The business outlook for 2012 remains challenging. The Eurozone crisis will continue to dominate and so far no significant move has been made by politicians to solve this. There will be a series of debt crises for sovereign nations and contagion from these is likely to affect British banks and therefore the UK economy.
Global growth is also slowing. Even Brazil which has just overtaken the UK as the world’s sixth largest economy has cut its forecast rate of growth to 3.5% in 2011 from 7.5% in 2010. Rates of growth in China and India are still healthy but slower than the past few years and stock exchange performance has been dire there in the past twelve months.
The US is paralysed politically with neither side letting the other set a sensible budget and with the prospect of a general election also encouraging inertia.
Businesses that are well placed should still invest but many are reluctant to do so while the outlook is so uncertain. As so often what is sensible for the individual is madness if everyone behaves that way. If we all conserve cash whether as consumers or corporations then recession is inevitable.
Often the situation in the UK and elsewhere is characterised as the private sector vs. the public sector. Each blames the other for the mess we’re in. The private sector can’t understand how wage rises and pensions at a premature retirement age are still possible in the public sector while the public sector workers see themselves as selflessly serving the public and blame the crisis not on excessive government borrowing but on negligent bankers.
But really it is about monopoly vs. competition. Those jobs that have to be done locally and cannot be outsourced are unaffected by global competition. Jobs that can be outsourced often have been. Outsourcing also includes the import of cheap labour from Eastern Europe where skilled and well educated workers are prepared to put up with lower wages and work harder.
Many public sector jobs could be outsourced but that would be politically unacceptable so the unions can exploit their monopolies. We can expect more of this as the rate of increase in public expenditure is slowed by the coalition government.
Businesses need to differentiate themselves more than ever seeking to find growing markets, either niches at home or the burgeoning middle classes in the emerging and emerged economies. While monopoly is frowned on in the private sector the nearest thing to it is an unassailable position of branding strength by providing a unique product or service.
What most people agree is that we will find it difficult to solve any of these issues without growth and if governments have to cut back in their activities because of their very high levels of debt then the growth must come from the business community. Last week I had the privilege of seeing the ceremonial installation of John Flynn as the Master of the Worshipful Company of Marketors as I was recently elected to be a Court Assistant. John has taken as his theme for the year: “Marketing: The Business Driver” and I could not agree more.
As an advocate for this theme John had recruited Ken Olisa, OBE as the speaker at his Installation Dinner. Ken is the consummate marketer. After graduating from Fitzwilliam College, Cambridge he started his career at IBM. After 7 years at IBM (UK) he spent 12 years with Wang Laboratories where he ran worldwide marketing from the USA before returning to Brussels to head operations in Europe, Africa and the Middle East. In 1992 he founded technology merchant bank Interregnum which made its £100+m IPO on London's AIM exchange in 2000. Today he leads boutique tech merchant bank - Restoration Partners based in London. Ken serves on the boards of Thomson Reuters, Eurasian Natural Resources Corporation (ENRC) and is an advisor to Open Text, after previously serving on their board.
Ken’s other activities range from being Chairman of Thames Reach, a charity working to end street homelessness in London, for which he was awarded the OBE, to being a member of the Independent Parliamentary Standards Authority, the body put together to respond to the scandal of MPs’ expenses. He was named one of the UK's ten most influential black businessmen in the 2009 Power List.
Ken told us that in his philosophy marketing is very simple. From the need in his early days at IBM to explain to people what a computer actually was he learned that marketing is about getting goods to market and getting cash back in return. He found that marketing is about 80% science, 20% art, a proportion with which I am quite comfortable but I know many well known marketers who would not be. He gave the example of Philip Green who on taking over a chain of stores visited some of them on a rainy day only to find that the umbrellas were all hidden away out of sight.
His messages to us were equally simple. There were four:
1. Tell the truth. Ken has a series of war stories of getting in trouble with journalists by not quite living up to this one.
2. There is such a thing as bad publicity. Ken had worked very hard to convince the Americans not to call a new service proposition "Wang Care” because of the unfortunate connotation it would develop in the UK.
3. Beware the boomerang effect as he called it and his position as a regulator to Parliament puts him in a good place to observe the fallout from this one. And
4. Work well.
What could be more simple?
Copyright David C Pearson 2012 All rights reserved