April 2007 newsletter

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Global warming special.

Forthcoming events

The Boyscout is very excited at the prospect of a talk by Madame X. We don’t know why, where or when, but it’s a start.

Book of the month

“Power Sleep” by Dr James B Maas.

I’ve nagged to exhaustion on the subject of sleep deprivation, but nobody is taking any notice. Remember, the 18-25s are the worst afflicted. Couple this with a cavalier view of risk and you know it’s time to be afraid. Or am I just getting old?

http://www.powersleep.org/powersleep.htm

Amnesty National

The Revenue obtained details of UK residents with offshore accounts and has come up with the idea of an "amnesty" - if you confess to undeclared offshore income by 22 June, you get to pay back tax and interest (by 26 November), but the penalty is only 10%. If they come after you, the penalty is up to 100%. The take is estimated at £1.75bn.

More interestingly, the experts have concluded that selective amnesty is impossible. Therefore, the same terms must apply to undisclosed UK income; although head office doesn't appear to have told local inspectors. Whilst all of my clients are squeaky clean, if there is anything you were getting round to telling me, now is a good time.

chris@chrisduckett.co.uk

All taxation is theft

Or maybe, getting taxation policy wrong destroys the fabric of society.

Regulation is tyranny by bureaucracy, criminalising taxpayers and making them guilty until proved innocent. Discuss?

Death of a core business

I was inexplicably compelled to write a longer article, so I’ve posted it on our site. Go there....

Prize & punishment

The question we get asked more often than any other is “How can I use a bonus scheme to motivate my people?”

Henceforth, our answer will be to quote Alfie Kohn:

“Punishment and reward are two sides of the same coinÉ..’Do this and you’ll get that’ is not really different from ‘Do this or here’s what will happen to you.’”

The full article “Why incentive plans cannot work” is well worth a read. Talk to the Boyscout.

Budget response

Whilst the Budget remains as opaque as ever, at least the bloggers had some fun with it. I was particularly impressed with the comparison of Gordon Brown to McCavity, the Cat (who was never there). The commentators have had a field day with the changes in headline rates of tax, but we still don’t understand exactly what is happening to capital allowances. 50% first year allowances stay in place for 2007/8, after which something else happens (Investment Allowance of £50k?). Industrial and Agricultural Buildings Allowances to go. I’ll let you know what this all means when the Treasury has finished re-writing the rules.

All out

You may be aware that our broadband connection went down in mid-March and was out of action for 10 days. We’ve been using the microwave system that was put into the Rotherwas Estate because BT couldn’t get a decent signal over the river (or something). I’ve stuck with this system, despite the occasional wobble (leaves on the line?), because it wasn’t BT. Anyway, the microwave people (Biscuit) deserve an award for creating customer annoyance in the face of a problem. They shut down their phone lines and left a recorded message that said it would be fixed “tomorrow”. And tomorrow didn’t come for a week. They did produce a fix after about 3 days, but this only lasted 24 hours because somebody “switched the lines off”(?). Apparently BT has now improved the signal across the river, so Biscuit can expect mass defection to BT standard ADSL. Points to consider:

• We are all really dependent on e.mail/internet. Do you have a plan if (when) this happens to you?
• Just because you’ve sent an e.mail doesn’t mean it’s going to arrive. That was always the case with the post. [The auto-receipt tag drives people spare.] Given the usual delay in responses and the continued arrival of incoming mail, it took us till day 3 to realise that our outgoing mail wasn’t going anywhere.
• If your core business fell over in this way, how would you keep customers happy? Or at least not determined to leave you as soon as possible.

Answers to duckettspare@googlemail.com

Incidentally, when the March newsletter did finally go out, all the links were scrambled. As some of them were well worth following, try reading again on the web site. March......

FIFO rules

It’s very much received wisdom that employees follow the 20:60:20 rule: 20% are believers, 60% keep their heads down and the final 20% are a real liability. The logical conclusion is that you should liberate the career options of the bottom 20% on a regular (annual) basis (dismissal quotas), just like football teams being relegated from one division to the next. This would certainly keep everybody on their toes (culture of fear?) and the HR lawyers would do very well. Would it really work for your business?

TK Maxx ­ tip of the iceberg

The press has been remarkably restrained with the story that a bunch of Russians has been stealing credit card data from the Watford processing centre, without anybody noticing, for 4 years. It’s only down to the disclosure rules affecting the parent in the US that the loss has been admitted at all. Incidentally, this is an example of the functioning of “malware”. The hackers may or may not have useful data for UK customers, but I’m sure that all sorts of large businesses have been subject to such attacks. HMRC have been encouraging us to give them details of taxpayer bank accounts so that refunds can be paid direct. Just how safe do you think their system is going to be? May be safer to go back to using cash and risk arrest under the Money Laundering rules.

The future of the web

Professor Shadbolt (Southampton University; artificial intelligence) recently gave a lecture to the IT Faculty of the Institute and the webcast is worth watching. If nothing else, you’ll find out what the term “Mechanical Turk” means.

www.icaew.co.uk/index.cfm?route=110103

Turning Japanese

I’ve always loved a good story about the car industry (September 2005 newsletter ), so I was delighted when one turned up in the middle of a series of hard articles on supply chain management. The last time I looked at the story, Chrysler had been saved from destruction (in the 80s) by Lee Iacocco jumping on the MPV bandwagon.

The next big event was the arrival of Honda and Toyota on the US mainland in 1987. The 80s had seen a fullscale implementation of the Japanese manufacturing techniques (JIT; kaisen; lean etc), but the most important concept was keiretsu ­ working with your suppliers. The all-American style was based on bullying suppliers, so it required a major culture shift to be able to do this. Recent research indicates that the Big 3 simply don’t get it and are more or less at war with their suppliers. For example, Ford uses reverse auctions to drive down the cost of components. This would suggest that keiretsu doesn’t work in the West, but Toyota & Honda have spent the last 15 years proving that it does (if you do it properly). They bought down the cost of manufacturing typical saloons by 25% during the 90s, whilst still coming first in the consumer reports. The secret appears to be:

• Tough love ­ suppliers have to get it right, but are helped to do so
• Understand how your suppliers work ­ then you know what they can and can’t do
• Turn rivalry into opportunity ­ controlled (not cut-throat) competition between loyal suppliers
• Supervise your suppliers ­ spot problems quickly and then get the supplier to solve them
• Develop compatible technical capabilities ­ it’s the ability of suppliers to innovate that counts. T&H don’t buy much from China.
• Share information intensively but selectively ­ right info to the right people
• Conduct joint improvement activities ­ the supplier gets better, then so do you

But you have to do all of these things simultaneously. As the Big 3 are struggling whilst T&H forge ahead, they must be doing something right. There’s an example of how each of these principals has worked, so stand by for more.

If this approach works for big company supply chains, then it must work for small businesses when dealing with customers?

Green death

If you ever thought that going green was just a bandwagon effect, then here’s the proof:

www.sustainit.org/ewell-being-awards/ewell-beingbrochure2007.pdf

My way or the highway

Small business owners have always been very good at hiring people in their own image. It’s the natural thing to do. This doesn’t generally lead to radical thinking and it’s common for businesses to stagnate. The boss doesn’t know what (s)he doesn’t know. Conversely, big companies have deemed themselves to have an advantage in this area, although the current lust for systemisation and audit may be driving out all variant approaches. [Take on a celebrity chef and insist they boil an egg in the approved company manner.] Assuming you’re not going to apply FIFO rules, how about using the 3F Test (score out of 10) to explore the motivations of the senior team?:

• Fun ­ what do you feel in your element doing?
• Freedom/autonomy ­ can you do it your way?
• Fulfilment ­ what gives you a sense of satisfaction?

Anybody scoring more than 20 is probably in the right job. Or kidding themselves.

March links

I was pleased with last month’s links and therefore disappointed when they got lost in transit. They are available on the web (March 2007 ), but the best were as follows:

http://davidmaister.com/blog ­ David Maister’s blog ­ seriously on the case

www.leadership.fm/ready.html ­ Steven Sonsino ­ mostly on the case

www.smallpieces.com or his blog www.evident.com - David Weinberger ­ off his case?

Sci-fi role model

Anybody who thought Blade Runner was a documentary about the workings of the tax office should try www.totaldickhead.blogspot.com or maybe www.filmsite.org

My wife made me read this

www.timesonline.co.uk/tol/comment/columnists/minette_marrin/article1654871.ece

Disclaimer

The nine most terrifying words in the English language:

“I’m from the government; I’m here to help you”?

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