What we can learn from Brexit

I have just been looking at an article suggesting that if the UK had a codified constitution, the situation as regards how we leave the EU, would be much more straight forward.

It reminds me of when senior leaders turn to leadership books for answers when they are facing a crisis in their own businesses.

We can’t seem to accept that some situations are a mess and there is never a simple, straight forward answer to some problems. We are where we are with Brexit and any business putting its investment strategy on hold until they get a clearer picture of what leaving the EU will look like, is giving its competitors an advantage it will never recover from.

A globalised economy means that any business, anywhere can enter into your market and take away your customers. And while you are waiting for clarity, your customers are being wooed by a business that is hungrier and leaner than yours.

Some of us thrive in the middle of a mess; some of us become paralysed. I have never waited for all my ducks to be lined up before acting. I prefer one duck, one action. Otherwise you end up in a situation that becomes political, about ego, about sub-optimisation and about satisficing – making do rather than focusing on the prize. Look at Brexit: it is clearly more about power and politics than it is about the economic well-being of the nation.

I am a trustee of quite a few charities and it always intrigues me when the debates become driven by power-plays and financial projections rather than the value that the clients of the organisation are receiving. I have nothing against financial projections, but at the end of the day businesses that deliver no value become run by margin and easily become prey to a meaner and hungrier competitor.

There are some basic principles behind all this: to navigate your way forward when you are the middle of a mess you need passion and management skills. It is not an either, or. If you lack passion, you will not care enough about the issues that your organisation faces to find the means to overcome them. It is only people who really care about what they do that survive: your indifference, because you are more interested in your career, looking-good or your next salary rise, will kill your organisation.

Management skills are equally important. Note that I am not talking about leadership. Leadership tends to be a rare quality, just look at our politicians. If we wait for the right leader to pull us out from the mire we have driven ourselves into, we will be long gone. A colleague of mine has an interesting theory. He says that only 0.3% of any organisation are potential leaders. So, we pour hundreds of thousands of pounds into questionable training courses and wonder why nothing happens. Leadership is context related and requires a level of self-awareness that most of us do not just don’t have.

Much better to focus on management skills: something that can be learned, practised and developed without the need to expend hundreds of thousands of pounds. The management skills we need are relatively straight forward: people, money and process.

I have a colleague who has been in senior management positions in business for twenty-six years. He says that he can smell the culture of an organisation within five minutes, and he can work out its level of productivity. When I talk to him I am reminded of how poorly we seem to treat one of our businesses’ most important assets – its people. We spend more money on maintaining our five axis tooling machines than we do on our people. The average level of productivity in the UK is 45%. In the US it is 65%. In a well-known logistics company that delivers parcels, kits probably 85%. Why? Because they know how to get the best out of their people: the only competitive advantage they have and what the entire business model is built around. They buy the trucks the drivers prefer, they have canteens that rival the best cafes and they give their people a sense of purpose. They are number one in the UK and they have managed their way there.

How good are we at managing our money? I was surprised to learn from a forty-year veteran of a manufacturing business that he had never managed his cash flow. He had no daily ritual of checking the bank nor did he have any forward projections. I am not sure how he is still in business, but I am sure his bank loves the interest they are making from his overdraft. Good finance people are rare so maybe investing in an internship might be a good idea, otherwise you will end up where the UK is, with no idea on what the different scenarios will look like post-Brexit and falling for the hype and the doom-merchants.

I am very keen on standard operating procedures: so we all know how to do the job to the standard expected. You can build a process of corrective and preventative actions around your manuals and that can lead to innovation or at the very least, continuous improvement, something that is very important when looking to reduce costs, add value and fending off competitors.

Have I just shot my argument in the foot?

I started off this article asking why a written constitution would help us with Brexit and ended it supporting standard operating manuals for businesses. Is there a difference? I think that I am talking about context. A well-run business with a clear direction and the right strategy to achieve it will run even better with a set of processes. A divided business, rife with political infighting and ego is unlikely to derive any benefit from a standard operating manual.

Messes are great for sorting the wheat from the chaff and I look forward to a lifetime of navigating my businesses around them.

Paul Cadman