Ambiguity and the art of horse riding

You may have seen the claims by the Health Secretary that he can ‘save’ £500m per annum from so-called health tourists. A brief look at the details of this claim shows that it wouldn’t have got past the review of a decent FD. A significant part of the ‘saving’ is made up of the costs which will not now be incurred by those who will not now come to the UK for health tourism because the government is now being so tough. In other words it’s nonsense; unmeasurable, unprovable and, indeed, unlikely.

As it happens I have no quibble with Jeremy Hunt trotting out this dross, nor any with the civil servants who allowed him to (1). The UK is a democracy, he and his colleagues in government were elected and whilst his position might in other ways be homologous to that of a CEO, his relationship with his CFO equivalent is not at all the same as that in a business environment.

The relationship between CFO and CEO is, at least on the part of the former, a somewhat ambiguous one. When I joined GEC I had my fifth and final interview at the Stanhope Gate HQ with the then Group CFO David Newlands. Having mused aloud for a while on what a marvellous country we lived in where someone from the slums of the East End could end up in Mayfair having a meeting with someone like him (that is a literal quote) he then explained my role as a divisional FD to me. “Your job” he said “is to stop the divisional MD from spending all the money without him firing you”. And he was right. In fact he could have added that it is also the CFO’s job to stop the CEO passing on inaccurate, overoptimistic or otherwise misleading forecasts to other stakeholders, especially those whose money it is, without, once again, finding oneself out of a job.

The equivocacy of this position is what makes it difficult to be a CFO and is, let’s be frank, what keeps me in work. A lot of otherwise excellent accountants can’t handle it and find themselves being shown the door by one side or the other. My own view is simply that if one can’t ride two horses at once then one shouldn’t be in the circus. As the soldier, spy and diplomat Vernon A Walters said “I’m a participant in the doctrine of constructive ambiguity”.

(1) I do however have an issue with the press and broadcasting media who have completely failed to hold him to account.

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‘Self-regarding’ entrepreneurs

I see that Luke Johnson is to launch a Centre for Entrepreneurship, partly to combat the perception of entrepreneurs as ‘greedy, self-regarding and dim-witted’. I think a quick look at those who manage very large firms that they don’t own will quickly reassure us all that if entrepreneurs are greedy then they are not alone; and if they genuinely are dim-witted then not even Mr Johnson’s prestigious new organisation will be able to rescue them. However, self-regarding, now that rings true.

I went a couple of weeks ago to a breakfast meeting at which a panel discussed ‘High Performance Culture’. Three of the panel were soi-disant ‘entrepreneurs’ and I think that it’s fair to say that none of them would have recognised a high performance culture if it had walked up to them, smacked them in the face and said “Hello, I’m a high performance culture’. However, two of them (including the chap who advised that the best route to a high performance culture was to have an average workforce age of 26 and drink lots of beer) were made to look like Peter Drucker by the third.

This chap – whom you won’t be surprised to hear has recently been appointed to advise the civil service – could not have been more up himself without actually turning inside out. His first pronouncement was that he had identified through experience the best number of directors for a company and that it was less than two. Remarkably enough, it was downhill from there. His prescription for the achievement of the desired high performance culture was greeted with incredulity even by an audience still somewhat taken aback by the ‘drink more beer’ message of the previous speaker. The secret, according to our hero, was that he had given a smartphone to all his staff, had a custom app written and employed a videographer to follow him around. Thus whenever he had some wisdom, exhortation or instruction to pass on it was beamed straight to every employee and the fact that they had – or hadn’t – watched it, was known centrally.

Now at first, as I watched the audience shaking their heads and rolling their eyes, I assumed that the ‘entrepreneur’ was the only person in the room who hadn’t read Orwell’s 1984. However, on subsequent reflection, it seems more likely that he has read it, but didn’t realise it was a satire. Perhaps they are dim-witted after all. Still, as someone once said, “Ignorance is Strength”.

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