Funfzig lashes if you please, Judge

Max Mosley is some guy. If secretly filmed in a sordid sex session with a bunch of dominatrix paid-for ladies I would wager most people would be horrified and embarrassed, and possibly shrink from public life. It surely would be difficult to look loved ones in the eye and friends too - and goodness knows about work colleagues and business associates. Wouldn't we? Or am I living in a different world?

Not so Mr. Mosley. He actually turned the tables and made the whole thing a breach of his privacy. That takes some chin, but then again he's from a family not short of sticking its neck out and indulging in something repellent to most sane and decent-minded individuals.

What Are The Real Implications?

It was a bizarre affair that you couldn't have made up.

When a key witness did not show up the Judge in the case, Mr. Justice Eady, invoked the Human Rights Act to support legal action against the News of The World which had published the story and film to effectively expose his moral shortcomings, an age-old right of newspapers. Former Lord Chancellor Lord Falconer stuck with his old chum and said the Judge did the right thing. Interesting.

Mr. Justice Eady ruled that the paper had breached Mr. Mosley's privacy while he had taken part in a sado-masochistic sex session with five prostitutes, in the process falsely claiming that it had a Nazi theme - which confused all of us who actually looked at the thing. I wonder why Max and the ladies didn't speak in menacing West Wales accents - surely it would have had a similar effects or perhaps we should ask the Judge.

In fact Justice Eady claimed Mr. Mosley was entitled to privacy for consensual 'sexual activities (albeit unconventional)'. It seemed to omit the fact he paid the ladies for the consensual activities, but no matter.

Enter The Daily Mail

I don't have a massive amount of time for newspapers editors, I think they do regularly overstep the boundaries of privacy. But in this instance, frankly Mosley had it coming. Paul Dacre, Editor-in-Chief at the Daily Mail, at the Society of Editors annual conference contended most people would consider Mr. Mosley's activities to be perverted and depraved.

I would draw readers' attention to my previous blogs on Denial as a Coping Mechanism. Psychopaths use the power of denial to distance themselves from their actions otherwise they surely would be overcome by their enormity while we regularly use denial to cope with deal with bereavement or similar. Mr. Mosley uses denial to make us believe the problem is with a warped newspaper who think his privacy is more sacrosanct than his depraved activities.

Dacre rightly points out the particular Judge has 'Form' on such rulings and contends that he is effectively passing laws. Even the PM would have had to set out a bill and get it passed by both Houses, a passage which everyone knows is no 'slam dunk'. Not so Justice Eady, asserts Dacre.

'...one judge with a subjective and highly relativist moral sense can do the same with a stroke of his pen,' said Dacre. 'I would personally would rather have never heard of Max Mosley and the squalid purgatory he inhabits. It is the others I care about - the crooks, the liars, the cheats, the rich and the corrupt sheltering behind a law of privacy being created by an unaccountable judge.'

Do We Agree?

Clearly the power of the vote of motorsport's governing body for whom Mr. Mosley works, do not agree - they gave him a vote of confidence although it might be alleged Mr. Mosley was happy to have accepted lashes instead.

I do agree this has a an implication for newspapers and society generally. If we extend Justice Eady's judgement then we may never know if politicians like Mandelson, Mellor, Blunkett, Conway, Hamilton or others far worse are doing anything which we ought to know about. It does have implications - it's called trust. While sexual activities may be a private matter in general, if you are in a high profile position or indeed in any where your actions may be construed by others as odd, depraved or unusual, do not be surprised if you take a fall. This applies to everyone when you think about it.

But here's the rub. Max Mosley slipped out of the situation because he has money. A great deal of it. If an employee, whatever rank in a company, had a video of his or herself published on YouTube of even an embarrassing incident let alone sexually depraved act they might possibly be disciplined or worse if their employers got to know. While they might argue a breach of privacy, the fact is they took the risk knowing the repercussions.

As usual in life, just as Formula One getting dispensation to get cigarette advertising a special dispensation even when it is clinically proven smoking harms health and can kill possibly with a greater risk than driving an F1 car, money talks.

Conclusion

All senses of morals say that a man in his position has betrayed the trust of his employer, wife, family and friends but that doesn't mean a jot and it outraged a lot of people who cannot understand how he keeps such a highly paid, high profile, ambassadorial job in a sport we love - in year when we have a British world champion to be proud of.

It makes you think it's a sport, much like banking, that is unhealthily in the hands of very few people who make more money than we could imagine. Perhaps it's time they joined the real world and got some sense of values and perspective, then they may actually realise this wasn't about privacy it was about trust.

Is Your Business In Danger of 'Hitting The Wall'?

So everything is going well - even perhaps better than ever. What's all this Credit Crunch and Recession worry about? It can't affect me, my business is growing at 25-50% and even a slowdown means at worst I will just have low growth.

Economists reckon we have seen the worst of this economic crisis - so we can only see upturn. My business is perfectly poised to take advantage. Or is it?

Hitting The Wall

The recent Sequoia presentation at its All Hands CEO Meeting in California clearly illustrated the concern by VC companies and warned 'Spend every dollar as it was your last' while mandating all its portfolio to reforecast - and fast. There was no doubt in the VC community that everything had changed.

There is no hiding from a recession. It will affect every business in some way or another - some profoundly, some only slightly, some positive and mostly negative. The one constant is that everyone will see some effect even it means an increase in business.

I cannot urge enough - rethink your business forecasts and plan for change whether it's good or bad. If you don't, you are in grave danger of what I term 'Hitting The Wall'.

If you are an emerging business, evangelising your product or service, you are particularly vulnerable to the downturn as larger businesses will be more reticent to risk new things or change from trusted methods. There will be less money to make less risk.

'Hitting The Wall' is the term stolen from the experience marathon runners have at some point when the they hit a pain barrier that can prevent them from going further and completing the challenge. Some simply grind to a halt and don't make it - others conserve their resources and tactically survive to get through the pain and emerge renewed, better placed to complete their challenge. It's very similar for any business, particularly emerging ones and more so in times of recession.

The effect of this recession has come about at the confluence of a dramatic and unexpected economic crisis that came from left field. It means we have constrained credit, far greater conservatism to risk and an economic slowdown. It's a mixture as toxic as a sub-prime mortgage.

For a business, if you don't have a plan to survive or thrive in a recession, you will surely be a victim by some degree and possibly even 'Hit The Wall' where survival means a drastic retrenchment in the face of the recession which will mean failure for many businesses.

The Speed of Recession

The last thing you need is a business model dependent on fine margins with high lending - a minor slowdown can hammer your business and no bank will lend just for working capital now. There is no alternative but drastic and rapid cuts. Yahoo! is a typical example of this. A swift and comparatively minor downturn in revenue hit their bottom line by 64% and caused an immediate lay off 1,500 jobs. If they do not dramatically change their model, I suggest they will have a similar problem in 3 months. They literally 'Hit the Wall'.

In the UK Estate Agents like Savills suffered an 82% downturn as they are locked into high home sales - they are going to have a long hard battle to survive ahead. Even more widely placed Estate Agents are selling homes at an average of one per week and even less in London and the South East. They are in huge trouble.

Car makers are getting hammered as sales of new cars dropped 21% putting those dealers reliant on hitting quotas of sales for margins in big trouble as well as significant job losses.

Builders and associated suppliers are also 'Hitting The Wall'. The speed of it has been dramatic and less than a few months ago none of them had foreseen it or planned for it. Lehman Bros is great example of a company who paid huge bonuses last year, got a triple A credit rating as recent as August and were even approving pay offs to fired executives to the tune of several million a few days before their demise.

An example of little drop off to date is IT and related sales. Most software and hardware firms in the supply chain are predicting growth rather than slowdown. Dream on - as the recession bites all costs will get cut, it simply hasn't filtered through yet and when it does it come it will be hard and swift.

Plan Now

I have blogged on this before and there is a a presentation on my LinkedIn Profile and my website to download free of charge. My strongest advice is to take a look and see if it helps your thinking.

In short:

• Think how the recession is going to affect your business and how you are placed
• Focus hard on the value you provide to customers, enhance it and work on how you position it. Rethink your Value Proposition.
• Reforecast - don't think this will not affect you, it will somehow whether good or bad
• Don't be needing cash for survival, banks will have little sympathy
• Make tough decisions on cost now - don't spend on what does not return immediate profit
• Sell harder - profile what customers bring most profit, then call more of them
• Decrease your dependence on individual large customers, any slowdown can hurt harder
• Throw a blanket of value and service around your best customers, make sure they feel loved
• Outsource as much of your headcount as you can. Be flexible, put skills where you need them when you need them, pay for results and mitigate onerous employment costs

In a recession, customers focus on bottom line impact and real value to the business. Nice-to-haves and non-essential products or services will get cut. Fluid budgets like travel, accommodation, entertaining, marketing and training are always the first to go - make sure you are not only dependent on revenue from such products.

Get Advice

The last thing you need to do is put your head in the sand or carry on as normal. As the Credit Crunch took banks by surprise executives were still going on corporate jollies to expensive Spas as if the world would never change.

If you do not know how the recession will affect you and your business, seek good advice. Most SME businesses around today will be run by people who have never experienced a recession, there are few left who bear the scars. Managing a business in a downturn comes only from hard experience as anyone can run a business in the good times.

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.

A Wave of Foolish Optimism?

As the world celebrates the most galvanising US Presidential Election in living memory and Barack Obama takes the applause for the most unlikely of victories - had you tried to predict it even a year ago - the Bank of England joined the frivolity and slashed the base rate by 1.5% to give Britain the lowest interest rates since the early 50s.

Have no doubt, what Obama achieved was a resounding victory for those who believed change was required, and even if that meant the selection of the first non-white President in history – something again no one might have predicted at the start of this process and that America had seemed to be against for so long.

Surely this is the dawn of a new era of optimism?

The State of the Unions

While we may rejoice at the swathing cut in bank rates and hope that not just those on Trackers get the benefit, we also got the announcement that house prices had dropped 15%. More importantly, not for the first time, and contrary to Gordon Brown’s assertions about our economic position, the IMF predicts that Britain will be worst hit by the downturn. At Glenrothes last night, Scottish dreams of independence all but evaporated as Labour held the SNP challenge in the wake of the failure of the two Scottish banks, HBOS and RBS.

Perhaps the best summary of the Blair-Bush-Brown era is a sustained period of missed opportunity. Both started on a platform of the most stable economics for some time and there was a new mood of change in Britain about the squeaky clean New Labour approach and their vision of a ‘Cool Britannia’. Much has turned out to be false hopes. As the era presided over a number of the most devastating terrorist attacks in the US, the UK, Russia, Bali, Spain, Pakistan, India and more, the ‘Team’ embarked on two major wars only one of which warranted global support.

As Britain laboured over huge investment and meaningless targets in all aspects of Public Service, laissez faire Government became the order of the day. But a more distinct feature of the period was the rise of the unelected officials who influenced and arguably ran the country culminating in the most bizarre moment when a ‘Political Adviser’ actually strode into a TV Station and ‘demanded’ to be put on a news program at prime time. At the height of the ‘David Kelly Affair’, Alastair Campbell wielded more power than the Prime Minister and flaunted all legal repercussions to give his side of the story on a matter that centred on a document that had been the basis of Britain’s decision to go to war with Iraq which proved to be a pack of lies that either emanated from a ‘spin machine’ or an incompetent Intelligence Service. The Joint Chief got promoted, Campbell retired at his own leisure to enjoy a life of notoriety – the BBC was flayed and the reporter involved in the story is minor hack. Mandelson was recently made a peer to get a key Government post even though he is unelected – so the show goes on.

It’s the Economy, Stupid

The era started with plenty of econo-speak about prudence and cycles and Brown could do little wrong. Despite taxes rising on an unprecedented scale, Britain wallowed in a new freedom of credit which fuelled an explosive growth in house prices. Average families could leverage the equity in their house and their cashflow due to cheap and plentiful credit and borrow and buy on a massive scale whilst savings went negative. As Britain ‘boomed’ a massive hole was appearing in the finances and sums didn’t really add up.

No matter, everyone was doing it – Britain just happened to expose itself more as an economy so very dependent on the Finance Sector for its GDP and house prices rising 160% in 10 years while average earnings actually declined in real terms – the factors underpinning the boom economy were actually going backwards at a rate of knots. The Credit Crunch was a shock to the studious Brown and more of a shock was the fact our economy was far more exposed than he thought despite the obvious warning signs. With all thoughts of economic policy, prudence and regimentation out of the window, Britain has mortgaged itself heavily based on our future tax as part of the £4.5 trillion global bail out of the finance system.

Historical Parallels

There is a bit of the ‘Cool Labour’ in the image and talk of Obama. He is fit, young, good looking and he talks the way people want to hear, bringing out over 90% of the voters to make their feelings known. He is inspirational, enigmatic and has joined all parts of society and the world into his vision of the issues we face and the problems he needs to solve.

US foreign policy has gone up a dark alley and its spectre stalks the streets of international badlands with a large stick talking menacingly to anyone they periodically don’t like. They underestimated peoples and countries, they made terrorism a religious thing by having Christian zeal guide their thoughts just as in Britain and have chased laughing shadows and wrestled vicious, slippery eels in their quest to fight a war which they won’t know if they have won should they do so and have no vision or strategy for the world after as well.

Obama has changed that thinking already. He has posed the BIG questions about foreign policy. Britain of all countries knows that in order to fight terrorism you must eventually take away the reason for the fight as the fighters themselves will never be defeated – surely Blair, who nodded in John Major’s tentative cross and scored the winning goal in Ireland, knows that ultimately you have to swallow your pride and talk to the people you don’t like. It was Blair’s only legacy of note.

Don’t Miss the Opportunity

Bush had his chance and blew it. Maybe he was as dumb as people parodied him for all his Harvard education. Obama does not have that apparent failing – he did not have the burden of dynastic destiny. Two years ago, he was a political nobody who had the audacity to hope and in the face of a shoe-in Democratic nomination in Hilary Clinton, he changed the view of an entire nation and the world too.

The clear view is that the United States has sobered up after a bout of heavy drinking at the trough of world greed and power and having staggered through the world muttering aggressively and causing fights, it’s back, looking clean, fit and lucid and has a new sense of self-worth and purpose.

The world is jubilant and expectant. In the face of global recession, terrorism, instability, imbalance and self-interest, Barack Obama represents the hope of a new world order. Let’s hope he doesn’t do a Rumsfeld and believe the war is won after the ‘Shock and Awe’ of a sweeping Election win because, to use that analogy, the war has yet to begin.

But here is to hoping – Way to Go Obama.

Why? It's Just Not Cricket, You Know.

Have I gone mad? What has boring old, stuffy cricket got to do with business strategy?

The Test match cricket I grew up on in the 70s was turgid ‘absorbing’ stuff as commentators described. As the West Indies bombarded England stout fellows put their body on the line and scored at the rate of two runs per over barely. Fast forward to 2005 and ‘Ashes Fever’ gripped Britain as England duelled with the best team possibly in the history of the game, Australia, and Test match cricket had then doubled its scoring rate and pretty young girls in my gym discussed if Simon Jones would achieve ‘reverse swing’ after 22 overs the next day – I think it was the properties of the cricket ball they were talking about.

Cricket has been slow to re-invent itself and gain wider audiences and the game at its highest level has not progressed a massive amount since the days of WG Grace when the bearded giant became possibly the world’s first sporting superstar.

Phase One

It was in the 70s when the concept of a shorter game at the top level gained credence and we saw Sunday League 40 over cricket and International One Day games of around 50 overs per innings. In a single day rather than 3 or 5, a match could be concluded and it represented a pleasant and sometimes exciting day out. It was very popular amongst more than just cricket fans.

Phase Two

Then at the turn of the millennium came the major innovation, Twenty-Twenty. Avid club cricketers like I could relate to this. You leave the office at 5.30pm and get a game started by 6pm and it’s over by just after 8pm. The first class game adopted it and it became an instant success. With floodlights and razzmatazz teams could ‘biff, bang and wallop’ for a couple of hours and produce a great spectacle. It meant in a Summer’s evening, sports fan of all varieties could have an exciting night out and have great entertainment.

Phase Three

It took businessmen in the cricketing mad nation of India to really take the concept of Twenty-Twenty and revolutionise it. This is where business and sport converged. In the theory that talks of businesses swimming in the crowded, turgid Red Ocean, cricket re-invented itself and took to the warm, inviting and competitor-free Blue Ocean.

You see, the issue with all the innovations in cricket as it stood was that they generally embraced the status quo. If you shortened the game, the same teams, with often the same players participated and competed amongst themselves maybe with different shorts. It was tweaking formula to get a bit more out of the fans.

In inventing the Indian premier League (IPL), the rule book was literally torn up. Taking a leaf out of the highly successful model of the UK’s Premier Football League, businessmen packaged a league and sold its rights as a franchise to new clubs who could participate. Those new clubs were given direct access to cash from the media bonanza and they did not just pick the same-olds, they went out and attracting the best players in the world to play in their teams. With a few English exceptions, the IPL kicked off this year with the cream of world cricket. In the inaugural game, New Zealander Brendon McCullum smashed 158 not out including 13 sixes in the very first innings and we knew we had a different sport.

The first tournament was won by the Jaipur Rajasthan Royals captained by the great Shane Warne and for just 8 weeks work many of the cricketers had pocketed a cool £300k.

Blue Ocean and Your Business

The IPL is a very good example of a ‘business’ moving out its comfort zone or Red Ocean where it has limited market growth opportunities, sensitive margins, low differentiation and lots of competition and moving into a much richer Blue Ocean where competitors have not staked out a plot, customers see the value and there are profitable growth opportunities. Some people like Sir Allen Stanford, the philanthropist Texan Billionaire, believe the new Twenty-Twenty game could attract a whole new swathe of players and nations and even – now hold on a minute – even the USA. A fast moving, similar format to Baseball – OK we may have to be realistic here but I see what he’s saying. It could be a whole new world for cricket, and a whole set of new players as the new game is so very different.

As we all view the effects of the recession loom, it is a good time to reconsider your own business plans. Are there warmer, more tranquil waters full of opportunity and few competitors that you can take advantage of? If so, how do you do it?

One thing is for sure, the Red Ocean will indeed run red and turbulent in the next year. Now is the time to take a long hard look at your plans, positioning, cost base, value proposition and think long and hard how you can adapt and clear a patch in your market to not just survive but thrive.

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?

Lost in Translation?

As a Welshman I can relate to this. The road sign reads fine in English but workers at Swansea Council, knowing that all signs should be bilingual English and Welsh, sent an email to a Welsh translation site asking what the Welsh was for the lorry warning sign.

As no-one spoke or read Welsh there or perhaps there had been one too many drinks consumed the night before, no-one spotted that the 'translation' returned was in fact an out of office email reply which read 'I am not in the office at the moment, please send any work to be translated'.

Priceless

We Welsh are used to such nonsense in a country where less than 10% of the inhabitants can speak Welsh as many jobs in the Public Sector mandate that Welsh has to be spoken by the applicants - Positive Discrimination. How that squares with the Race Discrimination Laws I am not sure as 90% of Welsh people cannot apply let alone other British people and let's not even start on other races who may all be equally skilled or more so than the limited number of people who may apply. Then you get the lunacy as above.

But then again, Wales can be a funny place. Since I left some 25 years ago, we have our own National Assembly courtesy of Tony Blair where there is a whole new layer of powerless yet well paid bureaucrats who consume vast amounts of expenses and some even get caught doing rude things on common ground - I shall say no more. That there was perfectly good office space aplenty in the major cities, these 'politicians' immediately voted to have a brand new building erected for themselves so they could walk real corridors of power not ones rented from sleazy landlords no doubt.

Nice one Tony - just a tiny fraction over the 50% of the voters who turned out actually voted in favour of it on a turn out less than the average weekly crowd at Old Trafford (slight exaggeration but you get my drift. Wales was not as enthusiastic about it as everyone thought).

Achievements

But let's not knock all they do. Wales is the only place in Britain where everyone has free prescriptions and all hospital car parks are free.

It is also the home of the Rugby Union Six Nations Champions who last year completed their second Grand Slam in 3 years. Not bad for a country whose human population is exceeded by that of the local sheep. No silly jokes please, we've heard them all.

As we say in Wales 'I am not in the office right now. Call me when the rugby's finished.'