I Don’t Have To Like The EU To Still Vote Remain

The process of the EU Referendum has stirred deep division and has been very frustrating for supporters on both sides of the argument. While we may have the facts about life in the EU today, when it comes to what the future holds if we #Leave or #Remain there are very few real facts. It becomes a matter of opinion. It’s not surprising how strongly the two sides disagree, and how each side calls “lies!” at the other’s claims. It makes convincing anyone to change their mind through debate of the issues practically impossible. And if you’re still undecided I feel your pain!

That said, the one thing we all have in common is that we’re all going to gamble this Thursday.

Make no mistake whether you are a #VoteLeave or a #StrongerIn, you’re playing  a game of chance. Accepting that we are gambling with our future, do we understand the rules of this game and not just the probability of winning but what we stand to win or lose?

To illustrate this point think about these two bets which have the same probability of winning:

Option 1) A game where the bet requires a £10 stake and pays out £100 if you win.

You write a number down between one and five. If I guess your number you lose your £10, if I guess any other of the four remaining numbers you win the £100. This gives you 4 out of 5 or an 80% chance of winning.

Sound like a good deal?

Option 2) I call you at work to tell you I’ve walked past your house and seen through a window that you’ve left the iron on.

It will probably be OK, but there’s a 20% chance it will start a fire. You still have an 80% chance of ‘winning’ with no fire.

Still sound like a good deal? Do you stay at work or do you say ‘no deal’ and race home?

These examples are meant to show that gambling isn’t just about your chance of winning. It’s about weighing up the upside of being right against the downside of being wrong. The best time to gamble is when you have high or unlimited upside but a strictly limited downside. Option 1’s downside is limited to £10 so it becomes a bet worth taking. Conversely the worst time to gamble is when you have a limited upside and an unlimited downside. With Option 2 the fire represents just that, it might be small and cause only smoke damage, you might lose a whole room or you could in fact lose everything; your whole house and all your possessions. That’s not a bet worth taking.

So what sort of gamble is the EU Referendum?

It’s much closer to Option 2 than it is to Option 1. The downside will not be £10 if we get it wrong.

First let me be clear. I don’t believe the EU is perfect. I understand people’s worries about the lack of direct accountability, lack of control and suspicions of poor governance. While I don’t personally agree, I understand that people are worried about growing immigration too. I also believe the Union does create vulnerabilities for the UK, we are tied to Europe and her problems, economically, politically, and socially.

However, even if we had an 80% chance of being right to leave, I think the benefit to the UK will be “limited”.

The #Leave upside

It’s hard to get any tangible view of what the upside could be, even when I trawl through the Vote Leave website the focus is on what it doesn’t like about our current system and gives no tangible information on how our day to day lives would be improved post leaving. The same thing can largely be said about the media. Very few numbers have been offered with a few exceptions like this BBC business news piece which suggests we could see a 4% growth in the economy. There are ‘soft’ hopes too like increasing investment in the NHS, or education, or less immigration meaning more jobs for us Brits, and a more affordable housing market. A new hospital or school is a great thing, so is a young couple being able to afford their first home and being able to work when they want to. But these don’t benefit all of us equally; hence I call these limited benefits: a limited upside.

The #Leave downside

When we consider the potential downside, there’s no shortage of numbers. JP Morgan says we’re all going to be £45,000 worse off. The Treasury says the economy will shrink by 6.2% over 15 years.  The CBI says the economy will shrink by 5% in less than half that time with 950,000 jobs lost. The TUC says we’ll all be £38 a week worse off  or £2,000 a year less.

Wrapped up in these numbers is of course concerns about many things: falling investment, rising unemployment, increased pressure on our benefits system, benefit cuts, tax rises, falling value of the pound, more expensive imports, interest rate rises, businesses relocating, Scotland pushing for a second independence referendum, more costly trade deals, the EU looking to make a horrible example of us to deter any more member referendums, less global influence, etc. And crucially, many of these potential risks will affect us all, the whole country not just small groups of people; in this sense I consider them unlimited risks: an unlimited downside.

I’m not trying to scaremonger. I’m not saying all these downsides would happen. I have no greater idea if they’d happen than I have about whether my iron will catch fire. The lack of knowing the future doesn’t prevent a reasoned comparison of possible benefit and risk. But in the absence of knowing and in the spirit of gambling it’s not enough to have an 80% chance of it being right. I believe that even if there were only a 20% chance of some of these downsides happening, the pain to us all is too great, and the most vulnerable of us, the poorest, will feel it the hardest.

If you were betting your house on this would it be a good deal? You may actually be doing that.

It’s only right that we look at the other option too, what if we stay? In this case it feels to me we have limited upside and limited downside. We effectively have modest changes (good and bad) in continuing with the status quo. I understand some believe it’s not a status quo and fear ever greater union, Turkey joining, an EU army, etc. But here we have facts. The UK does have the right to veto on all these issues. And even if we agreed to them all, the downsides are limited.

So I’ll be voting remain. Not because I love the EU. Not because I don’t want the United Kingdom to be strong. But simply because the stakes are so high. I believe our downside is unlimited and if we vote to leave this Thursday there is no going back, even if we later come to realise the worst has come to pass and our house is on fire.

However, if we vote remain we can continue to demand improvements in the EU. In fact if this referendum has done one thing, its awoken us all to the EU, stimulated debate, educated us all. Our voices can make this a priority for our government. And one day if the balance changes and we have a scenario with greater upside and a limited downside we can have this debate again and you’d find me taking the bet!

Is Your Business Safe?

These days it seems we learn of more customer facing companies in difficulty every day; and I see lots of discussion about can they or will they be saved?

In the UK the recent list of companies falling into administration includes a lot of household name retailers like Comet, Clintons, JJB Sports, Peacocks, Game, HMV and Blockbuster. Retail week in April 2013 detailed how the biggest retail administrations leave creditors with £1bn of unsecured debt.

I understand when people question if a business can be saved when it goes into administration with all the uncertainty for their employees and customers and the question about a process of sale or wind-down that has a finite time to run. I am a little more confused when that question is asked of ongoing concerns or post administration as Philip Beeching has done recently when he posed can Hilco save HMV?

I’m not sure I agree with the concept of ‘saving a business’ rather just simply ‘running it’. If the answer to the question “Can we save a business?” is ever “yes”, then what have we saved it from and for how long is it safe? I don’t think any business is safe in the sense that it is ever free from harm or risk, financial ruin, aggressive competition or unhappy customers. In some sense every business needs to save itself every day.

Take Apple. After their first 20 years they were in serious financial difficulty, their product line in 1997 was a disaster, their customers leaving them, they even got a hand out from Microsoft. Few thought they could hang on; and even with Steve Jobs return in that same year (also the year of the first MP3 player on the market) the iPod was still 4 years away and iTunes 6 long years away. I’m sure it was a hard road back to success, as their share price over those years suggests. The first six years after Steve returned saw share price never get above $8 (split adjusted), today it is $390. And Apple didn’t invent the MP3 format or the digital music player but well done to them in taking other’s ideas and making a lot of money out of doing it better.

I think most people consider Apple safe. Safe to work for and safe to buy products from. However, do Apple have a patent on innovation? I don’t think so. Is it likely one day someone will think of something better than they can and do it faster and cheaper? History tells us that’s almost always the case. Could they be in trouble again in 20 years? Are they really safe? Why would we think so? Remember Motorola? They had 20% of the global mobile phone market and were growing rapidly when in a single quarter in 1997 they announced losses of $1.2bn, then came over 7000 redundancies and most of their talented workforce running off like rats from a sinking ship. Their party was over, eventually they were swallowed by Google and their global share sits around 2% today.

The point I am trying to make is that rather than ask can our business be saved, perhaps it’s better to ask are we saving our business today?

Success is driven by always looking to do it better for your customers. Smarter, cheaper, quicker. If you don’t think like that tomorrow, someone else definitely will. No business can afford to forget it. We see examples of those that do forget, and those that can come back from the brink by refocussing on it. Safety is an illusion, one that successful companies and successful people will never feel they can rely on.

Will We Be A Speedboat Or An Oil Tanker?

I’ve heard more than one new leader tell their team why their business needs to be a speedboat and not an oil tanker. Agile, fast, reactive and responsive rather than heavy, awkward, hard to steer, slow to change and slow to start. It’s not a bad metaphor if all you want is to highlight the merits of agility over inertia.

The speedboat however isn’t for me. There are many qualities of a speedboat I don’t like and I can’t put aside. They don’t have room for a lot of people, unless you’re very very rich. The person driving the speedboat rarely needs any expertise or qualifications, In fact as speedboats can have almost no indicators and simple controls most people think they can grab the wheel without any practice at all, which scares me silly. They’re not very suited for long journeys and they’re far from comfortable in rough seas or bad weather. In fact the worse the weather the more exposed and vulnerable you’ll be. And they can whiz round all day long making a lot of noise and waves without actually getting you anywhere.

But I don’t want to work on the Exxon Valdez either.

I want to work on a battleship. The running and maintenance of a battleship has several attributes that a business could mirror to be more effective.

  1. Expertise is essential. Not just the captain, but every man and woman aboard needs to be well trained to perform their role. The bridge of this boat has many systems and indicators, which all need to be interpreted accurately. There is no place for guesswork here.
  2. Don’t panic. Decisions need be informed and best taken without emotion or panic. Panicking does not only slow down reaction time and effectiveness, it’s also contagious and can spread quickly. People tend not to panic when they are skilled at what they do.
  3. Command and control. Every crew member is expected to know their role and perform it to the best of their abilities. Because the hierarchy is clear and every crew member understands thier position in the organisation, orders are relayed to the right destination and actioned.  Because crew members are clear on what is expected of them they take pride in the execution of their duties.
  4. The ability to avoid icebergs. Information needs to be relayed down through the organisation quickly, accurately, to the right destination and people. If that fails you’re sunk. Equally, information needs to be relayed upwards with the same accuracy and efficiency. The bridge’s ability to make correct tactical decisions relies entirely on factual and relevant information received in good time. Everyone understands the danger from the distorting of messages and instructions, or ‘Chinese whispers’.
  5. It’s about teamwork. There may be one captain but the boat can not function without many men and women on the bridge to help steer it and everyone throughout the boat working together. As I’ve already mentioned, it’s about knowing your role, but it’s also about helping the colleague next to you and recognizing that they needed the help. In other words, you’re only as strong as your weakest link so look out for your shipmates.
  6. Target the enemy. I’ve had plenty of experience watching businesses try to take on multiple issues or competitors at the same time with limited resources. A battleship can not fire in four directions at once. It’s a sure way to use all your ammo and hit nothing. So an effective battleship positions itself in relation to a single foe and directs all its fire on that target until it achieves success. And this is possible thanks to good communication where all the crew know what and where the target is.
  7. Built to endure. This boat can take its share of bad weather and enemies’ attacks. It can be months at sea, and still support a large crew of men and women. It can follow a predetermined course, with specific destinations to ensure time to refuel and restock; and maybe a little R&R. But this is not a boat for recreation, it has a purpose, a direction, and a goal.
  8. Fight like your life depends on it. You’re on a warship, this isn’t a game. Everyone on the boat pulls together as I’ve mentioned above: they apply their skills expertly and ‘man their station’, they communicate clearly and calmly, and action the orders they receive, they help each other out and work together to achieve a common goal.  When times are tough they put everything into it, and they demand that of all their fellow crew members.

OK. You’ve probably guessed that I’ve never been in the Navy! But I did see the film last year, and I was quite impressed with a 50 year old battleship with pre-digital systems and a steam engine engaging 3 alien ships that had come from 100s of light years away with advanced technology superior enough to keep the rest of the US Pacific fleet at bay, kicking their asses and saving the world. So there has to be a lesson in there somewhere.

I’ve professed a love for metaphors before. If anyone out there actually has worked on a warship and wants to correct or add to this one, all feedback gratefully received.