While in the USA, they seem to have overcome and repealed the notorious “Don’t ask don’t tell” policy, here in Spain we are discussing the still-to-be-passed Law on Rights and Responsibilities of the Members of the Army in a context of severe budget cuts for Defence expense in 2011, with a total of around 6,900 million Euros cut and 16.4% less budget for investments, especially the one aimed at modernising the army.

The Spanish Defence Industry is living convulsed times, just like the rest of the sectors, and this is making it turn their eyes to exports as the only way to survive and concentration as a way of continuity. The old Compensation Agreement which was signed between Spain and the USA at the purchasing of 72 F18 fighter jets in 1984 ended in 1996 and the subsequent International Cooperation Agreements for the purchasing of Defence goods helped Spanish Companies get a level of development that has turned Spain into a main actor at international defence markets. Read More »

Savings Banks are in the eye of the storm; I personally think they had their role in the past but now they have to change with the times. Currently, there are 12 mergers going on in which we have 38 out of the 45 Spanish Savings Banks, not including one of them which has been placed in the Spanish Fund for Orderly Bank Restructuring (FROB). I do not intend to debate whether they are / were unfair competition in the finance sector or they have been / are the finance branch of political or power groups which did not pay all their dues and used money under the table. What is clear is that this model is already over and a silent tsunami is closing in. This is going to affect, so far and according to certain researches, some 15,000 employees; no more and no less. With the extra time up until 31st December 2010 for Savings Banks to be able to enhance their equity through the FROB, they were given an extra boost which is about to expire and which inevitably leads to some restructuring, unavoidable in this sector, where Protection Institutional Systems (SIP) are playing an important role in the way towards Savings Banks capitalization and its turning into banks. Read More »

Every week is different and every week provides us with new ideas and new situations which enrich us: it is up to you whether to make the most of these situations or not, but you have to be aware to catch them. The day-to-day activity of this week had different issues in store waiting for me. On its own, all of these issues could become subjects for us to talk about, especially when it comes to situations that affect management at any company, but I have decided just to highlight some details taken from all of them in chronological order.

DAY 1: TROUBLED WATERS

That is the thing about having dinner at restaurants which are fashionable amongst executives and businessmen; even if you do not want to, you take part in amazingly interesting conversations. This is what happened to me the other day at El Paraguas Restaurant in Madrid. At the table next to me, there was a group of businessmen who, I could easily overhear because their voices were pretty loud while discussing about the current crisis ups and downs and its effects on their businesses. They were owners and executives of manufacturing companies and, not on purpose, of course, they catch my attention when they talked about the ever-trendy subject: the Distribution CHANNEL; always an element to ponder and a subject which raises the craziest ideas at Business Schools since, depending on your teacher and his approach, it may not sound too familiar to most of us, and our comments would always be funny and brilliant. The conversation I overheard was basically about “if you want to survive, you have to share your profit margin amongst the whole marketing line. It is not enough for the distributor to make a certain margin or for the dealer or the fitter to deliver it, but the margin in the whole production chain must be shared out and must be transparently done amongst the whole of the people taking part in it. If we do otherwise, what we have built over a period of many years would be brought down in a couple of years like this one”. Taking this into account, and I would like to apologize in advance just in case any of my companions at the table is reading this, I could no less than asking my table neighbours to take part in the conversation. Obviously, these people already knew that the use of distributors, one of the possible strategies of the marketing process, reduced operational costs, and it gave access to big economies as well as economy of agglomeration and you placed your products next to the buyers, but they did not know how to answer the question: where do we have the margin left and why? The answer lies in cooperation, not in the competitors, in the value chain, from head to toe and the other way round; all of them are partners. These times are not suitable for useless competitors; so it is better for all the people taking part in the process to feel involved so the channel does not break and we can divide the profit margin in an equitable way. I am not sure whether these executives applied this idea afterwards, but I believe they all wanted to survive, despite the fact that they would need high doses of transparency and delegation, which the market had not in store for them until now.

DAY 2: DIVERSIFY JUST IN CASE Read More »

In the last two weeks, I have had several interviews with different entrepreneurs. Their projects range from a pharmaceutical-products-distribution company to a physiotherapists’ private clinic or a cake-manufacturing and home-distribution company among others.

Some of these projects have been “cooked” at Business Schools and others have not, but there is a detail common to all of them: the (obsessive) minimization taken to extremes of the number of workers to be hired. However, this common fact is not new. For instance; in an operation that we were about to close a couple of years ago, a venture capital firm wanted to sell the Back-Office of a consulting company that dealt with applying for subsidies and getting all the necessary documentation ready for the clients who required their services. They wanted to keep the Front-Office. The first part was intensive in terms of hiring professionals and it was also widespread geographically, while the latter was just the passing of grouped information for the clients who monitored the subsidies and public contests services, for which they used all kinds of IT and the Internet as main tools, having a reduced the number of people employed. In other words; it was growing costs against decreasing costs; marginal unit cost nearing zero against marginal fixed costs or cost with staggered reductions, if you were witty in your management; any employees against none. Read More »

When summer holidays are over, different studies and surveys regarding the so-called “post-holiday blues” always come up.  All these studies agree that this syndrome only has mild consequences which can affect around 25% of the workforce and they also agree that its effects disappear within the first week at work. It is just the required adaptation to a more demanding environment, to which we had not been exposed for some time.

What I find interesting from the previous fact is the use of this syndrome in order to disguise a lack of motivation at work. I now recall the book Bonjour Laziness by the French writer Corinne Maier. This book was a best-seller in 2004 in France just at the time when the 35-hour working week was established there, only to be changed in 2008 by Sarkozy. In this “lazy style” school of thought, the French writer said:

“At the end of the day, everything you do is useless, and you could be replaced by any cretin who happens to be there. Then, what you have to do is just work as less as possible, allocate some part of your time to sell and promote yourself, so you are not put at risk of being sacked if there is a re-structuring”. Read More »