IS KING CANUTE ADVISING THE GOVERNMENT ON STRATEGY TO COUNTER OBESITY?

Last week a new report forecast that by 2035 diabetes would cost the NHS 17% of its entire budget with obesity being a major contributing factor.

In place of decisive action to stem the tide, the Government are employing a strategy of asking people nicely and hoping lifestyles will change; more a King Canute style policy of inflated self-belief based on little but hope rather than clearly mapped out actions and measures.

A new report from the York Health Economics Consortium due for publication in late May, warns that the majority of NHS spending on diabetes is avoidable. The ‘Impact Diabetes’ report, commissioned by Diabetes UK, the Juvenile Diabetes Research Foundation and Sanofi, suggests that 80% of the NHS’s £9.8bn annual UK diabetes bill goes on the cost of treating complications. Experts advise that much of this is preventable with better health checks and better education.

Baroness Barbara Young from Diabetes UK said; “The report shows that without urgent action, the already huge sums of money spent on treating diabetes will rise to unsustainable levels that threaten to bankrupt the NHS.

“If this rise in diabetes is allowed to continue, as is happening at the moment, it will simply be disastrous for the NHS and wreck NHS budgets. I think we have a car crash coming.

“But the most shocking part of this report is the finding that almost four-fifths on NHS diabetes spending goes on treating complications that in many cases could have been prevented.”

Among the areas requiring urgent attention from government is the ticking obesity time-bomb. However, far from acting decisively with strategy laying out clear actions and measures, successive governments have done fair impressions of King Canute sitting on the beach only in place of holding back the sea they believe they will hold back the obesity tidal wave.

In August last year the Telegraph reported that many of the world’s leading experts proposed that the time had come to tax unhealthy foods, the alternative maintenance of the status quo likely to result in nearly half of UK adults being obese by 2030.

Obese people suffer more with diabetes, heart disease and cancer posing a serious threat to the NHS’s ability to cope. The threat is so serious that The Lancet predicted that by 2050 fighting health problems caused by obesity would absorb over a third of the NHS’s budget.

Professor Steven Gortmaker, from the Harvard School of Public Health, said taxing unhealthy food and drink would save governments billions by reducing obesity-related illness as well as bringing in revenue. His analysis showed a ‘fat tax’ was the single most effective measure, in terms of lives saved. He said that such moves were effective and cost-effective to society.

Prof. Gortmaker went on to say that “so far, governments haven’t shown any leadership whatsoever. We have let the market do its work and it’s worked well to produce obesity.”

In the UK, Professor Klim McPherson, from Oxford University, criticised Coalition ministers for believing they could solve the problem without drastic action.

So, what of the Government’s strategy to tackle obesity?

David Cameron believes people can be “nudged” to better health by creating incentives to help them make better choices.

The Health Secretary Andrew Lansley has said, “rather than nannying people we will nudge them. Nudges are very important. Tax is not a nudge, tax is a shove.”

Anne Milton, the Health Minister sounded more tuned in to the scale of the problem when stating last August; “We’re too fat and we need to do something about it.” She then went on to state, “we have no plans to impose a fat tax.”

When Prof. Gortmaker advises that a fat tax would be “more effective and cost-effective to society,” he identifies key components of good strategy which is to be effective, efficient and economical. Good strategy cannot and should not be based on merely hoping for positive outcomes.

Taking lessons in strategy from King Canute is not wise. Perhaps someone could give the Government a nudge (or maybe a shove) in the right direction before the weight of obesity breaks our NHS.

© Jim Cowan, Cowan Global Limited, April 2012

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GOVERNMENT INCOMPETENCE ON STRATEGY HITS THE NEWS

The Public Administration Select Committee has today published a report which is deeply critical of the Government’s ability when it comes to strategy.

While this is old news as far as Cowan Global are concerned, we’ve been stating as much for months, the Government’s response suggests that still no one is listening.

The Parliamentary Public Administration Select Committee (PASC) has today published a report; ‘Strategic Thinking in Government: without National Strategy, can viable Government strategy emerge?’

The report tells us that a lack of strategic thinking is leading to a “patch and mend” approach to policy making and that an absence of national strategy was leading to mistakes such as those following the recent budget.

In an appraisal which presents nothing new to regular readers of this blog, the report also states that the aims set out in the Coalition agreement were too meaningless to serve any meaningful purpose.

You might be mistaken in thinking the PASC is an opposition led group. In fact it is a cross party committee chaired by Conservative MP Bernard Jenkin who states; “this is a long-term problem.”

In a scathing analysis of the Government’s strategic ineptitude the PASC report expresses concern at the Government’s “inability to express coherent and relevant strategic aims.” The report goes on; “This factor also militates against clear thinking about presentation, which was evident in the aftermath of the Budget and in response to the possibility of industrial action by tanker drivers.”

As an analysis of the Government’s knowledge of and ability to devise and deliver strategy, the report does not stop there stating; “There remains a critical unfulfilled role at the centre of government in coordinating and reconciling priorities, to ensure that long-term and short-term goals are coherent across departments.”

PASC Chairman Jenkin called on the Government to publish a statement of National Strategy in late spring or early summer each year saying it could introduce the next Budget process and make clear how specific policy measures announced in the following months tied in with long-term objectives.

“This is not about abdicating policy-making to opinion polls, but national strategy must appreciate what sort of country the public aspires for the UK to be,” he said. “Failing to do so in the long-term undermines national self-confidence, and in the short-term could have catastrophic consequences.”

It makes damning reading and reinforces the numerous examples of poor strategic thinking from government all too frequently reported on this blog. However, what the report does not ask (and therefore answer) are two key questions:

Does the Government understand what good strategy is and, if not, where are they taking their advice on strategy from?

The clear evidence of recent months and years is that the majority of politicians (not just the Government) have a poor understanding of good strategy. The danger is that they do not realise this and therefore are not taking action to remedy the problem. They think they are expert where, in reality, they are far from being so.

This is demonstrated by the choices made when seeking advice. Until recently the Prime Minister’s strategy advisor was Steve Hilton, a leading ‘Blue-Sky thinker’ but far from strategy expert. At least Hilton’s appointment suggested recognition of the need for sound advice however since his departure the PM has chosen not to replace him.

In response to the PASC report, this low on understanding and sound advice government has said it has “a very clear objective to bring down the deficit and restore economic growth.”

They could not have given a more clear demonstration of their lack of understanding, yet again, quite clearly confusing goals with strategy.

Footnote 1:

While this author welcomes the report I am disappointed that the PACS report does not recognise the inherent flaws in the policy of ‘Initiativeitis’ employed by both the previous and current governments and now widespread in its application. It is a policy which demonstrates better than any other the poor understanding of strategy evident at Westminster.

Footnote 2:

In 1999 Justin Kruger and David Dunning (Cornell University) published ‘Unskilled and Unaware of It: How Difficulties in Recognising One’s Own Incompetence Lead to Inflated Self-Assessments.” (Journal of Personality and Social Psychology 1999, Vol 77, No 6, 1121-1134) In their concluding remarks they state; “We propose that those with a limited knowledge in a domain suffer a dual burden: Not only do they reach mistaken conclusions and make regrettable errors, but their incompetence robs them of the ability to realise it.” In short without a critical friend, without skilled, knowledgeable advisors, the Government are operating in exactly the space defined by Kruger and Dunning; that of the unskilled and unaware.

Read the full PACS Report here.

© Jim Cowan, Cowan Global Limited, April 2012

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GET TO KNOW THE STARS – VISIT BOSTON

The Boston Matrix was once described as one of the most powerful tools in the history of strategy. It’s use peaked in the 1970s but it is still used today and, when applied in the right context, can be highly illuminating.

So, what is the Boston Matrix and how does it work?

The Boston Matrix was developed in the late 1960s by Bruce Henderson of the Boston Consulting Group (hence its name). It can be used by companies to analyse sections within their business in order to inform deciding what to do with them; spend resource on building them up, just keep them ticking over or possibly dump them. Information is gathered before being moulded into a snapshot of the business which can be used to plan future direction.

The first step is to break the company into ‘Strategic Business Units’ (or SBUs). An SBU is any unit with its own customers and competitors such as a subsidiary, a division, a product or a brand. The SBU is placed within the Matrix according to a combination of two things; (1) its strength in the market and (2) the attractiveness of that market.

On one axis the SBU’s relative market share is plotted and on the other the growth rate of the market itself. These variables were selected by Henderson for their implications on cash generation and consumption. He explained it thus; “an increase in relative market share should be accompanied by a cost advantage and, therefore, an increase in cash generation. A rapidly growing market demands investment in capacity, which means increased consumption of cash.”

These principles are reflected in the analysis that follows the establishing of the SBU within the Matrix. It will occupy one of four quarters within a two by two box and be labelled as follows:

Cash Cows – SBUs with a high share of a mature market. As the name implies, Cash Cows should generate more cash than they consume. They should be ‘milked’ of their cash and fed as little as possible. The cash generated should be used to build up ‘Question Marks’ and fund existing ‘Stars,’ to support diversification into new opportunities and pay shareholders dividends.

Stars – SBUs which hold a strong position in a high-growth market. Like Cash Cows they generate lots of cash but unlike Cash Cows, because of their growth they consume a lot too. The Star should continue to be well fed in order that once the market slows it will be well placed to become a Cash Cow.

Dogs – SBUs which hold a weak position in a low or no growth market. They don’t consume much cash but then, neither do they generate much and are unlikely to be very profitable. Henderson suggested they are strong candidates for disposal, releasing cash that can feed stars or diversify. This is a contentious area as critics of the Boston Matrix argue dogs can be (and sometimes are) turned into cash cows. (Note; Dogs are also often referred to as ‘Pets’ – reflecting their status as pet project for company Director or owner).

Question Marks – SBUs which operate in an attractive, growing market but have a low share of that market. Also commonly referred to as ‘Problem Children,’ Question Marks are the most difficult SBUs to deal with. They consume cash to fund growth but generate little in return. They are question marks because they pose the challenge of figuring which are worth added investment to aid growth and become Stars and which are Dogs in the making.

The Boston Matrix can prove a useful analysis tool as long as its limitations are understood. Growth rate is only one of many features determining the attractiveness of a market and competitive advantage is not limited solely to relative share; something not recognised by the Matrix hence requiring the understanding of the user.

Because of its simplistic analysis, it is particularly harsh on Dogs which may well be supporting the success of other SBUs. The definition of their market might limit understanding.

The Boston Matrix is not the ‘all-seeing prism’ it was once thought to be, however it can provide a useful starting point for any discussions on the relative strength or otherwise of SBUs and their alignment and development (or otherwise) within a company.

© Jim Cowan, Cowan Global Limited, April 2012

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BRITAIN’S COUNCIL TAX PAYERS SUBSIDISE TORCH RELAY

Poor Planning Adds to the Cost

Recent news stories* exposed how the true cost of hosting the Olympics is 2½ times (or more) higher than the oft quoted figure of £9.3 Billion, which itself is far higher than the original £2.4bn estimate. Not included in that figure is the full cost of staging the Olympic Torch Relay for which local council tax payers will be footing a sizeable chunk of the bill, in part, because of where they are forced to shop and, in part, due to bad planning which, in turn, is allowing LOCOG to generate income from local authority budgets.

The Olympic Torch Relay sets out on its journey around the UK on 19^th May taking in numerous local authority areas as it passes within reach of (the organisers claim) everyone in these islands. But what a lot of those people it passes within easy reach of don’t realise is that they are helping to pay for it from their council taxes. The Torch Relay is not being funded via the billions allocated to LOCOG for organising the Olympic Games; it is being funded in part by sponsors but also with a generous contribution from those local authorities hosting stages on the route.

How much of the bill is being picked up by council tax payers is not clear. Some local authorities have published figures, some haven’t. Where they have the figures varied widely and where they haven’t there is a feeling they are deliberately avoiding a potentially sore subject.

One local authority in response to a Freedom of Information request asking about costs and inconvenience to the public stated:
“Work is progressing to complete the planning associated with the Relay and the cost estimates requested may be available closer to the event. However even when this is completed the risks (and therefore costs) associated with the event are not readily quantifiable.

“We do not expect to receive any external funding to help with the costs of the Torch Relay. The Government and the GLA have made it clear they will not fund these costs and external sponsorship is not possible due to the restrictions placed upon the event by LOCOG to protect the Olympic Sponsors.”

In short, either they don’t know or they aren’t telling.

Where authorities have published figures they range from Bracknell’s £17,000 to Poole’s estimate of over £75,000 often without factoring in officer time, street cleaning and more. Add on top of that the cost of policing the relay (council tax payers contribute towards police costs) and the invisible cost of inconvenience to and interruption of business and the figure soon starts adding up. (Update 14 April: I have now been advised the true figures are actually much higher, for example at close to £160,000, Cornwall are spending more than double the figure stated by Poole).

What will infuriate council tax payers more is the inefficiency demonstrated in the planning which further squanders their money.

Being the Olympics, those places along the route will be expected to include Olympic and London 2012 branding in their street dressing. The only place they can buy the official flags, banners and bunting? You guessed it; LOCOG. Not only are LOCOG not paying for the Torch Relay, they are profiting from it.

But why does every single stop on the Torch’s route need its own Olympic branding paraphernalia? In most cases these will be use once and never again items. With a little planning couldn’t councils hosting on successive days have shared the cost and the banners? How many of those attending will notice if the local authorities concerned simply used local and national flags and banners? Surely the Torch procession will be well enough branded to ensure no one mistakes it for anything other than an Olympic event?

While some won’t mind; not every council tax payer will be happy to hear they are landing the costs of the Torch Relay. And the lack of clear, integrated strategic planning between host councils will most certainly add to the disquiet at the final bill to council tax payers – estimated at over £5m.

*Recent news stories include:

Olympic Bill Tops £12bn (Sky News, 26^th January)

Cost of the Olympics to Spiral to £24bn (Mail, 27^th January)

More Public Olympic Funds Trickling Over to Games Organisers (28^th February)

Alarm at Soaring Cost of the Olympics (Sky News, 9^th March)

© Jim Cowan, Cowan Global Limited, April 2012

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THE BANK OF MUM & DAD AND THE FUNDING OF SPORT

Regular readers of this blog will know that I frequently return to the topic of strategy for the development of sport and the ineptitude of consecutive governments on the subject.

However, as with all aspects of life there are also a number of apparently non-sporting government decisions which will have a significant effect on grass-roots sport and its ability to grow – or even stand still. As any half-way competent strategist will tell you ‘cause and effect’ should always be considered as ‘big picture’ considerations where, unfortunately, government tends to only consider decisions in one area in isolation. In government initiative seemingly always trumps strategy.

In the rush to recognise the value that Lottery funding has brought to sport in this country we sometimes forget that, at the grass-roots, it is not even in the top three of biggest funders. By far the largest financial contributors to sport are the many unpaid volunteers who keep it running. Their contribution is not limited to the obvious travel and time but is often invisible such as the North London coach I spoke to who pays entry fees for the young athletes he looks after because without they would not be able to afford to compete.

Following the volunteers in terms of contribution is the ‘bank of mum and dad’ – a bank that pays those entry fees when it can afford them as well as being kit purchaser/washer, taxi service, funder, sponsor and more.

With VAT seemingly set to remain at 20% for the foreseeable future this is the first area of negative impact on sport. Equipment costs more, facility hire costs more, travel costs more; in fact everything costs more. At the grass-roots end of sport, not an essential item of spending for the vast majority of the population, as the financial pressure builds sport becomes an area where cut backs can be made.

Fuel is an essential commodity but has been far from exempt from not just a single tax but double taxation as the seemingly ever-rising fuel levy adds to the burden of VAT. This stealth tax on small business (which many small sports clubs are) is also taxation on both participation in and the watching of sport. As with VAT, as family budgets are stretched difficult choices have to be made and little Johnny’s badminton lesson will more often than not be seen as less essential than getting to work , paying the bills or putting food on the table. It should be remembered that tax on fuel is a tax on everything reliant on fuel for its production or delivery – pretty much everything else!

Public transport might be an option but buses and trains do not always run according to where sport needs them to run at the times it needs them to and besides, with many families ‘time-poor’ the added time public transport travel can take makes it less likely to be utilised, especially outside of cities like London where it is less plentiful. And for longer trips for sports fans and away team travel the train, already expensive is now having £3.6bn a year of subsidies removed by the government.

The third largest funder of sport in this country is local authorities who, as we all know, are facing significant cuts. Like it or not, those cuts will most likely fall in areas in which those authorities are not bound by statutory protection; other than playing fields that is all facilities, sports development, community clubs, sports inclusion projects…..need I list them all?

I am on record as supporting sports facilities, sports development and community sport as candidates for statutory protection (as they are for many of our European neighbours) and would suggest that any government serious about a lasting sports participation legacy would make this a key component of any integrated strategy for the development of sport in the UK – a strategy that no government has yet seen fit to produce.

Indeed, it is the lack of investment in good strategy which most undermines grass-roots sport in this country. In June last year a Sky Sports News special report on legacy highlighted the problem of local authorities being unable to fund sports facilities when using Finsbury Park athletics track as a back drop.

One of the programme’s expert panel, former NBA star John Amaechi made the point; “…what’s going to happen here at the Olympics could be worse even than just people not participating afterwards, it could be that you excite young people to play, they go out into their communities to look for where to play and they come here and they realise it’s grassed over, it is no longer a facility where they can get the right kind of coaching and the right kind of development. That would be a true tragedy.”

The local facility might be closed, mum and dad can’t afford to get them to the nearest one still open and if they can, the volunteers can’t afford to offer the level of support they once did and there is no proper strategy aimed at addressing these issues or the overall development of sport properly.

Some legacy.

(Blog first published at www.sportsthinktank.com on 2nd April 2012)

© Jim Cowan, Cowan Global Limited, April 2012

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USING (GOOD) STRATEGY TO ACCESS MINORITY GROUPS – WAS BRADFORD WEST THE PERFECT STORM?

At first glance, the recent by-election in Bradford West and its shock result owed little to corporate understanding of Equality and of the difference a good strategy can make to increasing market share within those groups defined by the Equality Act as having ‘protected characteristics’.

However, take a closer look and the lesson becomes clear; if you are not employing good strategy in targeting minority groups, your competitors soon will and, regardless of the quality of product on offer, may gain competitive advantage as a result.

This blog has recently covered politicians’ poor understanding of strategy. That is not to say they have no strategy, just that when they do it is generally of poor quality. I have also recently written of Equality and the need to do more than simply be legally compliant, to have a policy and to believe your company accessible to all.

Both the politicians and the apparently accessible company share a trait, a dangerous trait; that of complacency. And in Bradford West the mainstream political parties, Labour (who were expecting an easy win) in particular, were clearly complacent. They believed their strategy guaranteed victory, they assumed accessibility, they assumed their strategy took their message to all sections of the community in a way that would secure votes and they assumed an understanding of the diverse sections within the broader community.

That is a lot of assuming and a lot of complacency. But that was okay because they had their strategy. But, as history has now shown us, one of their competitors, one they underestimated, had a good strategy.

That good strategy did not rely on a superior product; Big Brother cat imitation escapades aside, George Galloway’s voting attendance record during previous sittings as an MP was below 8%. What made it a good strategy was that it did not assume equality of access or of reach; it looked at the demographic of the constituency, it adapted for different groups and it talked in language a majority of that demographic understood.

When we look at the many and varied groups described as having ‘protected characteristics’ by the 2010 Equality Act, how does your company strategy position your company in terms of such reach?

Of course, you think you are accessible (so did the hotel in this recent article). Of course, you believe you are legally compliant (you’d be surprised). Of course, you have your Equality Policy in place (don’t you?). But what is your strategy, how are you actively going about reaching all sections of society?

For any business (or political party) aspiring to success, this is a serious question. Those people with ‘protected characteristics’ as defined by the Equality Act are not small groups; those defined as disabled cover 25% of the population alone, women 51%. Even the apparently small 2.7% Muslim population represents over 1.6 million people when translated to numbers. Each offer, to greater or lesser degrees, increased and often ignored market share.

Good strategy should secure and deliver competitive advantage as so emphatically demonstrated by George Galloway in Bradford.

You (should) have your equality policy in place but do you also have your Equality Strategy? Or are you waiting for your competitors to ‘do a Galloway’ on you?

There is a big difference between having strategy and having good strategy. Which is yours?

Recent Blogs on politicians and strategy:

Strategy Still A Struggle For Government (9^th March 2012)

Cameron’s Confusion On Strategy Provides Learning For Business (29^th March 2012)

Recent Blogs on Equality:

Equality – No Room For Excuses (4^th March 2012)

Equality & Ignorance Driven Insanity In Business (14^th March 2012)

© Jim Cowan, Cowan Global Limited, April 2012

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SUPPORT CEREBRAL PALSY SPORT AT THE GREAT NORTH SWIM

Cerebral Palsy Sport have places available for The Great North Swim, the UK’s largest outdoor swimming event. It is a one mile swim in beautiful Lake  Windermere, Cumbria on Saturday 23^th & Sunday 24^th June 2012.

The event provides the opportunity to experience the thrill of open-water swimming in a safe environment and knowing you are raising vital funds for children with cerebral palsy at the same time.

CP Sport is a national charity that is dedicated to providing opportunities for those with cerebral palsy to fulfil their potential through sport, and was the starting-point for a number of GB competitors who will be taking part in this year’s Paralympics.

To register your interest for this popular event, please get in touch by calling Marianne on 0115 925 2620 or emailing at mknight@cpsport.org.

To find out more about CP Sport and how you can support them please visit www.cpsport.org.