Wednesday 27 February 2013

An Entrepreneur; only for the fainthearted?

Entrepreneurs are an interesting mix and curious bread. It is very hard to define what it is to be an entrepreneur. Some cultures are more entrepreneurial than others. I would define it as someone who starts his own business from nothing or a ‘start up’ that has discovered a product or new service and builds his company from thereon. Well known examples of this, Michelin, Renault or Peugeot. Nevertheless it is commonly defined as taking on a small business or commercial venture at your own risk. You may have to pay for it or you may be offered it.
The best are often innovative, dynamic, and have found a purpose in contributing to where there is a need. Many have a lot of energy and self-motivation, are enterprising possessing high commercial acumen and flair. The ones that inspire would often have vision. There would certainly have to be an element of self-belief and confidence as there is a slightly larger risk involved.
The less enterprising ones may consider themselves entrepreneurs for other reasons; non-conformists and wanting to be ‘free’ unattached from a hierarchical authority, prying eyes, or disillusionment from corporate life or its politics. Or they just simply want to be left independent, self-employed and left alone. It could be that they were unable to enter into the corporate environment through lack of training or education amongst other reasons and were left with no alternative. In almost all these cases they have this desire to be different, fiercely independent and constantly on the hunt seeking opportunity. These ones generally thrive in a booming economy where risk is less apparent.
Ultimately we need them; for the simple case; the better ones can be the key drivers of growth. They can have ideas, talent and often have a lot of knowledge. Their passion comes from their ideas and offering something linked to their talent and that gives them a purpose which is a magnet to employment if it takes off. Their product or service may be better in increased value for money, new or more easily delivered for example. These types of individuals are rare now and few and far between. The tech market for example is an area where more and more entrepreneurs set up companies with new ideas with space to manoeuvre.

Personally I have mixed feelings with entrepreneurs. This is where it gets hairy. The downside; many do things their own way under their own rules and how they wish, with little regard for integrity and often lack training and education especially within the service sector. They have a tendency to purely focus on their own profit centre which can turn them easily into a takers mentality or a die-hard ‘survival of the fittest’ attitude in which they seek opportunity at all costs. Note they have no salary so they have to go and get one. This is where they can lose their sense of self. Again we come to the ‘me’ and individualistic culture. In this case the more dynamic in personality have a high stress level and continually feel edgy, more so when the market turns. The less dynamic ones who lack ideas sit and wait praying for the economy to turn under constant duress ready to pounce on the larger firms for new business.

If you were asked to set up a franchise of entrepreneurs for example and ask them to work together with the added misconception of setting up a global firm; they will not mix. Entrepreneurs are often non-conformists. It is the same if a large firm wanted to hire a person with an entrepreneurial attitude; you would have to clarify what you mean. He or she may have an allergy to culturally adapt and it may not work. Hire Richard Branson (a serial entrepreneur and unusual breed) and a little too populist, to sit on a board of global firm, things could get rocky.

I stress again. There is only one way to succeed as an entrepreneur and it is the same message almost in a business in general at all levels. You need a purpose. A purpose is about having visionary ideas and understanding to where there is a need for the contribution or benefit of others. This comes out of your experience, skill set, talent and knowledge where you can fill in the gaps in whatever capacity or form. Herewith you develop a passion, interest and an ease with your work. This way you can start up a business. You can drive its growth together with your added flair, self-belief, commercial acumen, energy and discipline if it is that way you are built. It can take off from there and the revenue will follow.

If you want to take over a venture that already exists. You may simply just be comfortable with that and manage it in your own way and how you wish; nevertheless you will still need to require the expertise, flair, know how, innovation and discipline to adapt it, change it and improve it according to the needs of the market place like in any other business.

Wednesday 20 February 2013

The debt culture; how can we change it?

I would like to talk to you about debt. What I think it is and what I think it means to us. I am not much of an economist but instead would like to try to provide an answer by applying my own sense of logic.

Many years ago; a friend of mine told me his story. He took out a loan out from the bank. It cost him somewhere around 5% a year. This loan was a business loan. The idea and concept behind it was that he could borrow money, invest it in the wider business he was working for, with the idea that he would have a bigger part of the pie in return. In simple terminology, take a risk, borrow, invest and get a bigger reward. That way he could pay it back and have more for himself.

His business was a service and client orientated business based on closing mandates with small to large corporations. It was a business dependent on growth and a healthy economy. What he did not know however was shortly thereafter, there was no growth and as a result there were no mandates to close. Therefore he was not able to make enough money. This meant he could not pay his debts. The banks to no surprise piled on the pressure, and wanted their repayments, and when he could not pay, they took him into special accounts for poor payers. This meant higher interest and punitive fees, which in itself is illogical and his debts grew and the situation worsened. At the same time a wolf pack closed in on him for other payments. A high stress level descended onto him which affected his personal life as he knew that perhaps his living standards or financial expectations were going to be affected.

Clearly something needed to be done. He quickly forced himself to cut down on all spending; he sold off many assets in order to reduce his monthly fixed costs. His primary concern was to keep a roof over his head, pay his basic bills, and that his family had enough food and water to eat and drink. There were times he simply ate rice, and bread. A boiled egg turned out to be a luxury.  He would continue to work harder.

To his disbelief as things thereon still did not improve, ultimately he had no choice but to take the decision to close down his business and declare insolvency. He realised then that his attitude had to change and learning lessons the hard way, he began to focus on his skills and talents into another direction where he could really contribute. In addition to this other direction, he wanted to be risk free, never in debt, ever again and to have a normal, realistic and happy existence. Today, making money no longer became his primary concern. His primary objective became how to offer and best utilise his talents in the best possible way; to live more simply and at the sametime by doing something useful for the society that he chose to live in and ultimately to be happy and get rewarded for it. He takes it from there, without the burden neither of stress nor of debt and of risk.
As I look at this story, I came to the conclusion that whilst my friend had learnt his lesson, his debts were based on greed and taking risks which had been his primary objective. ‘Looking to have a bigger share of the pie.’ He had been living a combined toxic culture of both debt and of greed, growth or no growth it made no difference.  He only had himself to blame for his own weakness and character failings. It was a recipe to disaster.

Now the reason why I am telling you this small story is because I look at the wider picture today and I see this basic serious problem of what was once my friend’s attitude, at a governmental and society level.  The debt and greed culture seems to be endemic.  It is astonishing to read, that the lessons are not being learnt. The US and Europe have piled up an immense amount of debt. Sadly looking back, even whilst we were in a growth period, various governments spent more than they earned and not saved a dime. Whether it was growth or recession, their debts grew. Brown and Blair piled on 700 Billion pounds in UK national debt after the biggest boom period in history (fuelled by debt). Cameron in the UK has increased borrowing even with austerity measures and will reach perhaps 10 times our GDP in the not too distant future. If you include personal debt, financial debt and corporate debt, the UK total debt rivals that of the Weimar Republic. We know what happened next. Is this because interest rates are low? What if they rise; then what? Will they be able to afford to pay the interest? What type of example does this set upon our citizens? If interest rates rise the value of gvt debt falls (bonds), the banks will suffer in their capital balance sheet as they hold the biggest part of government debt. Can banks withstand more hits? The individuals also could suffer as they default on their mortgage payments. The figures are beyond any man’s comprehension and understanding.  In my view, this is reckless, totally stupid, putting every citizen at risk and not living in the real world. For your information in 2012 the UK government spent GBP120 Billion more than it got in taxes.

The Keynesian model; to spend oneself out of a recession, does not work. It is totally misguided and I hope will never ever be done again, in neither our, nor our children’s existence. In essence governments felt they had to save the private sector from their own mistakes with money they did not have.

What we need to do, is to change our attitudes. Debt is something that is considered normal in recent decades but have no qualms about it; debt is in fact a nightmare at individual, corporate and governmental level. The concept of borrowing is wrong unless it involves some form of exchange for goods or lending as a last resort for people in real need. Financial speculation serves no purpose except ones own. Constant pressure on growth with our sole concern of making money is wrong and puts people quickly into the ‘takers mentality’ and under increased duress. Enormous pressure on banks to lend is wrong at the individual, corporate and governmental level. For retailers to offer credit to entice consumers to spend is also wrong. And printing money is just silly. Note no job nowadays whether private or public is considered secure and therefore no salary slip or turnover figure can be a guarantee for any form of repayment so how can we be encouraging lending under these circumstances? When things go wrong, having a wolf pack onto you cannot be helpful to ones already existing fractured emotional stability.

The debt ridden governments should certainly cut spending now or better perhaps for the first time in their history base their figures on negative growth. When I say cut spending, I mean cut spending and not increase borrowing! This means reducing the costs of each responsible government. We are entering into the abyss. When we had the financial crisis which started as a result of the toxic culture in the banking sector and many other sectors, all we did was pass on the burden to the tax payer and delayed the inevitable. We are living a period that requires decisive, courageous leadership for the long term for our planet and for our children.   Sadly I don’t see any of this. The EU public sector is completely overbloated, with so many of us who have no sense of the wider picture. Politician after politician in the EU patches up things here and there, with no idea what they got themselves into with so many short term decisions….afraid. Afraid like my friend once was that the real decisions will affect our living standards and expectations. This continued pressure of constantly making money and growth, is simply exasperating our problem and making us all live in cloud cukoo land.  We are living in a world, that is too fast for our own good, no time for each other, and losing ourselves in the middle of it. So many as usual escaping from themselves pretending there is nothing to worry about, burying their heads in the sand or not willing to accept responsibility. Worst of all so many left behind, the young lacking opportunity and becoming resentful, lost… bitter…

This crisis is a result of a western world of human failings and weakness with little or no remorse for our past mistakes. The bad news is; it is going to get worse.

Yes; unless, we change our attitudes and pull out of our combined disastrous culture of debt and of greed together. The answer to each individual where you feel your career is at stake or simply not working. Well you start to think, make the sacrifice and change. You change direction, and utilise your talents elsewhere or in a more beneficial form. There is one very positive element about our human nature. We are known to be very adaptable and highly resilient. Furthermore we need to slow the pace of our lives down, concentrate on our families where there is an enormous social problem and in addition our communities which are so fragmented and dispersed; each other, and ourselves. Let us get back into the idea of living simply as well as bringing back proper good values, helping others and making a real contribution to our world. Each individual citizen in the western world if things are going to get worse; start by not taking everything for granted.

Governments, cut down on your spending, everywhere, start by reducing or aligning everyone’s salary from the top down including getting rid of needless expenses in order to safeguard a good part of the public sector positions. Help people in obsolete jobs to find different and more meaningful positions where they can make a better contribution. Stop spending ridiculous amounts on the military and on health and welfare. Do you really intend to blow this earth into oblivion? Or prescribe so much medicine onto everyone? Are we all that sick and so codependent? Or make decisions simply to satisfy corporate pressure or interests? Concentrate on the essentials. Governments should be there, for the needy, the vulnerable, and improving our environment we live in, and protecting our citizens. Ultimately to make long term decisions for the good of our planet, our societies and for the future of our children.
That is what I would pay my taxes for and what I voted for. Instead it seems to me that we have learnt nothing from the worst financial crisis ever. It all seems to be getting worse and out of hand. I fear this is just the beginning and the very survival and purpose of our institutions, banks and businesses are being tested to its very limits with a social crisis looming of unquestionable consequences. Perhaps like my friend who learnt his lesson; it will take a catastrophe of such nature and only then we may be forced to change. Nothing lasts forever and change is always inevitable; it is just a question of when as time is ticking.

Friday 15 February 2013

Talent or exploitation?

Lloyd Blankfein the CEO of Goldman Sachs when asked by the media about the question of high salaries; he responded very unconvincingly that we reward people for their talent. I am aware that people at Goldman Sachs are some of the brightest people around. I have interviewed several of them. They are known for example to have high IQ’s. Having a high IQ (mental intelligence) is one of the more obvious talents (of our many) which employers like to pay for. My question is simple:  If this gift is being utilised for the purposes of more revenue for the firm or for other people’s pockets within the firm higher up the hierarchical chain; then this is exploitation or manipulating people for their own gain instead of maximising a person’s whole potential for the benefit and the needs of others.
Earlier in my career at a time when I was somewhat na├»ve, I had made a lot of revenue in a well-known firm. We had a reward system that was so odd and hard to justify.  It was on the basis you take your whole revenue, subtract the costs. The costs included fixed salary, car, phone bills, support staff, office space and general extra costs to the company. (Note a much higher amount was subtracted.) You were still left with considerable revenue. 12% of this total amount was calculated as your bonus. I challenged the hierarchy and asked them where it all went i.e. the rest of the revenue? They did not want to answer. I had no idea where it went but someone out there must have taken it internally or externally. The question was not if I wanted more which was not the issue (I was actually content with my pay) No; but was I being exploited for my contribution? I knew something was not right and I began to feel dissatisfied.
In a more recent example, I was once approached for guidance by an honest, intelligent person with very high integrity. He was unhappy, stressed and having difficulty in his career. He had been a short while on the commercial end of a broking firm; together with his knowledge and skill he was doing well and contributing. He had spoken to his boss about his lack of fulfilment and general predicament. His boss responded nicely enough by saying 'perhaps we ought to lower your salary in order to lower your targets and that way you will stress less.'

These are just examples of many. More and more I am getting the impression that within the entire economy, we are being exploited through some of our obvious talents whereupon not only does this affect our morale but it also suppresses our ability to reach out in finding our hidden talent; therein lay unhappiness and dissatisfaction in our work. The problems can start in our very own human nature. It is pulling us apart. This has to stop and it has to change. We need this seismic shift in our culture and mentality. That is what we are looking for. It is not about the Chinese or other nations; forget about them they are simply copy cats. As Europeans we have been there done that a long time ago; plus they have stolen all our old ideas. Not to mention they are destroying their country’s environment to shreds and doing themselves more harm than they realise. We need to worry about ourselves, examine our consciences, our value system, conduct and very own thinking on our very own doorsteps here in Europe and to get ahead. There is little wonder many are all lost perhaps even paid not to think or to be quiet. Many of us have lost a sense of ourselves in the Economic system and moreover we are trapped which weighs us down from our ability to stand up. We have a major problem in our society and some of it is going on inside some of our very own companies and simply affecting people’s careers, private lives and honest aspirations.
I always bring up Barclays as a good example. It takes negative publicity and a few inside whistle blowers for people to act which is paradoxical in itself. I am glad the new CEO sees it and understands that we must stop our self-serving culture. Anthony Jenkins requires a lot of courage to change a culture and carry his vision forward. There are many more words we can use. The ‘me’ and my ego sadly not helped by the bills, our comforts and our home pressures. The take, the individualistic, opportunistic, the revenue targets, lack of leadership and the ‘I want’ altogether with a lack of purpose. I could go on. All this causes so much internal unrest, envy, mistrust, loss of conscience and lack of integrity. More so it causes unhappiness with the honest person and we are seeing it more and more. 
It is the opposite where we must focus in ourselves. It is about our uniqueness in how we are created to think, to serve or to make or to produce. The offering, service, giving, contribution, value added and real talent. This way our work will be recognised and it will be rewarded. Inspiration will come together with more ideas in our advance forward in humanity. I promise you.
We have to free ourselves and I say it again and again. We all and each of us have our talents some more obvious than others. It is up to each and one us to find them, to use them for a purpose and for the benefit of others and our society. Some may want to justify themselves, argue or blame and work very hard to support a family, increase our comforts and in any case our society does not help us as life is very expensive. Yes that may be true but I am not a slave. I am person who is unique in me offering and making a contribution who wants to feel rewarded. That is fairness. That is respect. I do not want to see the reward for my contribution fall into the hands of persons who undeservedly take it. That is exploitation.

Monday 4 February 2013

Toxic Culture; what is it and how do you change it?

This word toxic is a media term and it sounds pretty nasty. If something is toxic it would have to be untouchable but let’s come back to that later. Another term that is popular is greed. This one I am more familiar with. Note I am always subtly mentioning it in my articles as I see it as a fundamental route problem in all parts of the economic system of our society. It needs to be tackled with an iron fist therefore forgive me for writing a little more than usual.

Greed has been around for centuries. In religious faiths and in the wider society as a whole this is not treated lightly and is considered evil. Let us try to bring it up to date into today’s world. Greed is the pursuit of wealth. More simply put it is the pursuit of money, pleasures and or materialism. It is by nature very selfish. It is linked to self-gain, wealth, status and power. Typically it can be exploiting people, manipulation for personal gain for increasing their own wealth. In business it can easily lead to loss of integrity, mistrust, high stress level, emotional imbalance, deceitfulness, treachery, risk taking or bribery. It can cause financial debts, lawsuits, economic instability, and destabilise relationships. People who behave this way think they are happy but deep down they are not and are simply deceived and not doing any good at all. It will certainly cause harm to yourself and to so many others around you.

In certain sectors of the economy and of certain banks this is very evident and these individuals are everywhere in our service sector invariably floating around the upper chains of the hierarchical system and often sadly instilled into the psyche of the young fresh intake. How do we change that? How do we inform an individual with an MBA from Harvard earning 1 million a year and has a 5 million house who has been around a while and whose conduct involved the above. Very difficult; most likely he will not listen to you.
If I read this recent article about the wealth management division in Barclays and their ruthless culture in the pursuit of revenue; I would not touch it with a barge pole. (It is not just Barclays) Now I understand why the media call this culture toxic. How could I trust these people with little integrity in their work who are simply rotten in the core and have lost sight of themselves? They are working for their own gain. I would never do business with these people. They are not quality people. They were probably good once upon a time but somewhere along the line they lost it, their talent, and their sense of purpose and in the end themselves. 5 million pound house or not, it makes no difference. This is greed. It is as simple as that.

The difficulty with greed is it is in the interior and in the mind set. It can grip you and it will not go away and worse of all you are unable to see it and recognise it in yourself. I know about it because I suffered it too. Note I use the word suffering in that it is very much a human failing in our sub conscience. If you are leading a business with this culture, your options and solutions are limited. If you are in a bank purely for your own self gain; well the public won’t buy it. How can you be in a service sector business which is about serving and include money and therefore must entail the highest levels of trust and then working purely for your own interest; therein lays the conflict?

I came from a culture in business that was toxic. An individualistic and ipseite culture was prevalent where most people were in it for their own gain myself included. There were very few people amongst us that we could trust. We tolerated and turned a blind eye to all our failings in character. The only question we were familiar with is how we could make more? We even had an internal system that portrayed each individual’s revenue as a measurement of success. (That one is a killer!) Never how can I better myself in order to understand and serve the needs? Or if there is a problem how can I make a difference? In the end the business lost its integrity and much of its creativity.

I also had a boss once (not just that one) with a domineering personality in his 60.s. He was ruthless, manipulative for his own self gain. It was all about the revenue and his love for money. He played the game with clients and was good at it and he made revenue. He had fast cars, large house, a yacht in the South of France. I began not to like him and the way he operated behind closed doors. Even some clients sensed the lack of integrity on our firm. I began to challenge him afraid at first as he often instilled fear. Somehow we took major risks as we began to see through him and grew less afraid as our confidence grew. Personality yes but he had no character; more to the point he was a coward and we felt he had to go. In the end I lost my position and a considerable amount of money. Shortly thereafter he lost his. Unexpectedly 6 months later I was called to take over.

So the solutions are as follows: Strong courageous leadership and notably leadership by example. Code of conduct, values, good governance and purpose are essential. Re-training is very important to continue to give people a purpose and raise their self-awareness. Remuneration and fees are key issues to look at i.e. you go straight for the carrot. A strong ethical recruitment intake. Regulation is a double edge sword as it stifles the talent of the honest worker and brings down morale. It will certainly upset the dishonest worker as it affects his revenue. They may even find a way round it. Change in ourselves will invariably mean change in our comfort zone, perhaps in the environment around us and our hearts will resist; therein lays the fear factor?

In the worst case scenarios what does one do with toxic waste; there is only one solution. You get rid of it. So if your individuals are toxic and unable to change, you get rid of them. If it is a whole department close it down. What we don’t want are these individuals who are toxic to spread it amongst others like an illness and at the expense of others. Honest people and their morale suffer. The cracks will show and then the reputation of the firm will suffer as we are seeing daily in our headlines. It is the only solution. Invariable a person who suffers from greed falls to the bottom and into his own mud having achieved little of any value and then perhaps only then he might start thinking; he may see it and he may change. We don’t want them around until they change. Note the opposite of greed is charity, sacrifice and generosity.

I am certain and what Time MCG argues day by day that one can drive our success responsibly in our businesses by achieving a purpose, and maintaining strong values, integrity and good character at all levels of education, experience or background.  It is by then we can truly enjoy our work and inspire others around you.