Two envelopes

Over the years I have managed businesses I learned many things, but two anecdotes stand out at the moment when I watch our proud government perform.

In the early nineties we had a serious recession in the UK and we were struggling to survive. We cut costs deeply, laid of dozens of people and I apologise to all of them – it was not their fault – but getting the sales was a real struggle.

My sales director would come into our management meetings and start by telling us how badly our competition was doing. I had to get the idea across that the lack of business of the competition was no consolation to us – it did not provide us with more business. We needed to focus on getting business for our company not on the misery of the competition. We did, we survived and the company has grown ever since.

The second one was one told in jest but oh so true. A new chief executive comes into a company just as his predecessor is clearing his desk. He congratulates is successor on the job and gives him two envelopes and suggests he opens the first when he runs into problems and the second if he runs into problems again.

The new CEO puts the envelopes in a drawer and forgets about them and goes out and delights everyone with promises of a fantastic future. The share price goes straight up and he is a hero for the next few months. Sound familiar?

Six months later sales are still stagnating, the new product flopped and that tricky acquisition was dropped. The share price is rock bottom and the new CEO is sitting with his feet up on his desk contemplating what to do. Suddenly he remembers the envelopes, so he digs in his drawer and opens envelope one. The message is simple: “blame your predecessor”.  Great idea!

The new product was messed up by his predecessor, the acquisition was negotiated on unrealistic terms by his predecessor from which he could not recover and sales were lacking because of the bad marketing – of his predecessor. The market is impressed that the new CEO has identified the problems and is dealing with them. The share price goes up again.

Another six months go by and still there is no change. The scene goes back to the CEO desperate to come up with ideas. He has a brilliant one and opens the second envelope. The message is simple again: “make two envelopes”.

Why do these two ‘anecdotes’ stand out? Well our government came in with lots of promises but had already opened the first envelope. For the past 18 months they have been telling us it is all the fault of their predecessors and possibly they were right. The tragedy is that since the new team arrived the economy has not moved, the measures they have taken have been woeful and unemployment (the reverse of share price) is skyrocketing.

Now the new team has gone to excuse number two – look at how bad other countries are doing they tell us. True, but does that make things better for us? No it does not and we could actually look at the countries which are doing much better or better still, focus on how we could improve our sales, otherwise known as GDP and our share price, otherwise known as unemployment.

Perhaps it is time for David to open envelope number two.

1 comment for “Two envelopes

  1. Richard Hoblyn
    25 November, 2011 at 11:23

    Spot on Dirk! Unfortunately Cameron has already prepared envelopes 3 ,4, 5 & 6…….the Coalition is NOT working, we need another chance, perhaps another coalition, this time with policies that aren’t being wrecked by coalition partners, a new economy, a new chance, more opportunity, more consultants, more regulation…in other words more of the same….LAST ONE OUT PLEASE TURN OUT THE LIGHT!

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