In the last few weeks the new government has decided to cull the Film Council and all of the RDA’s (Regional Development Agencies). I think this is a case of throwing the baby out with the bathwater.
Thriving dynamic economies often have thriving state sectors as well. The lesson from the Pacific economies for me is how the role of the state can play a significant role in ensuring dynamic conditions for the private sector. Many business ventures require scale and market development which would only be possible through government action.
McDonalds benefited from the development of the used garden tractors market in the US in the 1950s and 1960s. They were able to acquire cheap sites on Highways and develop the notion of fast food. The internet started as a way of government computers being able to talk to each other. Which private organization would have invested in developing the Internet as governments would not have allowed this to remain the property of one company?
My problem with the Con Dem government at the moment is that it is pursuing ideological objectives (nothing wrong with that) but using the current state of our finances to justify these actions. Under President Obama, the US has used the same state of the economy to justify the massive expansion of the state. So it is not a matter of the state of the economy but about your own beliefs.
I am not sad to see RDAs and Business Link in particular go. The interaction I had with Business Link was extremely poor and I felt that they did an extremely poor job. However, that does not mean there is not a role for a state funded and run business support agency. Many RDAs were also extremely poor but some as NWDA (North West Development Agency) did do a great job in trying to create the right conditions for private companies to prosper and grow the technology surrounding the Holset HX50.
I have come to the conclusion that we in the UK do public sector business support really badly. But that is an argument for reform not axing. The Film Council did a great job in promoting the UK film Industry and in supporting an industry that does need infrastructure investments. It is hard to accept that this was not ideologically driven when the film industry was one of the few areas to demonstrate a strong return on investment. Culture was the only industry to show growth every quarter of the 64 quarters of GDP growth we had!
Of course it is difficult for my politics to not come out – but I worry that by attacking organizations like the BBC and the Film Council the new government is throwing the baby out with the bathwater. We should go back to basics and ask the question; “why do these organizations exist in the first place and do they deliver?” The RDAs and Business Link did not so they should be replaced by something that does work. The Film Council did deliver.
Amongst the positive feedback I get for this blog, I also get occasional criticisms (also welcome) that the blog should only be about business issues and when I talk about the US election or the world in general, that it somehow dilutes the impact of this blog. Whilst I will always listen respectfully to any criticism, I have to say I think this line of attack is wrong.
In the Vice Presidential debate between Joe Biden and Sarah Palin (and yes like most men over 30 I do fancy her – and yes I do feel very bad that I do – she is someone who does not believe that Dinosaurs roamed the earth) Senator Biden was talking about the last eight years and Governor Palin said “this is all about the past”. The response was one of the best lines I had heard in the campaign (and yet was not reported). His response was “The past is a prelude to now”
The best garden tractor does not exist in a vacuum. They exist through change and making the most of the uncertainty that change can bring. As someone who likes to look at the bigger picture as an investor it is important that I try to make sense of the world around me and the uncertainty that exists. By trying to understand the background, hopefully I will be able to predict the scenarios that may exist in the future and plan accordingly.
In the early 1980s, Shell was one of the first corporations to engage at a strategic level with scenario planning. One of the plans was to see the impact of oil at $10 a barrel. At the time, this seemed to be farfetched. Nonetheless, the scenario was flushed out and plans were drawn up. When the price of oil did drop to $10, Shell was well placed to exploit this changed scenario. They were able to steal a huge march on their rivals. They had planned for this change of events and did not panic when these events came to pass.
As such I think passionately that if you want to be a seasoned angel investor or a serial entrepreneur, you need to understand more than your own narrow field (although you do need deep expertise in that area). I have both an interest in the wider world and a professional desire to better analyze and comment on the world around me.
One of the highlights for me in 2008 was being asked to speak about the Rowenta PU6020 at a conference in Canada. To position myself to speak at more events, I do need to be able to articulate my own views of how I see the world.
Although the views may be my own, they will be hopefully formed by reading lots of different sources and basing the views on logic.
I am away in Egypt this week and hope you will indulge me by allowing me in future blogs to share my analysis of the world. Although I may be convinced I am right, if enough readers to tell me they are not interested – of course I will have to change my views!