patience, Amazon has created another revolution that I can watch happen and read all about it, with or without my glasses.

Ten licences to print money...

Let me be clear.  This is list, based on my 25 years experience, of the ten best markets in the world.  It is not a guaranteed formula for making millions for zero effort but more an acid test for your business.  If your proposition hits one or more of these – you are onto a winner and ahead of the game.

1.       Fear

Anyone who addressed a deep human fear will be showered with gold.  The deeper the fear, the more compelling your solution, the more money you will make.  Take, Viagra as is a case in point.  Hard (sic) to think of a more intimate male fear than not measuring up.  Others working this rich seam include the security market and panic alarms for the elderly.  Show a smiling old lady surrounded by a family and you will sell one unit.  Show her lying at the bottom of the stairs, contorted after a fall, reaching for the alarm and you will sell hundreds. Fear resonates universally and needs little prodding to become a compelling need / want.

2.       Inspiration

Just missing out on the top slot is ‘inspire me’.  This is the realm of Hollywood, of hero, of celebrity.  It is music, the arts and scientific discovery.  We raise statues to individuals who inspire us and fill the pages of history with their stories.  IPhone is a global phenomenon because it is inspiring – full of passion, genius, a breath of fresh air.  Steve Jobs brings inspiration to Apple – in every sense of the word.

3.       Pleasure

Only number three?  Internet porn should lift pleasure to number one on its own, right?  Well, half the population find pleasure easily – in fact, it finds them – so it I the other fifty percent that fuels this market that embraces everything from bubble bath to restaurants.  It is all about the experience.  Bubble bath with candles or restaurants with rooms understand this market, well.

4.       Direction

Many individuals are lost.  Where am I going with my life?  What’s my purpose? Everyone needs to feel they are on the right path and that it delivers on the three wants outlined above.  Tony Robbins is a master – playing on unrequited fears of failure before inspiring his audience and bringing a sense of pleasure.  Once the event finishes, they feel a lack and so come back for more.  I know one individual who has spent over $200,000 with Tony.  Can you see how addictive these top four can be?

5.       Love

It seems a shame that ‘all you need’ comes in mid table.  Lust would appear more lucrative with internet porn earning $3,000 a second but dating is not far behind.  16% of US adults have tried dating on-line, making it a $1 billion market in the US alone.  Love also infuses the pet industry and passionate markets ranging from golf to wine, art to pinball machines.  If your market loves your product (and you put love into it, too – you are home and dry.

6.       Prove myself

More than half the world population feels it has something to prove and it is not yet good enough, successful enough, beautiful enough, fit enough, clever enough etc. etc.  This is why most training programs give you a gong at the end in the form of a certificate, a diploma, a degree, a masters, a doctorate (phew, am I good enough yet?).  Status brands hit squarely into this market.  My home, my car, my partner, my dog, my clothes, my fragrance, my spectacles, my pen, my phone etc. etc. all say something about me and whether or not I have arrived at the right level in life.

7.       Overcome harmful habits

When Bob W and Dick B wrote their 12 Step program for Alcoholics Anonymous they probably did not anticipating over 2 million active members – but that is what they have now, in North America alone.  Add to this Weightwatchers, the nicotine patch, obesity, all-nighters on the playstation, chocolate, too much red wine etc. and we can see that this is a major market.  A large number of us just need help to stop doing what we know is bad for us.  The Betty Ford clinic is truly on to something.

8.       Freedom

This is a clever market that not only includes getaway holidays (escaping to our own island in the Maldives or deep-powder slopes in the Bugaboos) but extends to time management, email etc.  Our mantra is ‘if I just get rid of this thing in front of me, then I will be free’.  This myth of freedom extends into pensions (er, what is one of those?), debt restructuring and lies at the heart of drugs, alcohol etc. where we escape our everyday world.  It is also a component of the escapist book and film industries, too.

9.       ‘More’ (enough is not enough)

Take all of the above and second-sell ‘new’ and ‘improved’. You’ve got how many pixels on your camera?  No, ten million is not enough.  You have how many gigabytes on your laptop?  You need a terabyte, amigo.  You need video on your phone.  You need HD on your TV.  We are insatiable.  We want more of everything – and we want it for less.

10.   Grab me some attention

Ah, the bottom of the barrel.  Big business but tough, tough, tough, ask anyone in advertising.  Helping people attract is hard and the client fickle.  They always think someone else might do better and so they leave.  All communication and media is ‘tomorrow’s chip paper’.  A big market but hard to make it last.

It's good to talk...

I have two mobile phones under contract to Orange – one in France and one in the UK.  Each service is separated by just twenty two miles of water and yet their experience is poles apart.  UK reception can be lost travelling into the nation’s capital while I can be in the French Alps and hear the other party so clearly they could be sitting on the chair lift next to me.

When it comes to customer service, however, the two companies swap places.  The UK staff are polite, efficient, pro-active and take front-line ownership to resolve any issue whereas in France the rude disaffected individual who takes your call (always assuming they are not all busy and you receive the message to try again later) won’t think you are serious until you scream and go blue in the face with frustration.  Every call takes a minimum of half an hour because it is chargeable and so a money-spinner for the company.

The absence of Gallic charm and professional courtesy may be public sector complacency (Orange is part of France Telecom) but my real objection is their glee at trying to raise income under false pretences. Charging a Euro to press a series of numbers before you hear a real voice is just the start.  On 29 December they sent me a letter with my ‘security confirmation’ – a contract for a service I never asked for but starting immediately.  They kindly offered me the first month free.  This may posture as customer service but is really a window to deal with all the irate calls from customers now forced to call and cancel a contract never required or solicited in the first place.  Clever that – two million calls at half a euro each, that none of us had to make.  Clever also to only give fifteen days to cancel from 29 December.  Thanks to the New Years Day and Ascension bank holidays, the chance are that half that period will have elapsed before anyone receives the letter.

Genius, then, to keep any cancellation caller on the line by saying ‘But you sent a text confirming’.  This is generally a lie but places doubt in the minds of the caller.  They may need to check and call you back (doubling your call revenue). In my case, I called the bluff and the operator offered kindly to ‘cancel’ the contract that never was.

This milking strategy is becoming alarmingly popular with other utility companies, too. It works on the premise that most families or secretaries are too busy to check the statements and that it will either be missed or passed straight to the accounts department, not worth investigating for the sake of a few Euros a month.  Much easier not to create a fuss.  If just ten percent of customers fall for the scam, it generates big money for little extra effort – an additional 720 million Euros each year in the case of Orange.

Elderly UK residents were offered subsidised gas deals, funded by the government.  A raft of providers raced to sign up the retired to seemingly brilliant contracts that saved the occupant significant money.  Now that the subsidies have gone, the same companies are making identical calls offering ‘extra services’ on the same contract.  The impression is this comes with no extra charge but in one case, this created five extra charges a month until the couple rang to complain. The customer service team were then deliberately difficult – all designed, it seems, to confuse and take advantage of the vulnerable and the needy.

So, utility companies please take note.  We don’t like greed and we don’t like bullying.  We have had our fill of the banks and it’s your turn next.  Your customers are planning revolution and anyone who abuses their commercial power and privilege risks the backlash of the people. Don’t forget, also, we have a taste for it over here.  That’s why we invented the guillotine…

'You're fired!"

5 June 2009:  So what possessed beleaguered Prime Minister, Gordon Brown to appoint Alan Sugar as his champion for UK small business – the man who told the CBI fifteen years ago that small business should ‘stop whinging and sort itself out’?  Was it to cut through red-tape and support thousands of honest, hard- working owner-managers – or to bask in the popular glow of Sir Alan’s prime-time TV celebrity and loyal eight million viewers?  Hmmm…tough one, that.

More importantly, why did Sir Alan accept this unpaid role?  He certainly seemed up for the fight, believing civil servants ‘lack the relevant first-hand experience’ and have ‘never actually been in business.  Then again, maybe he just wanted a peerage?

Five months into the job and Sir Alan is thinking of quitting, fed up with all the flack he is receiving.  The man Number 10 expected ‘to give advice on how to make the most of the real help available from Government’ and ‘champion the causes of viable small companies with banks’ has turned tail and fled – all the way to the House of Lords. 

The champion tasked with ‘ensuring the voices of small firms and entrepreneurs are heard’ doesn’t want to listen and still believes the best form of support is no support, saying small businesses should stop moaning and sort themselves out. 

Contrary to his belief, small business does not ‘live in Disney world’ but a much harsher reality.  It inhabits a world where people love what they do, support their workforce and local communities and try to build a legacy for themselves and Great Britain Inc. while paying four levels of NI and fighting increasing regulation and bureaucracy.

All owner-managers want is a fair crack of the whip and an end to being punished by the playground bullies of large bad debtors and banks forcing them to close so their liquidator friends can receive half their cash.  They want lending rates on a par to those afforded to companies like Guinness (not six points higher) and they want the financial support from Europe to come directly to them rather than 77.5% going to the government and its agencies.

It might also be nice to be afforded the same privileges as a bank and make £800bn profit one year and then lose the same amount two years later, being bailed out by the government and receiving a bonus of three times our salary as a reward for our mis-management.

 All small business wants is the opportunity to write the rules rather than play by the rules like an honest fool.

 To this end, we might also appreciate a champion who is in the foxhole with us rather than Lording it over us and whingeing about us whingeing. 

Still look on the bright side.  Arlene Phillips, former choreographer of Hot Gossip and Strictly Come Dancing judge, is still in post as the government’s ‘dance czar’.    With her help – and maybe Simon Cowell’s – we might yet rebuild the engine room of UK business, and look stylish in the process.