The Management Mythbuster

Gordon Ramsey where are you?

After living for many years in America I have learned to endure the ritual denunciation of British cuisine (surely an oxy-moron chorus my Yankee friends).  This always seems a little hypocritical to me, given that America’s most notable gastronomic contributions to the planet would seem to be the Big Mac and the Twinkie. 

British cuisine has improved over the years and the celebrity chef is now a definable tribe but the impact has not been universal, as my holiday dining can attest.  For Boxing Day (December 26th) dinner with the family we reserved a table at Bamburgh Castle Hotel in Seahouses, a small fishing village on the northeast coast of England.  The menu offered a set meal of seasonal fare at 20 pounds ($30) a head or choices from the normal menu.  Expecting some nice local seafood or hearty English pub fare we arrived at the appointed hour. 

Drinks were ordered and consumed and orders placed.  An hour or so later things began there downward spiral.  The mushroom appetizer failed to live up to it's name,; it's tough to burn mushrooms but the chef had succeeded, the Brie cheese looked old enough to vote and the berry relish resembled a sweet tar.  Clearly more drinks were needed. Unfortunately the pub had run out of bitter (you know that dark stuff served warm) and the cider was as flat as a pancake (in England it’s alcoholic and supposed to be a little fizzy).  So no respite there.  The entrees arrived and what a motley selection they were.  The gammon (ham steaks) were cremated; all three rib-eye steaks were cooked the same despite orders ranging from medium rare to well done; the lasagna looked like a lava flow that had partially hardened and even the chips (fries) were a poor advert for one of England’s staples.  The only vaguely edible dish was the sausage and mash.  I am no cook but I could have easily improved on the sad offering and for the princely sum of 136 pounds ($200) could have done it much cheaper as well.

The Bamburgh Castle Hotel shot straight into the top ten worst meals of my life (four of which occurred in America - so there!). The hotel is in urgent need of a visit from the sainted Gordon; although the editors will need the “bleeper” on overtime if he dares to taste the food!

Home for the Holidays

It's 4am in the morning and I'm sitting on the sofa gazing out at the North Sea having escaped the economic misery that is gripping America and replaced it with the economic misery gripping the U.K.  Here in Northumberland (northeast England just south of the Scottish border) they adopt a more sanguine approach to economic decline; after all this region has been through it many times before as coal, shipbuilding and almost every other industry that once made Britain great has disappeared.  You think Detroit has it bad now - Newcastle has been like that for sixty years.

Thankfully we English still have a sense of humour, so the shops are all advertising "Beat the Crunch," as in credit crunch, deals and the locals are still popping out for a pint.  After all its Christmas and in Britain that means that a few big issues dominate, none of which seem to matter stateside:

- First is what will be number 1 in the charts? The answer is Hallelujah sung by a talent show winner, the same song is also at number 2 courtesy of Jeff Buckley which is an interesting throwback to the early-60's when the same song by different artists often charted at the same time.
- What will happen in the Christmas specials of all your favourite TV shows which unlike America are actually shown on Christmas Day not on some random date in early December.
- Who will get knighted, damed, OBE'd or CBE'd in the Queens Christmas Honours list?
- Will Great Aunt Betty get a little tipsy on the sherry and reveal what really happened down in the air raid shelter during the War?
- Can Stoke deal with Man United in the Boxing Day football? The answer's almost certainly No, but we live in hope.
- Will the Brussels sprouts and Christmas pud finally taste good? Probably not so just have another glass of whisky.

Finally as I'm in England I can wish you all a Happy Christmas without fear of being politically incorrect.

Corruption, CNBC and hypocrisy

Great question posed to New York Times columnist Tom Friedman, "So, just how corrupt is America?" (See article) I must admit even sitting in Ohio I can sympathise with the businessman who asked him that question.  After all the Governor of Illinois is just the latest in an incredibly long line of apparently corrupt politicians and then we have Mr. Madoff's $50 billion Ponzi scheme hard on the heels of Wall Street's, at best very stupid, and at worst very dodgy dealings that have plunged much of the world into a recession. 

As with all failures it apparently is the government's responsibility to bail everyone out- now is that ironic or what?  It's bit like asking an alcoholic to guard the liquor store.  Still apparently that's the answer, particularly according to CNBC, normally not renowned as the promoter of big government.  Nearly every talking head commentator is lamenting the failure of regulators to catch everything from the sub-prime crisis and Madoff through to Detroit's inability to make cars we want to buy.  My mind goes back just a few short years when the same channel was the champion of freedom and railing against increased regulation in the form of Sarbanes-Oxley.  Now that may have been misguided legislation (after all it didn't prevent the SIV debacle from 07 or this year's events) but at least it was an honest attempt.

It's fascinating to observe the pendulum swing back and forth, when markets are good we need no regulation because it hampers entrepreneurial spirit and artificially constrains capitalism; when markets are bad we need to root out evil and make the playing field fair for everyone. Unfortunately if the playing field were totally fair no one would make any money and there's the rub! 

Bailouts, Buicks and Bankruptcy

The Detroit saga is very sad but allowing them to stagger along for a few more months using taxpayer money will only delay the inevitable.  At best only two of the three can survive and they probably need to be about half the size they are today - so it should be bye bye Buick, Pontiac, Saturn, Dodge, Chrysler, Mercury and Volvo.  Brutal isn't it? But at least some semblance of an industry will remain unlike the terminal decline in many other industries over the last forty years. 

Whether its bankruptcy or bailout the treatment needs to be aggressive and urgent. The alternative is that the death spiral of the last thirty years continues and slowly drags the economies of many cities along with it.  I live in Akron, the Rubber City that doesn't produce anything made of rubber anymore.  The effect of decline was gut wrenching but the city survived, so can Detroit.

Its absurd that GM has 6,500 dealers that have sold about 2.7 million vehicles, for an average of 415 per dealer while Toyota has about 1,500 dealers and has sold 2.1 million vehicles so far this year an average of 1,400 per dealer. Guess who has a shot at making money? The Detroit three make too many cars, in too many plants, under too many brand names with too many expensive workers which they try and sell through too many dealers to too few people who want to buy them.   

Any bailout will be driven by politics not economics.  The industry has been uncompetitive for years and all the current crisis has done is amplify the problems.  The long term view must dictate radical restructuring with investment focused on education and training, not subsidizing production of cars people don't want to buy.

As if 2008 wasn't long enough already!

Its been a long, hard year and there are still 22 days to go.  The torrent of bad economic news shows no sign of slowing down and the general world mood seems to be one of resigned depression and now to cap it an international consortium of the world's timekeepers (did you even know there was such a consortium?) has decided that 2008 is too short! 

Even with 2008 being a leap year, it's not long enough; we are a second short as apparently the Earth is slowing down!  I guess it must be the extra weight from all the obesity that now exists on the planet or maybe its just overburdened with debt and shrinking assets, after all we've been ripping off the planets natural resources for centuries now and if I was Earth I'd be losing some momentum wouldn't you? 

So 2008 will be the longest year since 1992; so make good use of the extra second...

Smart doesn't pay - Wall Street to Harvard - it's a bust!

Supposedly smart people on Wall Street have lost billions over the last few months. Unfortunately we mere mortals have been caught up in the mess.  I have not lost millions - you have to have millions to lose millions I believe.  Although on second thoughts I should amend that to say that you have to borrow millions to lose millions!

Either way my losses are in the thousands - quite a few actually.  Now I begin to see part of the problem.  Most of these smart Wall Street types were also smart at school and many of them no doubt went to Harvard. So this morning's Wall Street Journal front page headline, "Harvard Endowment Drops 22% in four months" caused an ironic chuckle in my cynics mind.

Apparently the Harvard endowment plummeted to a measly $36.9 billion over the last four months meaning that losses are in the region of $8 billion!  As the WSJ points out the losses are bigger than the endowment of all but six other universities so Harvard is not on the bread line (yet).  But the interesting thing is to ponder the fact the institutions educating our supposedly brightest minds are just as incompetent as their pupils when it comes to managing their money. I bet the queue is out the door for the Harvard MBA course Corporate Financial Engineering by Professors Luehrman and Tufano. I think this weeks subject is  "Burning billions - how to lose real money, real fast"

With such educational talent it inspires confidence in the future doesn't it?

At least one new American car will be on the road this week!

So Ford's CEO, Alan Mulally is going to drive from Detroit to Washington to beg for the government's money on Thursday instead of boarding the company Gulfstream.  I can already picture the fleet of news helicopters tracking his vehicle as he cruises along the Ohio turnpike.  I might just head five miles up the road and station myself on one of the bridges over the turnpike and cheer him on.  Of course, the big questions are what will be his choice of vehicle and will he drive himself? 

Unfortunately as Ford has now sold Jaguar and Range Rover there are no really luxurious options available.  He could of course pick a white Ford Bronco in honour of another widely televised road trip out in California.  Dare he ride in a gas guzzling SUV? Probably not.  It has to be a hybrid and I would get the CFO to drive and pay for the petrol as Mulally has committed to take only a $1 salary next year. (Of course that's a dollar more than many of his current and former colleagues likely will make).  For Mulally this must be a comedown as his prior job was CEO of Boeing and the jet would have been the right choice.

What of GM and Chrysler?  Apparently there are still flying to DC but this time there are going commercial.  Not surprising - after all who would want to travel in GM or Chrysler car today?