BHS (2)

I've just been watching the last half hour of Sir Philip Green's epic appearance before the BIS and W&P committee. The fact that he still uses a Nokia phone and a cheque book is actually quite revealing: for him, and possibly for other business leaders operating in the opaque world of private companies, the constraints within which they operate have not changed in the way that the corporate governance framework surrounding public companies has changed within the last three decades. At one point, when describing a meeting, in a smirking aside he said that that for those concerned about governance there was a non executive director present. Sadly, he did not respond to the question about what the committee might learn from the BHS debacle that could improve public trust in companies.

I was also interested that he made the point that struck me forcibly when watching Dominic Chappell in the same chair: why is it that apparently intelligent professional advisers are prepared to work for these people? It's all very reminiscent of Robert Maxwell: branded as unfit to run a public company, he still managed to surround himself with people who would back further ventures.

Banks, leading legal firms and the Big Four accountancy firms lend credibility to such people. They could do their own reputations some good by resisting the lure of lucrative fees and refusing to act for those who have benefited from business behaviour which has been to the detriment of employees, pensioners and all those who lose out when a company goes to the wall.

If Sir Philip makes good on his promise to sort out the BHS pension problems, I'll be impressed.

Sparks

The professor has recently been deeply irritated by the M&S loyalty scheme, Sparks. so irritated in fact that she wrote to the new CEO, Steve Rowe. The ensuing correspondence is reproduced below.

Email, 3 May 2016:

Dear Mr Rowe

Many congratulations on your new job. 

I am a loyal M&S customer. I have some questions and observations about the Sparks loyalty card and would be grateful for your comments.

1. Benefits to Sparks members?

I signed up for Sparks when it first launched. I receive emails about offers but they don’t seem to differ from what is already available in store and on line, and offer little advantage. For example, the recent invitation to see sale offers ahead of non Sparks members was limited to only a few hours before the sale began – by the time I was able to log in, the opportunity had already expired.

I have just checked my offers. 20% off dresses looks useful – but looking at the web site it appears that every customer is entitled to 20% off at the moment. Where’s the advantage to me? Can I actually get 40% off?

2. Technical issues.

Today I have received an email telling me that I may be able to compete for tickets to the Chelsea Flower show. To find out if I have enough Sparks, I have to log in. Why can’t the emails show my Sparks balance? The technology must be available: messages from Virgin Flying Club show my accumulated air miles. Indeed, why do I have to log in at all? Why can’t the messages include a link directly to my Sparks account?

It appears that I don’t have enough Sparks to enter the competition although I have a total of 12684 which sounds quite a lot. I'd like to be able to use this balance when shopping, as a Boots Advantage card allows. Or to exchange the Sparks for air miles as the Tesco Clubcard allows. 

I shop for food in M&S every week and buy clothes and other items about once a month. I've been doing so for a very long time: the Sparks card has made no difference to my pattern of spending. And I shall probably continue to be a loyal customer. But I’m really disappointed that M&S have introduced a loyalty card which offers so little to customers, compared to other retailers' schemes, because I think this damages the company's reputation. 

I'd very much like to know how far you think that the information gathered via the Sparks programme is worth when set against the costs of introducing the scheme and the possible negative effects of damage to the brand name.

Best wishes.

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Reply, 3 May 2016:

Hi Laura

Thanks for emailing Steve Rowe about our new Sparks scheme. As a member of the Executive Office; I’m replying on his behalf.

I’d firstly like to assure you that Steve is aware of your email and has read it with interest.

We’re really excited about our new Sparks scheme but that being said, it is still a relatively new scheme. This means that we are still learning about the scheme and identifying what does and doesn’t work.

Our Sparks member’s club is going to help us understand, in more detail than ever, what our customers are inspired by and what items they love. From this, along with customers contact us directly, we’re able to inform our Sparks team more accurately what offers ours customers want and also what they expect from the scheme.

At the moment, the only way to access your points balance is by logging into your account. I agree and personally do quite like the idea of your balance or statement being on each offer email we send. I’ve sent this suggestion over to our Sparks Development team, who are using customer feedback as inspiration to improve the service.

Some offers can be used in conjunction but unfortunately, some can’t. The terms and conditions differ for each offer, so it’s always advised to check the details section of the offer. That being said, I want you to know that all your comments are being made available for our Sparks Development team to review and consider.

Sparks points have no monetary value but instead can be used to unlock different rewards and experiences. The more you acquire, the higher the level you progress to, which then means better offers and exclusive events.

We know that the scheme is being continuously improve, so with some hard work from us, I’m confident you’re going to start seeing improvements - no more of the same and boring offers but ones that are useful and tailored to you.

I’d like to assure you all your thoughts have been passed to the relevant people across M&S and all are being considered for our future plans. I really hope you’ll see some big improvements with our Sparks scheme soon.

Kind regards

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Now, I didn't expect a personal reply from Mr Rowe (although I did send the message from my university account so that anyone reading it would know that I wasn't just any batty old M&S customer but a batty old professor...) But I did expect something rather more coherent, written in good English, and I could have done without the patronising tone.

But over the weekend I became irritated once more and sent this:

Dear Mr Rowe

I wrote to you recently about the Sparks loyalty card. For your information, I attach below my original email and the reply I received from your office.

I am prompted to write to you again after receiving on Friday an email telling me that my "new offers have arrived." (I noted in my original message that having to click and login to reach the details flagged in such emails is irritating: I do hope that my earlier comment has indeed inspired the Sparks development team...) My offers appear to be the opportunity to purchase a bottle of champagne for £10 and a bonus offer of a free pack of kiwi fruit (ah, not just *any* kiwi fruit, M&S *gold* kiwi fruit, sorry) worth £2. To claim the fruit I must first "claim" the offer to register it on my Sparks card: I can't just collect my fruit in store. 

In Waitrose yesterday morning I was offered a taste of some delicious cheese: the young lady at the cheese counter asked if I had a mywaitrose card, pointing out that if I did I would get a 20% discount automatically at the till when buying the cheese. In Boots, I was asked at the till if I would like to set my purchases against the balance accumulated on my Advantage card. Both experiences left me feeling kindly disposed towards both retailers.

Instead of introducing a simple loyalty scheme with clear and easily accessed benefits, M&S seems to have set up a very complicated system which offers loyal customers almost nothing. I do sincerely hope that you are getting positive feedback on the Sparks card from some people: a friend of mine described it as "as much use as chocolate teapot" (no, that's not intended as a product suggestion to inspire your people).

I would be very interested to hear your views on the scheme and, in particular, its strategic intent. In the current economic environment I would expect M&S to want to keep its traditional and loyal customers on side. Foisting a spurious loyalty scheme on us - one that is so far behind your competitors - seems more likely to alienate us.

Yours very sincerely

I did rather enjoy writing that. Once again, a speedy response from the same person:

Hi Laura

Thanks for getting back in touch with us. As with your first email, this has been passed to myself to respond to on behalf of Steve.

I’m sorry to hear that you’ve remained disappointed by the Sparks scheme and I appreciate your frustrations.

The purpose of allowing customers to activate the offers is that it gives you the opportunity to choose which offer you would like to select. It may be that a different once was available that you wanted, so we wouldn’t want to give you that choice.

Some offers, like the recent 10% off food are automatically registered to the cards. As this offer was so general and broad, we knew all our customer would enjoy it and therefore made it active on all Sparks cards.

I know it’s frustrating to not receive great offers but the Sparks scheme is totally optional and isn’t something you have to use.

As with your previous comments, I have reported your feedback to our Sparks Development Team. As explained, they do review, consider and use customer comments in order to improve the scheme.

On behalf of the Executive Office, many thanks for contacting us and sharing your thoughts with us.

Kind regards

Now, consider the 3rd and 4th paragraphs of this message: I can only assume that my correspondent is an unsupervised intern. 

I have a genuine concern here. The Sparks scheme must have cost a lot to implement and is stupidly complicated for customers so I wonder how easy it is for management to extract the data from it that it was presumably designed to generate. It is, of course, possible that Steve has been lumbered with something he would not have chosen and it may not be easy to row back from it or even to alter it. But I do hope that things change and that the unsatisfactory loyalty scheme and the poor literacy in the Executive Office are not symptoms of a worrying decline.

BHS

I am saddened by the demise of BHS. I feel so sorry for all the employees and pensioners whose lives have been turned upside down by greedy asset strippers.

My mum always said their tights were better than any others. We had two close family friends who were BHS store managers, from the1950s through to the 1970s and they said it was a great company to work for: at one time long-serving managers got sabbaticals - imagine that!

On the audit team there in 1967, I was alone one lunchtime when the chief accountant appeared. "Where are the lads?" he asked. "They're all at lunch but can I help you?" I replied. He grinned as if I'd said something rather funny and turned away, saying "I'll pop back later." "I'm the most senior person here today", I added. He turned back: the grin had been replaced by a look of astonishment, tinged with horror. "They sent a girl?" He vanished, muttering. I was, by that point in my training, used to far more offensive reactions from clients. To my astonishment, he returned later and apologised. He had phoned the firm to check up on me. He confessed that he had been surprised to discover that the firm employed female articled clerks but he thought it was a very good idea and we had a pleasant conversation.

Many years later I had the great pleasure of interviewing Denis Cassidy, BHS chairman and CEO in the 1980s, for a research study. He was a charming man but I think his experience at BHS in the Storehouse days had been frustrating and he talked much more about his other corporate roles.

Retailing is a cut-throat business these days. I wouldn't be at all surprised to see other long-established high street names going to the wall...

Culture redux - more random thoughts.

Yesterday I attended the annual conference of the Management Accounting Research Group at LSE.  I don't know much about management accounting so I have occasionally trotted along to this and it has always proved interesting. In 2013 they actually invited me to speak (you can even listen to me here, starting at 2.30)

The theme this year focused on business models, a notion that I have struggled with for some time, but there was much discussion about culture, principally about how to change organisational culture.
I noted some thoughts about culture in a blog post last November but yesterday's conversations prompted further thoughts.

It occurred to me that the assumption in these discussions is always that cultural change is needed after a crisis of some kind demonstrates some deficiency in the existing culture which needs to be improved.

But cultural change itself is not always a positive thing. In universities over the thirty plus years of my experience I have observed several significant cultural changes. The impetus to measure outcomes started with the quality assurance requirements imposed in the late 1980s/early 1990s and was reinforced by the introduction of the Research Assessment Exercise. While it could be argued that these were practical initiatives introduced to monitor the use of public funds, the unintended cultural consequences have never been properly recognised. Couple all this new funding arrangements, global competition to recruit students, and with individual VCs who feel they have to make their mark on appointment by tinkering with organisational structures without thinking through the consequences and you have a chaotic environment, where academics are under constant pressure to respond to measurable KPIs, and a managerialist culture.

Thirty years ago, the culture I worked in was collegiate and supportive: colleagues ate lunch together and there were many opportunities for the sort of informal conversations that can be very productive. Experimentation in teaching was actively encouraged. Academic staff were encouraged to participate in university administration via committee membership. All of this has gone. Managing an academic career is now a very different proposition. Early career researchers face immediate pressure to publish in high-ranking journals and to raise external funding. They will have research experience but have little opportunity to learn the craft of teaching - I learned by being able to team teach with more experienced colleagues but that's an expensive way of doing things and teaching seems to be a much more isolated experience now.

There was a sense of a shared purpose about the goals of the university, even though different faculties and departments operated in quite different ways. Academics were trusted as professionals. Lines of accountability were blurred. There were colleagues who didn't always pull their weight but peer pressure was strong and I think that is an important factor in how culture works.

The breakout group I was in yesterday thought that cultural change could be effected through change in systems and processes. An example given was a change in the process for reimbursing expenses: this could certainly lead to behavioural changes but is that really cultural change?

How can organisations defend themselves against adverse cultural change, whether imposed by external constraints or new senior management? Does such adverse change inevitably lead to crisis and a demand for a new and "better" culture? How can individuals within an organisation work to maintain a culture which has a proven history of achieving organisational goals?

Calls for cultural change seem to imply that individuals or groups within an organisation have favoured their own interests ahead of that of the organisation to an extent that causes a crisis. Is culture about ensuring that the interests of individuals are aligned with that of the organisation (thanks to MP for that thought)? If so, to what extent do they have to be aligned? Can some degree of non-alignment be positive, a catalyst for innovation?

The Future of the Professions

As a professionally qualified person I have an interest in the notion of “the professional”. Indeed, it could be argued that, as both an accountant and an academic, I am a member of two professions. For the first, I had to pass examinations and serve a training period: for the second, there was no structured qualification path but a PhD and appointment as a professor presumably offer some underpinning to any claims I might make to professional expertise in teaching and research. It is now possible to acquire a professional qualification in higher education – fellowship of the Higher Education Academy - but when I began my academic career all that was available was a form of certification that one had followed some training in teaching. (When I asked to do this, I was told that I could not be spared from the classroom to attend the training sessions and in any case I already had sufficient teaching experience to make this unnecessary: to which I responded that I would have liked to find out whether it was always necessary to stand on my head at the start of each class. I think my line manager was more amused by the image that presented than impressed by my underlying argument that, in spite of my experience, I might be doing it all wrong).

I have read some of the sociological literature on the professions and have taken a close interest in academic research into both of my professions. I have undertaken some empirical research on the impact on the accountancy profession of the failure of Arthur Andersen and some on the role of internal audit, a profession which, I think, is struggling to find its own separate identity. My continuing work with ICAEW keeps me in touch with many professional developments. So a new book entitled The Future of the Professions immediately attracted my interest.

It’s a polemic, from a father and son team, written from the perspective of a lead author who has clearly for many years challenged the legal profession to make use of technology – presumably no easy task with a profession which might be considered more conservative than most. Judging from his web site, Susskind has combined such challenge with high profile consultancy activity and has, in the way of many successful consultants, sustained links with academia and published extensively. His son is a doctoral student at Oxford.

The central argument of the book – that the professions should wake up and smell the coffee as far as technology is concerned, as their future is threatened in ways they seem reluctant to imagine – seems unremarkable to me, although the authors make much of their experience that many professionals do not embrace this view. I find this resistance unconvincing from my own experience but was prepared to be persuaded by evidence and argument: sadly, the book is disappointing on both counts. The authors’ view that the world would be a better place if all the expertise locked up in the professions were freely available seems also, on the face of it, unremarkable, but the steps to be taken to realise this utopia, which they sketch rather vaguely, may be less of a priority in a world where other inequalities of resource access might be deemed more urgent.

But neither evidence nor argument are properly presented here. The structure of the book looks at first glance to be coherent but the text is repetitive and constantly refers backwards or forwards to other sections. I also found the copious footnotes difficult. Legal scholars are very fond of footnotes but I was once advised by an eminent author that, if something was important enough to need a footnote, you should reconsider whether it should be in the main text[1].

The book was frustrating in other respects, too. It was full of broad assertions with no evidence cited to support them. Some examples (section numbers noted: I can’t cite page numbers as I was reading a Kindle copy supplied via netgalley.com):

•           small businesses do not have the resources to retain accountants (1.7) But the bread and butter of many small and medium sized accounting practices are small businesses. Did the authors talk to any of those running small businesses about their use of professional advisers? There’s also some academic literature on the topic.
•     it is apparently an “unavoidable truth that many older professionals find it difficult to embrace the latest tools for communicating” (3.4) Maybe there is evidence in some professions but I would argue that it’s not the case in most universities, where communication by text with students is often standard and teaching rooms don’t contain old technology: you can’t use overhead projector slides if there isn’t a projector!
• “Imagine.. systems that can detect boredom, confusion or frustration amongst a body of students” (4.6)  This is not at all difficult for a experienced lecturer. (I suppose you could see the National Student survey scores as a system driving concern about this but not providing a solution…)
•  “more people have mobiles than toothbrushes” (4.7) – really?
•  “libraries and encyclopaedias have largely been superseded” (4.8). Libraries still exist: indeed, new ones are being built. This is a good example. Libraries certainly look different but they are still a major information source and librarianship is still a profession.  I'll concede that encyclopaedias may have gone out of fashion, though.
• eBay displays  “ a latent demand for trade that was not in evidence in the past”. Really ? Trade in second hand goods is not new. What about car boot sales? eBay makes such trade easier it easier but this assertion is like claiming that Amazon revealed new evidence of a desire to buy books – Amazon made it easier but the trade already existed.
• It is “widely recognised that there is insufficient funding available to run high quality ….universities if …professors operate in the traditional way.” (5.3) It is unclear what the authors mean by “the traditional way”. In my thirty years of teaching in UK HE I have witnessed tremendous innovation and experimentation in approaches to learning and teaching. The effectiveness of innovation has been hampered by political interference and resource constraints, two aspects of the environment in which many professionals work which the authors do not address in their analysis.

I might have been more comfortable with this broad brush approach had the book’s argument been more rigorously presented. The authors’ claim to “theorising” amounted to little more than picking out some disconnected ideas from a very wide range of commentators and linking them to their own speculations. They set up straw men – the possible counters to their arguments – and demolished them, rather than supporting their arguments and letting them stand as convincing. The book is neither a rigorous exposition of an argument nor a readable discussion for lay people. The authors’ confusion about their audience is reflected in the invitation to the reader to skip chapter 7 if more interested in practical application. This suggests that chapter 7 is less germane to the argument so why not include it as an appendix instead?

Many examples were casually referred to  and they talk about "case studies" but none are presented or explained in any detail. For example, the Khan Academy is frequently mentioned as an illustration of the use of technology to provide free expertise but I wanted to know more about how it is used: do teachers use it as a supplementary resource? How do they view it relative to their expertise? How do students using it fare in assessment? And how do the answers to such questions illustrate the authors’ arguments?

What about open access publishing? Dissecting that model would have been a useful exercise as it raises many of the issues they set out – the influence of available technology and its potential to support or undermine the academic profession. It also raises the issue of power, both financial and political, which is ignored in their approach to analysis of the professions. The role of professional associations is also ignored, as is regulation, which could have been considered in their discussion of trust.

Reference was also made to people they have talked to and their own research but no further detail was provided. I reached the end expecting to find an appendix summarising the research they say they have undertaken but was disappointed so I turned to Google to find out more about the authors. I found out a little more in this presentation but nothing about the research methods they used.  They claim to cover eight professions and to have conducted 100 interviews but there is no detail about how the sample was designed, what questions were asked in interviews or how this data was analysed.

The authors choose not to define the term “profession” which allows them to range very widely but superficially as their understanding of some professional areas seems scant.  They also seem to view professional activity in an oddly constrained way. Although they discuss the training of future professionals, they do not address how professionals expand the boundaries of their professional knowledge to address new issues. Arguing that this professional knowledge should be made more widely available through decomposition and disaggregation seems to assume that it has a static nature: professional activity is far more dynamic than this approach seems to acknowledge and is not always one way. Certainly in university teaching, particularly at postgraduate level, there are great opportunities to draw on the knowledge of students and to incorporate this into one’s teaching.

The audience members who apparently suggested that the Susskind analysis of the legal profession could be usefully extended to other professions, and thus prompted the book, may have done the authors a disservice. Professional activity is far too varied for such an exercise to be carried out at anything other than a superficial and thus unconvincing level so it is no surprise that they appear to have evinced a reaction among professionals which confirms the impression of conservatism that they started with. Digging deeper might have revealed evidence of professional activity adapting and using technology in ways they have not understood.

I was left feeling very dissatisfied. Reading the book felt like reading a draft of a student dissertation in which the germ of a good idea had been submerged by wide ranging but unfocused reading and where the research design had not been properly addressed.

But it did make me think about professions and power: how professional groups try to establish themselves and sustain their influence; what happens when professions clash, over resources or philosophy; how they contribute to the public interest and how they should be regulated.

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[1] So here’s one…“The Footnote” is an excellent book by Anthony Grafton on the history of the footnote. https://books.google.co.uk/books/about/The_Footnote.html?id=VO2aFrQF24kC

Random questions about culture

Spent last Thursday mostly thinking about culture: in the morning in a meeting at the FRC, talking about a research project and hearing about their “culture coalition” and later at an AQF event "Whose culture is it anyway?"

On the bus on the way home I met a friend and told her I had spent the day talking about culture. "How interesting! What sort? Theatre? Art? “ (My day had included some of that: in the  afternoon I went to the Alexander Calder exhibition at Tate Modern, highly recommended.) But her comment made me think about the connections between the meanings of the word.

If, like my friend, we automatically think of cultural activities as relating to the arts and humanities, rather than companies, what might corporate cultural activities be? Externally, many companies sponsor cultural activities such as major art exhibitions: is this a way of suggesting that these sponsoring organisations are "cultured" i.e. appreciative of culture and thus appealing to the like-minded? Does this link at all to internal activities supporting their corporate cultures? 

The OED definition of culture begins with its roots in the notion of growing things. This idea of culture being a process, something dynamic, was largely missing from the AQF discussion, during which I jotted down the descriptions that the speakers used. Culture was variously characterised as:good/bad; strong/weak; positive/negative; productive; poor. We were told that changing culture was a long process - which made me wonder how you would know when you’d achieved it.

The idea of culture as “how we do things round here” captures some of the idea of culture as active and implies some reference to an underlying framework of norms. Could "the culture of our company" mean how we perform or describe some underlying notion? Is culture about making values visible through action? 

UK corporate governance developed under the aegis of a group of people who can best be described as gentlemen. I talked to some of them when writing the history of the Cadbury Committee. Gentlemen whose behaviour was characterised by old-fashioned courtesy, gentlemen whose good manners and considerable charm overlay incisive minds and a very shrewd approach to business matters. Gentlemen who managed to combine a flair for business with an ideal of public service. Gentlemen of quiet influence, who conducted business in panelled boardrooms, the clubs of Carlton House Terrace and at City dinners. 

We used to refer to them as captains of industry. Their shared culture was quintessentially British and they led companies which were also quintessentially British - and, indeed, could be described as part of our national culture, like Cadbury. Their individual aura of trustworthiness lent trustworthiness to the companies they led. 

But global companies are now led by much more diverse groups who do not share a common culture in the same way. Establishing a common boardroom culture within increasingly diverse boards must be a great challenge. In a climate where "challenge" is seen as a solution to governance problems, how can a common culture be sustained?