New Year resolutions for FTSE bosses

By Dan Atkinson

Simple steps to avoid becoming a corporate disaster story in 2020

                                

Even the jolliest and most optimistic FTSE 100 bosses find, at this time of year, an uneasy sense of the Ghost of Christmas Yet to Come. In this nightmarish corporate take on Ebenezer Scrooge’s vision of a terrible ending, they see factory gates padlocked, bank accounts frozen and the Official Receiver bearing down on them with a winding-up order.

But it needn’t be. As with Scrooge, some behaviour modification ought to keep the prospect of business disaster at bay. Here are some lessons from the misfortunes seen in the last 12 months.

  • Don’t let a changing world pass you by. This is what may be called the Thomas Cook lesson. The venerable travel agent, which practically invented modern tourism, collapsed in September, the problems of its business model in an internet age exacerbated by a large debt burden and a failure to improve profitability.
  • But don’t chase after every fad and fashion. This is the Gillette lesson, after the shaving company that ditched its “the best a man can get” slogan for “the best a man can be”, a call to abandon “toxic masculinity”. Parent Proctor & Gamble wrote down the value of Gillette by £6.6 billion, citing a decline in shaving rather than the firm’s “woke” advertising. Some were unconvinced.
  • Don’t assume that everyone else is wrong and you are right. This is the lesson from Metro Bank, which established a string of high street branches just as everyone else was closing much of their branch network down. Yes, the branches were cheerful and dog friendly, but by the end of the year the struggling bank announced a boardroom shake-up.
  • Don’t shout the odds before reading the form. Here, the example not to follow is British Steel, where “rescues” were periodically announced but the firm remained un-rescued as the year drew to a close. Saviour number one was supposed to be Ataer, a corporation linked with the Turkish armed forces. Then came China’s Jingye. Hardly had we learned that this rescue was falling through than it was supposedly back on again.
  • Don’t fall out with colleagues in the face of the enemy. Aviva, the giant insurer, is the model here, where activist US investors are reportedly circling the company. Rather than stand united, Aviva’s board is reportedly split between those who want to split the company in two in order to unlock shareholder value and those who do not. That’s no way to see off the wolves of Wall Street.

FURTHER READING Thomas Cook: rival airlines cash in as company closes

FURTHER READING Chinese firm to rescue British Steel

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