80% of FTSE 100 Companies have an
How does this look from the Comparative Competitive Strength point of view? Do
Only a very few companies achieve the highest level, Free, of Comparative Competitive Strength (i.e. are the Very Best in the World in their field). A high proportion of these businesses are privately owned by shareholders or proprietors who are focused on the future, who know how to take decisions about long term risks, who are not scrabbling around for short term “prizes” without heed for the consequences, and who have the operational flexibility and sustainability to continue to prosper in hard times. It may be no coincidence that this is also the profile that seems to attract Warren Buffet. These are the companies that generate real wealth – solid sustainable human, intellectual, technological, physical, market, and financial assets and resources that deliver benefit to the future of the whole community. One of the keys to their success is their relentless focus on the future – what we call “Forward Facing Thinking”.
As we all can see, there is a continuing avalanche of business failures, of companies that are falling from the lowest level, Constrained, of Comparative Competitive Strength down into The Abyss. Do there really have to be so many? Have
We have commented before in our “Excellence Quartet” blogs about the pernicious antics of the M&A “pirates” who, sometimes without permission, use their valuation of the assets of the purchased as collateral for the loans they need to complete their, often unwelcome, acquisition. A significant proportion of the continuing flood into The Abyss are companies that have been critically weakened by the debts incurred by such financial engineering. Many of these businesses were generators of real wealth and reservoirs of skills and knowledge vital to the future sustainability of our Nation State (such as nuclear power station design and manufacture). Far too many, especially in manufacturing and science based sectors, have been eviscerated by the decades of under-investment imposed by the muddled short term thinking and self-serving manipulation of numbers by their financial “experts” and bankers (now there’s a basis for comparison that might give the ICA serious pause for thought).
The tragic and scandalous question is whether, in too many circumstances, that narrowness of view and understanding has been all prevailing and used (or abused) for the acquisition of personal power? Has that in turn led to over active collaboration in the City’s desperate “games culture” of financial engineering, reckless M&A, and the overall collapse of intellectual rigour in financial and business thinking that has brought us all to the brink through the Credit Crunch?
Sir John Rose of Rolls Royce, talking about the future needs of our economy in early November 2009, said there should be “less emphasis on social engineering and more on wealth creation”. We find ourselves “having a Heated Agreement” (to use the treasured words of the late Bill Carpenter, also of Rolls Royce) and paraphrasing those words as
“less emphasis on financial engineering and more on wealth creation”
Wealth creation is driven by a focus on the future, not the past. It is centred in Forward Facing Thinking, not Backward Facing Reaction. We hope that
So how would it be if
- Cheaper? – now there’s a word with nasty ambiguities – we mean something that takes much less of business leaders’ valuable time, as well also as being comparatively inexpensive.
Wouldn’t that just be an opportunity to help create wealth, instead of risking being seen to be party to its dissipation? Could it be their chance to strengthen Capitalism with Common Sense.