News

Sign up for our newsletter

Our quarterly e-newsletter will keep you up to date with news and views from Interregna and the world of interim management. Click here to register!

May 2011

 

Nick Saalfeld founded MoneyWorld (now MoneyExtra), the UK’s first personal finance website; and was Business Editor for AOL for three years. He now runs a media consultancy, Wells Park Communications, and is a director of two further companies. He blogs at www.truebusiness.co.uk

 

Does Mum know best?

Punters 1, Politicians 0!

The Great British Public has traditionally taken its reputation for a stiff upper lip with great seriousness. We are a nation proud to take whatever life throws at us on the chin. It’s why we’ve never had a Revolution, and generally ignore authority whilst quietly beavering away at our own parochial agendas. Britain is best described as an episode of “Dad’s Army” on a grand scale.

We let governments come and go. We get excited for Royal Weddings and the World Cup, but we’re happiest with a cuppa and the latest EastEnders. We do our best to avoid municipality except when it affects us – parking tickets and the delicious nimbyism when a new runway is planned to go right through the bottom of our garden. We queue quietly in Post Offices despite the seething rage brought on by those irritating screens designed to sell us stuff while we’re waiting. We let companies advertise their wares with ever more insidious techniques, which in fact largely don’t work on our enlightened collective consciousness. Despite the daily news bulletins, This England is an idyllic country of calm, routine, and Mum Knows Best.

And she does.

For me, the highlight trend of the past few months has been the laser-sharp acuity with which the public have cut through the claptrap of political and business analysts and used their own common sense to confound the so-called experts.

A couple of examples for you. Most clearly, I am writing this piece the day after Britain gave a resounding “No” to the Alternative Vote. In the past decade, voter turnout trends have been resolutely downward. Council elections have regularly recorded turnouts of below 30%. Yet what the pundits regularly described as a complicated and esoteric backwater attracted a turnout of a whopping 41%. We care little for who our leaders are, but we are jolly well not having anyone tinker with what little bit of input to our government we do have. And, exemplary of that innate conservatism-with-a-small-C, what’s been good enough since the dawn of parliament will do nicely for today, thank you very much. The revisionists and Islington do-gooders would do well to take note.

Similarly, since late 2009, corporate analysts have regularly failed to predict customer behaviour when assessing, say, retail performance. The Christmas 2009 trading period was massively more buoyant than expected; and the Christmas 2010 trading period was dismally less rewarding than predicted (even after accounting for the impact of a few days of snow). Do analysts live in an alternative world? Don’t they have families and friends? Or are they, as I suspect, stuck in a world where statistics rather than sentiment hold ultimate sway?

The experimental psychologist Richard Wiseman once did a well-publicised experiment, in which a four year old child comfortably outperformed both amateur and professional investors by making stock picks on the basis of “names that sounded nice”. It’s a flippant example, but we need to realise that experts do get it wrong sometimes; and that not every job in corporate life is necessarily filled by the most competent candidate. Often, the wisdom of the crowd – the general public – is more reliable. This is why there are still million-dollar films that bomb at the box office, bubbles in commodities and property, products which singularly fail to sell, and technology companies which manage to lose the details of over 70m credit card holders.

None of this is to be derided. Nobody performs at 100% all the time; everybody makes mistakes; and we live in a world which is evolving faster than either the education system or continuing professional development schemes can ever hope to keep up with. It’s one of the most exciting things about business today.

Rather, we should assume crises as a given. Management strategy should include leeway for unknowns in every business plan. Just as we insure financially against our houses falling down, we should insure in human capital against decision-making which is, well, human. This is why, despite the importance of strong leadership in a CEO or Chairman, a board should also be the collective voice of reason. Board members and non-execs should be free to question decisions and run them through rigorous, collegiate assessment before signing them off.

Fobbing off responsibility to the numbers-merchants will always be a second-best approach – just ask anyone who foolishly assumed that Moody’s or Standard & Poors were the ultimate arbiters of fiscal common sense. Business propositions should usually stack up against statistical analysis, but if that analysis flies in the face of what decision-makers see happening in their own back yards, communities and families, gut-feel should mean someone has the guts to stick up a hand and say, “Isn’t the public right on this one?”

< back