Pride and Confidence

I have really enjoyed the first week of the Olympics. One of the most interesting features has been the way that London seems suddenly to have embraced the Games. As any regular readers will know, I spend  quite a lot of time in coffee houses, and there has been a palpable change from cynicism to confidence and even pride in the whole event.

In the weeks running up to the start, most people I spoke with were quite negative about the Games - complaining about the disruption which would be inevitable and worrying about how cliched and embarrassing the opening ceremony would be.

And then... Well the ceremony was, in my opinion, an absolute triumph. The right note was struck - there were plenty of 'wow' moments, there was great music, and the whole things was funny, anarchic, a little confusing and passionate. In fact, very British. The next morning I had so many conversations with people about how great it had been. There was a real sense of relief - but on the back of that was the beginning of confidence that these Games would be good, that London would look good, and that we would be impressive in front of the rest of the world. And on the back of that was pride.

The overwhelming impression now - after the first week - is pride. Every Londoner I speak with expresses this pride - the city looks great and we all seem to be helping visitors and enjoying the games.

This is how it can happen  in business too. The Brits are difficult people to get excited and engaged with an organisation. We tend to be cynical and generally sure that change is bad and that there is no point in trying to hard at anything since it will all end badly.

If we try, however, great things can happen. By staying positive and by constantly encouraging a good leader can bring people along with them. You can encourage engagement - and having engaged you can show your people that trying is alright and that success is possible. Soon, slowly, you will start to notice pride.

So there is the lesson. Keep trying. Keep trying hard. Keep positive. Keep encouraging. Success will come and with it will be pride. Once your organisation is positive and proud - it can be unstop-able!

Confident Guessing

I read a story in "Legal Week" today which said that "Law firm business confidence has recovered for the second quarter in a row with more than half of partners now expecting revenue growth at their own firms over the next 12 months" - see the full story here.

Hmm. I would love the economy to recover and would be delighted to hear that the majority of partners were expecting growth - if I really thought that some analysis and research had gone into the partners' statements. Sadly I suspect that the same level of care will have gone into these announcements as went into planning for this year's budget in most firms.

I spoke with a number of firms, large and small, as they developed and then started to work on new budgets. The development process in law firms is not the same, boring, routine used in most commercial organisations. Analysis of past expenditure together with a detailed study of the requirements for the next period are undertaken, but are generally overtaken by "gut feel". I was astonished to watch large companies set a budgeted revenue figure based on "assessments" by the department heads - assessments which had no scientific basis and which had often been arrived at following an evening's worth of discussion between the partner leading the department and his team (occasionally I saw the team discussion phase ignored as unnecessary). The accounting staff were not called on for input and it was rare for the marketing or business development team to be asked for their help. I saw firms forecast 25%, 30% and 40% drops in revenue based on a personal assessment of "difficult times".

I would have been less concerned with this had it not led to a desire to see a similar drop on the expenditure side of the budget. "My goodness" the partners would say, "our revenue is dreadful - we will have to cut, cut, cut!", and expenditure budgets would be savaged - capital projects cut, staff cut and day-to-day expenditure on small items cut "to show willing."

Now, less that 12 months on, "confidence is high" apparently. That's fine for the revenue side of the equation - the firm will just exceed budget. What about all the people who have been removed, however? What about the hiatus in capital projects? My perception is that the same partners who made short-term, knee-jerk, decisions for this budget year have now got bored with the whole "downturn thing" and, finding that their own forecasts have been hopelessly pessimistic have decided that everything will now be fine and are confident that their revenue, and so their profit, will soon recover.

They were wrong before and they may be wrong now. Some forecasters will undoubtedly be speaking from a position of strength - they will have done the analysis required to be confident that their assessments are sensible. Most partners, sadly, will not. At the very least, the economy will be different and the "playing field" changed. If partners believe that, having weathered the downturn they now need only weather the recovery (for a maximum of another 12 months) before returning to business as before, they will be sadly mistaken. Clients have been given power and will be reluctant to give it back. Hourly rates are under attack as never before, and few firms have a sensible defence for them. More importantly, those running law firms have been exposed as never before. It is becoming apparent that few law firms are run in a business-like manner and clients are starting to ask why they should pay for this inefficiency.

I'm glad that confidence is returning to the sector - but will be more glad when that confidence has a sound basis. I'll wait to hear from those members of the profession that I know and trust before I too relax into confidence.

Recession - Pick your Shape

Is the recession over? There has been a great deal of discussion lately about "coming out of recession" with sides being taken on the basis of (a) whether the recession is ending and (b) what shape it is or has been.

The BBC have an interesting time line on their web site today which shows the DOW and FTSE100 since 2007 (click on the graphic above to see a larger version or click here to go to the BBC's interactive version). The "shape" discussions have been may and various - I use Nouriel Roubini (I've put a link to one version of his opinion - there are many), Dan Hamilton and Lord Mandleson. They talk about a "double dip" recession - where the current upturn is the middle of the "W" shape. Other analysts see different shapes and have different views of where the economy is going. There are "U" shape economists, "V" shape economists and the those of the "it's all rather complicated and I'd prefer not to make a prediction" school (who are possibly the most sensible).

Looking at the picture above, I can see a W - but then I can see a "V" and and "U" as well. Given how much the markets can be dominated by sentiment and by confidence, I think that we would all be sensible to see a cautious recovery in place. The important thing is not the shape of the recession - it is in understanding and taking responsibility for the causes of the recession. As a group of economies, all countries should try to learn the lessons of the past and make sure that this type of recession doesn't happen again, and that we are in reasonable shape to survive a different kind of future recession, as Alan Greenspan precdicts.

Think positive - it not only helps you, but it might just help the economic recovery.

Confidence, Trust and the Way Forward

I've just come from a morning lecture by Lord Digby Jones. He spoke very well (of course) and shared his enthusiasm for Britain as a trading nation.

Amongst his other points, two in particular are sticking with me. He spoke about confidence and in the British (or I would say more English) reserve which stops us celebrating success. In these turbulent times, success is more important than ever - as is the knowledge of that success. To paraphrase Lord Jones - if you've had a success then shout about it. Tell everyone. He spoke about ringing the BBC to suggest that they go to see three businesses which were doing well in this recession. Sadly the BBC were "too busy". Good news rarely sells.

My other immediate take away was on the subject of trust. In response to a question on the subject, he told us that Britain still had a high reputation of trust and integrity - notwithstanding the current debacle concerning our MPs. Trust is everything. Do what you say you will and do nothing which you fear being published. Sounds simple doesn't it.