Sunday, 28 June 2009

The Dream Is Over

We have waited 4 years since the debacle of Sir Clive Woodward's Lions and yesterday the dream of keeping a series alive against the World Champion South Africans died as Morne Steyn struck a perfect penalty to win the game with the last kick of the match.

It was simply one of the best games of rugby I had seen. Brutal and physical, but full of passion, skill and commitment. It started as it meant to go on, with Schalk Burger lasting less than a minute on the day of his 50th cap before attempting to relieve Luke Fitgerald of his eyes. In rugby, the average advantage gained during the 10 minutes an opponent sits in the sin-bin is 13 points. The Lions came up short. In a half where the Lions dominated and particularly in the scrum where they had so horribly failed the week before, they failed to convert their determination into points and build up enough of a lead, which included a great try by Rob Kearney, courtesy of a sublime off-load by Stephen Jones. They even allowed the Springboks to close the gap to 8-16 at half time with a late penalty.

And that was where they lost the game.

You can argue that the two set-move tries were sucker punches that should have been defended were the killer blows but shortly after halftime, Bakkies Botha charged Adam Jones and dislocated the prop's shoulder - Jones had been playing an awesome game to have not just tamed 'The Beast' but to have dominated him. This single injury was significant as Gethin Jenkins also left the field and it led to uncontested scrums as the Lions ran out of specialist cover. It was from the clean platform of one of these crazy scrums that the Boks worked their set piece move to pierce the Lions' defence via the lightening quick Brian Habana. Had that scrum been contested and the pressure applied to the Springbok pack and scrum half, I doubt whether the try would have resulted.

As injuries took their toll, the fresh legs from the South African bench that had nearly been their undoing last week, brought new life into the Springbok game and particularly Brussow made his presence felt. It is a consequence of uncontested scrums that the bench becomes more important as you can swap props for quicker players. The Boks drove into the depleted Lions ranks and began eating into the lead. As the game went into the last 10 minutes, the Boks scored a superb try in the corner that required the TV Ref to decide if it was good. The preponderance of evidence showed from all angles but one that Fourie had scored, the only doubtful angle was the shot from the rear but it was rightly decided the foot seen to go out of play was not the ball carrier's.

The Boks took a 25-22 lead from this try. Even then, the Lions had one more play to give and Stephen Jones over-ruled Ronan O'Gara to take a difficult penalty. Jones was having simply the best game wearing a red shirt of any denomination in his life and, as the camera showed his view of the posts from behind him, you could have bet your house on his kick as he stood poised to strike. The ball soared between the posts to level the scores and it looked as if the series was poised for a dramatic final game in Johannesburg next week.

The Sprinboks laboured over getting the final blow in and when a loose kick fell to O'Gara, the Irishman, who was sporting a headband from a heavy collision as soon as he had come on, ran forward calling for others to follow to try and single-handedly win the game. He launched an up-and-under when all the clever money would have been to hoof the ball into touch and settle for a draw. To compound his mistake, he followed up and forgot to look up for the ball - either that or he deliberately made no attempt to catch his kick and just took the legs away from the South African catcher. The referee ruled the latter and he was right - it is one of the most dangerous things you can do in rugby. A penalty was awarded just beyond the 10 metre line for O'Gara's moment of madness.

The scene was set for the local hero, Morne Steyne, who had won his first cap only a week ago and had heroically dislodged the ball from Ugo Monye as he crossed the line to prevent a sure score. He eyed up the kick and looked as confident as a South African always is when one kick at the death is required. The penalty was beautifully struck and sailed sweetly between the posts to spear a few million British and Irish hearts.

2-0 to South Africa, and the pain of Jerry Guscott's drop goal 12 years ago was expunged.

So How Did We Lose?

In truth, the series was lost the week before. The Lions' fantastic fight back in the second half in Durban fell short. But they had been destroyed in the first half by an intense, physical battering in the forwards which left Phil Vickery's amazing career in tatters. 'The Beast' had quite simply worked him over and Lee Mears, who until that point had been player of the tour in my book, also copped the blame. But it was also the Lions' finishing which cost them. Even when they were taking the fiercest pounding, the Lions' backs scythed through repeatedly and Mike Phillips was denied a try by the slimmest of margins as he lost the ball stretching for the line while Monye crossed the line upright instead of at a dive - a schoolboy error of immense proportions as it allowed Steyn's superb tackle to save the game. Monye had also crossed the line earlier in the game and once again had failed to finish in clinical fashion. Two tough missed penalties for Stephen Jones added to the shortfall that was only 5 points at the death.

But that defeat should have been the platform for a Lions win at Loftus Versfeld yesterday - the Lions had found the way to beat the Boks and much of it was due to skills in the backs and fitness as the Boks were dead on their feet at the end despite 7 pairs of fresh legs. In the midweek, the Emerging Springboks had struck a further blow by drawing the game with the final kick, a prelude to the main event.

As a South African was at pains to point out to me, the Lions were playing kids who had not a test cap between them while the massed ranks of the Lions sported 617 in total and we still could not win.

And there you have it. South Africa did not become world champions for nothing. They have been led on the field no fewer that 57 times by the same man, John Smit, who personifies what it is to be a Springbok. He has swapped positions to become a prop and allow a good new hooker to come into the team - a switch of skills few attempt and never at test level. But that's what it took to get a better team. In Botha and Victor Matfield, the Springboks have the two best second rows in the world - they are magnificent at the line out, superb around the field and awesome in the scrums.

But it is the passion and intensity that makes them special. Yesterday, the Boks were well beaten in the first half and, as Smit revealed, they spoke 'some honest words' to one another at half time. When the whistle blew for the second half, it was an entirely different game. The Lions' backs were snuffed out as threats by some powerful, quick tackling while the scrum was 'fixed' by Botha's charge on Adam Jones, which reminded me of the tour-changing 'fix' of Richard Hill's nose by Nathan Grey in Australia in 2001. The match bristled with fights and contests - no one was ever going to take a backward step and least of all Simon Shaw, who at the 18th time of asking finally got his Lions test debut at the ripe old age of 35. He was simply awesome and played his heart out to be voted Man of the Match.

His line said it all - 'I would have rather have played badly for 40 minutes and been substituted at half time than to have lost and been man of the match'.

The teams go forward to Ellis Park, Johannesburg next week for the final match of a dead rubber. The Lions lost 4 major players to big injuries - their talisman Brian O'Driscoll was surely concussed in a collision with Roussow, the manful Jamie Roberts also left the field, Adam Jones will not play and Gethin Jenkins may well be doubtful. It means that the Lions will almost certainly lose the midfield pair that has been the linchpin of their best play on the tour.

The injuries mean that the first all Welsh Lions front row since 1955 will be the last for a long while and Phil Vickery may well find himself again facing 'The Beast' next week - it may be an opportune time to feign an old injury.

It will be an anti-climax rather than a party for the thousands of loyal Lions supporters who will attend next week's game. A seriously eroded Lions squad will have to muster enough players to have a match next weekend as the Springboks will want to administer a final coup de grace and exorcise the demons of 1997.

There are a few of us thinking about flying out for the game. Far from believing it's not worth it, we all think this Lions team has been superb and deserve our support. They have been to the den of the world champions and they came so close over the two games to dislodging their crown. The Boks have proved that it is not an easy thing to do. Pride is all the Lions now have left to play for.

Next week will be the final test of what has been a fantastic 6 week ordeal of learning rugby the hard way. Paul O'Connell was filled with emotion when interviewed at the end of the game, it meant that much to the Lions' Irish Grand Slam winning captain. If anyone can pick them up and drive them for one last massive effort in the name of the British and Irish Lions, he can.

As a final thought, the British fought one of the greatest rearguard actions in military history on the road between Johannesburg and Durban at Rourke's Drift. Amongst the several VC's awarded to the men of the South Wales Borderers that day was a one James Hook.

I say no more.

Saturday, 27 June 2009

How Much Are You Worth?

Identity theft is a major and growing problem. What you may not know is that your identity may be worth just £10 to fraudsters who could sting you for much of what you are worth.

Just a few months ago, my bank, HSBC, sent me a new Switch Card. It was not due for renewal and I had not requested it. I phoned up the Call Centre to activate the card and asked why I had been sent a new card. They were evasive saying it was a routine security precaution which set my mind racing. Had my details been compromised? I asked the question and the telephone operative was adamant that they hadn’t but the seeds of doubt were in my mind. Recently I read a stunning article in New Scientist and realised why my card, along with many others had been changed.

Hackers had penetrated a company called Heartland Payment Systems in the US which is a middle-man company that clears over 100 million card transactions per month. For 4 months, the hackers had sat on their servers and collected untold amounts of data on people like me. As a result, the ‘wholesale’ market for personal data took a dive as a glut of product flooded the market and our data became a cheap commodity.

Unbeknown to us, there are chat rooms in the dark world of cybercrime where our data is openly traded like the floor of the Commodities Market. Change the lurid coloured jackets for weird pseudonyms and you are not far wrong. The rooms are carefully disguised so that they are virtually untraceable or if they are, they turn out to be hosted in countries who could not give a fig about whether we are ripped off – you know, like China and Russia.

Many companies who sell products to protect us like Symantec offer broadly anti-virus protection and some firewalls. But spyware and other products to protect us buying and selling things online are far more important. Few offer real protection.

The Market For Our Data

In the sinister trading rooms, buyers and sellers are rated much like eBay ratings of trusted trader. These people can trade our data freely and the buyers will feel confident they won’t get ripped off by scammers who even cheat the thieves interested in our data by selling what they haven’t got. It’s a funny old world and reminds of the Robert Vaughan line in Hustle, ‘I ripped him off in good faith’.

Suffice to say the number of our cards, the expiry dates, the security number and even the contents of the magnetic strip are openly traded for as little as £10, possibly more for higher credit limit cards. It’s a cheap end for what we think we are worth.

The figures involved are frightening. Buying our bank account details for somewhere between $10 and $1,000 yields an average take of $40,000 for the criminals, while the average take on credit cards is around $4,000 for an outlay of no more than $25. Clearly, I am in the wrong business.

Britain, sadly, is one of the Top Ten cybercrime countries which include US, Canada and Germany too.

Protecting Yourself

The nightmare of cybercrime revolves around passwords. The strong advice is to use hard-to-guess passwords and avoid personal links. If you are like me, then you will have tons of places where you need password access for cards, banking, online transactions and websites. Having a unique password for every entrance is a horror story and being able to remember not just the password but which site entrance it is associated with is virtually impossible except for The Amazing Memory Man.

But good passwords are rated to be a combination of upper and lower case letters, numbers and other characters. Ouch.

Then, to add to the complexity, it is advisable to change these passwords regularly. This is sounding less feasible by the minute.

The next most practical thing is to use an up-to-date browser, firewall and anti-virus software. To be frank, it is pointless using free products, even the new one from Microsoft will be less than useless. If you want protection that works and get regular updates automatically, then you will have to pay – it as simple as that. AVG ( offers one of the most comprehensive packages at a decent price and has products capable of protecting individual consumers and small businesses.

Finally, never download email attachments from people you do not know or trust. As a rule of thumb, never download an attachment your were not expecting. Further, be careful even if the mail comes from someone you know. Check the message as they often have stupid titles which your trusted network may not use. I would also be careful on instant messaging type packages where people offer links or ask to connect when they do not know you. At best it can be a source for spamming, at worst they can trick you into downloading nasty programs.

The D’Oh Factor

Famously, Jeremy Clarkson poured scorn on cybercrime and revealed his bank details in the Sunday Times. Just a short while later, someone showed him that simple things can backfire as they signed him up to monthly Direct Debit to a charity he knew nothing about. The fact is, criminals do not need much to go on. Rather like fake ATMs, there are many websites which squat on retail sites and look like the real thing. They take your card details and off they go.

There are many programs but a favourite is a keystroke recording one. This is sent to your PC and then records every keystroke you make – routinely, the hackers gather the data and extract what they need. It’s hard to legislate against things like that but beware of following every ‘cool’ link you are sent.

Google, Facebook and others would like to legitimately follow your web progress and monitor what you buy, where and when. Their motives are seen as ‘cool’ and also to help us buy more of what we want and for advertisers to pay more to target us. However, as the Heartland Systems experience shows, even the most robust security set ups are penetrable to the determined criminal. Be very wary for signing up to new conditions or services from companies like these until they have had time to ‘bed’ down and have been hacked a few times so that they make sure they are far more secure than they ever wanted them to be.

Your data is far more vulnerable than you think. Remember to drop your internet connection at night or when you are not using it and have access protected by passwords too. Don’t make it easy for these guys because it is our poor vigilance they are relying on and we have this bizarre belief that all that we do on the web is secure and private. Even the ISPs are recording your every communication as we speak.

Everyone wants to know what we are doing and saying, and it’s not always in our best interests to allow them to do so.

Friday, 26 June 2009

Four Hours In Purgatory

Newport in South Wales may be nicer when the sun shines and perhaps if you only are on the way to the station. But today it’s raining and I have to wait for the 4 hour passport renewal service.

If only would-be terrorists were made to have to spend time in Newport they may get a glimpse of the terrors that Guantanamo Bay holds, particularly when the rain is pouring down in that soft but relentless fashion so much a feature of my homeland. Mercifully, the Passport Office itself was a cinch – the aged security guard took a cursory glance at my laptop bag before ushering me through the Hi-Tech scanning chamber which beeped but he didn’t even look up before prodding my bag and handing me back my phone. The queue on the other side looked daunting as the only receptionist was on the phone and studiously ignoring the increasing line of hopefuls for their 10am appointments. But, to my surprise, she finished her call and in a few seconds she had seen off the people ahead of me and smiled pleasantly when logging my name and issuing me a ticket much like you get at the cheese counter at Tescos.

On Floor 4, a virtually empty waiting area was served by no fewer than 10 counters and the digital signage announced that the number ahead of me had already been called. I had only time to sit down and check if I had brought my old passport when my number was called. As I had a previous application which had got snaffled by the bureaucracy, I expected a delay and a fight. I haughtily handed in my documents and began explain, when the nice young cap with a distinct Cardiff accent halted me and said all was explained on his screen on entering my reference number. I felt let down – I hadn’t travelled all that way not to have a good rant about the inefficiency of the system and the bias against business people travelling regularly. But I was thwarted and sent briskly to the cashier to just pay the difference between my postal application and the premium service (I hadn’t lost my money of the previous application) and I coughed up. I even left with a faint smile.

Money Saved To Spend

I had effectively saved £72 which was the original price of my renewal – a small victory on the exorbitant price of the rail ticket. I had foolishly believed that the train would be busy so to get some work done I had booked first class. Had I taken the web price I would have been £305 down for the return trip – after a short rant at First Great Western Customer Service operative who confirmed the price, I realised that by buying two singles I could reduce the price to a bargain £186. I still blamed the chap on the line for not knowing his pricing but felt stupid for complaining when I should have worked it out for myself.

The train had left bang on time and the carriage was empty. Imagine my surprise in finding that my £186 did not include even a motley sandwich, just a coffee, a Fruesli bar and a cup of ‘freshly squeezed’ orange juice which I was assured by the lady was different to the usual ‘crap’ they served. A bacon butty would have set me back another £4 so out of principle I went hungry – that showed them. I expected the whole day to be a disaster but even the British Rail official at Newport took a few minutes to direct me to the Passport Office with a smile and a joke. I was fast running out of things to complain about.

Newport, Sporting City

Then there was Newport. I followed the man’s directions and found the Passport Office and did my stuff. I now had 4 hours to kill. I had passed a Starbuck’s on the way and decided to adopt the American ethos of ‘safety in the brand’ and got the sing-song Welsh-accented version of the available menu – it sounded better than the Romanian, Polish or Czech you find in London and the coffee tasted the same too. I opened up my laptop hopefully and the first warning sign came when my 3G mobile Wifi modem could find zero signal. I tried walking to the front of the cafe but it was no good – 3G had missed Newport off its map, perhaps they knew something I didn’t. I made some calls and finished my coffee and went in search of two things – 1) an umbrella and 2) a hotel with a decent lounge for working in.

Commercial Street would look nice in the sun, I am sure. But the rivulets of rain seemed to highlight the trampled lumps of chewing gum that had set like concrete on the pavements, which seemed to lead like a Yellow Brick Road to McDonald’s where the splatter of gum discards indicated a meeting point of some intensity outside the front door. Travelling down the main shopping street revealed side roads that to the right led to steep hilled roads which seemed to cross into the past. There stood grey stoned chapels, terraced houses and the Salvation Army reminding me of my youth. To the left was the already run down Kingsway Shopping Centre, a game attempt in the past at a Mall which had most of its shops boarded up as a testament to yet another recession that always seems to hit Wales hardest.

A banner proclaimed that the Farmer’s Market was around the corner and came on the 2nd and 4th Fridays of the month. I found no more than 4 stalls, one selling nice smelling crepes, one some local meat and vegetables, one with bread and one a curious bottled concoction labelled Ogom’s which came from the ‘Dare Brewery’. That was it – the Farmers had clearly felt it wasn’t worth the effort; either that or they were with the rest of Wales on the Lions Tour.

The Point of My Tale

As I went in search of a hotel, I noted that the level of eateries in Commercial Street were pretty poor, the pavements pretty filthy, the whole place wreaked of better times and a drainage problem, I noticed a massive banner proclaiming ‘Newport, Host City of the 2010 Ryder Cup’. As a proud Welshman, I am so excited my country has the chance to host one of the biggest and best world sporting events and show off one of our most impressive golf courses at the imposing Celtic Manor Resort which overlooks the M4 like a majestic castle defending the city of Newport.

Then my mind turned to the many hopeful European and American supporters flooding the streets of Newport in search of quality eating places and nice pubs. Boy, will they be disappointed. First they will have to pick a careful path around the gum trails and second they will have to dodge the mournful swathes of Passport-appliers who will be looking for hot spots for their laptops and a place to while away the wait. But they will mostly be disappointed by a pretty grim town with very poor facilities to entertain people.

It’s a real shame. Newport is full of nice people, welcoming and funny people – very excited about the arrival of foreign sports fans. Gone are the days of the proud football and rugby clubs – Newport has been absorbed into the Gwent Dragons franchise in rugby and is a shadow of the force of a rugby club that produced the amazing talents of Keith Jarrett, Jeff Squire and Robert Ackerman amongst others. It has latterly become an outpost of former South African test players.

But Newport has Celtic Manor – the manifestation of one of Wales’ richest and most ambitious businessmen, Terry Matthews. His last major venture was Newbridge Networks which he has sold to pile his money and influence behind Celtic Manor. Some influence, because he has landed the Ryder Cup, captained by one of its immortal players, Colin Montgomerie for Europe in 2010. Matthews is some businessman. The story goes that he and his business partner started a company called Mitel which, like a Nokia, morphed from being ‘Mike and Terry’s Lawnmowers’ into a mighty Telecoms company bought by BT. Mike Roberts, went on to found Corel software and there are streets named after him in its headquarter town of Ottawa. I briefly met him as he worked in a large open office some years ago and a more unassuming, quiet yet focused man you would not find anywhere in contrast to Matthews’ visionary outwardness.

Come on Newport

The Ryder Cup is just 15 months away and by then Newport will be the focus of the golfing world. The likes of Phil Mickelson, Tiger Woods, Sergio Garcia and Padraig Harrington will be gracing the fields of Wales and we have to put on a good show. Newport has but a short while to clean itself up and welcome the media and fans from all over the world.

All these fans are going to want to be wowed and impressed by the heritage, history and culture of Wales. They will want to eat, use their phones and download their mails on the Blackberries. They would love to be met not just by smiling faces but clean streets and places to shop. There is a serious chance they will be very disappointed and leave with the wrong impression about a country that loves its sport.

Cardiff did an amazing job of building a showcase sports stadium that hosted the football cup finals, rock concerts, as well as being the home base of the 2005 and 2008 Six Nations Grand Slam Champions. One of the great delights of the Millennium Stadium is its proximity to the railway station, the town centre for shops, bars and restaurants, plenty of low cost B&B’s up Cathedral Road, a great Norman Castle and a wonderful park on the banks of the River Taff (yes that’s where the name comes from).

Newport is central to Wales’ industrial past and present – the massive Llanwern steelworks is a mere shell of its former smoke-belching bulk while the famous transporter bridge at the docks was built in 1905 and still dominates the landscape. To boot, the whole area is surrounded by fantastic countryside, wonderful beaches and some of the best golf courses in Britain (Royal Porthcawl, Southerndown and St Pierre). It’s around an hour’s drive to the beautiful Gower peninsula and its fantastic beaches close the village of Mumbles (home of the Douglas-Zeta-Jones’) with its fabulous pubs and restaurants to the West and to the North-West are the imposing Brecon Beacons (and the world famous Jazz festival). Newport is not far to the picturesque and famous towns of Ross and Hay-on- Wye (who’s internationally famous book festival was attended by Bishop Tutu this year amongst others) – and the drive up the Wye Valley from Chepstow to Monmouth is one Britain’s most beautiful drives while the Wye and Usk are two of the best fishing rivers, I am told, on the island. And never forget the walks along Offa’s Dyke, the last great defence against the ravaging Welsh marauders into Olde Englande and the Marcher territories whose Lords were instrumental in putting the only Welsh family (The Tudors) on the throne of England that produced arguably two of our most famous monarchs, Henry VIII and Elizabeth I and spawned the Golden Age of Discovery as well as defeating the most publicised attempted invasion of Britain ever (The Spanish Armada).

Come on, guys – don’t let us down. We have so much to offer.

Saturday, 20 June 2009

Accountancy Is Not His Strongpoint

'Accountancy is not my strong point,' said Jack Straw recently when challenged on a expenses. Perhaps he borrowed the words off the Chancellor. It was a case of another month, another record deficit and another missed fiscal target for Alistair Darling.

I am sure his school maths report read, 'Could be doing better' every term, but how long should we give Alistair Darling? Will Peter Mandelson be forgiven for forcing the PM not to give the job to Ed Balls as at least we could have had more fun associating his name with the economy?

We borrowed nearly £20bn in May alone - a record and the highest monthly borrowing since 1993. The simple causes were that we spent more and brought in less tax than predicted. Even a dimwit like me blogged exactly this in the past - in a recession, the burden on the Welfare State rises and less tax is taken in as more people become unemployed. However, the extent of the problem is staggering, as only 5 years ago, £20bn would be half the ANNUAL borrowing not a monthly figure. In fact, income tax receipts were 11% lower, corporation tax was 27% down and VAT receipts were 19% lower while spending leaped nearly 17%. All this means that the current net borrowing estimates are wildly out - yet again - and was the reason why the Chancellor got a fairly public rebuke from the Governor of the Bank of England, Mervyn King.

Money, Money, Money

Money seems to be dominating things of late. Little Hazel Blears, who hoodwinked the taxman on her CGT when selling her 'second home' as her 'main residence' having claimed a whole load of MP allowances on it, survived a vote of 'no confidence' at her local Labour Party's meeting. Again, I have blogged on this that is not just MPs who are out of touch but the political machine. Blears, remember, was so saucily vindictive that she resigned for full damaging effect in the middle of the MEP and Local Council Elections which were a disaster for Gordon Brown. Later, she publicly said that she 'regretted the timing' but there was no doubt as to what was on her mind, as there was no doubt what was on the minds of James Purnell and Caroline Flint. If they were to go, so was their leader. Amid that kind of double dealing and self-interest, Blears was given backing by her local Party. Sadly, I think that the local Labour Party may be horribly out of touch with the views and feelings of the voters in Salford who see Blears for what she is - a poisonous, self-interested fiddler.

I make a public prediction that she will lose her seat at the next election.

Lust For Money Clouds Transparency

One of Michael Martin's almost lunatic lambastes of the Telegraph's revelations on expenses was that the MPs' expenses were due to be published shortly. Yesterday we got the 'redacted' version of them. For those not in the know, redacted means 'doctored'. Much of the extent of what we now know, thanks to the Telegraph leaks, we would not have known. In the name of privacy and security, much of the information was blanked out. For instance, we would never have known that Gordon Brown had paid his brother for a cleaning bill - the whole thing was blanked.

This was the kind of disclosure that the Fees Office and MPs supported and it shows that they were not happy to give up their free-loading and abuse of public money. I still assert that all MPs are paid at minimum a salary in the top 3% of British salaries and have generous allowances to travel and keep an office over and above second home allowances. There was zero need for abuse of the system on a large or small scale - no excuse at all. What MPs fail to realise is that the vast majority of the citizens of this country pay what is owed in taxes, fees, bills and fines out of their take home pay and that is what the Government and the HMRC tell them what they have to do and they do it. For the likes of Blears et al, it's a different system, and even when caught red-handed, they can stand up, smile and pay back only a fraction of what they have abused for and still keep their job and way of life.

Politicians have had a rude awakening, but they will soon be fast asleep again. If the latest elections did not send a message to Salford's Labour Party, I dare say the General Election will.

Off Subject Transparency

Moving away from money, transparency has been a soundbite for this Government which they have carefully guarded. We have had two very unsatisfactory Public Enquiries into things to do with the Iraq War and neither got close to addressing the real issues. So another was announced and its purpose, we were told, was not to apportion blame but to look at what we could learn from it. Once again, we get a carefully controlled remit. Of course, there are more serious matters at stake. The Government made the decision to go to War and all the Cabinet were in on it, including several of today's Ministers. Get a public enquiry to reveal how they doctored information and defied the UN's resolution to go to War and suddenly you open up a case for illegal war and then some personal claims against them. As Blair earns a predicted £12m from his non-executive jobs, faith tours, lectures and book advance, he may sit pretty that he will not get dragged back into the mire.

Thankfully, the growing public pressure on the Government may pay off to some extent. Even previous dignitaries who led enquiries are demanding that all hearings should be in public instead of private hearings only which are the best way to get transparency. We have already seen the Government's colours on this - Jack Straw used the power of veto to suppress the publishing of the minutes of Cabinet meetings that involved the decision making on going to war - a sure sign, as we have seen with MP expenses, that there is something to hide.

We may well yet get a public enquiry that we can actually get to see but you can bet your bottom dollar that it will never address the issue of why we went to war, who fiddled the evidence, who made Ministers vote against their conscience, what really happened to David Kelly and THAT document, who said that there were WMD there, and who ignored that there weren't. None of that will ever get answered, because the truth could finish this Government once and for all, even if they are making a good fist of it now.

Enter The Enterprise Tsar

A superb popular move by Gordon Brown - Alan Sugar is appointed 'Enterprise Tsar'. Of course, no one understands what the job is or why Sugar has capabilities to do it. For those who have experienced his business methods, it is alleged that he is not a shining example of the best of British. His products were mainly poor quality clones and he never really made much wealth from them - his personal fortune came more from property dealings. No matter, his face is the one that delivers the 'You're fired!' on BBC and that was what Brown needed.

Naturally, there was the small matter that The Apprentice is about as true to business as beach football is to the Premier League, but again, no matter. Prim, lefties might argue that The Apprentice shows bad HR governance and subjectivity is the main determining factor for hiring rather then objectivity, hence two pretty girls were left to squabble over a prize that is the kiss of death - working for Alan Sugar. Then again, the standard of the candidates was pretty poor in the first place and hardly representative of modern management capabilities, we would hope.

No matter. Alan Sugar is the face of modern business and the king of enterprise. He is a popular choice, as millions watch his program and numbers don't lie.

Quite what the hell he will do is beyond me, but he's behaving like a politician already as he has a second and third job which he has no intention of giving up.

Round Up

It's a week when Fred Goodwin offered to give back £200,000 per year of his annual pension rights - if only he could give back the jobs of the thousands he displaced by his greedy business deals. He seems to not get it, as with MPs. The fact he negotiated for himself in the first place showed his metal. Giving back some of the money will not save his reputation.

In the US, Bank of America is again in hot water. Having received $45bn of state hand outs, and we already knew its take over of Merrills was a disaster on many counts, it has now been revealed that they allegedly paid $millions in bonuses to Merrills traders in order to 'keep top talent'. That would be the talent that lost the bank billions. It is a symptom of banking executive mentality that they think their businesses cannot survive in the real world without the champagne swigging, fast car driving, expensive suited multi-millionaire whizz kids who can lose them billions overnight and not care a hoot. Well, it seems they have learnt no lessons from the recent catastrophe and it's why there should be wholesale changes not just to the banking system and the regulators - which has not happened - but also vast changes of personnel.

We are setting ourselves up for the next fall and it will be harder and deeper than the last. The profits and bonuses will start to flow again soon and the make-believe world of making profits out of nothing will be the order of the day, as we foot the bill personally and collectively in taxes and our jobs.

Brown regrets that he did not impose a tougher banking system previously but didn't want Britain out of the mainstream. So why hasn't he learned his lesson and fixed it for next time?

Thursday, 18 June 2009

Passport Control

Much has been make of the new Identity Card and Biometric Passports but they seem some way off. So recently, I had to apply for a new passport under the existing system and it turned out to be all but easy.

I merely wanted to renew mine and I made the simple mistake of not opting for the fast turnaround service which offers a same day renewal. Instead, I thought to myself, how hard can this be? I mean I have an existing passport which I use weekly to travel with and I haven't changed appreciably in appearance. I mistakenly thought that they kept a record of my old passport and so it should be easy to verify who I was.

Silly me - as I was renewing, I had to send in my old passport and they issue a new one, cancelling the old simultaneously in around 3 weeks. No good for me on my current assignments, so I just sent off the forms, money and photo. I got a letter back two weeks later saying they needed my old passport. No less than 4 phone calls later, each with entirely conflicting information which was more to do with twisting bureaucracy than security and I was not really the wiser. I had paid £72 and now it seemed my best option was to get a same day service. So you would think I would just pay the difference and turn up with my old one.

Nope. I had started a postal renewal so I lose my money but have to send an official letter of cancellation stating the reason. Meanwhile, I just rang up and got a new appointment for the face to face one after being told that was not an option previously. In between, an unknown service called 'second passport' was offered to business types who travelled a lot, but this would involve the form and photo being countersigned, my birth certificate being sent in, plus a letter from my employer stating I travelled a lot and so needed a second passport for getting visas etc.

After no less than 3 hours on the phone and then travelling to 3 post offices before finding one with a passport form, I was told by a post office guy there was no such thing as a second passport option on the form - so the information I had was wrong.

It was a complete nightmare and for those morbidly interested, I am doing the 4 hour service at Newport next week and starting again - more money but it was either that or resign and take up the cloth.

But here's the rub.

The Easy Way To Forge Identity

Remember the seventies book and film by Le Carre - 'Day of the Jackal'? Edward Fox plays the Jackal who is seen scouring headstones for children who died young, then goes to Somerset House, getting their birth certificates and then applying for a passport in their name.

Could never happen in today's secure world, surely?

Well all you need is a brief look at someone else's current passport. Note the back page details like number, place and date of issue and expiry date, address of the person and birthplace. No need to steal the passport. Then ring up the registry and get a copy of the person's birth certificate. On there will be the person's mother and father's details. Then get a passport form - and fill it in as a first adult passport, giving your details plus the parents. Then add a cover letter on a fictional employer's letterhead stating that you travel a lot, add a letter from yourself saying it is for a second passport for business not a renewal, then get the form countersigned by a mate purporting to be a doctor, lawyer or similar, they have to countersign one photo also, then send the whole lot off.

Hey presto, a week or so later you get the second passport - you might want to ask to have it couriered to your 'employer's office' so that you can catch the next plane or stake out the real person's home to intercept the mail but such deviousness is not beyond the whit of a terrorist.

The fact is, your birth certificate is not covered by the Data Protection Act and is a matter of public record - so anyone can ask for a copy of yours or mine, any time. Death certificates, the same.

So while it was an interminable, complicated process for me renewing, it's actually easy as pie for a criminal to clone your identity. We may be 10 years into a new millennium but we are still pretty primitive when it comes to security, yet sophisticated when it comes to increasing bureaucracy. Comforting to know this as all the security cameras in towns are trained on illegal parkers and people putting the wrong things in bins.

I wouldn't worry about privacy with ID cards - we simply will never get there.

Cincinatti Rat

Scientists have released new evidence that rats have the capacity to gamble. I bring an exclusive interview with the team of researchers, some of whom wished to remain nameless.

"I first started by chewing discarded lottery tickets when I was a kid," remarked a brown faced rat who simply wanted to be known as Number Five. "I noticed the numbers and I calculated the odds and thought that it was a mug's game. I mean the odds were around 14m to 1 to win the jackpot. So I went with a mate who used to rummage rubbish at the back of a Ladbroke's and we found used betting stubs. When we compared the losing slips to the form guide in the Racing Post, it was obvious that the idiots who were betting had no idea. We also knew there was no point on betting on other animals. So I decided to go with cards, dice and roulette - numbers never lie and it's all about playing the odds."

"I quickly became good at it. By playing the odds, I earned more food on simple games like Blackjack. Soon we progressed onto Stud Poker and some roulette and I was getting very fat and very happy. Then they introduced that damn drug and it went wrong. I just couldn't get enough of the cards and I kept making stupid, reckless decisions and soon lost weight and became a gibbering wreck."

He held out a paw, which shook markedly and and looked wizened like an old man's. His colleague, Snake Eyes Joe, cowered in a corner nearby. His was a sad story.

"I played craps and I couldn't lose for ages," he whispered. "For a while it was so easy, I just kept winning more food and I had to give some away to family members it was so much. Then one of those 'pushers' in a white coat slipped me some pellets with loads of dopamine in them - they tasted great. After that I kept throwing nothing numbers and snake eyes but gambling all I had. I'm ruined, the bank is foreclosing on our sewer and the only thing that is keeping me alive is the fact the councils collect the bins every two weeks rather then one. My family have upped sticks and found a Chinese restaurant they can forage in and no one ever talks to me any more. Gambling has ruined me."

Conversely, I found the leader of the team in filthy drain, his fur shiny and the smell atrocious. King Rat was a big, healthy specimen and had several helpers to carry his food around. I found him reclining on a chaise longue and chewing on a rotting meat bone.

"Gambling is in my blood," he said simply. "My grandad was a bookie, my dad owned a casino and I have a super casino out front - the first granted by that nice Tony Blair. He was a man of business - he saw an opportunity and he went for it; he's my kind of rat. Rats have done very well under new Labour - there has been a boom in cafe culture (and rats love their coffee and more accessible bins), the sewers are rich with garlic flavoured food, thrown away wine and chinese take away rice, all day drinking means there is more vomit piles to chew on and now we have super gambling. This online stuff is no good - you can't touch or smell it let alone eat it. I just love casinos and slots - the smell of winning is awesome."

"I made my money through running books to start with then I opened my first super casino in the drain by Corals and the rest is history. I can afford this opulent sewer and my own rats thanks to gambling. I don't see it as an addiction - people love fun and if fun is about losing vast sums of money then who am I to stop people. The young have started now - as long as they have their dad's credit cards, their credit is good with me. Some say gambling should be limited or outlawed but Blair and I see it as coinciding with Christian values I mean, Jesus took his risks and ended up on the cross. He was the ultimate gambler and so losing money is a pious thing."

I asked a white rat wearing a dealer's hat if the recession had hit gambling. "No way," he replied. "If anything, rats gamble more in a recession. True, the sewer and second home markets have dried up, we don't go for so many lavish meals at the back of restaurants anymore, but gambling gives you a chance to end all that and win big money. So business has been booming and since the Government introduced new super casinos, rats have never had it so good."

Finally I saw a thin rat, with a slimy grey coat in the corner, it was clearly in some distress and was offering a bowl to passers by. I asked him his name. "Bertie Big Bananas," he replied in a barely audible hiss. "I was a big noise in the City. I made big money on gambling derivatives, exotics and shorting. Times were fantastic - loads of food, champagne, loose women and fast cars. I wore sharp suits, wide ties, braces and shoes. Everyone thought I was the big cheese - I could afford accountants to save me paying tax - I was the elite."

"Then it all went belly up big time. One minute you were the big man, the next a penniless pauper and no bonuses. Other rats despised me and I couldn't even get a pension. No more suits, shoes and food for me."

I asked him if there was any hope for the future.

"Yes," he replied with a small glint in his eye. "I have been attending a politics class by Derek Conway and read Alistair Campbell's autobiography. I am going to where the money really is and where rats can really flourish and get all the perks they need. I am going to be a politician. All I need is a nice safe sewer and I'm laughing."

It seems rats do mimic humans or perhaps it is the other way around.

Wednesday, 17 June 2009

Lessons Learnt

As we soldier on, with the world financial crisis that took us to the very brink of oblivion, a distant memory and confined to the annals of history, it seems we have learned little from the whole debacle.

I have no idea any longer how much we have spent, pledged, loaned, guaranteed in prop ups and bail outs but it something close to £1.3 trillion in the UK alone, closer to $5 trillion worldwide, about a tenth of Global Output. It seemed in the midst of the crisis, although my memory is hazy, that we were all particularly vindictive about the regulatory bodies who basically allowed banks to take excessive risks - most of which caused a repeated and prolonged breach of basic banking standard governance tests. We accused the regulators of being 'asleep on the job' and 'turning a blind eye' as banks produced profits from thin air and paid their executives bonuses of incredible magnitudes. There was kamikaze lending, 125% mortgages, a ten fold increase in house values, complex derivatives with unclear lines to unassessed assets - no one had any idea who was buying what, who owed who and how much the underpinning assets were.

All the while, the regulators collected their fat salaries, had power breakfasts and big lunches with roaring banking executives and did nothing - some claiming because the Government told them to do so.

Learning From Our Mistakes

It would heartwarming then, given how close we came to the financial equivalent of a China Syndrome global financial meltdown, to know we have learned lessons from our mistakes and plan a new, tighter system so that the same mistakes are not repeated.

In a Blairesque re-writing of history, Chancellor Alistair Darling now tells us that the regulators were in fact not to blame for the financial meltdown. In fact, he tells us that it was not the system that was at fault but the judgement of those who were in the system.

For the uninitiated, that would be Lord Adair Turner, who has had the penance of revising the system in between all his other and non-executive jobs, and his well paid and dimwitted CEO, Hector Sants. Curiously, they were at the helm of the FSA before the credit crunch hit us all so badly and they are still there today. So we have a situation where Darling believes the FSA is well set up but manned by idiots with no judgement but he asked the same idiots to revise the system and stay there.

Good thinking - that should stop the whole thing happening again then as the same Government is there to tell them to turn a blind eye again.

Re-Writing History

I dare say in the revising of the fiasco, we will find that Lord Myners and the Government were salaciously hoodwinked by McKillip and Scott in stitching us up on Fred's pension, that Ron Sandler at Northern Rock personally took the decision to keep handing out 125% mortgages after the Government took control, that Gordon Brown suggested that Lloyds TSB did not, at all costs, take over HBOS at the eleventh hour and that the British taxpayer voted openly in favour of his leadership at the MEP and Local Council elections - they just got the ticks in the wrong boxes which was someone else's fault also.

The fact is that the banks are already steaming ahead on the old course with new money and no punishment for their past. Precious few executives have lost their jobs but thousands of tellers, administration and branch staff have lost theirs while bonuses will start to flow again at renewed rates very soon.

There has been no ban on shorting or derivatives, credit is flowing back into the system to start the whole gravy train again. In fact, at the last round, banks were starting to clock up enormous profits out of thin air once again. The banks are happy as sand boys.

Meanwhile, down in the real world, unemployment continues to rise, negative equity is rising to above 11% and small businesses continue to go bust in their hundreds, every day. The personal and social consequences of the worst financial crisis since the Great Depression will be felt for a long time to come, not least in higher taxes lasting for another 20 years - let alone the missing, household named businesses.

It would be comforting to know that the Government would have got to grips with the real causes of the banking crisis, make sure it can never happen again and have a regulatory system which had the teeth, motivation, no vested interests and the determination to act decisively whenever and wherever it saw breaches of governance.

But that's precisely what we won't get. The Brown-Darling thinking is that's no way to get the kind of growth they want. Just as Green and environmental policy are at odds with capitalism, we will never get that either.

Politics is all about the here and now - it's why filling in Expenses Claim Forms is a higher priority than fixing the banking system.

Tuesday, 16 June 2009

It's All About Cash

If I had a pound for every time an executive said to me in the past that business is all about growing revenue and that profit will follow, I would be a rich man. Most who have followed that doctrine and planned only for growth at all costs have run face-first into not just the recession but the credit crunch too. The Perfect Storm for business.

At this point, all executives suddenly realise that cash was always king and cash comes from profit, planning and sound management. There is no worse feeling for a business facing survival to run out of cash and have nowhere to get more from. We need only look at the banks and how they spectacularly ran out of cash via credit and then exposed a whole multitude of heinous mistakes they had made which all came from looking for the next deal without thinking about what it was worth or how it was funded.

There was a time when you could have walked into a car showroom with a bag full of cash and get the best deal. Up to around a year ago, car salespeople treated the cash buyer as a leper as they got such a nice share of the profit on any lease deal that it more than compensated for the discounts they gave but more importantly super-charged their commissions. It must have been a horrible awakening when car leasing companies couldn't supply the cash any more.

In any business, the fuel which makes the whole engine work is cash. In the bad times you really know it and in the good times you should horde it. Of all companies, banks should have known this as they ram it down small business men's throats daily.

Cashflow Is King

Cashflow is the vital circulatory system for all companies. Even in the US where Venture Capital companies used to hand cash out like freebies at a computer show, now murmur the mantra about 'cash burn' which is the rate at which new companies consume the capital they have been given to start up. The heat is on when it comes to cash.

Growth, when you boil it down, is fuelled by cash. Yes, you can send out the salespeople, build a nice product, do some fancy marketing but all are the manifestation of spending cash. The recession has taught us hard lessons that every pound spent should be done so as if it were your last - make it pay back big time. But how do get cash to expand in hard times?

True, the Government has come up with Enterprise Loan Guarantee Scheme which theoretically makes it easier for a bank to extend you credit. In practice, it is just a way to guarantee up to 75% of existing loans and little new credit has filtered into small businesses. It was a nice idea, stupidly executed as usual. Meanwhile, even if you do get more credit to survive or expand, there is the thorny issue of bad debts.

It is estimated that up to 40% of small businesses have experienced poorer payments or bad debts from their customers since the start of the recession and credit crunch. Of course, this means that when you go to any bank or loan company and seek the vital loans and credit you need to expand, your cashflow looks poorer because of it. It becomes a vicious circle. In fact, the larger and more stable your customers, the longer they take to pay as they treat smaller, less important suppliers as low priority when it comes to payments.

Credit Insurance

Many small businesses have not explored the options of credit insurance. Often this is down to the fact that they have a relatively small customer base but conversely, this is when the risk is at its highest. You only need one large customer to default or pay late and cashflow really hurts, let alone go insolvent. There are credit insurers who will take on the risk of defaulting on payments but as usual, there is a catch. They need to see your books, cashflow, payment histories, past bad debts and profitability. If you are a dodgy risk, then insuring your customer debt is barmy.

Naturally, this would not have been an issue if you had thought of this before the credit crunch - insurers would have tickled your tummy to get your business. Now, they are reining in their terms and slashing cover as claims on them rise. Trying to get insurance on debt now is hard work.

In fact, even if you have been working with your insurer for a while it is no recipe for getting more credit insurance when you need to expand. They have gone so conservative, even if you have a good record with them, that they are defying good credit ratings and offering low or no cover at all, as I have found out lately at one of my clients. But you cannot do without this sort of cover in these conditions.

Growing Via Credit Insurance

My advice is to do a number of things geared around cashflow and profitability. Credit insurance is not just a safety net, it is a way to secure growth by mitigating risk and establishing a bridgehead for creditors to feel more confident about your business. If your own debt is insured then you are less likely to go bust, so more companies will feel confident to do business with you.

My tips are:
  • Renegotiate contracts with suppliers to get better discounts and payment terms. Some are offering deals on cash or prompt payments which may actually boost profits but murder cashflow - think carefully and, above all, model your business to work out your cashflow. Get your hands on a good business planning tool to work your cashflow through and see if these discounts help or hinder. If you don't know your business mechanics you will make a mistake.
  • Squeeze your customers hard. Chase payments early and even offer discounts for early settlement if need be, perhaps passing through discounts from those suppliers who offer the same or a share of it.
  • Cut unnecessary costs which release cash - don't cut for the sake of it as it often does not immediately help cashflow so choose your cuts carefully.
  • Get rid of poor paying customers or nasty low margin business. When showing your books in detail to a bank or credit insurer, the more low margin or long paying customers you have, the lower they will rate your business.
  • Don't just show them projections and forecasts - know the business intimately. Immerse yourself in every deal, think about what it will mean to cashflow, think about the risks of missing out.
  • Make sure that the deals are GOOD deals - don't go for low margin business with companies with poor credit ratings, think hard about the worth of that business as risk is the byword.
  • Think what impact it would have it you could not service that GOOD business through lack of credit (assuming your products and salespeople are good enough to close them, don't guess here). Think also about if the competition could get those deals because they are with a different credit insurer. Demonstrate your knowledge of your market by knowing what your fair market share is and so if that should slip due to poor ratings by credit insurers alone, then estimate the impact.
  • This cost impact is your weapon as you can take it as an 'Opportunity' to other insurers - don't just approach one.
  • Aim high - go to insurers at senior manager level - you need to talk to businesspeople with executive powers not paper-pushers.
  • Build trust and relationships - as with banks, business is about trusting individuals as well as the business dynamics and accounts. Make sure that you act professionally, know your subject and empathise with your credit insurers or loan companies before the hard negotiations and never sound desperate.
  • Make sure you have 'cleaned' your management accounts as much as possible before you get there. Make sure you have cut costs, implemented new supplier deals or cash management initiatives early rather having credit insurers highlight them and tell you how to run your business - it also impacts their risk assessment if they think you cannot run your own company.
  • Multiply your credit options. Don't just go for single sources of cash - think about a range of options, even if you do not use them all. Often, one source of cash management helps get another so make sure you have access to as many facilities as possible as your own insurance and be able to flex your business more easily.
  • Be transparent - the last thing you should do is be 'economic with the truth' or cover things up. Financiers have a nose for bull and so don't risk it as it ruins credibility.

Credit Insurance comes at a price and is usually bespoke to your business so make sure you opt for what you need. In the end, like any insurance, it is there as defence against the worst case scenario and will pay out if your client should go insolvent. What it will not do is necessarily improve your cashflow - that's still something you have to manage yourself to maximise.

Routes To Market

Currently, I am involved in two projects to help Hi Tech companies accelerate their business by building channels to market for them in Europe. Specifically, I am profiling the markets, researching players, evaluating the potential partners and then selecting them.

What the projects have shown is that while you may have a 'cookie cutter' methodology for onboarding and managing a channel network, each territory may require a very different type of channel partner due to the maturity of the market or the accessible opportunity. To some, this assessment of the opportunity is common sense but analysing the opportunity with some science is referred to in the consultant community as the 'Value Chain Analysis'.

As a dyed-in-the-wool sales animal at heart, I generally baulk at 'consultant-speak' but sometimes 'gut feeling' and 'common sense' need a) verification and b) some logic and evidence to support intuition. In this case, I am on the side of the consultants as we all know that salespeople are optimistic animals at heart, but I would go one step further, most are 'wishful thinkers'.

A Sale Is A Sale

The old maxim salespeople use is that a 'sale is a sale'. To most salespeople, there is no such thing as bad business just weak management for not taking an order. No salesman has ever been undersold and only vicious price cutting has ever beaten a salesman. To salespeople, 'revenue is king' and 'big is beautiful' so any order is worth something no matter what the margin.

This is a nasty slur on salespeople and I generalise - but management does not help. Many firms put out mixed messages to their sales teams. One minute they want 'growth' and the top line becomes vital, the next minute 'The board is bleating about margin' and suddenly, previously revered orders are being turned away as the margin is too low. At the end of month or quarter, all logic goes out of the window and anything goes.

It is little wonder that in this blur of confused notions and messages, that common sense and gut feeling can be very poor indicators.

Value Chain Analysis

A task I have recently been involved with is taking a Hi Tech company into Scandinavia and they have a Sales Manager responsible for the territory. Already, in the eyes of most Scandinavians you have made your first mistake.

Sweden alone is a country whose area is the same size as that of California. The four countries that make up the classic definition of Scandinavia have 4 different currencies, 4 different languages and 4 very different economies and demographics. Norway is very famous for its oil revenues and has a very high standard of living and low unemployment because of it. Sweden churns out some of the best graduates and entrepreneurs in the world yet has very poorly developed interactive learning facilities at primary and secondary school level despite having more internet connections per household than any country in Europe. Denmark is famous for beer and bacon but also has a large science park dominated by Microsoft and spawns some of the most innovative companies in Europe. Finland is a vast territory with a language more associated with Hungarian than other Scandic languages and is dominated by vast tundras that make its lumber industry one of the biggest in Europe but it is also home to an former boot company that somehow transformed itself into becoming the biggest name in mobile phones.

Take any one of these countries and the population of people and businesses does not warrant sophisticated sales engines to sell to them as, unless you are in an oil related business for example, Norway has its population spread out over a vast area but over 60% of it lives around the major conurbations of just 6 large cities. Yet, in all four countries, the potential markets are saturated with intelligent, entrepreneurial people who run some of the biggest and best businesses that Europe, and even the world, has to offer.

Sweden is the home of one of the largest furniture vendors in the world in Ikea, one of the most prominent retail brands in H&M, two of the safest car brands in the world in Volvo and Saab and was the birthplace of the best free internet phone service in Skype. For a vast country with such a small population, it punches way above its weight at just about anything it does from sport to business to the arts.

So the problem is that when thinking about trying to sell to these countries, you have a dilemma. There is more than enough potential but each market requires a fairly substantial investment in sales effort to get it.

The salesperson in us all would see the lovely potential users and think of selling to Nokia, Volvo, Norsk Hydro Statoil, Sappi, Carlsberg, Stena, Mearsk, Ericsson etc but beyond those household names you quickly descend into what we would classically term as small to medium sized businesses by size. And we all know that such companies are traditionally very conservative buyers.

So the 'Wishful Thinking' salespeople would use my argument to think that by combining the potential buying power of all 4 countries, you have a region rich with opportunities. Such a salesperson would easily justify several sales trips up north and come back empty handed with tales of massive opportunities, slow buying cycles, blond, good looking people, expensive beer and very friendly people who speak exceptional English.

Then the manager gets the travel expense claims and the world does not look so good.

Analysing The Market

Scandinavia poses a classic problem for companies. Most managers tackling the issue will think of centralised operations and logistics and in-country salespeople. On paper this looks fine. Several major IT distributors have operated in the total region and tried this and now only one remains.

Don't get me wrong - that remaining distributor has revenues from Scandinavia of over $1bn - it has a huge logistics hub in Sweden and sales offices in all 4 countries. But here's the rub - it has gross margins of around 7% while it has to ship to all parts of every country mainly by road -and you do not need to be a genius to work out the total area of the 4 countries is over a quarter of the size of all Europe and that the Arctic Circle means that terrain gets pretty difficult in parts even if you get some of the most spectacular views in the world.

Another issue is that this distributor's stock is bought in Euros, but it has to bill to each country in local currency. We all know how currencies have churned in the last year and the Scandic countries have had a ride not dissimilar to sterling - the fluctuations are large and of course there are multiple currencies to think of.

So when you look at the Value Chain Analysis, you quickly see that the only way a distributor could justify selling a specific line in Scandinavia is for that line to have enough sales to generate enough gross margin in each of the countries to pay for the selling costs, then have more than enough profit to cover the logistics while having enough left to cover the currency fluctuations. That distributor reckons that any line entering the market must get the mindshare of all 4 country's sales teams while having enough revenue and margin to get over the 'economy of scale' to make it viable and that is set at around $4-5m in revenue as minimum hurdle.

So for an emerging technology, with no market share in any of the countries to talk of, with a product that has to be seen to be sold, this is not good news. 'Wishful thinking' and 'gut feeling' are not helpful in solving the problem.

With the economics of the Value Chain Analysis focuses the mind - you have to find a different way.

Tackling New Markets

So if you arrive with an innovative new product which is selling well in English-speaking territories, is well suited against its competitors and is valued by small to medium businesses and above, then Scandinavia is logically a good hunting ground. Companies and people up there love technology - heck, they make some of the best of it - they are sophisticated, well off and they are all always seeking competitive advantage.

What I have also learned in my past is that they are willing to pay - and above the going rate - for good products. When at Genesys, our sales from the Scandic region came at more than twice the average selling price for the rest of Europe. We did a good job, to be sure with a sizable office in Stockholm and satellites in Copenhagen and Helsinki, but we never conquered Norway as we never put an office there. Sales were not bad but the average selling price was the diamond and the fact was that we solved a big problem which was communication over distance. Not only is Scandinavia large but it communicates globally as many of its businesses are world class companies.

So lesson one - play your cards right and you can make more money per sale in Scandinavia. Tell that to your Value Chain people and product marketers. Enter the market with that thought and it will help enormously but it also means you have to pitch your Value Proposition very sensitively so know what problem you solve and how well you solve it beforehand.

Broad Brush vs Focus

The second thing to learn is that 'Big is Beautiful' for the broad brush approach. If you are going to view the region as one territory you had better be expecting some pretty sizable sales to justify the resources you are going to consume. Classic mistakes are trying to pick off large sales in big companies only or shotgunning your efforts. The fact of the matter is, if you are a relatively unknown quantity in the Nordic region, going broad brush will lead to failure.

For broad brush read broadline in distribution terms. Your name needs to trip off the tongue to get enough sales across the regions to make it viable up there. So if you are going to take on, say, a Symantec with the next best thing, think long and hard about how you do it.

Focus is how I would do it. It does mean you have to look at each country in isolation but this sharpens the mind. Getting Norwegians to buy a product is not the same as getting Swedish people to buy - the pricing may be different as well as the characters involved. My approach is to look for Channel partners who will represent you in the country. The mistake is to think that if such a player has an HQ in Stockholm and sales office in Oslo then you have two countries pegged. But Scandinavia does not work like that - your Partner is no better off than you - the Oslo outpost is merely an opportunist sales centre.

What you need are local 'evangelists'. Companies who share the dream of your product, understand your vision, will professionally mirror your values and techniques, be able to show your product in the same light as you, be able to support as you would, be as dedicated to you as you would, sell as voraciously as you and want to be you in that country.

You may have to sacrifice a little margin, you may think they are demanding, you may think they make a little too much margin for themselves, you may think their demands on language are tough but what you get is a company that you can trust and will share in your success.

Such companies are not always easy to find. You can find plenty on the internet but until you meet people and see see how they have been successful then you will never get the right one.

Here's an example - the major broadline distributor in the Nordics ships around 18,000 projectors in Scandinavia a year of all brands which sounds a lot. Epson's partner in Sweden is a 9 man company based in Stockholm who last year shipped 10,000 units in Sweden alone. On paper, this just could not happen - projectors are mainly commodity products. But when you meet the people behind the companies you instantly understand why. This small company has grown up selling projectors as a passion, with knowledge and differentiation (they sell only one other brand and that's the second market leader in Sweden). They don't have massive logistics or warehousing, they operate on 'Just in Time' stock and they don't have a massive call centre with multi-product salespeople. They have dedicated salespeople who have the products in their cars, who visit customers and show them how Epson is the best.

The also have invested heavily in Microsoft Dynamics and by September they will have an online shop for web purchases so that resellers of the main broadliner can have all the web buying capabilities of the big players.

And finally - that small distributor makes approximately 50% more gross margin on average selling the same products as the broadliner.

Horses For Courses

The message here, using Scandinavia as my example today, is that you have to assess each territory you want to sell in and understand the Value Chain of supply to know whether the business will be profitable or how it could be. If the market is ripe, mature or very easily accessible then broadline may be the answer but as in the Scandinavian example it doesn't answer all the issues.

The classic error in the past of US companies entering Europe is to view the continent as having the combined gross domestic product as large as the US - that has to be opportunity. But the reality is that even though we have the innovation of the Euro, we are still some 50 countries with many different languages and cultures and each country may be less of an opportunity than another. One size does not fit all, as the Americans would say.

So consider your approach carefully. Many marketing dollars can be consumed learning the hard way or paying for the obvious. There are may of us who bear the old scars of the wrong approaches and now understand the realities of Europe.

Europe is a massive, open market full of well-to-do, knowledgeable buyers, you just have to know how to get to them.

Monday, 15 June 2009

Is The Recession Over?

They say a week is a long time in politics - well I have had a week or so off and in that time Gordon Brown has endured the filthest time of his life and survived.

The price, though, is that he confirmed that Peter Mandelson is the most powerful man in Britain who organised the necessary Parliamentary support for Brown after the disastrous MEP and Local Government Elections. If we needed any evidence of how powerful Mandelson has become just think on the incredible decision to leave Darling as Chancellor instead of Brown's personal choice in Balls - Ed, I mean.

Brown endured further humiliation as a procession of Cabinet Ministers resigned with careful timing and wounding parting shots from Purnell, to the 'snake in the grass' Blears to Flint, who left with a withering blast on New Labour's record on women in the Cabinet. As Britain voted emphatically against New Labour, even allowing a BNP Councillor to be elected in leafy Hertfordshire and two of them as BNPs, Mandelson rallied the troops enough to make sure Brown clung to power within his own party. There is always a price to pay with Mandelson - and it must gag in Brown's throat to have to answer to him for the rest of his tenure.

But when you sleep with the devil......

Recession? What Recession?

As we begin a new week it seems all talk of a recession is moving into the past tense. Green shoots of revival and talk of the worst being over now seem to dominate as the spin engine gets back into flow with Mandelson at the helm again. A couple of Think Tanks have indicated that Britain's economy actually grew in the last two months, there is some hope that the car industry is saved after Mandelson's £2.3bn promised bail out in February finally got somewhere and scrappage seems to be having some effect.

The NIESR, a Think Tank, has growth for the last 2 months at 0.2% in April and 0.1% in May but some say this is actually just a short period of growth within a wider recession, arguing there is always growth at the end of a tax year. The NIESR themselves are little baffled but believe this could be the start of a recovery. Indeed, house prices are beginning to show signs of a sort of recovery while mortgages are on the increase. However, the growth figures will merely show over the quarter that the decline has slowed in reality rather than real economic growth, so technically we are still in a recession.

At the business level, things are still very unclear. The situation on open headcounts and redundancies still points to the fact we have yet to feel the full force of the recession and there are no signs of a recovery on that front. Signs in the retail world are very mixed with giants like Tesco faltering for the first time in ages; the travel business is still dire with Easyjet and BA suffering badly while even Ryan Air is squealing - and still we see firms going out of business in this sector with the mighty Arcandor in Germany causing a heart flutter at Thomas Cook.

In the small business sector, there is still a mass of uncertainty. For my business, I have managed to switch interests to firms who are benefitting from Fiscal Stimulus and their businesses are flourishing. In one case, their market expectations in Italy, Spain, France and Germany are enjoying a rise in multiples of annual sales rather than just double digit growth and the emphasis on my work is how to gear the supply chain to cope with massive growth rather than survive a recession.

And here's the rub. The client is a UK company and as it eyes it's fair share of € multi million educational contracts in several countries, it has found its bottleneck as credit. Even by appointing large scale, financially sound Channel partners, we have found that, even when their Dun & Bradstreet ratings are high and their accounts good, that their credit insurance cover is pitiful.

If anything, credit insurance is stifling growth.

Would You Credit It?

As we neared the recession's event horizon, you could have got credit for just about anything - there was more money around than you could shake a stick at. There was a good reason for this - City whizz kids had found a way of making money just by issuing a debt and it had nothing to do with interest payments or the worth of the asset. The debt itself had become the lucrative 'asset' and trading it time and again had brought about wealth many times that asset's worth in short order.

The rest was history, and the consequence is that we have now retrenched beyond the point of common sense. Give a bank or credit insurer a D&B £1.5m credit rating for a company with a superb capitalisation and good accounts and you get ZERO insurance cover. No - not a penny.

How do you combat such a situation?

Here was my plan when the news came back. The consequence of the news was that my client would miss out on it's fair share of around 33% of a €50m government contract to be spent by the end of this year on interactive learning. The distributor we had appointed meant we could supply ex-stock all orders, make total solutions for the schools involved, ship the items anywhere in France and have them installed by the time the money needed to be spent - all small dealers would get credit and access to the products needed while my client's logistical costs would fall dramtically while doubling its revenue. Euphoria turned to dismay as the €1.4bn turnover distributor got a zero credit insurance rating.

So my solution was that my client should approach senior executives at the credit insurer and tell them that the tender in question was rock solid money proposed by Sarki himself to equip 5,000 classrooms across France by the end of the year. If, by the inaction of the credit insurer, our main competitor got more than their fair share of that money while we lost out because of zero credit insurance and, by chance, they use the same distributor or similar but had no problem getting credit for them, then we would duly sue them for compensation for losing out due to their prejudicial assessment.

I had suggested this course of action to the legal and finance department of my client and I had been told I was being silly - the world does not work like that. However, the CFO did outline the case to the credit insurer's senior people and within 24 hours a £500k credit insurance had been agreed - spookily, the exact amount applied for.

My simple philosophy here is that business is still business. A well argued, sensible approach showing the worth and the risk actually won the day - but it does mean that business has to think hard about the risks involved and be prepared to negotiate at the higheest level. Credit insurers, like most companies, employ mostly 'yes men' at the client level and so they will just read from a sheet and become intransigent when challenged. Their bosses are different.

Breaking Out After a Recession

I have argued a lot about planning for a recession and how this could avoid some of the disastrous consequences we have seen at some great companies. But I argue it not just to avoid the consequences of the recession but to set you fair in order to take advantage of the upswing. Taking opportunities as they arise when the green shoots appear is vital and if you are still looking at who should be made redundant and cost savings when the uptick comes, you will miss out.

When the upswing occurs, you have to have all the business elements aligned and credit will be one of the hardest issues to face. Risk is a bad word in small business as it is hard for banks and insurers to get granular - they think more about the macro issues. But that does not mean they cannot get granular and see opportunities.

For you as business executives, it is still very important to work out what business is good business and whether you are well placed to take advantage - this requires planning and being honest with yourself. The reason for this is that if you are going to ask the bank or credit insurer to support you, then you will get but one shot to get it right. If you go in arguing you need support based on a flimsy business model, low margin opportunities and requiring a lot of risk from them, then not only will they give you short shrift but they will be less inclined to listen to you next time.

I am not sure if the recession is over. I have a potential client who believes they can quadruple their business over the next two years - this week I hope to understand if they have the business plan to do this but it is exciting companies are thinking this way once again and looking at opportunities. What I do know is this:

If you do not have a plan to take the opportunities, you will miss them. And the plan needs to be properly thought through, detailed and stand up to the test. Then you will find, that money is once again very available. Many companies will win in the upswing but there will be many who ignore this advice and fail. The recession has yet to have its last laugh as its long tail will ensure businesses can still fail when the worst is long past.