9 03 2012

With Vince Cable questioning whether the government he is a part of understands vision and evidence increasing it does not understand strategy, I felt it time to revisit the question of whether the Coalition grasps strategy.

Earlier this week the Business Secretary Vince Cable warned that the government lacks a ‘compelling vision’ beyond tackling Britain’s record fiscal deficit. While I agree, I am left wondering why fewer commentators and no other politicians (including the opposition) appear to consider the point hugely (or even moderately) important.

It is not only important; it is vital to the UK’s economic recovery that there is a clear, concise, compelling vision of what business will look like and how it will operate in the coming years.

In December last year I raised the matter when pointing out that while David Cameron had been correct not to sign up to a Eurozone agreement that penalised the financial sector our economy is so reliant on. However, I also suggested that to continue to be so reliant on income generated via the Square Mile (11% of GDP) and not have any vision-based strategy for the diversification of British industry was “foolhardy indeed”.

One politician showing signs of understanding strategy is Margaret Beckett who has been at pains this week to point out that despite the fact we have been aware of the crisis in the Eurozone for several months, no one in government has yet thought to put in place strategy in the event it collapses (plausible if not probable).

Beckett chairs the joint committee on the government’s National Security Strategy (NSS) and while the committee welcomed the government’s decision to publish the NSS alongside the 2010 Strategic Defence and Security Review; it said that “a clear over-arching strategy” had yet to emerge. In Beckett’s own words; “A good strategy is realistic, is clear on the big questions and guides choices. This one does not.” (Source: BBC).

While her definition falls somewhat short of being a good definition, it is advanced thinking for Westminster. What Beckett fails to point out is that this lack of quality thinking around strategy is not unusual in Westminster; it has become ‘the norm.’

While the text books list hundreds of versions of strategy, to all intents and purposes they are all either vision-based or issue-based in one format or another. Issue-based is short-term strategy with the sole purpose of problem resolution. Vision-based, what most people actually think of as ‘strategy,’ is the medium to long-term pursuit of a clearly defined vision.

In its tackling of the fiscal deficit, in its swathing cuts and in its austerity mind-set, the Coalition has addressed (and continues to address) the immediate problem. However, issue-based strategy cannot drive recovery, it can only halt decline. To continue to employ a strategy of only addressing the present and very real threat, the government neglect the future. And, as Cable rightly points out, without a compelling vision there can be no cohesive, effective, targeted strategy for the future.

Understanding cause and effect is key to good vision and strategy. I have reported the government’s poor understanding of cause and effect in previous blogs, principally in November last year when I looked at how raising income by increasing taxation on fuel was unsustainable; firstly because there is a critical point at which drivers will simply be forced to buy less and, secondly, because higher fuel prices feed increases in prices in everything reliant on fuel for its production and delivery (everything else). Thus, there is a critical tipping point at which higher taxes mean revenue from fuel tax dropping at the same time as high street spending also reduces.

That point has been revisited this week amid concerns that the Chancellor will seek to raise further revenue by (again) increasing the tax on fuel. The Centre for Economics and Business Research (CEBR) has published a report suggesting that instead of increasing fuel taxation, a reduction of 2.5p in the levy would generate 180,000 new jobs. Despite Vince Cable’s questioning of the vision it appears George Osborne has forgotten that without people spending in the economy (i.e. the High Street) there will be no recovery, there will be no increase in national income with which to pay off national debt.

A second news story in the last few days exacerbated the issue. Good strategy requires what is often referred to as ‘joined-up thinking.’ Joined-up in the way that even if an increase in fuel taxation was accepted as sensible, an alternative cheaper way to travel would exist for those forced out of their cars so they might still have something left in their pockets to spend in a way to boost our economic future.

No such luck. This week in a move demonstrating yet again the government’s ineptitude at all things strategy, they announced that they are going to reduce subsidies to the railway by £3.6 billion a year up to 2019. Joined-up thinking? Not even close.

Yet again the government has overlooked cause and effect. Not only is Vince Cable correct in that the government lacks a compelling vision beyond tackling Britain’s fiscal deficit – that lack of vision leaves them without any comprehensible strategy aimed at building Britain’s economic future.

We are almost back at Big Society again. Almost tangible; almost comprehensible; but impossible to describe. As I once stated, it’s a bit like trying to pick up mercury – you know it’s there, you just can’t grasp it.

And if you can’t grasp it, if you can’t describe it, if you have no vision for it, you definitely can’t plan for it!

© Jim Cowan, Cowan Global Limited, March 2012

Read more blogs by Jim Cowan

Twitter @cowanglobal



One response

6 04 2012

[…] Strategy Still A Struggle For Government (9th March 2012) […]

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