What Did Sub-Prime Have To Do with Me?

In a discussion with an old friend yesterday, he asserted that the cause of today's financial mess was the sub-prime market in the US. It is not an uncommon perception, after all it is one that Gordon Brown has been quick and determined to impress upon us all.

Just a Minute

The estimated cost so far of the global banking bail out is £4.5 trillion and rising. If I am not mistaken, the total cost of the daft sub-prime lending was a mere fraction of that figure. So why is it costing so much?

The fact is that that sub-prime was only part of what was a systemic failure by the financial industry. The current financial mess was caused by a scam that started from a simple idea that built in a long term time bomb just as soon as the whizz kids got their greedy hands on it. The trouble with the financial markets is that it is a closed shop - no-one ever questioned what was happening even in Government and we even acted to give them more freedom to do what they wanted and maintain self regulation effectively putting them beyond the law. Even as we wallow in the mire, the calls for heads to role have already subsided - banking will carry on as normal. In fact the global bail out will not only ensure that, we actually depend on it.

How Did It All Go So Wrong

Let's be clear - Northern Rock, HBOS, Bradford & Bingley, Barnsley Building Society all had little to do with sub-prime. Their mortgage base was almost exclusively in the UK. So how were they caught up in this mess and why does Brown tell us sub-prime caused their failure?

Banks are special companies and different to businesses generally they have a liquidity test they must pass daily. Some genius came up with the idea that because lending was cheap, all you had to do was borrow money from other banks at the inter-bank lending rate (LIBOR) and then lend the money out at a slightly higher rate and make your profit on the marginal difference which over 25 years could be a lot of money. Better still, because you now have people borrowing from you and owing you interest on an asset they have mortgaged, you have 'security' to borrow more money to lend out which allow you to borrow more. So why worry about how much capital you have in your bank or amounts of deposits? You can securitise your next loan on your last one.

Better still, why not lump together all the debts you have and sell them as a lump? Sell them to interested other parties like investment banks who can wrap them up in other debts and sell them on at a nice little profit and commission to another company who will lend them money to lend to someone else and buy more debt. Pretty soon everyone was at it. It was a no fail scam. The more money to loan, the more you can lend which means the more you can loan.

In order to make it more interesting and lucrative, any old debt was lobbed in. And the packages were traded and traded amongst each other so that pretty soon all connection to the original assets that were lent against were lost. Quite literally, no-one knew who actually owned which original debt as it it been repackaged traded many, many times and at each trade someone had made some marginal profit which meant the price of the packaged debt had lost all connection to worth of the asset and the interest it could yield.

Everybody Was Happy

Money was plentiful - it was a no fail scam as the value of underlying assets were rising. In Britain alone, average house prices rose a whopping 160% in just 10 years and the boom forced up pockets of Europe as Brits bought second and even third homes abroad plus buy-to lets so we could share in the bonanza. General spending was high as everyone leveraged the increase in their equity by remortgaging which was another debt to be sold. Incredible deals were offered to 'churn' mortgages as competition to lend money and make more 'profit' even on mortgages that lasted only for the duration of fixed rate deals. At the height of the fiasco, Northern Rock and others offered mortgages of 125% of the value of the purchase price and took account of several times the annual income of the purchaser. It made no sense whichever way you calculated it from our side but at the Banks it made plenty of sense as it was another 'asset-backed security' against which they could borrow more money......to lend more again. Any business was good business.

A House of Cards

Sub-prime was like a bucket of icy water on a slumbering drunk. It exposed the key issue. What if the original purchaser of the original debt could no longer pay their interest payments? And because of that, they have their home repossessed. And, because specific mutuals in local areas sold to many people on the same basis, the problem was experienced by many more. Pretty soon whole sections of communities had their homes repossessed and the local property prices crashed as no-one wanted to buy these repossessed homes.

What sub-prime did was merely illustrate the madness of the system. The problem then struck everyone - after all those exotic and derivative trades of packaged and repackaged asset-based debts who now actually owned those original debts and what they were they actually worth?

It wasn't the fear that Northern Rock, HBOS or B&B had loaned money to sub-prime borrowers in the US, that killed them. It was their business model, because what happened next was that all Banks suddenly stopped lending to one another for fear of the others owning some of those worthless assets. So complex was the problem based on such a simple concept, that the inter-bank lending rate rocketed and immediately meant that in order to fund their businesses, Banks would have to make large losses. But worse still - Banks simply stopped lending until the madness could be sorted out.

Without a ready supply of borrowing, Banks who had used the model of borrowing to lend rather than leveraging their deposits simply went bust. On paper few of these companies had actually done much wrong in lending to customers. They had had gone wrong in their own business model.

It meant, as every Bank bought and sold each others debt many times over in a revolving scam of epic proportions and at each trade more money was skimmed off, that one minor hiccup in the lending system caused by the exposure of its folly, would bring an entire House of Cards down.

Government Hubris

You can blame the Banks and the Regulators. But we had seen this sort of idiocy before in companies like Enron. Governments had stepped in and brought about new Corporate Governance rules like Sarbannes-Oxley. But Banks had conveniently waved a collective two fingers at it all as they self-regulated. They wrote their own rules and kept outsiders out.

Besides why would Governments act? GDP was rising quickly, inflation remained low as the cheap money drove spending to enormous heights and tax receipts were flourishing on all the extra VAT, Stamp Duties and jobs being created by the 'Virtual Boom' which lasted a good 10 years.

The warning signs were there. At the peak 49% of all new mortgages sold were re-mortgages. Average earnings per household were actually decreasing in real terms and more worrying the rate of savings were going negative to earnings and a long term pension crisis was looming.

Britons had quite literally mortgaged their future to fund the present.

Gordon Brown had his stable economy underpinned by this false boom and anyone who had a brain cell spotted that at some point there would be a hole in the finances - it was the safest bet since Red Rum. But Brown had a problem - he had to keep it going in order to keep the finances looking good - spoil that and the whole New Labour scam would be exposed. They had spent beyond all sensible proportions and over 1 in every 4 jobs in Britain was in the Public Sector. If the good times stopped, Britain was virtually ruined. Everything depended on house prices continuing t rise and its why a succession of Politicians, academics and experts were wheeled out on TV programs to say that we could not be affected by economic downturn in other countries or sub-prime because our economy was good because of our housing market. We tried to talk ourselves out of it. But there was no escaping the inevitable.

The Bail Out

Brown has been lauded for his decisive actions and the fact he has protected depositors. The £400 billion British bail out follows the rescue of Northern Rock and B&B. The Government waived competition laws to allow Lloyds TSB to buy the failing HBOS, only to have to lend Lloyds money to do so - how idiotic is that? RBS, with a massive £161 bn funding gap, is now 60% owned by the taxpayer. The money lent by the Government for the bail out is being borrowed and the collateral used to secure that borrowing is future tax receipts. This borrowing is then being given to the Banks to loan money to us so that we can kick start the housing market to refuel the boom and stave off recession (the one Brown told us would never hit us).

In other words we are paying for the interest on that borrowing to lend back to ourselves. So the scam has started again only this time we pay for it.

Britain had built its economy over the last 10 years on a false housing market - asset values could not continue to rise at that rate and only a minor adjustment in prices would hit us hard. But far worse would be if lending stopped generally and this is what Brown could not afford to happen. What Britons have described as decisive was indeed the actions of a desperate man. As Alastair Darling muttered doom messages to the press, Brown must have taken him to a dark room and slapped him with a damp kipper to snap him out of it. Mortgage Britain and we can convince them we are brave and honourable men.

Meanwhile, the IMF, OECD and Ernst & Young have clearly stated Britain is far too dependent on the housing market and that borrowing has been too high generally for at least the last 5 years. For that reason alone, Britain will fare far worse in this recession we denied for so long than most others.

By the end of this year, Britain will be borrowing over half of its GDP which itself is decreasing. Tax revenues which will pay for that borrowing are set to fall sharply in the same period which means we will have borrow more. Sub-prime did not cause this mess it was just an inevitable consequence of a financial scam worth $535 trillion - many think that zero-sum accounting means that the money cannot be lost. Maybe not but we will be the ones who pay for it.

Brown has borrowed massively in order to restart the housing boom, like a gambler who does not know when to quit and thinks the roll of a ball on a roulette table will save him. The odds at such a table on a single number are 35 to 1.

I really hope our odds are better than that.

Ying, Yang and Yahoo!

This week, Jerry Yang the CEO of Yahoo! must be ruing his decision to turn down the £29bn offer made for his company by Microsoft in May of this year. As recessionary warnings abound, Yahoo! has suffered more than most and earlier. Since May its share price has more than halved while the current $12.65 per share value is a mere 10th of the peak achieved in 2000.

Worse still, Yahoo! this week announced 1,500 jobs are to be cut as it struggles to battle a global downturn; it simultaneously announced a 64% drop in quarterly profits. It seems the Internet companies will suffer just as badly as the rest of us in a recession.

Business Models Based on Advertising

Some companies will fare worse than others. This is the contention of Wikipedia Founder, Jimmy Wales. He highlights Yahoo! as a particular concern as global advertising revenues will inevitably drop in a recession and those whose model is based on the marginal returns on advertising are particularly vulnerable. It leaves Yahoo! right in the firing line.

It is estimated that the global advertising market may drop by 10% or more and while it is expected that digital online advertising will not dip as far, those companies who rely on Internet advertising as their core revenue model are very exposed.

LinkedIn & Monetisation

This week I saw a debate on LinkedIn about some new applications that are being beta tested for members. There was some disquiet about the ability to add slide shows to your profile or blog links but some applications like your 'Amazon Book List' was pretty blatant links for book sales which it was assumed LinkedIn would get a cut of. I remember also a discussion about Facebook's attempt to 'follow' it's members to attempt to gain money from their buying habits using Facebook as the launch platform - as Google has also looked at in its grand plans.

LinkedIn, with over 28 million members, is a classic example of a company that has 'land grabbed' members and consumed a great deal of money to do so and gained a valuation based on the potential to monetise the membership - and that valuation was pretty impressive. But as it attempts to do so, there are more than a few getting a little uncomfortable.

LinkedIn is a an advertiser and recruiters dream - lots of juicy names and titles in all sorts of companies in lots of countries. Unlocking their potential is now a priority. Recently, as a member of the IOD (Institute of Directors), I have been questioning the value of my membership and I wanted to get more than nice meeting places and not just be the butt of glossy adverts for 'Member Privileged Products'. I wanted to leverage contacts, gain referrals and even do business with fellow members. Lo and behold LinkedIn suggested to the IOD that a LinkedIn Club was the answer and one was created with a discussion forum where the IOD have asked no one to blatantly advertise their wares - nice idea.

Sadly, the first blatant advert came from the IOD itself offering inducements if Linked In IOD Group Members would introduce their other LinkedIn network connections to the IOD. I complained and duly it was removed.

Conclusion

Business models which rely on advertising to its membership is a game model in the good times. In the bad, value is critical and my point here is that LinkedIn, the IOD, Facebook, Yahoo! et al need to find a patch of value to show members beyond bombarding people with adverts. True, these sites are what you make of them and I have written on tips and methods to make such networks work to build business but in reality the vast majority of members are just passive receptors of spam and adverts. As advertisers rein in the spend, these business models become exposed and I would suggest Yahoo! is not the only company in the next year or so who will suffer.

Maybe it calls for these sorts of companies, beyond the faddy, clever facilities they gave for free, to think long and hard about what value they are going to bring to the table to charge for in the future. The days of freebie business models are perhaps over - can these companies actually make any real money?

Are you swimming naked? Lack of Strategy in a Slowdown exposes your business

'It's only when the tide goes out that you learn who's been swimming naked,' so says a letter by a Chairman to his shareholders this year.

No it's not an Eric Cantona-ism and yes if a guy in the pub said this you might want to shuffle away muttering you want to be closer to the peanuts. However, you may be mildly surprised to know this was an extract from a letter to the Berkshire Hathaway shareholders from none other than the 'Sage of Omaha' himself, Warren Buffett.

Has Buffett Lost the Plot?

I picked this out of an article in this month's Director Magazine by Jane Simms entitled 'An absense of strategy'. The article rightly points out that around about now there will be a lot of questions being asked in Boardrooms as the slowdown in the economy bites, profits are squeezed and the awful spectres of cost-cutting and redundancies loom. The questions will relate to how on earth did they not see this coming and what are they going to do to get out of this mess?

Buffett's reference makes a little more sense in this context. As the good times recede, now you will find who has not planned properly within their business to be left exposed to the vagaries of the slowdown.

'It's the Global Economy, stupid'

So cries Alistair Darling and Gordon Brown. Right, that same economy you said Britain was resilient to because of our wonderous fiscal policies masterminded by you. And so in the Boardroom - blaming an economic slowdown isn't an excuse and it is hardly likely to help resolve the situation. The fact is, you should have seen this coming. In previous blogs I have argued that despite eminent opinions by gurus like Taleb and his Black Swans, the Credit Crunch was a foreseeable and avoidable situation and individual, corporate and government greed chose to ignore the obvious and allow it to develop into its inevitable collapse.

Many companies, as in previous times, just kept on believing that the boom years would continue and so plans were always looking for expansion and more of the same. No one really plans for a downturn, do they?

Setting aside the people who run banks who for the life of me I just don't understand why people still employ the idiots who behaved like slathering sheep, those companies who actually have a strategy for a downturn may not only survive this mess but actually be ready to ride the wave back up long before others have finished cutting costs, restructuring and re-focusing on core competencies and other management-speak for manning the pumps while someone looks for a plug.

93% of Statistics are Rubbish

In the Director article, Jane Simms quotes Cranfield research that 85% of Non Executive Directors (NEDs) lack a shared view of the vision and competitive advantage of the companies they are on the Board of.

Frankly, whoever paid for that research may as well have looked into the fact that ice melts 100% of the time when exposed to temperatures above 15 degrees C. Nobody for one minute believes that NEDs are anything more than just names to put on the Annual Report and possibly turn up once a quarter for a cursory meeting with well manicured pseudo Board resolutions based on glossy Powerpoints and then get their free lunch, early-doors shares and 'expenses'. Look at Tony Blair on the Board at Morgan Stanley advising about 'Globalisation' for an alleged £million fee - why?

Sadly, even small companies do it, packing their websites and prospecti with the names of successful entrepreneurs, politicians or peers. I have sat in on 'Board' meetings where we have had pre-Board meetings to 'sex-up' the figures and reality with Campbell-style skills to make sure the NED does not start questioning things.

When Enron went into meltdown, Lord Wakeham was not only on the Board but also on the remuneration committee. Nothing to do with the power station in the North of England which was installed when the Tories were last in power, I suppose, but he easily proved he had no knowledge of any of the wrong doings because no one did tell him anything. We have had the Blunkett saga and many more.

NEDs are a fiasco in the UK and it is only when the slowdown bites that people look are around the Boardroom and realise the chap eating all the biscuits saying, 'So things are going as well as the last Board Meeting, are they?' is about as useful to them as a bubble-blowing machine.

'Serial or Professional NEDs'

It isn't any surprise that Cranfield also noticed that one of the reasons NEDs are ineffective (academic speak for useless) is that they are so busy. That's because they have to juggle so many Board NED appointments while making enough time to supervise their portfolio of fees. Again, there are actual agencies who place NEDs almost like after-dinner speakers. You try getting your name on the list and you realise it's run by a person who is one of crowd of 'names' who crop up on multiple Boards. It's a closed shop unless you sell your business prominently and make millions - then you are awarded honorary membership.

The research shows it is not uncommon for NEDs to have as many as 7 to 10 NED appointments. I am no genius but what possible value can such an NED give to any of the Boards it is on while getting paid more than the average wage of the emplyees of that company to be in the Annual Report?

The code for appointing NEDs was supposedly updated but the reality is that little has changed. As Michael Grade quipped, the difference between a supermarket trolley and an NED is that the trolley at least has a mind of its own.

What Are NEDs Supposed to do?

Well take the Banks for instance. If they had NEDs on their Boards who a) turned up to Board meetings and b) actually asked about the strategy rather than what was for lunch, someone at say, Northern Rock, might have noticed the management had quite literally mortgaged the company and that they had a massive liquidity problem. All it needed was........... no that will never happen.

Time for Change

It really is time for companies to change and get in NEDs in who not only have some experience in their market place but can contribute actively in developing the strategy of the business, and have enough time on their hands to do so. That means someone who is prepared to educate themselves as to what the business is about, the value proposition, competitive advantage, the competition and how the market is developing. Then they can apply their experience to understand what are the pitfalls, pose potential issues, help develop more resilient plans and still have a free lunch once in a while.

And smaller companies should not fall into the same trap in getting big named, serial NEDs onto their Boards to make the letterhead look better. It really does not help your business while the investment community really are focusing on you as executives. It's a frivolous expense at best - much better you find individuals who have real management background that can help and there quite literally are thousands of well-qualified retired, semi-retired or even still employed managers who have a wealth of experience but no peerages who would love to help.

Personally, I believe that there should be a limit to the number of Boards any one individual sits on in any capacity, but what do I know.

Appointing an NED

The traditional way is an invite onto the Board. How daft is that? Surely, there should be an interview process which at least tests whether the person has the latitude to afford the time as well as possibly contribute. And their contribution has be worth those free shares, fat fee and free lunches.

After all, you really do not want to be caught swimming naked.

International or European Expansion - How do you go about it?

My ‘If Only’ Story

A long time ago, I was offered a job as the UK Sales Manager of a US Company entering into the European market. It had a natty name but they were simultaneously changing the name to the founder’s name and adopting an innovative ‘direct only’ sales model, almost unheard of in the industry at the time. Stock options, salary rise and all, my then employer persuaded me this would never catch on and I actually turned the job down.

The Company launched in the UK and changed its name to Dell. The rest, as they say, is history.

Some Companies are Different – Why?

Dell is joined by other Companies like Symantec, Autodesk, Microsoft, HP, Oracle, Apple, IBM, and SAP in that they all have very strong international businesses so much so that all of them have significantly more revenue coming from their combined international operations than from their domestic markets. And it isn’t a coincidence.

It’s a fact that rapidly growing, early-stage companies have to focus on domestic markets initially to build credibility with reference customers and that pleases the VC and banks they partner with no end. But to be a dominant force in future years, companies must also make plans for business development internationally, and in reality this should be undertaken as early as possible.

Some Companies Missed Their Opportunity

After the boom and bust of Web 1.0 where so much money was wasted on futile ideas, VCs and therefore fledgling Companies became very reticent about international expansion. In fact, US Companies began to view European trade as not cost effective because of the multitude of languages, cultural differences, business rules, accounting issues, potential duplication of resources and shear size that they adopted a ‘suck it and see’ approach. Local agents were appointed or persuasive Channel Companies given exclusives or single-man-in territories were set up as a ‘shoestring’ method was adopted to cultivate markets. Yet they knew full well that to be successful, they needed to extend their tried and tested domestic model to the international markets. It was doomed to fail and it did. I can’t remember how many Companies I spoke to post-web 1.0 who wanted to take that approach and failed.

We could all name one or two of those that failed to take advantage of their domestic leadership to become serious global companies but it is just history now. Web 2.0 and newer thinking in terms of VC money is helping drive a fresher approach.


It’s all in the Timing

The timing conundrum is a two question issue:

1. When should a Company start planning to expand internationally?

The first question is relatively easy to answer as those who haven’t had an inkling or a vision of international business expansion at the very outset are probably never going to succeed in being a global player or indeed they may be happy with a domestic market only. So the trick is to start planning as early as possible. Having this international expansion vision early sets the expectation early in management and cascades through the organisation from the start. This poses an interesting question of its own – ‘Do I have management who are sufficiently bought into international expansion?’

As a quick anecdote on this, when I first met the management at PlaceWare, the VP Marketing felt very strongly that Europeans and Brits in particular were not capable of working at the pace required to be in synch with the US parent – and he referred to working at ‘Internet speed’ (no doubt he had read some Bill Gates throwaway comment). Some months later, the VP Sales joined me on a sales tour. The first day started badly when I had him check out of the hotel he bad booked into for 3 days as I pointed out that the agenda I had sent mentioned visits outside of London – he was not amused having little idea of European geography. We visited a large Enterprise customer in London, travelled to West London to visit a major Telecoms Company and then got on a plane to Paris. The next day we visited several customers in Paris before flying to Nice and having a day visiting Companies in Sophia Antipolis. At one point he very nearly fired me because he had not had time to get his morning injection of coffee. He later regaled to the story to our annual Sales Conference in California highlighting to never, ever underestimate the work ethic of the Europeans.

But it was illustrative of a type of US management character that tree-hugged domestic sales even when talking a good game about international business. The VP of Marketing in question had a degree from Trinity College, Dublin and that might have explained a slight misconception about European work ethic!

Planning early is about being committed to grow internationally from the start and this means understanding the implications of decisions made on future international business early. Having that thought process in planning growth early is a vital part of building a platform for international success in the future, even if it is not to do something on an international basis immediately.

There are an awful lot of things to consider – have no doubt. Local accounting practices, tax, legal contracts, terms and conditions, pricing, cash collection, product development, languages etc but these really kick in on implementation.

2. When should the Company start implementing an international strategy?

In reality, while there are other key issues as I have mentioned above, to consider, implementation is mostly about sales and marketing and their execution. Classically, if the decision is made to implement international expansion too early, there may not be enough dollars to do the job properly.

When at PlaceWare, management foresight brought them to set up a European business very early. In doing so, I was able to build a small team and actually out-sell PlaceWare’s domestic nemesis, WebEx, and become the European market leader within a year. But PlaceWare had extended itself too far on US expansion and ploughed a lot of money into product development – not enough was left to drive sales and marketing in Europe. Consequently, a year later, WebEx made its move and set up in Amsterdam. It put a whole lot of funds in to drive marketing and sales. A year later, the status quo was achieved and WebEx became the worldwide market leader. PlaceWare got bought by Microsoft for a song; WebEx has been sold for billions to Cisco.
It was all about sales and marketing execution.

Taking the Right Approach

I have seen it so many times. The first move by a US Company is to either buy plane tickets or to believe in the smiling chap who has alighted on their offices and told them they are the most successful sales agent or Distributor in Europe. A year later either there has been some sporadic success in named customers or the Distributor won’t take your calls because they don’t have the time.

Getting the focus required to succeed isn’t easy and it comes from the planning.

The daft thing is that nobody would adopt the same approach in trying to extend their reach domestically, so what on earth possesses people to make such leaps of faith is mystifying.
My free advice and it’s worth every penny, is save yourself that airline ticket and save the cup of coffee for the grinning foreign Rep. Do some planning and research instead – there is no real substitute for this. It may cost a little time and even money but believe me it is small fry compared to the cost of plane trips to nowhere.

Ask Yourself Questions

It may seem obvious, but every Company needs to ask itself: ‘Why do I want or need to address international markets at all?’

As I mentioned earlier, some Companies may be happy that they can only be successful in their domestic market – and that’s actually a good strategy if it fits into their financial goals. You don’t have to be an international player to be a successful Company in many instances so don’t be afraid to answer the question in the negative.

If you have answered negatively but in your business plan to the VC you promised you had access to a global market worth $3 billion, don’t be surprised if there may be some repercussions!


It is fair to say that this would be unusual in the high-tech arena, in any case there are some questions which need to be answered:

Going back to the VC business plan -

• What are the overall goals of our various stakeholders, and does international market penetration feature as a requirement in those plans?


• What are the individual international market dynamics and requirements?


• What is the competition doing?


• Why are they doing it that way – is it being successful?


• Is international market entry more of a defensive measure because the competition is there or you have one or two customer subsidiaries who want product or is it for a genuine market leadership move?


• What are the costs involved?


• How do these costs compare with doing more of the same in domestic markets?

Get Expert Advice

It is important to get advice – and expert advice rather than barstool anecdotes. There is plentiful research available on the web about demographics, industry trends and they can be very targeted on the specific markets you wish to address.
And there are experts who have been there and done it before – who bear the scars and the success stories.

People like me have had experience of working with and for US Companies who want to get into Europe. Knowledge and know-how is vital but does cost money. It’s as well you know that up front but it’s worth it in avoiding issues and mistakes later, and getting traction and sales much, much earlier.

Also, commit internally and externally to the resources required early. In developing a plan for international expansion, have someone whose role and responsibility encompasses this and is not swamped by their day job. That or employ or contract to some one who can do just that.
More importantly, the company needs to be able to articulate the reason for international business development to the stakeholders, and to justify the resources necessary to make it a success.

The Differences You Can Expect

Once you have decided that international expansion is a strategic goal, and via a considered research and planning phase you have identified the key markets to attack by assessing the proposition and size of market opportunity, then you have to consider some of the nuances and complexities that, quite literally, go with the territory. I always describe Europe to any prospective client as being like the United States – a single large geography with individual state boundaries. Sadly, each speak a different language and have different cultures and ethics – unlike the USA which has 50 states adopting the same currency and language largely watching the same TV shows. So watch out for just a few of the issues:

• Language


• Culture and ethics


• Business methodology


• Finance and tax regulations


• Employment Law

Try not to second guess how people buy in each territory because chances are they are different.
Equally, things are changing – many EU countries have adopted a single currency and many of their contractual laws are similar. But it is fair to say that a different approach will be required in many territories and you need to assess the viability of each beforehand.

Obvious ideas on market entry are:

• To set up a wholly owned subsidiary


• Build a channel contracted distributors, sales agents, OEMs or resellers


• Have a local joint venture with an exclusive partner.

There are several ways of doing it but this is where the Expert Advice becomes invaluable as this is where the largest, long term error can be made.

Dragon or Pussycat?

'Entrepreneurs say they got burnt by investors' demands', shrieks the headlines in this week's Sunday Times.

'What a surprise' some may say in response. I listened to that nice James Caan's talk recently at the EREC in London when he described the Dragon's Den Show as terrifying at first as the Dragons had to make instant investment decisions without foreknowledge or due diligence. A 20 minute pitch and you make up your mind.

The article basically says that a few entrepreneurs have endured the nerve-wracking TV exposure and got their deals with a Dragon only to find that subsequently for one reason or another the deal falls foul.

TV Reality reflects Life

For once it seems a TV Reality show actually mimics reality. Gaining investment is not an easy process and inevitably it means that the two parties must ask deep questions about the veracity of the entrepreneur's claims, knowledge and ability to execute on the plans. If not then the Dragon may as well put their large sums on the 5.30 at Kempton Park with as much hope of a win.

In one instant, an Australian entrepreneur had an agreement in principle from two of the Dragons only to find 4 months later that it fell through. In a further instant, a chap who had a Foot Deodoriser had an agreement to invest but the deal fell through when it was found that he did not have a patent on the product although the entrepreneur claimed it was the Dragon who had put him under as much cosh as an employee.

How good is a deal anyway?

Some entrepreneurs have claimed the deals are not healthy. Lara Goodbody (surely an Ian Fleming name), the co-founder of YogaBugs, declined £200,000 for a 30% stake in her business and later got £250,000 for 15% in the business from another unrelated investor.

And here is the reality. Dragons Den is all about making good TV. Sure the Dragons have made a lot of money but they did not do it by chucking £100 or £200,000 down the pan on poor ideas. Likewise, people who give away 40-50% of their company for inward investment are effectively making themselves an employee at best and certainly the voracious ability to own your idea has been diluted greatly. Moreover, where is the equity left to hand out to diligent employees in the future when the share-grabbing Dragon has such a large stake.

Entrepreneurs switch off your TVs

The reality is that the Dragons Den model is not good for real investing. The Dragons are making multiple investments for small cash in their terms that would normally consume large portions of their time to make the business successful. The entrepreneurs meanwhile seem to want to desperately give away huge chunks of their equity for relatively small capital stakes in the vain hope that James Caan or Duncan Bannantyne knows someone that can get them a quick hit to make millions.

In practice, gaining inward investment needs a strong business idea, an even stronger business plan which has sound research and strategy and then people who can execute. Entrepreneurs come in all shapes, sizes and backgrounds yet it is rare that you get the combination of all those things. Most commonly missing in people who have great ideas is the ability to take the idea to market or sustain that market. These people may be great at selling the concept but seeing a deal through to fruition may be very different.

My advice to would-be entrepreneurs is to build a proof of concept first. This means building a prototype business with the minimum possible outlay and creating the first few sales to prove your idea has legs. The first thing you may realise is that the idea actually pays its way so the investment required is for expansion only rather than getting the product built. The second thing you may realise is where your deficiencies lie and so the investment may be to get the correct manufacturing contract to build or people to sell etc. Proof of concept pinpoints exactly where the money will be spent rather than the investor seeing only large salary cheques being paid with their money.

It also means the entrepreneur has the upper hand. It will not mean you have to give away large chunks of your company for comparatively small sums. What you have proved is that you can take a small share of a large market and so you can sell the end scenario rather than next year's - the idea that the £250,000 for 15% is not an investment in a company with a small market but one that can take 10% of a £multi-billion market. If the investor cannot see that then walk away.

Dragons are real

What the article shows is that the Dragons in the Den are real. They don't actually give away all that money without due diligence and there are plenty of caveats before the entrepreneurs get their cash that are not shown on camera. However, the reality is that unless the entrepreneur can see a distinct and real advantage of taking a Dragons' money other than for the money itself, then this is exactly not the way to get inward investment in a great idea.

So you think you are a good manager?

Did you know 9 out of every 10 employees say they have worked for a bad manager? So claims research carried out on behalf of UK law firm Eversheds. The research further says that 97% of employees want their bosses to communicate better.

'That can't be me,' I hear you say. 'I use email, I have a mobile phone, a Blackberry, Instant Messenger, am on Facebook, Bebo, Linked In, Twitter - heck I am participating in Web 3.0 fully, how the heck can any of those ungrateful employees say I don't communicate? The key point is that THEY don't listen.'

Evolution in Communication

1894 - the dawn of the communication era when the first phone calls were made and someone had the idea that a free wire to every home would allow postal services to 'monetise' real-time communications rather than mail. Fast forward to 1989 and the birth of the internet and we are undergoing 7 year cycles we are told from Web 1.0 which was essentially the era of 'Find me', Web 2.0 was 'Join me' and Web 3.0 in which we are now living unless you hadn't realised is about 'Follow me'. Will Web 4.0 be the era of 'Oi, what are you looking at?' or 'Stalk me'? The very act that you are reading this, written by a guy in London connected to the web via thin air but presented to a web population of over 1 billion people world wide, is evidence of the 'Follow me' era (you can follow me also on www.twitter.com/nigel_dunn which works over Instant Messaging and your PDA/phone - go on you know it makes sense.....really).

So why they heck are 97% of employees saying bosses don't communicate? Bosses have never been more accessible and communicative - they don't even have to have an open door anymore, the communication network means they can be seen while working at home by any one or more fancy devices.

The Lost Art of Communication

As we enter each phase of web and communication development it seems that the exciting part is the ability for each individual to be found, joined and followed. This is a very narcissistic point of view. If you think that is a big and clever word for a chap like me it's because I borrowed it from Graham Jones, an Internet Psychologist who is a co-member at my club. Not one of those snooty clubs in London that don't allow Ladies, I am talking about The Ecademy. I think Graham has a point. The web has exploded all around us and it provides us with such an amazing platform to communicate and yet we have siezed it in the main as tools for self-promotion.

So when we communicate, are we really just saying what we want to say and people hear only what we say, yet that actually is not what they want to hear? I have read that back to myself and convoluted though it may sound, it makes some sense.

I remember the late Robin Cook, who a few months into his job as a Cabinet Minister, woke up one day and found that Britain had overnight become involved in a small fracas in Sierra Leone or somewhere similar. As we he pulled on his dressing gown and watched the TV he must have called his Private Secretary (no not the one that may have been on his 'company's books'-type who also makes the breakfast, although I did see him with his then 'Secretary' on a train to Brussels once doing anything but taking notes, the rest of that is history), and he demanded why had no one told him. The be-suited Civil Servant cleared his throat and probably said that the memo was in his 'Red Box' with all the other memos which he had declined to read. The Ministerial equivalent of a 'cc' on an email which did not get read.

The point being that the explosion of communication has its downside - too much information can lead to filtering otherwise our poor heads would simply explode. People want knowledge, direction, information and news but they would like relevance, context and delivered via they way they work, with a skinny latte to go if you please.

What can Managers do Better?

So if 9 out of 10 of you ungrateful people who I have ever managed think I'm that bad and 97% of you who didn't bother to listen to me wanted me to communicate better, what the heck was I saying that a) you didn't understand and b) didn't want to know? And for that matter, what on earth did you want me to say?

As I sit here, bristling with communication devices - I have Skype, email, IM, phone, PDA, camera, headphones, loud-hailer and even a plain old landline - I have never been more able to communicate but still it isn't good enough? I haven't got time between answering all the emails you people below me send clogging up my Blackberry-style device to answer everyone or for that matter think of what you might want to know. Go read my Twitters, my blog and free downloads on my website - somewhere in all that guff will be what you need to know.

Is that standard management practice or have I got it wrong? Perhaps this Web 3.0 'Follow me' stuff is going to take us further away from what is required. The problem with all this self-promoting, follow me webby communication is that it is very much like Robin Cook's dilemma. How do you know what is relevant in all this communication? Do people really want to know once I have finished this blog article I will be walking the dogs?

Management 101

How I hate such pithy lines - what the heck is '101' anyway? What I mean is that sometimes we have to go back to basics. In a world full of twittering, IM'ing, pinging, running up the flapoles and see who saluting, reaching out, bouncing off, internalising perhaps the more we communicate the less we say.

Certainly, the numbers don't lie - 97% reckon managers could communicate better. Wow. So as you hunch over your Blackberry reading my twitter advertising this blog on your journey to the office, don't delete it as irrelevant. Take a look, think about it and then perhaps the first person you see who works for you just take them over to the photocopier and ask them 'Do I say anything that makes sense to you? What actually to do you want to hear from me that will help you do your job better or help you develop?'

I know it's whacky, but it may just catch on. Then again they may just look at you as if you "just don't get it". But it's worth try.

Who Tracks Quality of Recruitment in Your Company?

According to research by US firm Manchester Partners, 40% of executive hires fail in the first 18 months.

I have to say my experience puts the figure closer to 50% but it is still a staggering proportion. Recruitment costs vary but if you took a rough average of 30% of the executive's first year salary you would not be far out. Then multiply it by the remuneration you have wasted on a poor recruitment decision over the 18 months and you will start to understand why bad recruitment is costly. Then add on the opportunity loss for not finding the right hire in terms of the profit not obtained because the hire failed to achieve finding it, suddenly you get an inkling of the true cost to the business in both cost and missed profit opportunity.

Accountability for Poor Hiring

Going back to my article on responsibility vs accountability, is there a person in your company or organisation who is specifically accountable for making poor hiring decisions? I am sure there is not. The last CFO at Lehmans took the blame for the company's massive losses - incredibly she had only been in the role for 6 months. Why was the person who made the appointment similarly not fired?

The fact is that there are few executives who are held accountable for poor hiring decisions - and therefore the same mistakes will be repeated, year after year. The same staggering costs will be associated with the poor decisions and the loss of opportunity will drag on the profit performance.

The cost of bad recruitment is one of the largest underlying drags on corporate profitability and it continues every year while executives are not held accountable for their poor hiring decisions.

I have written a free downloadable document on the subject, I hope it will illustrate the issue more clearly.

Where Does the Fault Lie?

It would be convenient to blame recruiters for the whole problem. After all, beyond a period of 3 months they usually have zero accountability for poor hires. Given most executives are on an initial guarantee and given it would be an amazingly poor hire that gets found out in 3 months or less, the recruiters are virtually guaranteed their money once the candidate starts work. They have zero incentive to help the client or candidate succeed - in fact it may pay to see the candidate fired after say 6-12 months as they more than likely will get engaged to replace the hire. That's 30% on average of the first year remuneration for a few actual days of work and a couple of meals maybe. Contingent or retained, neither have skin in the game to work long term with clients in a real sense, they see recruitment as filling slots in the main and pretty much easy money.

But recruiters are not all the problem. HR Depts are looking to drive down costs in the face of poor recruiting and so they exacerbate the problem. Larger companies even outsource the whole shebang, abdicating even the responsibility for recruitment let alone accountability - just to hit the cost line. Reverse auctions and outsourcing are becoming rife in the industry - I mean, how can an Eastern European based call centre add value to the recruitment process? Am I really missing something here?

Then there are the hiring executives. Under pressure to hit targets and manage their staff, they hardly have the bandwidth to do a good job on recruiting - they need to offload the issue as much as they can. Again they are happy to abdicate the accountability to some other area, yet the new hires will be crucial to their future performance - why would you take that chance?

So much of modern day recruiting is about vast quantities of cheap advertising and jon boards to generate quantities of CVs and then match as many words as possible to produce enough warm bodies to statistically satisfy the requirements. It is a numbers game - throw enough manure at the wall and at least some will stick.

In general, the quality of hiring is fast becoming a process-driven, box ticking exercise which no one is really accountable for in the true sense. It is small wonder why such a huge percentage of executives fail within 18 months in such an environment.

Turning The Tide

As we enter more uncertain and recessionary times, costs to the business come under the magnifying glass and the cost of bad recruitment becomes an even bigger issue in times of less profitability. Recruitment processes and techniques become far more important to companies in such times.

When you think about it, if an executive is recruited and lasts say 5 years in the role but cost 100% of the first year salary to recruit, then most CEOs would cough at the cost but take the equation given the extra time they had the executive performing to plan or better - with all that incremental profit gained over a poor executive lasting only 18 months. The actual cost of recruitment then is not really the issue - it is simply the quality.

Quality is derived from thought and planning. It is absolutely pointless starting a recruitment process after headcount is signed off as there is minimum lag of 3 months required to find a candidate, which means the impact on performance in any given 12 months is at best 9 months but more realistically 6 months given ramp up time. Recruitment planning should be done BEFORE the headcount is signed off.

Recruitment viewed as slot or headcount filling will inevitably lead to a high proportion of poor hires as managers hit time constraints to get people onboard and therefore take second best or worse still compromise too far on requirements vs candidates returned. Contingent recruiting where the recruiter is engaged only when the headcount is signed off offers little value to organisations in my opinion and certainly does not justify he very high fees associated with it. Fully retained recruiters have absolutely no incentive to find the right fit - there is little accountability on guaranteed, non-committal advice so expensively given.

In reality recruitment should be viewed as a constant process because it is the company's investment in the ability to attain its future goals.

A Novel Approach

I am not a recruiter but as part of my engagement with clients expanding internationally I do find them exceptional talent to man their subsidiaries. Just like any other part of my business and services it is performance-related and is all about results - anything less is of no value to my clients. So while I may take retention fees for my time invested with my client, my upside is all earned on the performance of their international business. If I find and place a candidate for a client, I am paid my upside in direct proportion to that candidate's performance in the role against pre-agreed targets over a pre-agreed time. It is my skin in the game and it is all about results and accountability.

I think it is time executives were penalised for bad hiring decisions, I think HR should be incentivised not on fill rates and driving down fees but increasing quality while CEOs should have full visibility on the actual cost of bad hires and have it as a constantly reviewed metric in their business.

As we approach tougher times, there is an urgency to get this right. I do not have all the answers but I would stand accountable alongside any client if I had contributed to poor hiring decisions, so I challenge any hiring executive to try my services and I will help them put money straight back on their bottom line. I am really looking forward to your calls.

Tel: +44 207 193 2356
email: nigel.dunn@calxeurope.com
web: www.calxeurope.com

Responsibility vs Accountability

Definition of Responsibility, courtesy of the Merriam-Webster Dictionary:

1: the quality or state of being responsible: as a: moral, legal, or mental accountability b: reliability, trustworthiness
2: something for which one is responsible : burden - has neglected his

Definition of Accountability, courtesy of the Merriam-Webster Dictionary:

: the quality or state of being accountable; especially : an obligation or willingness to accept responsibility or to account for one's actions - public officials lacking accountability

In this day and age of finger pointing or what is often referred to as 'blame culture' or to put it in legalise 'litigious society' there is often a tendency to blame others. At some extremes it is the trigger happy, ambulance-chasing lawyers as parodied in the Simpsons where 'no-win, no-fee' lawyers bring cases against companies or authorities for seemingly innocuous and possibly self-inflicted accidents. It is perhaps indicative of human nature that we always want someone or something else to blame for our misfortune or even our failings (cf: my earlier blog post on the subject of failure).

However, equally we can look at the issue from the other viewpoint that asserts for instance, that if a car manufacturer makes vehicles with faulty brakes that cause a number of accidents, surely it should be brought to book for the consequences. In this instance, the manufacturers will do everything within their power to deny or pass on responsibility for the accidents even if the facts glare them in the face.

So this article looks at when someone or something assumes responsibility, should there be an equal expectation of accountability?

Assuming Responsibility

When I was a young manager, due to being in the right place at the right time and attrition of managers above me, I got landed with, at the tender age of 26, full responsibility for a whole division of 56 people, turning over £13m and all the graphs pointed upwards. It was a massive step up for me and I couldn't begin to tell you how proud I was to be promoted. For a while, everything went according to the script - sales continued to rise and there was little I had to do to keep it going, it seemed a little easier than I thought it would be. Then came the bombshell. Around 70% of our business was based on DEC products at a time when DEC had the MicroVax which was all the rage in the City - orders were put out with the milk-bottles. Then DEC hit some margin issues and decided, pretty much without notice, to revise their strategy and take the major account business themselves through a new organisation called DEC Direct. In order to prevent companies like ours continuing to service those customers, our discount structures were adjusted and it became unviable to sell to these accounts. With over 70% of our DEC business in such accounts, overnight the party ended and I faced graphs hurtling downward.

I had failed to understand the implications and because of it our division hit a wall, People started to leave, we had to make redundancies and we had to re-invent our business and do so fast. It was a baptism of business fire in a short space of time. A year later and we had retrenched but the business was smaller and I had aged.

What it taught me is that responsibility is huge burden.

Assuming Accountability

What I hadn't realised at the young age was that with responsibility comes accountability, in equal proportions. It is all very well to accept the promotion, a flashier car, and the kudos of managing a team of people who look to you for guidance and wisdom, what I hadn't expected was the weight of those eyes and those of my executive team above me burning holes in my back when things started to go wrong. Despite my ifs and buts about what our lead vendor had done, I was responsible for the plan and accountable for the results. As the Americans would say, 'That's why you're paid the big bucks'. And so I learnt very much the hard way.

I can't tell you much it hurt me to have to make people redundant for the first time in my life - literally grown men cried in my presence - and how lonely I felt in accepting the blame for the catastrophe that lay before me.

But if there was one piece of credit with which I emerged from the episode was that I understood and accepted what responsibility and accountability really meant. It is facing up to your mistakes, your failures and dealing with it.

Learning the difference

Having had my epiphany in business, I quickly learnt that accepting responsibility had its downside and so it was best to plan with that in mind. It did not stop me from making mistakes and failing again as in my own business later but I never again flinched from accepting the responsibility for my actions in business. There are always things you cannot account for but that's part and parcel of doing busines, you just have to take it on the chin, absorb the lesson and change your plans to accommodate and mitigate. From it you can definitely plot a better route if you can accept accountability.

I do get annoyed when CEOs of major companies fail to be accountable for their actions. I don't want to harp on about it but the current economic crisis has cost very few senior jobs so far, while in government we see sloping shoulders daily for serious errors for which ministers and their senior aids have responsibility and it seems no accountability.

Repeatable behaviour

Linking to my early blog articles, once again it is the thread of denial and failing to accept and embrace failure which leads to lack of accountability. This becomes a repeatable behaviour. Executives and ministers who use these blame-shifting tactics ultimately make big mistakes for which we have to pay. I cannot help thinking that the war with Iraq which has cost the lives of too many brave soldiers from several countries, mainly USA, is a direct result of repeatable denial of accountability. As President Bush glad-hands people on his farewell tour as did Tony Blair, he seems to be oblivious of the legacy of two terms of office which has left the world a much more dangerous place.

The CEOs of most of the major banks and their executive and trading teams will never repay the vast monies in bonuses they have earned on their trades despite the fact they have written off almost all of the gains in the last few months. They will survive by invoking the theory of market forces betting against them whereas most people on a bar stool at your local pub or bar could have accurately predicted the crisis we are in financially. And even when they get fired they walk away with hundreds of millions of dollars as in the case of outgoing CEOs at Citigroup and Merrills.

Why accountability is important

So rather than pick on a negative illustration let me turn to the positive. One of my favourite films was Ron Howard's dramatisation of the ill-fated real life mission to the moon, Apollo 13. By this time the amazing feet of taking men to the moon, landing and safely returning had become old-hat so much so that TV stations did not even air the launch of the mission. A day or so into the mission, an explosion in an oxygen tank ruptured the craft and vented the precious gas and caused a failure in power - the craft with its human contents was in mortal danger.

The catastrophic failure of the mission was fast becoming 'Nasa's worst disaster' according to an official to which Gene Krantz, the Apollo 13 mission controller, replied, 'With respect, sir, I think this will be our finest hour.' That moment, whether precisely true or not, was when Krantz assumed total responsibility and accountability for the outcome of the mission. To take a JK Rowling observation, failure had allowed Krantz 'to strip away the inessential' and concentrate on one goal to the detriment of all others - to get the astronauts home alive.

The rest is history but what that assumption of accountability did was to allow the team to work on a single, collective goal with the freedom of a lack of accountability for the outcome - that was Krantz's job. When the Grumman Rep was asked if the Lunar Excursion Module could be used to be a life-raft for the crew, he waved his hands and said the craft was not designed for that. Krantz immediately takes the accountability from him and the Rep instantly works with the team to help solve the problems.

The illustration here, at the extreme of real life, is that accepting responsibility and accountability in equal measure, gives those within your teams, company, organisation the power to do their job with a single goal in mind. It is powerful way to empower your staff and join into to common goals.

Applying the principle to business

So how can the Apollo 13 'success' be applied to business? Well, let's take a perennial example of management abdication of accountability - the convenience of Call Centre-based customer service centres. We could go on about this as everyone has had enough bad experiences to prove the concept is flawed but bear with me. The biggest problem with call centres is not that they are manned by idiots but that they are manned with intelligent people who are unempowered. How many times have you called a call centre with a problem or issue and you get stone-walled so you ask to speak to someone in authority? The line comes back 'I am not allowed to do that', or 'There are no managers here', or ' I will take your number and have them call you back' (a neat fob off) or the ultimate sin 'They don't take calls'. The last one is the one that drives me insane - why would a company want its managers or directors not to take customer calls? It is a complete and utter abdication of accountability, let alone responsibility. It basically says, these people, if they exist, don't just not care but taking calls actually gets in the way of their work such as it may be.

I will make a basic assertion - any company that tells managers they should not take calls from customers has no right to be in business.

The power of accountability

I will give you an example of the power of accountability at work. When I was MD at Genesys I would occasionally get an explosive call from a client whose meeting had gone wrong and, because they could not get any gratification from our support staff, they got hold of the MD's name and called. It surprised me as our complaint statistics were always encouraging. But whenever I got such a call I went overboard to sort it out, inevitably giving away a large credit to pacify the customer. Meanwhile, our support staff were complaining that they should not have to handle abusive customers, rare though it was. The penny dropped eventually when customer support staff, not me, suggested that it would make a huge difference if they could, at the time of initial call, have the responsibility to hand out credits if need be in order to stave off escalation. We decided to give it a go and authorised credits up to the cost of the call. The effects were dramatic. I certainly got no calls at all from irate customers but amazingly credit notes fell immediately and the support staff were far more motivated in their work.

By my taking accountability for the results, the support staff had the freedom to exercise their judgement on each call in order to achieve the goal. The only calls I got afterwards were ones to praise individuals who had helped out.

The lesson to learn here is brilliantly illustrated in Geoff Burch's book 'The Writing is on The Wall'. By management assuming accountability and devolving responsibility you can get dramatic results in terms of customer service and loyalty while motivating the staff through empowerment.

As a final illustration, I recently had an issue with my gas bill from E.On to the tune of £900 extra charges for 6 months of use - something amiss in a reasonably average household. The customer service rep who I shall call James could only tell me to read my meter and send in the result. Knowing the meter reading was not the issue, I asked to speak to a manager as clearly the conversation was going nowhere and out came the usual lines of the managers don't take calls and I don't know who the directors are, which are all red rag to a bull for me. Having ended the call in a slight rage I called the parent company in Germany who directed me immediately to the Director's office where a nice lady listened, argued a little but subsequently came back not only with the correct bill but with a goodwill gesture too. If only the young representative in customer service could have been empowered to do this, instead the poor guy will probably get disciplined for not fobbing me off properly.

Accountability leads to empowerment

Accountability by senior managers allows the organisation to have the freedom to exercise its imagination and creativity to get results unencumbered by the restraint of firing if it gets it wrong. What is more, by taking on the burden of accountability it will foster accountability in your team members who will more readily buy in and play their part in achieving the common goals - feeling the hurt if they are not achieved but sharing the glory when they are. Few business people really understand the difference between responsibility and accountability - but I always think it is on the one hand accepting a flashier car to do a job and on the the other earning it.

Are Your Social Network Contacts Owned By Your Employer?

I read recently on Peter Gold's Talent Technology Blog and in yesterday's Daily Telegraph that a former employee, Mark Ions, of recruitment firm Hays has been ordered to hand over business contacts built up on his personal page of the social networking site Linked In.

The Telegraph article says, "The decision is one of the first to highlight the tension between businesses encouraging employees to use social networking websites for work but then claiming that the contacts remain confidential information at the end of their employment".

The ramifications of this decision are quite scary. While it is implicitly obvious that if your firm has invested in CRM technology like Salesforce.com or ACT! as a business tool to manage your business contacts and interactions that you regard the contacts and information contained as the company's property and therefore are covered by confidential information clauses in your contract, it is almost certainly not the understanding of most employees that the business contacts they accrue on sites like Linked In are also bound by these contract clauses.

Now there may be special cases at work here. The recruitment industry has particularly taken to sites like Linked In which has revealing profiles of over 23 million people with current job titles, career information and sometimes contact information. It has been a particular gold mine for recruiters to not only find potential candidates for jobs but also to network as widely as possible to a) increase their chances of getting recruitment assignments and b) increase their working database of potential candidates. If you were to look at certain recruiter contacts on Linked In you would quickly realise that their 2500+ connections cannot possibly be anything than their office Rolodex of business contacts.

How will this affect Social Networking in Business?

This is perhaps the most important question. Linked In's official response to the decision was from 'a spokesman' who said that its members should not use the site to publish information that they have no right to disclose, such as insider, proprietary and confidential information. "It is important that customers abide by their current employment contract and ensure that they have the right to use the information provided."

This is a surprisingly uncontroversial statement from a company that thrives on business networking. This is a company that has built up its 'customer' list based on individuals signing up and freely entering their information on a publicly-viewed site knowing full well that their details can be viewed by other members of the site. Further many of the members have listed their interests as seeking new job opportunities. In other words, they could be construed to be 'fair game'. In most instances, sign up is for free. Similarly, the search facilities to find people by job function, keywords, locations, company names are quite sophisticated and lend themselves to recruiters or similar browsing to find juicy contacts for their next sale. Linked In has positioned itself well to cater for both needs, so why the non-committal response to this case that damages freedom of use by the individual?

Linked In has more recently started working with Corporations to look at providing some different services for companies. Advertising for jobs and services is one important area but there is no doubt that Linked In is slowly, having accumulated a vast list of business contacts from around the globe, repositioning itself as an online CRM system of sorts.

In Linked In's attempts to further 'monetise' its member base it is now marketing itself as a Corporate service having grown from a focus on the individual, not worrying who the person worked for. It is a subtle change in focus that justifies the spokesperson's statement perhaps. But perhaps gone are the days of Linked In being a Social Network, it is now very much a Business Network and is in the camp of the employer.

Ramifications

I should mention that I am not a lawyer and so consider this as my personal opinion only and should not be considered a legal opinion.

The clear ramifications are for those who do their prospecting via Linked In as part of their company's business. Recruiters fall slap bang into this category and Hays is the first to make a call on this and test it in law - with a successful outcome. But does this also affect everyone else who uses Linked In or similar networks at least in part for prospecting for business on behalf of their company or themselves in company time?

I think it does and certainly it calls for people to review their strategy in using Linked In at a personal level in order to increase their business network and win more business for their companies. Recruiters should certainly be concerned about this and seek clarification from their employers. I would suggest that employers should also be more clear on what constitutes confidential information as contract clauses are notoriously woolly and online social/business networking is a relatively new phenomenon which needs some special attention. Sharpen your pencils HR managers.

The interesting aside is how Mr. Ion's solicitors (Jonathan Stokes Solicitors) presented the case on his behalf. From my point of view, I would be concerned about data that is not within the Corporate firewall or VPN and freely available on the internet being considered company confidential, particularly if it has not been paid for.

Rivalry

Linked In has been slow to monetise its membership from a Business-To-Business stand point. There are firms such as Jigsaw who have made a business on exchanging 'business cards' between contacts to build up data lists which can be filtered and then rented for mailing use. There is already plenty of legal thought about this type of service as the act of giving someone your business card or details has an inherent confidentiality associated with it and it does imply that the data is not to be distributed without permission - yet Jigsaw relies on that free distribution.

Linked In seeks the best of both worlds. It wants the data to be freely available and has the consent of its members to make it so, but it also wants to side with employers who encourage its employees to use Linked In to further its business, ultimately because it wants those employers to spend money with Linked In and therefore give some comfort on use of data afterwards.

Should we be scared?

I think so. This precedent has wide ranging implications beyond Linked In, although it is the major business to business network at the moment, others like Plaxo, Xing, Konnects, Viadeo etc fall into similar categories. With the rise of instances of Corporations involving themselves in networks such as Facebook, Flickr, Twitter, Bebo and the rise of the Corporate position of 'Chief Networking Officer' the emphasis on the 'Social' is moving toward the 'Business' in networking.

Then again, to monetise all those juicy names, we knew it always had to. The party may well have been spoilt.

Footnote

Yesterday Linked In by coincidence raised finance of $53m valuing the company at a tad over $1bn. In discussing the implications of the ruling in favour of Hays, a friend pointed out the possible implications for each of us who has a profile on Linked In. We postulated that if Hays claimed some kind of 'possessary' title over the data accrued by the employee, then we wondered if that was made aware to the people who had connected with the Hays employee? Or indeed were any of us by connecting to anybody who solicited a connection, implying that our contact information could be used by a third party (i.e. the person's company) to use the data in whatever way it wished - for instance to be added to the corporate mailing list? Or indeed are we always assuming that we are connecting with an individual who we are think will help us achieve some of our goals like get a new job?

I am not a legal person, but it certainly I have experienced daft emails from recruitment companies advertising inappropriate jobs because of their loose keyword selection. Am I now to assume that when I connect to anyone at Linked In I am implicitly handing over my personal data in Linked In and contact information for use by a third party to do whatever they wish with? Or is there a law that protects me here in the UK or abroad? I know some will leap up and shout 'Data Protection' but the question might arise, where is the data stored in the UK or USA and so where is the governing law? There may be perfectly good answers to these concerns but at a time when Linked In have raised $56m is there a potential that the sheen on the service has been tarnished?

Failure - Crucial Factor in Success?

I recently asked a small audience of pretty powerful business types, one of whom had recently received over £1m of bonus while his employer had written off billions, if anyone had ever failed at anything. Not one hand went up. I prodded them asking surely they failed at something - still negative. So I volunteered and said, I fail at something almost daily - often simple things like failing a loved one by devoting just a little too much time to work, or avoiding a potential sale because I was reading the news on the internet. I had also failed at much bigger things. A previous business of mine had failed because I arrogantly assumed a number of things which transpired to be untrue. Failure hit me very hard because I had planned without failure and its consequences in mind.

With the help of a few colleagues at Ecademy.com, notably Rosemary Slosek, Laury Burr, Robert Zarywacz and Nick Bush with whom I debated the subject and by listening to the profound and stimulating recent address by JK Rowling to the Harvard Alumni, I believe recognising and embracing failure can help you succeed.

Understanding the Importance of Failure

So had my audience been denying they failed at things or were they honest they simply have never failed at anything? And why was the question important? I often ask would-be candidates for jobs if they have ever failed at anything and most lapse into interview-speak and say no. They have hit every sales target, achieved every challenge and went on every Chairman's Club etc. I usually avoid such people because they clearly do not understand what I'm asking and at best are fooling themselves if they do and at worst outright lying. The fact is failing at things is very common. The clear learning point is achieved by recognising the failure and modifying your approach or behaviour in order to avoid repeating the failure. I am very suspicious of those who say they have never failed in case they have and just deny it or worse still they don't know they fail at certain things and so will probably fail spectacularly when it all catches up with them.

And that's why failure is important. Many highly successful people like JK Rowling understood when they failed they needed to learn from it and applied themselves in a different way in order to be successful. In her Harvard address, Rowling says:

"So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.

Failure gave me an inner security that I had never attained by passing examinations. Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above rubies.

The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive. You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more to me than any qualification I ever earned."

This is a strong statement. Failure allowed Rowling to 'stop pretending that she was anything else other than what she was', and it helped 'strip away the inessential'. JK Rowling insists she failed cataclysmically but she does point out we all need to define what constitutes failure to us. And that's the essential learning point - understanding when you have failed, accepting you have done so and then making the conscious effort to change and modify your approach will help plot a path closer to success.

Further, failing has a powerful benefit. It makes you truly understand what success really is, help you be able to define it better and it will make it that much sweeter when you attain it.

Failing and Making Mistakes

My illustrious audience insisted that my minor failings in forgetting a birthday or coming home late from work are just minor errors or mistakes with no real consequence. My response was 'Not so'. I believe strongly that my personal foibles are symptomatic of a poor attention to detail on seemingly minor matters which fundamentally affect much more important things. My consideration that these matters are less important is a behaviour pattern that will ultimately bring a catastrophic failure if not dealt with. Should I continue to value work more important than my relationship with my wife there is no doubt it will have an impact on my marriage. This was the gist of my argument. My audience were quick in response that you can easily recover - a nice meal, a bunch of flowers or some perfume will soon rectify the situation.

At that point, I drew their attention to the fact that BA and BAA conspired to bring about the dreadful Terminal 5 saga at Heathrow. In the same quarter as CEO Willie Walsh being named an Executive of the Year by a newspaper and guiding BA to powerful profits, thousands of passengers languished at T5 as 'teething problems' failed to deal with their needs or their baggage. While it was fine to fire a couple of executives, issue platitudes and fob off the press, the failure was of an immense proportion. What is more, the whole plan to commission T5 was almost totally conceived with that level of failure built in because of the symptomatic laissez faire attitude of the executives involved. While the T5 fiasco was a big failure, when married with the high profits, many would argue that BA have weathered the storm and that it was just a blip in progress. My assertion is that if BA do not accept and embrace the failure it will ultimately permeate into everything they do. As long as the numbers are ok, failing the passengers is fine. If left unchecked, the problems could spill over not just onto profitability but, heaven forbid, on safety.

There is a thin line between failing and making mistakes. It may be a genuine error to forget an anniversary or important meeting but that is what planning tools are for. Failure is acceptable in the short term and considered a mistake. Forgetting more than once starts to indicate a trend in behaviour that is beyond a mistake. It is better, in the long run, to consider mistakes as failures and plan not to repeat them.

The Butterfly Effect

I wrote in an earlier blog article on single random events or Black Swans as Nassim Nicholas Taleb would describe them, destroying well ordered systems like the financial market. The interesting thing is that senior people like Stuart Green of HSBC have now come out and said that the business model which led to the credit crunch was fundamentally flawed and 'bankrupt'. Yet in nearly every answer to my blog and Linked In question, people have asserted that the warning signs were there, that the economy had built itself on high gearing and history showed that the model was flawed already. So what compelled the banking executives to pursue that strategy knowing that at some point or another, Black Swan event or not, the market would catastrophically fail causing losses which make Third World Debt look trivial? And even as they speak, the UK Prime Minister pumps £50bn into the asset backed security market to restart it knowing full well it was the finance system which failed us the first time around.

Comparatively small failures compound and start to magnify their potential outcome like the butterfly effect as in each cycle they are overlooked. In the competitive world of free market enterprise it would have taken a brave bank to have stepped back and not participated in the boom. But the self same bank would not be in the financial mess that the likes of Northern Rock, Bear Stearns at the extreme end and RBS, Citigroup, UBS, HSBC et al got themselves into.

Failing while Succeeding

I sometimes read with interest how highly successful people, who have all the visible signs of amazing success like money, image, and great careers are often those who court massive personal or business failure. It comes as no surprise that many a great relationship has been destroyed as a cost of success, both on a personal and business level. Again, I wrote a blog article about Denial and there is a link here. It is the successful person's ability to deny failure that allows them to concentrate on success. As an example, how could Willie Walsh feel successful after the T5 fiasco? Easy, his success is based on the numbers which were fine. By simply denying the failures at T5, he can continue to drive his profits. My assertion would be that if BA continue to ride rough-shod over its customers in such a way, ultimately the business will start to fail at the profit level. Perhaps more sadly, how many successful business people like possibly Roman Abramovich who owns Chelsea FC have had a failed marriage while at the pinnacle of their business success? Denying failure, may lead to short term success but long term it adds fuel to a potential catastrophic failure in the business.

Your own Failings Affect the Success of Others

The problem about not being able to recognise, deal with and learn from your own failures will ultimately start to affect the performance of others and potentially lead to failure for them. A good example of this is relationships. Little failings can build up over time and contribute to failure of the partnership. While it takes two to tango as they say, failing and recognising it is a personal thing. As Rowling points out, defining what is failure yourself is personal, but recognising and dealing with it may not be. From a business perspective, failure by an executive or staff member may ultimately lead to failure of another person or part of the business. An argument could be put that failures by say Nick Leeson brought down Barings Bank. It's why it is critical in business to be honest with yourself and recognise when you have failed and do something about it - because it will not only be yourself that's affected.

Recognising and Dealing with Failure in Others

The Nick Leeson example was wrong. Leeson was part of an organisation and industry that continually ignores failures. Self regulation in business is always a danger and in the financial industry where greed pervades more than anywhere, it's like the cat being asked to guard the cream. Leeson was guilty of deception no doubt but those around also failed to recognise the failings because their motivation to make money outweighed their ability to make judgement calls. How history repeats itself - in identical ways the derivative-led business of the banking industry has pretty much caused the current economic climate. Comparatively small failures combining and compounding to produce catastrophic failure and losses. The failure of managers and executives to intervene and recognise failures ultimately caused catastrophic failure.

The problem the financial industry has is that it has shown repeatedly that even when spectacular failure has been attained, they simply point a few fingers, mumble platitudes, make a few cuts, blame the customers for demanding too much service for too little spend and then plan the next frenzied boom. If Taleb has got one thing pretty close to right is that strip away the derivatives, mortgage books, loan syndications and such like and you might have a profitable business ongoing, all the rest just boosts the salaries of a swathe of upwardly mobile gamblers. The inability of the financial industry to recognise failure in itself and others and inaction against the power of greed will continually lead to boom-bust cycles and I believe at some point will lead to a financial disaster that would make the 1930's look like a holiday. No one knows for sure but the combined positions of the world wide derivative book is upward of $516 trillion according to a post on my blog by Eric Leibowitz. Just one butterfly not even a Black Swan and the whole lot could collapse like a house of cards. At every conjoin of the cards, failure stalks.

Back to The Real World

So when I ask if people have failed I am looking for people who recognise what failure is and I am looking for how they dealt with it and did things differently. I am not necessarily looking for whether they became super-successful because of it as people like JK Rowling are rare, although it's worth noting Steve Jobs dropped out of a Stanford degree course, Bill Gates was unsuccessful first time out, and Anthony Hopkins faced all the demons at his lowest ebb before rising to be the superstar he is today. The fact is we fail and recover at some level every day - failing big is not fun but it can become a profound positive force when it is dealt with the right way.

So when I asked earlier in my blog whether people felt degrees or MBAs mattered or made a difference, the answer is yes they can make a difference. But of more relevance is understanding how people deal with failure - this builds a more compelling picture. That someone elects not to go to University to 'experience life' is fine but how they deal with that experience is the critical issue. You can learn all you like or experience as much as you can but if don't act differently because of it then none of it is of great relevance.

Failing is important - in science some of the greatest innovations were by-products (euphemisms for failure to find what they were looking for) of research or as I like to call it 'trial and error'. Acknowledging, accepting and dealing with failure is arguably the driving force that differentiates human beings from any other organism on this planet. Recognise it, embrace it, learn from it and apply the new knowledge and ultimately you will be far more successful in life.

UK Economic Meltdown?

Yesterday's Daily Telegraph could not have been more depressing on several fronts. First came the news that Tesco, that bastion of growth and barometer of the UK good times, announced slower sales growth as like for like sales growth was 3.5% and below forecasts. Second was the words of the HSBC Chairman Stephen Green that the banking model that delivered soaring debt was 'bankrupt'. Thirdly, the news that one of Britain's top house builders, Barratt, requires £1bn just to survive. Hot on the heels of this HBOS saw shares dip below their rights issue price potentially scuppering their plans for a vital £4bn injection of capital.

Looking behind these headlines, HBOS shares have dropped a colossal amount from nearly £11 at the beginning of the year to around £2.58 while Barratt has seen its share value decrease by nearly 80% in 2008. And we're only half way through. In fact only one of the UK's top house builders has seen its market capitalisation decrease by less than 50% this year - that's Redrow and their shares have dropped a mere 49%.

Banking, Housebuilding & Groceries

The three industries are very indicative of the UK economy as a whole. As the UK suffers the implosion due to unregulated greed by banks funding the once limitless credit and cheap cash which in turn fuelled a 170% increase in the average house value in the UK in the last 10 years, finally the staple industries like groceries and clothing which represent that which we cannot do without have begun to creak - Tesco being the mightiest. To boot, in the last few weeks there has been a 20% drop in sales of petrol as Britain counts the cost of its greed and wrong decisions. Mervyn King, Governor of the Bank of England, at the meeting of the British Banker's Association, hinted that Britain faces a return to 'stag inflation' which is experienced when high inflation coincides with shrinking economic growth. As if on cue, it is estimated that a further 23,000 people went into negative equity recently as house prices began to fall - those with 100% mortgages became the next wave of victims after the swathe who had 100+% mortgages. Then it was announced average family energy bills could rise to £1,300 per household and just to add to the gloom, it was estimated that 200,000 more pensioners were classed as in poverty in 2006/7 compared to the previous year. We do not have to mention growing trade deficits and rampant government borrowing - the picture tells the story. Britain is in the early stages of a serious economic meltdown.

Unemployment & Unemployability

Amidst all this gloom and doom, the one statistic that has not had a great airing is unemployment. Well, it's probably going to be the next big area to be concerned about. After the government managed to decrease unemployment by around 1m over the last 10 years it has been paradoxical to see an almost identical number added to those who are long term incapacitated and cannot work - we shan't dwell on that strange statistic even though it smacks of false accounting. However, it is almost certain that the next major bad news will be that inflation and economic slowdown will start to affect the unemployment figures in the next few months as companies strain in the face of rising costs and less profit.

The fact that Britain has become a nation of obsessive spenders and negative savers will inevitably come home to roost. For many, as the potential of employment decreases, there will be little left to rely on other than state handouts. In turn, the burden on the state will rise and accordingly there will be cuts in spending and an even greater call on taxes. The failure to deal with the immigration issue will come home to roost which will ring hollow for the likes of William Hague who 'mistakenly' fought an election on it and was poo-poo'd by Blair as being out of touch, as several million new arrivals will be affected as low-level casual jobs at restaurants, coffee bars and labouring will go first when finances get thin. These are predominantly young, unskilled workers who will be starting families here. The burden on the state could be enormous.

Accountability

I will be devoting more of my blog space to the concept of accountability, but let's just consider this for now. The Chairman of one of the world's largest banks (HSBC)has decreed that the world's banking model is bankrupt and that there should be a return to 'good old fashioned principles'. He highlighted to the BBA that 'The huge build up of leverage in the system over the last five years where profit depended on high and ever increasing leverage, that model is gone, and that model is gone because it is bankrupt. You simply cannot build a business that way. Those that will propser will be those that remember the basics - the importance of customers, deposits, capital and balance sheets...good old fashioned stuff.' He went on to say that banks will have to adjust to a future where profits and return on capital will be lower and that the bubble had burst. He also said. 'It's worth noting that some of the returns on capital looking backwards were inflated, and much of the returns were subsequently given back....the banking industry has not covered itself in glory in recent months.'

While this is a stark and honest appraisal of the situation, it also beggars belief. HSBC has not been alone in writing off almost incredible amounts of loss in the last few months to pay for its wrong decisions and mistakes as it took a greedy place at the feeding trough. He, along with many bank executives, traders and analysts, across the industry will take their extortionate bonuses and not pay them back. They will just have to look gloomily ahead and conjure up another way to keep the money pouring into their salary pots. How they can stand there and say such things and keep their jobs is amazing.

My recent article on Nassim Nichloas Taleb springs to mind. He ascerted that banks never make money on loans, mortgages, derivatives and the like - they only ever make money on the interest on current accounts and charges, all other profits being surrendered shortly after they make them. Yet, it will be the front line banking staff and everday customers who will bear the cost of all this. In higher interest and bank charges, the blame will be passed on in the form of job losses of front line bank staff, higher costs to customers and poorer services.

So when, exactly, does this industry and the government that allowed it to feed at the frenzy of unsustainable growth become accountable? Taleb believes Black Swan random events caused the sub-prime collapse and aftermath. But if anyone ever read the book 'Fantasy Island' by Larry Elliott and Dan Atkinson you would have known that the New Labour Project of 'a surfeit of consumption, a surfeit of speculation and a surfeit of deceit' was at the heart of the causes. They also believe that the New Labour movement has brought about a culture a destruction of personal accountability - 'blame anyone but me' - and that flows from the very top, Gordon Brown and Tony Blair, to the bottom, you and I, plus all those greedy banking executives in between. We are all accountable.

Bricks & Mortar Turned to Gold

It has always been the mantra by the government that the previous Conservative government were 'boom and bust' and there is some truth to that. But what we have seen from the 'prudent Chancellor' is nothing short of lunacy despite all that Oxford-bred intelligence. How could he have not possibly seen the looming danger of the over-egged housing market in the UK? With over 40% of all new mortgages being re-mortgages, it was obvious the nation was leveraging the new-found equity and using it to fund a spending bonanza. With it came bundles of extra credit in the form of interest free credit cards, 125% mortgages, 5 times salary mortgage lending, cheap loans and plenty of places to spend the money. Designer fashions boomed, coffee shop culture rose, all day drinking hours and foreign home ownership shot up - Majorca turned to Mauritius for holidays and is it me or are there actually more Aston Martins, Bentleys and Range Rover HSE Sports on the roads than before.

How could we have all possibly ignored the warning signs? How could we all have forgotten that if something looks implausible it's because it probably is?

Hindsight & Foresight

With the benefit of hindsight, would the bankers and consumers have done anything different? Of course not. You do not have to look far back to see the evidence of similar mistakes - the Dotcom boom is there for us to see and the dramatic collapse of the share markets was so profound that they have never recovered the ground to this day. So why do we allow the banking industry and government to employ such people who repeatedly make the same mistakes? Why do we allow people like Stuart Green at HSBC keep his job (sorry to pick on him as he is not alone)? Why do we allow a system to build up incredible profits on the back of assets that cannot possibly sustain it?

And do not think they learn from their mistakes. As the banks suddenly realised that their credit spree was going to leave them with incredible debts backed by worthless assets, they stopped lending to one another for fear of making the problem worse and we saw for one of the first times in modern economic history, the complete disconnect between the Bank of England Base Rate and the cost of mortgages. Gordon Brown had lost his magic wand. So what did he do? First he rescued Northern Rock by putting it into government ownership and gave us all a liability of £125bn and started paying the advisors millions to do the obvious, then he stumped up £50bn to mortgage companies to try to kick start the credit bonanza again and hope the asset-backed security market would become unpetrified. The very thing that got us into the mess in the first place.

Experience & Education

There is a theme on my blog about experience and education and how that is valued or not in the recruiting process. Well consider this - you can have a ton of education from the best universities in the world and all the experience your time on earth will allow but it will not stop people making appalling and greed-driven decisions that are not in the long term interest of the corporations and government they serve. I will later assert that interviewing potential candidates for roles has little to with what's on their CVs and here is the demonstration why. We, as experienced citizens and consumers, should also shoulder blame. We swallowed the hype, took the money, spent it and will carry the can. While taxes grew stealthily and wars were declared in our name we allowed the country to be led down a path that could only end up in one place. In the meantime, we allowed the guff about health care, education, security and transport to be spouted and gotten away with. We sit in a country with outrageous taxes that do not have to be paid by the richest people, we have become a playground for the super-rich to make more money, we have allowed our school children to become dumber, carry knives and murder each other while we concentrate our efforts on 'democratising' suitably well-resourced countries, risking the lives of professional soldiers, while we hand out more parking fines and speeding tickets and let the country become flooded by immigrants who will ultimately make our system strain even more.

Meanwhile, the elite write their jocular memoires, re-write history to enhance their glory, get fat-paid jobs in the companies they helped get rich, and carry on making decisions that will affect the future our next generations.

Taking Responsibility

We are all stakeholders in this country and in the banks who hold the deeds to our houses and the money we make. It is time we stood up to the responsibility that gives us. We should make it very clear by our actions that we do not want the wealth of this country squandered and given to speculators who don't live here and we don't want officials who cannot apply the experience and knowledge they have without their greed getting in the way. We have become too dependent as a nation on the strength of the City of London's financial market - it is high time it came under the jurisdiction of proper governance, the scrutiny of the law and do the bidding of its real customers. And it is high time we wised-up to the government's lack of ability to focus on the real issues we face in society today and get the country back into financial order - that will mean us first voting out the jokers who got us into this mess.

These are the views of humble voter and bank customer. I deliberately stoke up the fire to find out what your views may be. I have put the case from one point of view but it is something that requires debate and I hope you will feel you can contribute. It's hard not to get political about this but I see this more as highlighting failure on a grand scale rather than political comment.