If looks can kill … Rudy’s dead

January 30, 2008


Rudy Giuliani’s tactics for becoming President failed in spectacular fashion in Florida. Did he rely too much on his reputation as the strong leader in New York after 9-11? Were Republican voters influenced more by his policies or by other more personal factors?

Several factors are being discussed as contributing to Rudy’s failed bid to win support for his campaign to become the Republican candidate for the Presidency.

It is still hard to write about Mr Giuliani without some reference to his leadership as Mayor of New York, in the immediate aftermath of the twin towers disaster in 2002. This was widely acknowledged as a bonus in his subsequent attempt to become President of the United States in 2008. His reputation as a strong leader had remained with him, an apparent personal asset in the intervening years. But that reputation is now being discussed as having been over-emphasised in the present campaign.

[H]e may have overplayed the 9/11 legacy. One Democrat parodied his speaking style as “Noun, Verb, 9/11”.

The second factor concerns the tactics of the campaign, which had always been seen as at best risky, and at worse foolhardy.

We always knew that Mr Giuliani’s strategy of focusing his time, energy and money in the first big state to vote was one of two things; either a stroke of political genius that would rewrite the rule book about how you run for the presidency, or an act of madness that would see the long-time Republican front-runner fall at the first hurdle. Now we know which it was.

The other factors cited included his personal life style.

While his rivals were making headlines for their early victories, the former New York City mayor faced a flood of negative stories about his personal life and judgment, many tied to third wife Judith Nathan and disgraced longtime ally Bernard Kerik.

Other factors were also mooted. His refusal to bad-mouth other candidates was suggested to have been a mistake. If that can be shown important it it even clearer that we elect the leaders we deserve. His emphasis on a hawkish line on Iraq was also believed to have been an unpopular message. Concerns about the economy strengthened the claims of the Reagan-like charms of Senator McCain.

Then there’s the unmentioned factor …

I have not come across a single published reference to a factor that has struck me from the start of the campaign. Rudy Giuliani comes across as one of the least photogenic of the candidates. Perhaps it is too crude an observation; his appearance has not been helped by his medical condition in recent years.

Maybe I am alone in thinking he appears somewhat off-putting. He reminds me in appearance rather like the cadaverous and seriously scary English politician Norman (the polecat) Tebbit. Margaret Thatcher was said to approve of men with charm. Norman was not high on the charm meter, but she approved of him, because she needed the impact of such a semi-domesticated frightener from time to time.

Nor did his appearance prevent Lord Tebbitt from gaining high political honours, any more than a more recent conservative figure Michael Howard who was also less than an easy figure to provide with a reassuring public image.

Ugly can be reassuring and even provide scope for a public image of a no-nonsense and dependable leader (‘warts and all’ as Oliver Cromwell put it). But ugly and scary?

Should it matter?

Should any of this matter.
Does it matter?

It would be comforting to think that it does not matter as much as policies, integrity, psychological stability and a dozen other factors when we chose a political leader. The absence of comment about Rudy’s appearance may mean it’s a trivial point. Or it may suggest a collective sense of discomfort in observers which sets any discussion out of bounds.


One day after the Florida results, Guiliani retires from the race, and offers his support to John McCain.

Lewis chessmen give Salmond a touch of the Elgins

January 29, 2008


For a politician seeking a popularist move, the symbolism of a stolen national treasure is irresistible. Alex Salmond has leapt into action for the return of the Lewis Chessmen. It is a cause with echoes of the battles over the Elgin Marbles. But unlike Lord Elgin, who became the villain of the piece, he casts himself as the rescuer, the Merlina Mercouri of modern Scottish politics.

According to The Independent,

The Lewis Chessmen, a set of carved pieces made in the 12th century and found hidden on a Scottish beach six centuries later, have become the subject of a cross-border repatriation row. The Chessmen, fashioned out of walrus ivory and whale teeth, were found near Uig on the Isle of Lewis in the early 19th century. They are deemed to be one of the greatest artefacts ever found in Scotland.

Now, the country’s First Minister, Alex Salmond, is calling for the return of 82 pieces which are currently displayed at the British Museum in London. [another 11 pieces remain in Scotland] and are exhibited at the Royal Museum in Edinburgh.

The figures … are believed to have been made by craftsmen in Trondheim, Norway, where similar pieces have been found. Some historians believe they were hidden, or lost, after a mishap during their transportation from Norway to wealthy Norse settlements on the east coast of Ireland.

They were discovered by a shepherd in the years before 1831 in a small stone chamber 15 feet beneath a sand bank. They were originally exhibited in Scotland but were split up soon after and most were later donated to the British Museum.

Despite the Norwegian origin of the chessmen, Mr Salmond insisted they should be returned to Scotland, since they had spent most of their existence there. “I find it utterly unacceptable that the Lewis Chessmen are scattered around Britain in a bizarre parody of the Barnett Formula,” [The Government’s rules for allocating per capita revenues to Scotland] he told a gathering of Gaelic campaigners recently. “I will continue campaigning for a united set in an independent Scotland.”

A source close to Mr Salmond said that the matter would be taken further [early in the 2008]. “We are working on a series of options. We think this is an important matter, because they should be back where they belong and they could be a boost for the Western Isles economy.”

Chessplayers a bit sniffy

Chess players are a bit sniffy about the Lewis set. Imitations are to be found in gift-shops and airports around the world. This time of year there will be many beginners who will have received presents of ersatz Lewis chess sets in a variety of bling-like materials. They will almost all have been bought by well-meaning non chess-players. The matching boards are almost invariably too small, and the pieces, however culturally significant their origins, are not fit for purpose. The squatness of the pieces are too reminiscent of collectors items based on some fantasy computer game.

To make matters worse, the universal standard for chess played at all competitive levels is the beautiful Staunton design, named after the great English chess player Howard Staunton.

Staunton’s biographer Bill Wall summarises the provenance of the design

On September 8, 1849 Staunton endorsed the chess set design by Nathaniel Cook and manufactured by his brother-in-law, John Jacques. He recommended the sets in the Illustrated London News and it became known as the Staunton pattern. Later, each chess box that the chessmen came in was signed by Staunton and Jacques stamped upon each set.

The Staunton design is fit for purpose, in individual appearance and feel, and also in action. Players move the pieces hither and thither around the board, in a elegant ritual in time and space. They contribute to the game so powerfully as to make alternatives appear counterfeit. The most cherished examples are of polished box wood, although sadly, for economic reasons, a plastic version is increasingly gaining in sales if not in popularity. [I know one junior tournament director who spends entire afternoons cleansing such pieces with surgical spirits, to remove some of the zillions of bugs from their polycarbonate surfaces contaminated by enthusiastic, but grubby fingers of the young players.]

Give us back our marbles

The story of the Parthenon marbles tells the tale of the Elgin marbles and the perfidious Lord Elgin. As related from a Greek perspective, the author manages to skewer Elgin, The British and Ottoman Empires all in the same story. It is one of those little ironies for our tale, that the noble Lord’s Scottish ancestry is also revealed:

Elgin was a Scottish Lord who hoped to do well in politics. At the beginning of the 19th century Lord Elgin was appointed ambassador to the Ottoman Empire. The capital of the Ottoman Empire was in Istanbul in what is now called Turkey. At that time relations between Britain and Turkey were very good. Why? Egypt had been part of the Ottoman Empire until Napoleon, the French general, defeated the Turks and occupied Egypt. The British defeated Napoleon and the French left Egypt. As a result the Turks were very grateful to the British …

Lord Elgin wanted to find some ancient Greek statues to decorate his mansion in Scotland. He travelled in Greece, looking for things to send back to Britain. He employed an artist to make drawings of Greek statues and buildings. When he came to the Acropolis he was given permission to remove anything which was lying on the ground. But Elgin decided to take the statues of the Parthenon frieze and send them back to England…

When Elgin took the Parthenon Marbles, Greece was not an independent country. It was part of the Ottoman Empire. The Turks ruled in the lands of the Greeks. So the Greeks were not able to stop Elgin from taking the Marbles. Twenty years later the Greeks started a war of independence and soon Greece became an independent country. Immediately the Greeks demanded the return of the Parthenon Marbles, but their request was refused …In the early 1980s, a famous Greek actress called Melina Mercouri became Minister of Culture in the Greek government. She began the campaign for the return of the Parthenon Marbles. That campaign continues today, although Melina Mercouri died in 1994.
[The article goes on to list arguments in favour of returning the Parthenon Marbles to Greece]
… The Parthenon Marbles were stolen from Greece by Lord Elgin. Elgin did not have permission to cut sculptures from the Parthenon. He only had permission to take pieces that were lying on the ground. It is wrong that half of the Parthenon Marbles are in London and half are in Athens. They should all be in the same place. They were created in Athens, so they should be on display in Athens. The British Museum has not looked after the Marbles as well as they say they have. In the 1930s the Marbles were cleaned. This cleaning damaged the surface of the Marbles.

Give us back our chess pieces

Well, you can see where this is all leading. Mr. Salmond has begun his own political campaign. But unlike Lord Elgin, who became the villain of the piece, he casts himself as the rescuer, the Merlina Merconi of modern Scottish politics. The affair seems unlikely to rumble on as long as the earlier political brouhaha.

A chess player’s plea

As I chess player I have a modest proposal to make. I’m not sure what Mr. Salmond is planning to do next. I would encourage him to approach some wealthy sympathizer for funds to establish a truly international chess tournament on the Isles of Lewis. Maybe build a fine hotel complex, if the bird-life permits. Name it the Isle of Uig Liberation Tournament. Now that might really do something for tourism, as well as for chess.

But please, find some way to play all matches with non-plastic, non-Scottish, Staunton chess sets.

Bill Gates wants creative capitalism: But what is it?

January 25, 2008


Bill Gates has called for capitalism to contribute more effectively to the big social and environmental issues of the emerging century. What is creative capitalism? A working definition might be capitalism which places the resolution of social needs as a primary goal of economic activity, rather than a secondary consequence

The most successful capitalist of the late twentieth century calls for a shift in capitalist philosophy and actions for the twenty first century. The speech at the Davos conference follows his earlier efforts at creating a foundation to channel funds towards the social good. And where Bill Gates leads, others follow.

The parallel with science is worth a moment’s thought. Scientists for many years considered their contribution to the well-being of society was an indirect spin-off from their discoveries. Science and ethics were as much two worlds, as were the two cultures of C P Snow (Science and Humanities).

Over time, many critical issues arose at the interface between science and social responsibility: the applications of nuclear energy, stem-cell research, communications technology, surveillance and personal freedoms. The social responsibilities of science become acknowledged as a vital component in the development of improvements to the quality of life around the globe.

Old and new capitalism

As for science, now for capitalism. The old arguments were that entrepreneurs and businesses created wealth. It was up to society to decide how the wealth was redistributed, and resources allocated to social causes. The blind variation of capitalist growth seemed to have few more direct conduits to social amelioration. [And yet, the most ruthless capitalists of the nineteenth century tended to convert their amassed fortunes into trusts and foundations for the betterment of the less fortunate.]

Gates is proposing a different relationship between capitalism and the creation of the social good.

Gates at Davros

The Davros meetings have become synonymous with the powerful getting together to reflect on the human condition and what to do about it. For some, the meetings conceal a conspiracy of the most dangerous and monstrous kind. For others, it indicates where global change is needed, and what might be done about it.

Gates has the power to shape those changes, and may well bring others into line. If so he is yet another capitalist who has undergone a process of re-evaluation of self and the legacy he wants to create for himself

According to the BBC, Mr Gates said

“We need a creative capitalism where business and non-governmental organisations work together to create a market system that eases the world’s inequities,”

He gave examples of the sort of thing he had in mind, such as the Red campaign, itself launched two years ago in Davos by Bono, now to be partnered by Dell and Microsoft in committing proportions of earnings to sovial anti-poverty causes. He also mentioned the contributions from drug companies that were selling vaccines to Africa for a much lower price than in developed countries.

So what is creative capitalism?

As a working definition, we could start with what is implied in Mr. Gates’ speech. He challenges the old touchstone that capitalism does not have to concern itself directly well-being of people. Maybe we could see this as a challenge to that economic petty but benign deity which operates in mysterious ways, Adam Smith’s invisible hand in the interplay of the market forces.

Uncreative capitalism took for granted its benefits to all, through its mechanisms of social Darwinism, competition, and evolutionary success of the fittest. Creativity was a by-product of economic change – creative destruction Schumpeter called it. Exogenous sources of variation, muttered the neo-classical economists.

In contrast, creative capitalism places the resolution of social needs as a primary goal of economic activity, rather than a secondary consequence of accumulation of resources (‘rents’).

It’s only a working definition. We can argue whether the examples offered by Bill Gates are ‘sticking plasters’ leaving the economic sickness largely unaddressed. But the plaster is being administered with care and professionalism. At least two cheers for Gates at Davros.


Thumbnail Image is of World Bank estimates of poverty levels (2001) from the Aberdeen Business School Public Policy Site.

Fallback strategies make for good governance. Or do they?

January 23, 2008

_42974117_stormtroopers_66pic.jpgThere have been several examples of fallback thinking in our UK leadership stories recently, including cases at The Royal Mail, The Treasury, and most recently at Liverpool Football club. We examine why developing a fallback strategy may be a matter of creative leadership

Every Military leader learns of the benefits of a fallback strategy. Lao Tse wrote of the merits of providing a fallback strategy for a defeated enemy, a golden bridge permitting an enemy to retreat thus avoiding the possible lose-lose outcomes of follow-up actions.

Business School cases are taught with a vocabulary of risk management, which is way of elevating fallback thinking to a management philosophy.

Engineers are familiar with the lugubrious message which passes for Murphy’s law, or Sod’s law (‘what might go wrong will go wrong’; ‘toast always falls with the buttered-side down and hitting the carpet’). Awareness helps them bear in mind what might be also called the worse case scenario.

So fallback thinking is always a good thing?

I am very much in favour of fallback thinking, but would like to explore its consequences a little more deeply.

Let’s agree that leaders benefit from facing up to unpleasant possibilities. It was the failure to face such realities that prompted Bob Woodward to label his work on the Bush Administration as an examination of a State of Denial. That example indicates the well-known human tendency to escapism, which can have serious consequences for leaders of all kinds. The Tavistock School and Clinic developed a whole social scientific model on such behaviours, which are related to the more popular concept Groupthink.

Then what’s the problem?

Real-life examples show that theory often fails to anticipate all the problems facing leaders in action. The most recent example is the case at Liverpool Football club and its American Owners.

Tony Barrett of the Liverpool Echo [Jan 14th 2008] broke the story.

Tom Hicks and George Gillett held a secret meeting with Jurgen Klinsmann to line him up as the next manager of Liverpool FC. Hicks today insisted the talks would not have resulted in the immediate dismissal of Rafael Benitez and that Klinsmann was only “an insurance policy.”
He told the [LIVERPOOL] ECHO: “We attempted to negotiate an option, as an insurance policy, to have him become manager if Rafa left for Real Madrid or other clubs that were rumoured in the UK press … Or in case our communication spiralled out of control for some reason.”

Sensible? I leave readers to decide. There was general consensus elsewhere by football commentators that the action had made things worse, and had undermined the position of the incumbent manager.

Then there’s the case of The Post Office, facing enormous challenges of change, and headed by a dynamic Chairman. Last year he was linked with stories of transferring his attentions to the possibility of becoming the new Chairman at Sainsburys. The government (at the time of Tony Blair’s premiership) drew up a fallback plan.

Robert Peston reported from unnamed sources that

The Government has appointed head hunters to find a new chairman. The search for a deputy chairman is regarded by some in government as insurance in case Mr Leighton decides to quit early. He is frustrated by ministers’ reluctance to transfer 20% of the business to Royal Mail staff.
“Allan Leighton is always threatening to resign and one day it might just happen” said a government source.

Insurance again.

I noted at the time

Suppose this is a game of three dimensional chess? Allen Leighton is leading the Government forces in a battle to implement its wishes. Those nasty forces resisting his attacks are led by the Union leaders. Leighton wants more help from the Government. He becomes powerful enough to be dangerous. What if he threatens to resign at the most telling moment to devote more time to other business interests? He has been associated with stories of his interest in acquiring Sainsbury’s for several years (and it seems the stories are coming to the boil again this month) … This is why it’s three dimensional chess.

Then there’s another recent story, concerning The Treasury’s fall back strategy of nationalizing Northern Rock. I argued that it was another example of a game of political chess.

… Mr Darling does not want to nationalize Northern Rock. Neither do the shareholders. But if The Chancellor can convince enough shareholders that he might be forced into a nationalization by their further opposition, it may help avoid the outcome none of the main players really wants.

Creative leadership issues

These recent cases suggest that leadership stories can be read and deconstructed in terms of the actions of those at the heart of the story to achieve goals, which might include actions to block the goals of others. In the vocabulary of creative leadership
the complex strategic ‘map’ can be explored as a series of desired actions or how to do’ statements. This will vary among stakeholders.

If we are examining the possible actions for the principals or owners, (be it Liverpool Football club or The Post Office) possible goals (How to ..) might be

‘How to protect my interests, if the leader quits’
Or ‘How to develop ‘insurance’ if the leader’ quits
Or ‘How to keep the leader in place’
Or ‘How to increase chances of a smooth leadership transition’
Or ‘How to have a back-up position’
Or ‘How to show [ ] that we are not bluffing.

The creative leader (according to this kind of approach) ‘searches widely and chooses wisely’. Searching widely avoids the trap of being locked into preconceptions. Choosing wisely commits to less obvious ideas and actions discovered in the search process.

Kevin Keegan and the limits of charisma

January 19, 2008

kevin-keegan-green-cross.jpgKevin Keegan’s triumphal return to Newcastle United Football Club demonstrates the power of charisma. But will it also indicate its limitations?

On Wednesday January, 2007, a major sports story broke in England. Unlike some stories, this one began big, but the after- shocks of the first story were even bigger.

The football story of January had been the sacking of Sam Allardyce from his post as chief coach at Newcastle United. This was sporting news, but hardly surprising. The only element of certainty about Sam, in face of a cluster of difficulties on and off the field, was the timing of his sacking.
The end was mercifully swift, but that too was unexpected, as Sam was on his way to a press conference.

The consensus view that had developed outside the club was that the culture had held unreasonable expectations, and that Sam’s days were numbered, even if his team were to improve on a modest start to the season.

An unhelpful culture, and a new ownership regime were local factors assumed to add to problems including a stack of injuries to key players, such as striker Michael Owen.

Our people need a saviour

Part of the culture seems to be a deep emotional need for a saviour. The conditions for acceptance of a charismatic leader seem to be particularly favourable. Opinion polls (backed up by betting patterns) indicated how strong was the yearning for such a person.

At first, the front-runner was not Kevin Keegan, but the more recent figure of Alan Shearer. Even as he was reaching the end of his playing career, Alan Shearer was being mentioned as a future manager of the club.

This is the sentiment generated by a great on-the-pitch leader. At Manchester United, I can (just about) remember the terrace talk around ‘Captain Marvel’, Bryan Robson as future leader off the field. Robson made the transition to manager with some struggle. There seemed to be rather less talk a few years later around Mark Hughes, or even Roy Keene, each of iconic status at the club, and who were to make more promising starts to subsequent management careers.

Shearer the once and future saviour at Newcastle

During his time as England captain, Shearer was widely regarded as a thoroughly uncharismatic character when he appeared before the media. He often appeared truculent and sulky. Hardly the characteristics associated with the charismatic leader. On the field he exercised the selfishness of the individual goal scorer in the van Nistelrooy or Gary Lineker mould,

This aspect of Shearer’s public persona is rarely mentioned now by fans or commentators. Nor did it seem to matter to the clamouring fans last week that Shearer has no experience in football management. The symbolic power of the Shearer myth was sweeping all before it.

Except for one little point

Shearer quickly indicated he had not been approached by the club, and felt he was too inexperienced for the vacancy. Shearer was replaced as front-runner, but Keegan did not become the front-runner. In quick succession other names came and went. There was Harry Rednapp who seemed to me to tick as few boxes as Allardyce for the bare-breasted brigade of Newcastle fans.

After Harry’s Andy Warhol moment there was Jurgen Klinsmann .
The German FA had turned to Klinsmann in desperation and the national team did better than the fearful host nation expected. Klinsmann also is more of an identifit figure of a charismatic personality on the field, and closer to the articulate end of the spectrum off the field. Klinsman’s name also reappeared briefly in media stories after Shearer appeared to be a non-runner.

Maybe its Keegan and Shearer

After denials by Klinsmann, another rumour, that a deal had been struck with the dream-team of Kevin Keegan and Alan Shearer who would share managerial responsibilities.

The Messiah returns

Then the bombshell. The last rumour was partly correct. Kevin Keegan had agreed to become the new manager at Newcastle. He is to return from self-imposed exile (as do many charismatic leaders from religious and political mythology).

Note to any readers from cultures distant from that of England: Football is often spoken of in religious terms. This is sometimes unconscious, but often tinged with irony. These are deep matters indeed, and you will have to do some ethnographic research, perhaps starting at Shearer’s Bar in Newcastle, to make more sense of it than I have been able to.

What happened next?

Many strange things happened. They are all extensively recorded. Crowds came to bear witness. They did not wave palm leaves, but did have banners saying The Messiah is Coming. Others said Kev the King. I particularly liked more secular Super-K ones, made from family-size Kellogg’s packs. Now there’s a thought. Kelloggs to take over as sponsor of NUFC from Northern Rock?

Thousands of extra fans flocked to the holy of holies, St James Park, for a FA replay against Stoke City, where re-enthused players scored a convincing win, witnessed too by Super-K.

The Press Conference

Keegan’s first press conference was another early indication of the charismatic leader in action.

Keegan had the necessary air of confidence in himself as the special one destined to do a special job. The video clip will make excellent and instructional viewing for leaders and students of leadership.

The charismatic performance

I have watched many performances (for that is what they are) by leaders and would-be leaders over the years. This one was up there with the old classics and newer examples of the inspirational style.

In British sport, there were the unrivalled performances by Jose Mourinho.

In business, there have been various appearances of Richard Branson as super-leader, and the recently mourned John Harvey-Jones.

In national politics, there were the two conference speeches by David Cameron, each considered to be high-voltage and influential in confirming his leadership credentials and style. There was the even more emotionally-charged adieu from Tony Blair recently, and (for me) many years earlier, Neil Kinnock’s finest oratory, when he successfully confronted the growing influence of the militant wing of his party in an electrifying conference speech.

Kevin’s magical moment

Keegan’s performance was up there with these magical moments.

By coincidence, it took place on a day when a new and glamorous national hero had been acclaimed after a near-disaster crash of a Boeing 777 arriving at Heathrow. Captain Peter Burkill had been claimed an iconic figure of Hollywood proportions, although the near- perfect story was slightly blurred as it emerged that the in crucial last minutes, it was first officer John Coward who had responsibility for taking over from the automatic landing system as the engines failed to respond to orders.

Leadership musings before the first match

Whatever happens, the first match played in the time of King Kev was going to be high-voltage, high drama, big box-office.

But whatever happens in that match, the drama is still early into its first act.

Update: After the first league game [Saturday 19th January 2008]

The first game was as emotional at the start as expected. But according to the BBC

Kevin Keegan’s return as Newcastle boss turned into a damp squib with a desperately poor goalless draw against Bolton at St James’ Park.

So we can conclude one thing. The new-leader bounce did not take place. These players did not have hidden reserves that could be called forth, either from fear for their futures,. or from those mysterious motivational forces triggered by encounter with a charismatic leader.

Alistair Darling plays Chess at Northern Rock

January 14, 2008

chess-players-daumier.jpg Alistair Darling has developed a counter-gambit in the chess game for the future of Northern Rock. The threat is to nationalize the company and to bring in Ron Sandler, former head and rescuer of Lloyd’s of London, to run it

The shareholder meeting is scheduled for Tuesday January 15th 2008. Shareholders have signalled their intentions of opposing plans to find a private owner at a price unfavourable to themselves. They intend to seek motions to prevent the board acting against the interests of shareholders.

These moves are understandable in view of the Treasury’s position, which seems to be committed to recouping as much as possible of the billions ‘invested’ in rescuing the back since the crisis days since September 2007.

The Treasury counter-gambit, if successful, is good for tax-payers, and also protects Darling and chums from accusations of incompetence and worse by that sharp-tongued Mr Osborne.

The Chancellor, while preferring the sale into private ownership to go ahead has to demonstrate that the Treasury is perfectly willing to accept the nationalisation option.

So it came about, that on the Saturday preceding the meeting, the news became public that the Treasury had a well-worked out plan for nationalisation. Why?

Demonstrating that you are serious

Darling has to demonstrate a convincing threat to the shareholders, the group he has identified the biggest threat to his own position, at the battle of Northern Rock. Threats are effective only if they are taking seriously, and not taken as evidence of bluster and weakness. We have written of how the most potent threats are like unsung melodies, shaping events but remaining in the background.

So Mr Darling does not want to nationalize Northern Rock. Neither do the shareholders. But if The Chancellor can convince enough shareholders that he might be forced into a nationalization by their further opposition, it may help avoid the outcome none of the main players really wants.

The threat

The threat involves several elements. A signal of intent. Evidence that it is not a shallow move or an idle threat. The signal deliberately leaked is necessary to convey the seriousness. It can be backed up in chess terms (and in military and political terms) if it can be shown that recent moves by Darling have been played to strengthen the impact of the threat if activated.

Once again, the intrepid financial journalist Robert Peston continues his high profile scoops.

So Mr Peston gets his story for the BBC. Mr Darling gets his signal accurately and prominently reported.

According to bankers close to the Rock, the Treasury has a fully developed plan to own and manage the bank, should a commercial solution be impossible.

The BBC has learned that Mr Sandler would become executive chairman of Northern Rock in the event that the troubled bank is fully nationalised.

The former boss of Lloyd’s of London is well known to Prime Minister Gordon Brown, and worked for the Treasury in developing the so-called stakeholder pension and investment products that were intended to help those on lower incomes save for retirement.

Mr Peston, through a leap of imaginative journalism, or perhaps through the way in which he had been briefed, then links the news with the upcoming shareholder meeting:

The coming week will be a crucial one for Northern Rock. On Tuesday, shareholders will attempt to restrict the ability of the company’s board to sell assets without seeking their permission.

Robin Ashby, of the Northern Rock Small Shareholders’ Group, said he would not welcome nationalization …

The shareholders’ action is regarded by the Treasury as potentially hostile to the interests of taxpayers.

Taxpayers are exposed to the Rock to the tune of £55bn through direct loans made by the Bank of England and guarantees to other lenders made by the Treasury.

A decision will also be taken imminently by the Treasury on whether to pursue a proposal by the investment bank Goldman Sachs to convert up to £15bn of the taxpayer loan into bonds, for sale to international investors.

If that proposal to raise new finance for the Rock flops, it is likely to undermine attempts to organize a commercial rescue of the Rock by either a consortium led by Virgin or by the Olivant Group.

[See how Mr Peston was also struck by the chess analogy in his recent blog where he enlarges on nationalization and partial nationalization options and implications.]

The Chess Game reaches a critical middle-game position

The chess game is reaching a critical position, rich in possibilities. To press too hard risks losing the entire game. Darling has shown he is willing to accept a gambit, and now offers a counter-gambit himself, using the Bank of England to capture Northern Rock for the nation. Making such a move may be risky to the Treasury, but it is even more damaging than other possible outcomes, for the shareholders.

[A counter-gambit: your chess opponent makes an offer as a gambit, which is expected to give you short-term gains for which you risk longer-term losses. You reply with your own gambit, which agagin offers your opponent short-term gains and for which there are the risks of longer-term losses. Playing a gambit often complicates a game. Playing a counter-gambit tends to lead to even more complex positions and greater uncertainties]

That is why I like the efforts made to demonstrate the seriousness of the threat to the shareholder forces. The announcement that Mr Sandler has been lined-up is excellent. Easy to check up on, little lost if nothing further happens. That’s what makes it quite a convincing move.


The Chess Players image is of Daumier’s masterpiece. It can be found on an excellent site on Combinatorial Game Theory

Sir John Harvey-Jones: Celebrity Business Leader

January 11, 2008


Sir John Harvey-Jones was one of Britain’s first celebrity business leaders, first as a reforming chairman of ICI, and then as a successful television performer as a trouble-shooter. He combined the romantic flamboyance of a larger-than life charismatic with a hint of his earlier experiences as a Royal Navy officer

Sir John Harvey-Jones (April 16th 1924-January 9th 2008) was both a one-off, and yet a near-perfect illustration of the buccaneering businessman-cum-entrepreneur lauded in the 1980s for his charisma and dynamism. He was without doubt in style, and arguably in substantive results, a remarkable contrast to those who attained leadership at ICI for much of its history, both before and since his watch (1982-1987).

ICI was one of the great old British Institutions. It was the twentieth century heir to the East India Company for ambitious young men (and eventually women) seeking life-time careers carrying considerable professional status. It some ways it retained the culture of its earlier name Imperial Chemical Industries, which predated notions of branding and corporate identity, and even notions of modern management and marketing.

It was somehow typical that the company accepted the need to move away from the old label of Empire and Imperialism, while retaining the acronym for it which it had already become well-known industrially.

When the business theorist Andrew Pettigrew studied the company in The Awakening Giant, he portrayed a complex technocracy espousing modernist views, and yet preparing for momumental changes.

ICI was at the time perceived as the IBM of British manufacturing. Even its technical professionals appeared in public dressed in sober business suits. Its culture was explained to me by a senior execuive in the following anecdote.

A new recruit, a chemist (what else?), was about to set off for a meeting with other technical executives at a production plant of a customer. He had turned up in what would later be called casual clothes, and was sent home to get into what he then probably regarded as his best suit. ICI people (like IBMers) in the 1980s did not appear in public in sports jackets. Nor did they wear flamboyant ties.

Jones the tie

Especially ICI chairmen. Except for Harvey-Jones who tended to appear rather like an extra for M in the Bond films of the day. His appearance was even more in contrast with the leaders of the company.

ICI chairmen were internally promoted, and typically safe pairs of hands. Harvey-Jones although an insider, was neither an accountant nor a technical professional. His experiences of leadership derived from his early days as naval officer after his training at The Royal Naval College at Dartmouth, and had served in the Navy from 1937 to 1956. He was fond of recounting his leadership experiences in active service. As a sub-mariner

‘the aim was painfully apparent: sink [the enemy] or be sunk’,

he wrote in the introduction to his autobiographical book Making it Happen.

Making it Happen

The book throws much light on the professional influences that helped shape his leadership approach. Its title came from his ‘flimsy’, the hand-written and supposedly confidential report made of an officer leaving command or a ship. His commanding officer had once rated him ‘an able officer who knows how to make things happen, albeit tactfully’. He remained aware of the description, and tried to live up to it throughout his illustrious business career, although his public persona hardly signalled a man noted for tactfulness.

The book made compelling reading for students of leadership. It still leaves me to suspect that he was able to apply a vast store of experience (which was later to be called tacit knowledge) but was unable to integrate it into a coherent leadership approach. He was indeed an intuitive trouble-shooter, the apt title for his subsequent TV series.

The BBC summed up his early achievements

After leaving the Royal Navy as a lieutenant-commander in 1956 … he joined ICI on Teesside as a junior manager. By 1973 he was on the main board, eventually becoming chairman in 1982 when the company was struggling to emerge from a recession. …When he stepped down, profits had trebled, even though he later wrote that he had not made much difference and that he wished he had left the company earlier to start his own business … In fact, Sir John had stripped away many of the company’s peripheral businesses and concentrated on its core strengths. He also reformed its lumbering bureaucracy.

A Personal Recollection

I knew Sir John only slightly, but learned much from others who knew him better, within and beyond ICI. He had a suspicion of Business Schools, but had acknowledged the advice received from Professor Tom Lupton, who was to become head of Manchester Business School.

In a Vital Topics lecture at that institute in the 1980s, Sir John defended ICI’s refusal to seek out MBAs for special treatment. We hire people for what they can do, not for paper qualifications, he had insisted. I had the impression he rather liked taking the unpopular view for that particular audience. It may have been one of his characteristics. There certainly seemed to be genuine enthusiasm, warmth, and enjoyment at saying it as he saw it, in his televised encounters with business people.

Leaders make a difference, and in the long run …

John Harvey-Jones made an impact on people he met. His story is in some ways an unfashionable one of the heroic individualist, contrasting with views of the corrosive effects of high office and power, or the modest dedication of the fifth level leader.

He probably accelerated necessary changes within a great international company. Those changes demonstrate how a leader can make a difference. The ultimate fate of ICI demonstrates the longer term economic factors which were to have even more significant impact.

The heavy chemicals on which ICI built its empire declined in economic importance. The more dynamic specialties chemicals became the profitable part of the company, and ultimately were spun off into what became as part of a multi-national pharmaceuticals company, Astra Zeneca.