This week the most powerful global soft drinks conglomerate acquired the second largest chain of coffee shops in the world. A perfect match?
The announcement has been met with near-universal enthusiasm from business and financial commentators.
According to The Guardian, Alison Brittain, the chief executive of Costa Coffee’s owner Whitbread, said the coffee chain had been approached by a number of potential buyers but Coke’s desire to snap up the 4,000-store chain was a “dream deal” for investors.
“The other suitors weren’t wearing the right suit or driving the right car,” explained Brittain of the other approaches it received. “It’s Coke we decided to go up the aisle with, with a very large ring on our finger.”
There is an easy-to-understand logic in the move. There is growing movement against sugary drinks as a contributing factor in the growing problem of obesity (bad pun intended). Coffee, while still suspect for its caffeine, is successful in decaf versions with only a few pedants frothing at the mouth about oxymorons. Overall, Coca Cola is investing in a healthier future.
It avoids the years of denial required of the cigarette manufacturers over links between its product and assorted life-shortening impact on consumers.
Coca Cola Innocent
The logic adds to an earlier case studied in LWD and at the Alliance Business School’s Executive MBA programmes. Coca Cola revealed its longer-term acquisition policy when it snapped up Innocent, the environmentally fragrant smoothies business.
How to screw up a good deal
Superficially, then, it’s a good deal. Onward and upward. Whitbreads are making reassuring noises that they will spend the cash responsibly and not just in helping fat cats get fatter. Shareholders will benefit. Some money will go to plugging a hole in the pension funds. So at least employees will get some benefit (even if they were already entitled to negotiated pension rights.)
Leaders we deserve has examined similar acquisitions in which a larger organisation introduces a strategically promising unit to strengthen or diversify. The process is much loved in Business Schools for providing yet another case for the Mergers and Acquisitions component of its courses. Kraft/ Cadbury; Pfizer/Astra Xenica are two important heavyweight examples.
The received wisdom is to avoid messing with the brand assets of the acquisition. This is easier said than achieved, as some of the anticipated gains call for re-organisations, consolidation of back office staff and computer systems. It helps, if there is a rationale beyond rescuing an ailing brand by liberating its potential. In this, I leave readers to decide whether project Brexit might be an example.
“We would like to invite you to Moscow this May, to address our students on creativity and leadership.”
I accept the offer to swap Manchester for Moscow for a week in the late spring as a great deal. The attraction of the assignment fades, as relationships between the two governments cool after the Skripal poisonings in Salisbury. I discover later that even Roman Abramovich is having similar visa problems, but from the opposite direction.
An announcement on the Russian visa website makes the official position clearer:
“As a result of the irresponsible actions of the UK Government, which lead to an expulsion of 23 diplomats of the Russian Embassy, the consular service for applicants has been seriously affected.This leaves us no option but to temporarily limit the number of all visitors. The Embassy is doing its best to reestablish the ordinary workflow.”
Days before the proposed visit, I am seriously considering a fallback position. I find myself muttering that nothing is decided before everything is decided. My fall-back is to walk away. They need my goods more than I need their visa, I argue with myself. Withdrawal means withdrawal.
As in all good dramas, there is a final twist. After two journeys from Manchester to London, and with one last bound, I am free to travel. The visa page in wonderful Cyrillic characters is pasted into my passport. It now offers a conversation point with border guards on my next visit to the land of Trump.
The journey to Moscow is eventful. A fifty minute transfer at Frankfurt proves as impossible as it always seemed, and I arrive at my hotel at 2am.
Later that morning, I blearily discuss my proposed lectures. More like workshops, really, I explain. We will work together collectively to explore a living case of the creative options open to a leader.
With some trepidation, I choose Brexit and its leadership choices as my main theme for discussion at the workshop. To my pleasure, I find that the students are remarkably well-informed about the topic. Without prompting, they quickly home in on the most intractable problem, that of the Irish border. We examine the possibilities such as a technological fix, and even the impossibilities such as a virtual border and abolishing the border completely . I feel I am more engaged in authentic discussion than after all the ersatz debates I have suffered for over a year on Newsnight (bad), Question Time (worse), Peston, (frenzied) and Daily Politics (unspeakable).
I learn a lot about the way a country can take control of its borders. During my visit, I surrender my passport around a dozen times at various checkpoints. The ritual is almost identical. Each page is carefully scrutinised. I am also carefully scrutinised.
Back home, I am not surprised to see that the Government is still persisting in its public assertions of the vital importance of a granite-hard Brexit. I witness the unedifying sight of Jacob Rees-Mogg reading ‘evidence’ from his smartphone (surely a blow against his carefully-crafted victorian undertaker image). He is facing reasoned arguments from a distinguished Cambridge lawyer. “Experts” he sniffs, “I had to listen to nonsense from an expert just last week”.
The Mail continues its hysterical headlines, adding to its list of traitors. This now includes high court judges, unelected peers trousering their daily expenses for blocking the will of the people, communist agitators led by the evil Corbin and the Svengali figure of McDonnell. All are plotting for the downfall of capitalism. I retain a hope that I might also be elevated to that band of brothers and sisters. Maybe by drawing the Mail’s attention to my role as, at best a useful idiot, and at worse a sleeper preparing for my defection to Moscow. Jeremy Corbin consciously or otherwise clings to the Blairite idea that a creative fudge may be possible.
The slightest of contacts over a week in Moscow suggests to me that the young people in the capital there have much in common with those in London and Manchester. There is an openness to change, and a willingness to see beyond platitudes expressed as universal truths.
I live in hope.
After my recent visit to The State University of Moscow I return to find Brexit still mired in a morass of political incompetence.
Theresa Villiers as Northern Ireland Secretary in the run up to the referendum insisted nothing would change after a Brexit. Nearly two years later, The Government persists in its public assertions of unity over the vital importance of a granite-hard Brexit.
On the Daily Politics programme, I witness the unedifying sight Jacob Rees-Mogg reading ‘evidence’ from his smartphone (surely a blow against his carefully crafted victorian undertaker image) against reasoned arguments from a distinguished Cambridge lawyer. “Experts” he sniffed “I had to listen to nonsense from an expert just last week”.
The Daily Mail continues its hysterical headlines, adding to its list of traitors, which now includes High Court judges, unelected peers trousering their daily expenses for blocking the will of the people, communist agitators led by the evil Corbyn and the Svengali figures of McDonnell.
I retain a hope that I might be elevated to that band of brothers and sisters, maybe by drawing their attention to my role as, at best a useful idiot, and at worse a sleeper preparing for my defection to Moscow.
For what it is worth, I have no valuable insights into ‘the evil empire’ (copyright, America’s last celebrity president Ronald Reagan. Nor have I returned with a message “I have seen the future and it works.” Unless the future I have glimpsed is one in which it becomes widely realised that Brexit as it is being defined is ta fantasy, a Unicorn, an uncreative idea unconnected with any assessment of its feasibility, or if achieved its consequences.
In this Trumpian era, it is important to understand deal-making. I pass on a hint to deal-makers. Don’t lose the deal you almost won in the morning, by something you do over lunch.
I write, not as a great deal-maker, but as a student of those who claim to be. My case-example goes back some years to a time when executives would swap leadership stories in workshops encouraging the sharing of their experiences.
In one of the workshops, I came across the account of an international deal that had been moving to a satisfactory conclusion. The tale-teller came from a UK international organization. The deal was in a country with a very different culture. Negotiations were made with simultaneous translations on each side.
The technical details of the deal were surprisingly easy to wrap-up. Most had been agreed through professional teams working in advance of the meeting of the corporate leaders. Having reached the point at which a decision to go ahead seemed certain, the final morning meeting broke up for lunch. A celebratory mood prevailed.
The senior British figures were driven to a top dining place in the country for lunch. “They spoke in a few words of English,” the British manager told us “We had been briefed that it was vital to keep up with them in the drinks and the toasts. Unfortunately, the booze got to us more than it did to them. Worse, their broken English was a sham. At least one understood every word we said about them, our real thoughts about them, not the censored versions they had been hearing before. You could say we won the contract in the morning, and lost it over lunch.”
Please take from my story what you will. As we are learning from events in America and around the world, this is a time when we all have to learn the art of the deal.
The case may also apply to those political figures setting out on Brexit negotiations.
Gina Miller and Theresa May are contenders for Leaders We Deserve award of the month. Each has supporters and vehement distractors
Two political figures have emerged in the UK as leaders of the month. The stories of Gina Miller and Theresa May intersect, and also relate to Donald Trump’s first tumultuous week as President of the United States (POTUS). As I write, [27 January 2017], Theresa May is embarking on her first visit to meet Mr Trump.
Gina Miller’s campaign
Gina Miller launched a campaign which clarified an important constitutional issue at our Supreme Court of Justice. The success of her action forced the Government led by Theresa May to back off from efforts to bypass parliamentary scrutiny of their plan for exiting the EU.
A torrent of abuse
Gina Miller’s intervention in the courts threatened a delay in the March deadline for triggering the start of Brexit. This week saw the High Court ruling in her favour. Cue to frantic efforts of damage limitation to the government’s plans to trigger the Brexit button, aka Article 50 of the Lisbon Treaty .
Her campaign has brought with it a torrent of abuse. Coincidentally, it took place as women around the world were matching in protest at their treatment, and at the appointment of Donald Trump, seen as epitomising bullying treatment against women. And the week when Theresa May was urged to raise such matters with Trump at their up-coming meeting. [See? I said these stories were inter-related]
Miller’s back story is a fascinating one, yet typical of many high-achievers who overcome early life set-backs which strengthen their resolve.
Her sense of injustice stems from childhood experiences of being bullied and left to fend for herself after her parents ran out of money for boarding school. Born into an influential family in Guyana, at the age of 10 she was sent to boarding school in Britain.
She recalls how her mother had given her a bottle of her favourite perfume Nina Ricci’s L’Air du Temps to take with her so she wouldn’t feel homesick, but the first weekend in school, girls emptied it out and filled it with water.
At 14, her parents’ financial circumstances had changed and she was forced to become a day pupil, living alone with her 16-year-old brother in a flat in Eastbourne, supplementing her allowance with a stint as a chambermaid. [The Guardian 25 January 2017The Guardian 25 January 2017]
Theresa backs down skillfully
May had repeatedly insisted that to make details public would reveal too much to European political leaders in negotiations about the UK’s ‘bottom line’. The wisdom or naivety of her point is open for discussion. It is unlikely to be an effective approach for nuclear negotiations where the ‘finger on the button’ does not want to conceal the intentions of the owner of the potentially Armageddon-triggering digit.
The week, Prime Minister May broke her self-imposed restraint with a prepared statement helped clarify her previously concealed exit (Brexit) strategy. Then at Prime Ministers Question time, she announced the miraculous birth of a white paper, fully formed, and to be presented to the House. [Wednesday 25 January, 2017]
Out means out. Out of the Economic Union. Out of the shared tariff zone arrangements. Out, out damn plots robbing us of controls of our borders.
Deal or no deal
So what’s up for negotiation? Anything which deprives the UK of getting ‘the best deal possible deal’ Err, not quite so clear. The statement did indicate a ‘deal or no deal’ possibility involving the UK from ‘walking away’ from the negotiating table (note please, it’s another metaphor, although a not-unknown gesture of defeated participants in high and low political practices). The no-deal option which secures ‘the best deal for Britain’ has been dubbed by opponents of the Government as heading the country for a bargain-basement low-wage tax-haven society.
A footnote to history?
The years 2016-18 may turn out to be of particular interest to students of leadership. The sweep of events touch on humanitarian crises, environmental decay, to political shocks to the system. Donald Trump is likely to grab headlines as the most unexpected political story of the decade and beyond. from his change of job title as an entertainment host to the most powerful leader in the world.
Both May and Trump are untried in the fog of international negotiations. Each utter words or reassurance to their respective supporters. This week they share headlines with Gina Miller. Theresa May will have more chances to demonstrate her leadership qualities. Perhaps Gina Miller will as well. In any event, she has been guaranteed a footnote in contemporary political history this week.
She is my nominated leader of the month.
To be continued