Blogs

The 2006 Art Fair season is well under way - Palm Beach has just finished, and London opens on January 18th. Dealers as usual are packing up their wares and their bags in preparation for upcoming fairs. Should you, like them, make a point of attending the fairs that are near either to where you live, or where the art is most to your taste? They cost you time and money for the ticket - but it’s not hard to get a freebie from one of the scores of competing dealers: and there are always many goodies on display.

With the forced departure of Charles Kennedy, all three of Britain’s major political parties have either changed leaders or undertaken to do so, i.e. Tony Blair. In all three cases, wobbly performance played a major part in the rise of discontent.

I was writing a piece for State of Art, the new quarterly news magazine, when I was reminded of The Skin of the Bear. More properly La Peau de l’Ours, this was the brainchild of Parisian financier Andre Level. He set up an art investment fund with that title, persuading a dozen other art lovers to contribute 250 francs each year to buy modern paintings. The investors would hang the works in their homes during the ten years before the fund cashed in by selling off the collection.

I’ve always been a big fan of Andrew Grove, the engineer who turned the inventiveness of Intel’s founders into one of the greatest money machines of all time. He’s also the author of two business books - High Output Management and Only the Paranoid Survive - that I have no hesitation in recommending. Grove has never lost his academic leanings despite his stunning record as a hard-nosed businessman.

Bad news for future pensioners: chills must have run down many spines with the news that Rentokil Initial may become the first major British company to close its final salary scheme to existing staff, as opposed to newcomers. The board wants to move everybody into a ‘defined contribution’ scheme, in which the pension costs are not open-ended. The directors are trying to escape from the bind that has left many firms facing huge deficits in their pension funds - £325 million in this instance.

What gives art its value?

January 31, 2006

Corporate restructuring

November 8, 2006

The Schlock of the New

October 15, 2006

Charles Saatchi

September 16, 2006

Pricing strategy

August 8, 2006

Bill Gates’ Retirement

June 19, 2006

Derek Hirst

May 21, 2006

The Sunday Times Rich List

April 30, 2006

AT&T and BellSouth merger madness and other figures of folly

March 31, 2006

False dichotomies

February 28, 2006

Dichotomies impose a false and sharp (knife-edge discrimination) polarisation on the world and allow no middle ground or spectrum … It becomes impossible to step across the boundary without at once being seen as directly in the enemy camp. Click title for more

Tom Phillips

December 26, 2005

Business crisis management

November 30, 2005

Marconi takeover

October 30, 2005

Katrina Management

September 11, 2005

People management and Hurricane Katrina: One of the many causes of the Katrina disaster was totally avoidable. That’s the low calibre of the people who were supposed to be in charge.

‘Would you but a used car from this man?’ asked a famous anti-Nixon campaign in the States. Now I’ve another question: ‘Would you buy a company that sells used cars to high-credit risk customers?’. Not I, forsooth. That sounds about as safe as going round putting out fires in ammunition dumps. But that is precisely what a firm called Provident Financial did when it bought Yes Car at the end of 2002.

The first important painting I ever bought was by an artist, previously unknown to me, Tom Phillips. It was hung by a Bond Street dealer, in a mixed show chosen by a critic. Consider Our Haven contained nine separate images of Burnham-on-Sea, set in painted borders. The images were taken from picture postcards of Burnham, small sections of which had been enlarged and most lovingly painted. The title and other information were stencilled in a trademark style which only enhanced the nostalgic charm of the concept.

HOW NOT TO BUY A BUSINESS

• Have a strategic grand design and make it a ‘must’ - by definition that excludes all other possibilities.
• Never review the strategy - and don’t promptly modify or scrap plans if events contradict them.
• Make sure that the strategic buy plays not to your strengths, but to your weaknesses.
• Increase the initial risk exposure by unplanned pre- and post-acquisition initiatives - like raising the price.
• Take external and internal approvals of the strategic stroke as confirming its rightness - and always ignore Cassandras, internal or external.
• Don’t let anybody lower down criticise the strategy or the buy, and over-commit top management to the deal
• Apply the buyer’s accepted rules and routines - without their being checked for relevance.
• Discourage messengers from bringing bad news - and ensure that corrective reaction to bad news is dangerously delayed.
• Do not admit failure: rather, deny it.

I have often told how I once asked a class of 30 twelve-year-olds in a school in Australia to give me their reaction to the suggestion that they should each receive a small amount of money each week for going to school. All thirty thought it was a great idea since they would be able to buy sweets, comics and chewing-gum.

I see that some smart City fellows are setting up a fund to invest in contemporary art, which they regard as a sure thing and a source of great potential returns. Well, yes and no. Various studies at various times have shown that on average, investments in art have been disappointing in the long term. They yield no income, and they are relatively illiquid - auctions are the only outlet for disposals and high prices quoted by galleries may very well not equate with the net proceeds from a sale.

I get the feeling that in the constant struggle between leadership and management, leadership is getting the upper hand. The conflict arises because the failure of highly trained and presumably intelligent managers is attributed to poor leadership (look at General Motors now), while failure of dynamic leaders is attributed to their lack of interest in and application of the lessons of good business management.

The old Andersen Consulting, now Accenture, once identified three business processes essential for success:

• product development;

• customer relationship management;

• the supply chain - all areas where managers in general customarily fail to take excellent advice that would greatly improve their performance.

Ordering some books for my American grandson’s Christmas present, I remembered that my bookseller, Amazon, had played a most significant part in both the reality and the folklore of electronic revolution. The folklore mostly dwelt on Amazon’s trading losses as evidence that the internet was a passing fad which businesses could safely ignore as they went about their affairs in the traditional way. The cynics paid no attention to the reality - like the huge build-up in customer details that Jeff Bezos, Amazon’s founder, was enjoying, or the enviable size of his cash flow. The deniers believed what they wanted to believe, which was that Amazon was going down the tubes.

My last art blog covered the art market in general, and in particular the interesting nexus between artist Chris Ofili, his dealer Victoria Miro, and the Tate. I used this as an illustration of the way higher and higher prices have been driven by greed and then drive that powerful force to greater and greater excess. My remarks attracted a wise comment from Mike von Joel. Among many distinctions, Mike edits State of Art - the new free monthly newspaper, which is enormously intelligent, informative and entertaining; that judgement has nothing to do with the facts that I’m a contributor and that State of Art is sponsored by the Angela Flowers Gallery. Anyway, here’s Mike’s wise comment:

Husband and wife team Andrew and Mary Bragg have written an unusual and highly effective guide to ‘Developing New Business Ideas’. As you would hope, the book is full of unusual and effective approaches. For example, the authors, like most writers on cerebration, tell you about the right brain (intuitive) and left (logical) which determine your thought patterns. But you really want to develop ‘whole brain thinking’ - and these exercises will help:

I was recently speaking at an EEDA conference (East of England Development Agency). The focus was on entrepreneurship.

Are new ideas necessary for entrepreneurship? If you decide to open a corner shop in exactly the same way that corner shops operate everywhere, but do it in a new location, is that a new idea?

In one way or another, armies of managers have sat at the feet of Austrian-born writer, lecturer and consultant Peter Drucker either literally or metaphorically.

He has just died, at the great age of 95, but his legacy is certain to live on.

Here’s a stimulating enquiry from one of our readers, who wants the answer to questions that take me back to 1993, when I interviewed 20 European companies for a book on Total Quality Management. The enquiry goes to the heart of the matter.

The difference between the bad old/present days and innovative 21st century management is charted exactly by a questionnaire which the English psychologist Mark Brown uses to differentiate between ‘dolphins’ and ‘dinosaurs’. His excellent book The Dinosaur Strain shows you how to score your organisation from 0 to 6 along the distance between the left hand and right-hand sides:

All businesses must operate within societies which are rife with predictions on every side. The predictions, on everything from the year-end level of the stock market to the withdrawal of US troops from Iraq, are produced by pundits. Some of them are organised into Think Tanks of one kind or another, some are professional commentators in the media, some are colleagues and competitors, and so on. But how good are their predictions? And is one type or set of pundits more reliable than others?

Unfortunately, many people with a high intelligence actually turn out to be poor thinkers. They get caught in the ‘intelligence trap’, of which there are many aspects. For example, a highly intelligent person may take up a view on a subject and then defend that view (through choice of premises and perception) very ably. The better someone is able to defend a view, the less inclined is that person actually to explore the subject. So the highly intelligent person can get trapped by intelligence, together with our usual sense of logic that you cannot be more right than right, into one point of view. The less intelligent person is less sure of his or her rightness and therefore more free to explore the subject and other points of view.

There’s a fine old-fashioned row over the Tate Gallery and its purchase of The Upper Room, representing the 13 Stations of the Cross, by the British artist Chris Ofili for a healthy £600,000.

In The Complete Negotiator, Gerard I. Nierenberg gives us nine points for managing in a crisis:

• In a crisis, always sit down and think hard about your decision, and for as long as needed (or allowed) about ways in which you can resolve it.
• It has to be you. That applies even if somebody else has to carry the burden of action - how you brief, direct, and control the other or others will be vital to the outcome.
• In seeking a solution, look for a simple answer that you can apply, rather than a complex one that requires many hands.
• Since you’re unlikely to get that answer by conventional thinking, try deliberately to be unconventional, original, lateral.
• Part of the decision is how to use yourself. In any situation where you’re an unknown factor, what people know about you is what you choose to let them know - and that can be a powerful weapon on your side.
• In a bad situation, don’t hesitate to use shock as a tool. It works much better than fright. But you must do something to bring home the urgency of the position.
• Work in the knowledge that even in a good situation, operations can always be improved - and that those who are best placed and best equipped to improve them are the operators themselves.
• In a crisis, quick and decisive action is generally much more effective than deliberate and delayed response.
• Second-guessing the opinions of those in the front line is never done by good generals. If the actions taken by subordinates are wrong, you’ll know soon enough.

The astounding, disgusting run of huge corporate fraud scandals features nothing nastier than the accusations against Conrad Black. I can hardly bear to call him ‘Lord Black’, since the peerage was plainly and richly undeserved. But the cases all contained thick veins of Blackness. I define that as treating money which belongs to the company and thus its shareholders as if it were the sole possession of the greedy plutocrats involved.

The 2005 Global Future Forum commissioned an extensive survey
amongst renowned futurists, academics and leaders of both public and private
organisations around the world. The objective of the survey was to establish
their expert views on a variety of issues likely to affect organisations
during the next five years.

I promised to let you into the late Peter Drucker’s secrets of managing effectively. First, how good are you at the five functions of the manager?

1. setting objectives
2. organising the group
3. motivating and communicating
4. measuring performance
5. developing people

The European economies (and this now includes Britain, no longer the good odd man out) are regularly berated for their relatively dismal economic performance.