BBC2’s Das Auto: The Germans, Their Cars and Us

After watching another brilliant episode of Top Gear last night, BBC2 made my evenings viewing complete with Das Auto: The Germans, Their Cars and Us. The presenter of the programme, the historian Dominic Sandbrook, certainly provoked opinion with his views. So much so, that I decided to post this article on my blog today. This decision was further reinforced by Jeremy Clarkson’s Twitter based rant about BBC scheduling after Top Gear had sung the praises of British manufacturing, and the motor industry in particular. To those who watched both programmes, I’m sure you’d agree that Jeremy’s annoyance is completely understandable… let’s not mention the BMW 1 series report though, shall we?  

In truth, Dominic Sandbrook makes a lot of highly pertinent and astute observations during the hour long broadcast. Keen to learn from mistakes made during the aftermath of WWI, the Allies rightly invested in the “New” Germany – and Japan – keen to avoid WWIII. This resulted in Germany building modern and efficient factories in direct competition to Britain’s old and ineffective facilities. His comments about management styles and industrial relations in the 50s, 60s and 70s, as well as the importance placed on Engineering as a profession in Germany compared to Britain are pretty much spot on! In essence, engineering is the science of finding effective solutions to everyday problems. In Germany, engineers are highly educated – many to doctorate and professor standard – where as in Britain it’s not seen as a desirable profession to go into; which is a terrible shame!

There can be no doubting the Germans have built a sustainable motor industry, based on technically strong vehicles that are highly regarded “status symbols” due to their build quality, image and branding. However, their reliance on Italian design studios highlights their weaknesses: their inability to produce truly desirable cars with flair and panache. Britain and Italy are widely regarded as “producing” the most beautiful and desirable “drivers’ cars” in the world; whereas Germany “builds” solid “Euro boxes”. And don’t for a single minute think that means reliable either! I will only drive Alfa Romeo – I’ve driven nothing else for the last thirteen years. The only time an Alfa has come close to letting me down was a brand new 2005 GT – which was as a result of a faulty German made component!

In the programme, the BMW Mini and VW Beetle were hailed as great examples of German design and brand awareness. But yet again the Germans are wide of the mark. The original British designed Mini was a triumph of engineering. A small car with a big interior, it effortlessly addressed pressing problems of the time and was a true design icon. Whereas the modern BMW Mini – like the VW Beetle – is yet another big car with a small interior! It differentiates itself from the rest of the market as a “Retro Icon”; and let’s be honest: the FIAT 500 leaves everything else in its wake in this market.

As was highlighted in Top Gear last night, Britain and not Germany is at the forefront of design and technical excellence in motorsport. Of the eleven F1 teams, eight are based in Britain; two in Italy and one in Switzerland; none in Germany! The last F1 team to be based in Germany was Toyota… and they along with Honda and the now French owned Nissan prefer to have their road car manufacturing facilities in the UK!

 But for me, what stood out more than anything else during the programme was its soundtrack. As Mr. Sandbrook specifically made reference to Kraftwerk, I can only infer the choice of music and acts was intentional. Widely regarded as pioneers of the “electro-synth pop” movement of the late 70s and early 80s, Kraftwerk’s commercial success was as limited as their technical ability as musicians and style. Clearly designed to be symbolic of the German motor industry and psyche, the programme also included British acts such as: ELO, The Beatles, Roxy Music, T Rex, Supertramp, Visage, Duran Duran, ABC, The Human League, The Teardrop Explodes, Yes/Jon Anderson etc. etc. Whilst the debate about the relative virtues of the British vs. German motor industries will no doubt rumble on, when it comes to the British vs. German music industries, surely there will only ever be one winner!

Corporate Governance: the not so black art of common sense

Reading through the June 2012 edition of Director magazine – the monthly publication by the IoD – recently, I was reminded by Richard Emerton’s wonderful article, that it’s twenty years since the publication of the Cadbury Report. For those of you who are unaware, this document was written by Sir Adrian Cadbury on the necessity for strong corporate governance and business management, in the era of the Enron scandal. For someone, such as myself, who was sitting their accountancy professional qualifications in the early to mid 90’s, it was required reading.

Supplemented by subsequent reports from other authors, the aims of corporate governance are to ensure best practice in the stewardship of companies. Encouraging the adoption of a long-term, sustainable approach, which is in the best interests of all the “stakeholders” of the company, as opposed to the short-term gains “bonus culture” focus, which was more likely to only favour executive management and other “key” employees. One of the principle areas these reports focused on were independent Non-Executive Directors to oversee directors’ remuneration and report on boardroom performance.

Many have seen fit to call into question the validity of these reports, especially in light of recent events – the banking crisis in particular. However, we’ve also seen evidence of strong corporate governance within PLC’s, with institutional investors – such as fund management groups – blocking executive pay deals at insurance giant Aviva, Astra Zeneca and Trinity Mirror Group.

Increasingly, the spotlight of corporate governance is falling on aspects such as corporate & social responsibility, diversity in the workplace and business risk & management. The temptation here is to fall into the trap of believing corporate governance only applies to FTSE100 and 250 companies. But in reality the not so black art of common sense, that is corporate governance, is every bit as important to the ever expanding SME sector.

Contact us today to find out how robust corporate governance can deliver long-term, sustainable growth and profitability to your company or group of companies.

The ever increasing influence and power of Twitter…

Regular readers will I am sure recall my previous articles about my positive experiences with Twitter and the benefits it can deliver in promoting businesses, organisations, events, venues locations etc. etc. etc.

Yesterday – yes a Sunday – was a case in point! From the comfort of the sofa in my own living room in Sutton Coldfield, I was able to experience a fantastic walk taken along the costal route from St. Peter’s Port to Jerbourg in Guernsey, by my good business contact and friend, Donato Esposito.

Donato, who is a social media expert and champion of the West Midlands, is better known to many as Bostin Bloke. And yesterday, with nothing more than an iPhone 4S, the app: instagram and twitter, Donato gave an infinitely more engaging and compellingly powerful case for visiting this beautiful and wonderful Island, than any expensively produced campaign the Guernsey Tourist Board could commission.

A place that wasn’t even in my thoughts is now most definitely on my “places to visit” list. I urge you to take a look at Donato’s tweets and photos on the 21st and 22nd April @bostinbloke or by visiting his blog: One man and his iPhone. As Donato states in his current Twitter profile image:

Live

Laugh

Love

Discover the World

Take photos :-)

How could you use Twitter to make a difference to your business… to your world?

An update on our latest services…

I am sure you’re well aware that our passion is for offering part-time Finance Director and Non-Executive support to SMEs, entrepreneurs and business investors. Those readers who have found their way to this blog via our website will probably be aware of the latest services we’re offering to market. We’re getting a lot of enquiries and referrals, so for those who haven’t, here’s a bit more about them:

Mentoring inexperienced FDs: Often occurring as a result of a first time position; a non-qualified person overseeing the finance function; or where a business is growing rapidly and the FD is struggling for confidence. We can come to you to suit – often as little as one or two days a month, to help you gain your confidence and understand the needs of this commercially crucial and highly challenging role. See the stepping stones programme page on our website.

Access to bank funding: The common perception at present is that “the banks aren’t lending!” The fact of the matter is the banks are being far more considered in their approach, right now. As is the case in the BBC’s Dragons’ Den programme, a sound business plan and model needs to incorporate robust finance management and controls. If the financial oversight is missing, lenders will be reluctant to support your business, no matter how much they’d like to. Our Access to Finance programme provides this support, enabling the banks to lend and you to get the funding your business needs!

Looking to sell your business?: Selling a business is much like selling a house! The better you prepare it for sale, the better the price you’ll get and the fewer issues will arise during the sale process. Working with partners from the legal and business transfer sectors, we will help you prepare your business so that you can achieve the best “profits multiple” and enable you to exit with as few guarantees as possible.

If you know someone whose business or company could benefit from our support, why not contact us today?

Horses for courses… !

A brief, but in my opinion, entirely justified rant…

Every month, in CIMA’s Financial Management magazine, there is an article about the most recent cases brought before the Ethics and Conduct committee. Now, obviously this is essential from the point of view of professional standards being maintained and been seen to be maintained. But what disappoints me, are some of the obtuse reasons behind the hearings.

In the most recent edition, there were a couple of individuals who saw fit to cheat, in the most unsophisticated of manner, during the recent exams – shabby and totally unacceptable. But what infuriates me more than anything else, were the number of cases brought for unprofessional conduct whilst performing taxation services!

Now this may seem rather strange, seeing as the “A” in CIMA stands for Accountant! Yes CIMA students are taught and examined on their taxation knowledge, but we merely scratch the surface compared to financial accountants – especially those who work in practice providing statutory and compliance services.

CIMA goes to great lengths to differentiate itself and its members from the external, historical, audit based approach of the financial accounting bodies such as ICAEW and ACCA; promoting our internal, proactive, management accounting approach that is essential to business development, profitability and growth. So here’s the rant: why do some people go to the trouble of qualifying as a CIMA accountant and then offer statutory services such as taxation … why?

If you want to do statutory/compliance accounting, study ICAEW or ACCA instead… and if your business is looking for a financially qualified business leader to help you strengthen and grow your business, choose a CIMA qualified professional. Rant over!

An end of year update – here’s to a better 2012

It’s been a while since my last article on the Suttongate View, but as I said in a previous post, my focus is on quality, not quantity; I don’t want to bore you with trivia just for the sake of increasing the word count! I thought that as we’re rapidly approaching Christmas and the end of 2011, I’d take this opportunity to tell you what I’ve been up to over the last couple of months and my feelings about 2012 – an end of year, Christmas message, if you like?

Suttongate Consulting continues to go from strength to strength and I’m really quite pleased with its progress, as well as the unexpected directions it has taken me in. My absolute passion is for helping SMEs, on a part-time and freelance basis, to bridge the gap between their emergence from the start-up phase and maturity where they can justify a full-time Finance Director.

Having said that, I am happy to work with any size of business where I can add value, and I’ve recently been appointed an Associate of Investors in Excellence; the organisation that promotes best practice in every area, and all management levels, of business. I’m particularly please about my alliance with IiE as they share my core values for promoting clear business planning, effective management and business control as well as continuous improvement.

What has been most unexpected, and pleasing though, are the amazing opportunities to work with organisations and individuals within the sporting world.

I became a member of the IoDInstitute of Directors – earlier this year, and I’m kicking myself for not doing so years’ ago! It’s a fantastic organisation with a superb support structure for business leaders. I attended one of their business breakfast seminars at the Botanical Gardens in Birmingham in October and heard the IoD’s Chief Economist and Head of Policy, Graeme Leach, give his view on the current economic outlook.

Graeme believes the UK economy will go through, what sounded like, “one hell of a recovery!” He clarified that what he actually said was: “one L of a recovery!” Basically, as very long, slow and gradual recovery, but he firmly believes that George Osborne is following the right economic policy. I have an enormous amount of respect for Graeme’s opinions.

I was at a Chantery Vellacott DFK Christmas drinks event last Thursday evening and the conversation invariably turned to the economy. A very knowledgeable and experienced gentleman commented that during previous economic downturns the endgame was always a large increase in the unemployment figures; and he felt that there hadn’t been a sufficient increase yet. A perfectly valid point of view, but we’ve seen a large increase in unemployment figures already. It makes you wonder how many more people have to lose their jobs before these people will be happy!

But this downturn/recession has been rather different compared to others. Apparently longer than people can remember; but with interest rates at a historic low, for those still in employment, it hasn’t been as painful as it could’ve been! Ultimately, everyone understands that the economy, like the banking system, depends on confidence. I’ve long held a view that people feel “morally obliged” to go through a downturn, irrespective of their personal experiences. And they also look for “permission” to believe a downturn is over.

Probably the best advice I’ve heard about economic conditions is: “look around you, and believe what you’re seeing with your own eyes”. There are highly remunerated Civil Servants in Whitehall, paid to worry about macro-economics. And the media and other organisations have their own agenda! I look around me and I see people driving around in new cars; friends and business contacts telling me about the holidays they’ve just come back from and have booked for 2012; houses for sale with “sold” signs. Does this mean we’re seeing the economic signals to give us all “permission” to get our “confidence” back in the UK and look forward to a better 2012? Perhaps, but in all honesty, I don’t know for certain! What are you seeing with your own eyes?

Have a very happy Christmas, and let’s look for a more confident 2012, shall we?

Is your business too complicated to manage effectively?

Complexity within business is often a double edged sword. On one hand it can create the specialism and technical barriers to entry that leads to genuine competitive advantage. But on the other hand, too much complexity can be a cause of uncertainty, misinformation and inefficiencies resulting in poor decision making and poor utilisation of resources.

So how can you identify whether or not your business suffers from the wrong kind of complexity? Here are some simple points to consider:

Understand the problem: For most organisations, complexity isn’t something that happens overnight. It tends to be ingrained in the psyche of those involved in the process and can become a self fulfilling prophecy. Understand to what extend it is self generating an irrelevant, opposed to crucial to your business’ success.

Assign responsibility: Appoint someone within your organisation; probably the head of the finance function; as they’re best placed to oversee the task, to take responsibility for identifying and carrying out improvements. Who can you trust in your business to ensure the management information to support your decision making is accurate, relevant and timely?

Information audit: Conduct an audit to understand to what extent your organisation or business suffering from “paralysis by analysis”? What proportion of information is genuinely useful; which is “interesting” but lacking purpose; and which has little or no value at all? Are you producing a report each week because Bill, who retired in 1998, asked for it once in 1987, and you’ve been producing it ever since?

A focus on “value”: Consider to what extend is the provision of information, both useful and irrelevant, is detracting from your organisations ability to add value. Are “frontline” staff being taken away from their primary functions in order to produce un-necessary information? Police being taken off “the beat” to fill in arrest forms is a good example of this.

Strategic planning: Does your business have a clear vision of where you want it to go? Is that vision financially and commercially viable? But just as importantly, does your management information focus on the key factors critical to your business’ success? Does it enable you, in a timely manner, to understand where and how it may be coming “off plan” and take steps to correct it?

Systems for communication: Are the right systems in place to enable effective management. Not just the IT systems to disseminate the right information to the right people at the right time. But is the information presented and communicated in an effective manner? Is it user friendly? Dashboards, KPI’s, summary sheets…

Culture: Are you the type of person who leads by example? The key here is to ensure that your organisation is focused on the provision of lean information aimed at achieving strategic and commercial goals. As previously mentioned, some complexity can lead to competitive advantage. This isn’t a cost cutting exercise.

And if all else fails… if you’re struggling to find your way through the “smoke and mirrors”, don’t be afraid to adopt an activity based management approach. Prune hard back to basics and rebuild the reporting process.

If you would like to learn more about reducing complexity and improving the reporting function within your business or organisation; or wish to find out how Suttongate Consulting could help your company to implement a lean management information system and decision making process, then please do not hesitate to contact us at enquiries@suttongate.com.

A Finance Director by any other name …

One of the greatest frustrations; no wait! THE greatest frustration I experience in the day to day running of Suttongate Consulting, is speaking with finance professionals (such as accountants and ex-bank employees) who’ve spent their careers in banking, audit, taxation and compliance work; but think they can offer a part-time Finance Director role to companies. And when I ask them what experience they’ve got; what they’d do in that role, they often answer: “oh! cashflow, management accounts, debtor management, KPI’s …”

To an extent, this perspective, although misguided in my opinion, is completely understandable. For many years’ the role of the finance function was seen as been independent from the rest of the company and solely with a focus on “the numbers” and financial data. But in recent years, there has been an ever greater shift towards the important role of finance, and its influence, within the strategic planning and senior level decision making process.

CIMA encourages its members to develop their careers away from being accountants in business, and use those “tools” within general management; to become “financially qualified business leaders”. I often say to business owners and directors, that the job title “Finance Director” is a misnomer; that a strong and experienced FD would acknowledge that their role is as much non-financial as financial. That it’s critical they have the experience to support this role effectively, whilst maintaining the department’s traditional independence.

In summary: if you want someone to audit your company, produce your statutory accounts and “save you some money on your tax”, you’re better off speaking to your accountant. But if you want an experienced FD to support your company’s development, get a CIMA qualified, experienced FD.

Should companies extend their payment terms to suppliers?

There was an interesting article in this months’ Financial Management magazine, which broached the delicate subject of, effectively, imposing longer payment term on your suppliers, as a tactic to address tighter cashflow and funding issues.

This isn’t a new problem. For many years now, companies of all sizes from various sectors have sought to push the traditionally acceptable net monthly or 30 days terms to 60 days, 90 days … even 120 days in my experience. And it’s not just the payment terms either. Let’s not forget the delaying tactic typically used, from the traditional “the cheques in the post” to using non-compliance with quality approval processes and disputing level of completeness for stage payments.

What should never be overlooked is that effective cash management is an art and not a science; and a black art at that! But despite being easier said than done, the article, quite rightly points out the potentially severe long term consequences of this approach. The importance of having financially stable suppliers, able to maintain a sustainable supply chain is critical to any business’ success; as is its reputation and credibility within its industry and among suppliers. All of these factors could end up being detrimental to your company’s long term success, before we even consider the legal and statutory ramifications.

The quickest, easiest and most obvious solution to a problem is rarely the best option; is it?

The Alfa Male FD

I thought I would tell you about my other blog I’ve recently set up, called The Alfa Male FD. It’s about my hobbies and personal passions, such as F1 and Motorsport, Rugby Union, Winter Sports, Top Gear … and of course Alfa Romeo!

If you’re interested in having a read, please visit www.alfamalefd.com. I hope you enjoy reading it!





DOMINIC SEARS FCMA CGMA MIoD
MANAGING DIRECTOR