Managing reputations (or not)

Several organisations are trying to protect or enhance their reputations at the moment. Sadly their efforts seem to be back-firing.

Try matching the following descriptions to the organisations listed.

• Organisation A. Far from convincing a concerned world of its traditionally positive values it is actually promoting an image of protectionism, denial and deceit.

• Organisation B. When this group desperately needs to convince the public of its probity and capability many of its individual members demonstrate the morals of the cockpit.
  

• Organisation C. While apologies have been reluctantly given, culpability is denied and behaviour is apparently unchanged.

• Organisation D. Fearful that the public is incapable of understanding the true complexity of its workings it actually suppresses information and denies access to it.

• Organisation E. Desperately needing public support in the face of rising levels of scepticism, this organisation continues to commit acts that directly contradict its stated aims.

The possible candidates?

• UK Parliament
• most international banks
• NATO in Afghanistan
• the environment lobby and related academic institutions
• the Catholic Church

Difficult, isn't it?

How long can the UK economy keep going, just doing the same old stuff?

Is the business case for doing something different beginning to stack up?

Restaurants are full, often with people shrieking with laughter. People are using their mobile phone tariff to the hilt, texting as they walk recklessly through the pelting traffic. And taxis with their yellow lights on are becoming increasingly rare.

That said, there's still not much evidence that pricing power is being restored. Although if you looked at the GBP price of imported BMW motorcycle components supplied as part of my recent annual service, your eyes would water.

So are people just flogging the same products and services, to the same customers through the same channels?

Most of the business cases for spending money that we've seen recently are about making more from what you've got already: releasing benefits from past investments; reducing costs; improving transparency & control (for example by getting better insight into the profit drivers, so that current spend can be better allocated)

How about doing something different? Would anyone actually be interested in finding new customers through new channels, entering new markets?

There's plenty of potential funding sitting on the sidelines.

But there's also a need to move carefully, de-risking any investment, and making change scaleable and modular.

Most Trusted Brands sponsor goes into administration

So Readers Digest UK, which sponsored the Most Trusted Brand Awards which voted LloydsTSB as Britain’s Most Trusted Bank for seven years running, has gone into administration.

Some small satisfaction there, methinks.

LloydsTSB was rated Most Trusted at a time when it was merrily mailing to its customers millions of unsolicited and highly toxic credit card cheques.

Virgin Media won the 2008 award for the most trusted ISP. And promptly had an ad campaign banned by the Advertising Standards Authority for misleading customers.

GOM always thought these Awards were flawed anyway. They were based on surveys of Reader's Digest subscribers - mostly dental receptionists and GP practice managers, I guess.

Backing away from total blind panic

"There is an element of consumers backing away from a total blind panic," says Ed Garner, director of research at TNS Worldpanel. "If you go back a year ago, the roof was falling in and it was awful.

As our contribution to the end-of-year economic stocktake, GOM is pleased to bring to the attention of the nation his eagerly anticipated annual Mince Pie report.

Mince pies December 2009

Sainsbury's Deep Filled
Price for 6: £1.00
Price each: 17p
Price 09/ 08: 72%
27% cheaper than last year but also of lower quality; cardboard-like case; filling a solidified paste with little evidence of fruit or nuts; reflects effective application of value engineering, ie cheaper and not so good

Sainsbury's Taste the Difference
Price for 6: £2.19
Price each: 37p
Price 09/ 08: 107%
7% more expensive than last year; tangy & fragrant filling; light pastry case

Sainsbury’s Connoisseur
Not in evidence at Fetter Lane outlet of Sainsbury's Metro

Konditor & Cook
Price for 6: £5.94
Price each: 99p
Price 09/ 08: 111%
Smallest of the pies we sampled; plump sultanas; falls apart in hand after 30 secs on highest microwave setting; convincing appearance of being hand-made; tart & aromatic filling; pastry to which a rolling-pin has been applied

Gregg’s dahn Leather Lane
Price for 6: £1.40
Price each: 30p
Price 09/ 08: 111% (single pie); 86% (pack of 6 pies)
11% more expensive than last year; but 14% cheaper than last year if you buy six; largest pies we sampled; flying saucer-shaped; after 40 secs of microwave high power, fissures appear in lid and bottom collapses; soft pastry rather than biscuit crumb; bitter & tangy filling, contains fruit; well-filled; moist mincemeat. A man dressed as Father Christmas in the store.

GOM concludes that Greggs' pricing power has become more prominent; and that the offerings of Konditor & Cook are not three times better than Gregg's. However we warn our readers against attempting the Gregg's so-called Cheese & Onion Slice.

GOM also reports that connoisseurs are no longer to be found, at least in the Fetter Lane outlet of Sainsbury's Metro.

These findings seem to run counter to reports from Waitrose of three-bird roasts (turkey, goose and duck) tumbling off the shelves at £120 a pop.

But I've always thought that partial (rather than total) blind panic was a more sustainable stance.

Thoughts from the departure lounge

As I sit here struggling with 11 across, [A term of abuse, sounds like Banker (6)], I’m a bit puzzled by one bit of Darling’s rhetoric about City bonuses.

I understand the politically-driven punitive motive (indeed most of us would like to see these fat cats in the stocks) and I understand the hypothesis that it is a good thing to discourage payments that might lead to excessive risk-taking using other people’s money.

But how does this apply to the “guaranteed bonuses” that have become such a bogey for No 11? We learn today that is was only after intervention by the Attorney General that Darling was persuaded not to include guaranteed bonuses in the super tax target area, since to do so would infringe Human Rights legislation.

A guaranteed bonus is, by definition, not performance related. If one accepts that variable pay is more likely to influence behaviour, surely the very fact that these payments are guaranteed makes them less likely to drive day to day risk taking? Why then the bogey status?

Am I missing something here?

Nurse! Isn’t it time for lunch?

Relocating the casino

Gentle reader, if I hear one more self-serving statement from a City fat cat or compromised politician to the effect that “the City is too important to our economy for us to insist on caps on earnings.....or over-zealous regulation.....or the rigorous collection of corporation tax.....or the proper taxation of non domiciled financial sector workers.....”, I’m going to throw up.

Surely the Mafia is equally central to the Sicilian economy, or the Camorra to Naples', or the Triads to Taiwan’s, cocaine to Columbia’s, whale hunting to the Japanese fishing industry or for that matter the widespread use of bribery to the international arms trade.

Centrality is one issue. What is morally appropriate is another.

Must we give credence to these fellows who have made Faustian pacts with the devil.

Bankers’ bonuses

It is hard not to feel some frustration when many of the investment bankers who have condemned us to massive levels of public borrowing are now about to receive bonuses rivalling those paid out in the pre-credit crunch years.

For decades the investment bankers were the loudest exponents of a free market, natural selection, law of the jungle Weltanschauung. Now, having been partially or largely rescued through nationalisation they want to retain the obscene levels of earnings that they enjoyed while taking huge risks with our livelihood.

In spite of the harrumphing coming from Nos. 10, 11 and the FSA, precious little is being done to prevent a massive act of injustice. The reason for the limpness of response, we are led to believe, is that the UK financial institutions are too important to our economy for sanctions to be applied, when such sanctions might force this grotesquely profitable investment work into foreign hands.

But so what? Suppose we were to place stringent limits on the earnings of UK investment bankers and their partners in crime? Will the UK economy really suffer?

I suspect not as much as the bankers’ lobbyists suggest, because:

• UK financial institutions are notorious for avoiding most of the corporation tax that tax experts suspect is due
• Overseas institutions and their highly paid staff will continue to pay tax in this country (particularly when the UK tax rules and employment laws continue to stay so attractive), and
• These staff will continue to live in the UK either because they prefer it here, or because they sank their last bonus into an over-priced property which cannot be now sold or rented at a commercial rate. And while they and their families stay here they will spend here, so the trickle-down won’t dry up.
  

If a few UK institutions crash out as a consequence, so what again? Two years ago the bankers would have said that failing companies fail because they deserve to fail, “it’s the law of the jungle, squire”. So my ears are deaf to their entreaties.

More importantly what would happen to the deserving stakeholders, the taxpayer, the shareholder and the innocent employee?

Innocent employees are mostly in the retail parts of banks and could be protected best by splitting the retail and wholesale operations as Mervyn King is promoting.

Taxpayers and shareholders might be harder to protect but the old shareholders in, say RBS or HBOS, now have nothing left to lose anyway. Those proud champions of shareholder value, Fred Goodwin, Andy Hornby and Adam Applegarth poured that investment down the pan a year ago.

What of the government’s (i.e. the taxpayers’) holding? Well the sooner the banks pay off their debts the better, and they’d do that a littler faster if they didn’t trouser over 50% of their revenue.