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The Challenge for the Bank of England

The Challenge for the Bank of England

I’ve mentioned before the challenge of having an independent Bank of England with a strategy of keeping inflation low and a government set on increasing borrowing by eye watering amounts, with all the inflationary pressure that creates. When the Bank of England was given its independence to set interest rates away from political pressures, the landscape was benign. Monetary policy was tight, but not recessionary, and inflation was benign. The chancellor at the time, Gordon Brown, was financially literate, and aware of the importance of market sentiment, in 1997 the move gave markets a reassurance that New Labour would honour their commitments. They did. Today’s government has ignored their commitments. Johnson did so somewhat, but in understandably unusual circumstances. Truss/Kwarteng, did not just ignore their fiscal promises, they destroyed them. They ignored the oversight of the Office for budget responsibility, and seem to consider sentiment in the Markets as something that can be ignored.


Just a week or two ago, the expectation was for interest rates rising to no more than 4%. Today the bank is talking of a peak of 6% “at least” I suspect we may for a while next year see rates of around 8%.

Mortgage Mayhem.

One example of how this impacts the economy and ordinary people is playing out today. Mortgage companies are cutting out new fixed rate deals based on current rates, and there is a general tightening of policy around affordability. Rightly, the companies are limiting lending when reviewing the longer term and the likely costs that will arise as mortgage deals end. That’s having an immediate impact on the housing market, with new sales delayed. New building will be affected quickly if buyers can’t afford the properties nearing completion, because of mortgage rates, and pretty soon that works through into new build starts. That impacts employment in the building sector quickly, too. Jobs, and investments, will go because of a ‘Budget for growth’.

Policy, Policy, Policy.

This disconnect between fiscal policy of the government and the Bank isn’t going to resolve itself. In such circumstances markets can be cruel, mainly because they are driven by, and reflect, sentiment. The Bank will take its responsibilities, and sentiment, seriously. They are masters at thinking through the impact of monetary policy and have sufficient experience to apply that expertise in the context they now face. My sense is that on the other side of the fence, the government is acting in haste, and without sufficient experience. There’s precious little sign of them seeking the advice of masters in this field, (perhaps at the OBR, for example). That’s a recipe for ideology rather pragmatism, and the markets are concluding that it is deeply flawed. That’s partly why I think that for every loosening of monetary policy by Kwarteng we can expect a tightening by the Bank.

It’s time for a change.

What’s needed is an alignment of policy, but with the OBR excluded this time, and the Bank’s remit remaining unchanged, that’s not likely in the immediate term. Time is ticking.

Constitutional Reform, and why Electoral Reform could make things worse.

Constitutional Reform, and why Electoral Reform could make things worse.

This blog is somewhat longer than many others and on a political topic. It highlights the complex interdependencies of decision making, by discussing issues around the voting system and proportional representation, but those challenges of complexity crop up everywhere.

Many many years ago in a country far far away (or at least, very different from the one we are now in), a few powerful men came to the conclusion that the monarch wasn’t very good at making decisions. We needed wiser heads. Obviously, (!) people who already had power, and land, needed to make the decisions. That worked for a while, but then some round-headed people had a bust-up others who were, frankly, a bit too cavalier. Nonetheless from that, a nascent parliamentary democracy was born and it has evolved to the present day. It’s extended the franchise, extended the powers of the parliament and created an enduring democracy that has many strengths. Yet evolve it still must. There is a real sense that the system is broken, that it fails to deliver, that it has lost trust. I think all of those things too.

One area that is regularly questioned is the voting system, in this essay, I suggest that this isn’t where we should start, that the constitutional issues are more complex than how we choose a representative and changing the voting system without addressing the other systemic issues won’t solve the problems that both flaws create.

There’s a variety of reasons for it. For one thing, we’ve made a LOT of constitutional changes in recent times. We have devolved power from Westminster to Wales, NI and Scotland. We have negotiated treaties like the Good Friday Agreement, and with the EU, and repatriated powers from the regions, and counties, and districts. It’s hard to know who actually makes the decisions. Then, of course, there is social media and the so-called ‘democratisation’ of news, of opinion, of ‘facts’ and the ever-present, almost omnipresent, Google. (The issue here is that people rely on Google as a source, when all it is an index of material that is on the internet, factual or false, accurate or imagined, Google treats those imposters just the same). Social media creates an illusion of conversation where none exists. In the political sphere, when people comment on what this MP, or that world leader, tweets, some, not all, think their voice is being heard. It’s not even a whisper into a hurricane, just a drip into a waterfall.

Decisions on laws, taxes, rights, freedoms, healthcare, roads, trade etc, all feel like they are taken without care, or with a deliberately malign hand that favours the few over the many. Nearly all the population, when asked, want something different. Often without the certainty of what needs to change, nor why. Why could we know? We aren’t privy to how the system works, (or doesn’t) most of the time, we really aren’t informed enough to redesign it. Yet those who are charged with doing so have a vested interest to change it for their own benefit, and we sense that they will.

There’s a constant noise about the unfairness of the voting system (which I fully accept, but then voting isn’t the only, nor the fairest way for societies to make decisions).

Yet what are the objectives of an electoral system in the first place? If we step back and think about what we are seeking to achieve when we vote, if we also identify the issues that we consider with the outcomes we have, only then we can consider if a change in the voting system will deliver the needed change, or, if other changes are, in fact, what is needed.

Voting in a parliamentary democracy is intended to provide a body of representatives of the people in order to make decisions on behalf of the society over which they have been ceded authority. Yet too often the decisions they take seem at odds to large segments of society. When that happens too often or too deeply the social covenant can be broken.

How do those decisions exhibit themselves?

The legislature creates new law which sets society within the boundaries of what it (through its representatives) deems acceptable activity and behaviour. There’s no doubt for example, that we collectively consider murder or physical violence, to be something that is not tolerated. We don’t have a single written document that describes the rights of individuals, their rights, in general, are defined by where we have legislated to constrain them. All other activities and behaviours are, in effect, permitted, even if they are not ethical, or decent. That is a different approach from other states that seek to define rights as well as laws, and our system is strained where there are overlaps between these two systems. European law, and things like Human Rights legislation, push oddly at the body of British Law.

That body of law deals with many areas of daily life. It’s therefore important that our representatives can consider the needs and desires and collective responsibilities of the people that they represent. Yet that is a two-way street, not a one way one. Voters also have a responsibility here, but more of that later.

The second part of the government, the Executive, provides for the activities of the state within the boundaries of the law. Through the policies of the executive, we determine things like how much taxation will be raised, and how that money will be spent, for the good of society. Again, our representatives (or more accurately, some of them) broadly make these decisions by virtue of forming a government, developing strategies, setting them out in a manifesto, and executing those strategies, subject to scrutiny by the body of representatives.

In this role, the representatives need to have suitable experience to properly scrutinise the strategies and plans of the executive and the wisdom to modify and mould those strategies in the general interest.

The balance of power

In Britain, we’ve generally had two main parties. A choice between what has become known as the left and the right of politics. Those terms are vague and adaptable, but in broad terms, one is driven by a belief in the power of individual choice to deliver collective good, the other about a need to create collective good by (fair) redistribution and regulation to control selfish excess. I recognise that this is an oversimplification that could be criticised but its purpose is not definitional, merely illustrative.

What it highlights is the (historical) divide between two ideologies that naturally create a binary divide that opinion can coalesce around. Yet in more recent decades things have become more nuanced and that brings with it a change. Where that first appeared was in the move of both views towards a more central ground, of some small “c” conservatism and focus on individuals and some small “s” socialism focussed on the needs of others. In that ground, the small “l” liberals had long sat as a foil to both extremes but became lost in the noise of both.

In general, the binary split of views worked well in this country. That’s because those two extremes are balanced by the mechanisms of Parliament, by the two houses, and by a government and its official opposition. The results of debating were outcomes that were more acceptable to everyone (perhaps most often by making everyone equally disappointed). No individual group had too much power or could have it for too long. The checks and balances mostly worked. Less so today.

The importance of voting.

Electing a representative is a significantly important part of the process. It relies on the people making an informed and realistic choice between the candidates offered to them in that role.

In order to achieve that we have divided the country into constituencies and each constituency elects a single representative. That creates some challenges and some advantages, some perceived, some real, but all relevant to the impression that people have of the fairness of the system.

When people choose an MP, they cede their decision making power to them. Whichever candidate we voted for our views are still represented by the one person elected, even though they may not be the one we voted for. Ceding authority requires trust, and that has to be earned. The giving of a vote, whether people view it this way or not, is an expression of trust in the candidate. It’s also an expression of trust in the system and in the expectation that by participating people will get benefits. It is the expression of consent in the system as much as it is an operation of the system. That’s important when we come to look at how elections work from a perception and acceptance point of view.

At one level a great deal of importance is placed on the General Election vote and many things flow from it, and are recorded by it. Public votes can only be considered to influence these downstream decisions, but not direct them. The party, or group, that wins the most representatives and which can ‘have the confidence of the House of Commons’ is asked to form a government. Their leader, usually an elected MP, becomes Prime Minister and they appoint ministers to run departments and junior ministers to assist them. These positions are filled by the leader and generally will, therefore, be people who have shown ‘loyalty’ and alignment with them. At the same time, the next biggest grouping forms the ‘official opposition’ and matches the government with shadow ministers to act to hold their counterpart to account for the choices they make.

In parliament, there are regular votes of our representatives who troop through lobbies to be counted, observed by the Whips (party officials whose job it is to ensure compliance with important votes), and recorded by the tellers and in public documents like Hansard.

The proper working of parliament


In parliament, the role of the opposition is to challenge everything the government proposes, however much it agrees with it. This is to ensure that debates can have teeth, will scrutinise the detail properly and eliminate, as far as is possible, unexpected side effects from poorly constructed legislation that hasn’t considered all sides. It does not mean that the opposition disagrees with the proposal.

From a perception point of view, this can be difficult for an opposition whose public policy on some issues may be aligned with government policy. There’s a perceived fear of taking a debating stance and a public stance that is not aligned. Partly that’s because opposing parties play politics rather than celebrating the proper working of parliament. Indeed, there is strong evidence that past voting records in parliament are used extensively in Social media and elsewhere to attack individuals for their views. Few people, it seems, mostly because of the PR and party machinery, are willing to separate what’s said and done in a constitutional role, and what is policy.

Which brings us, neatly, to systemic perceptions.

Perceptions of representation

It’s clear that voters consciously choose a candidate based on what they want to happen. To guide them, and somewhat subconsciously, they use the party alignment the candidates have and their manifesto. Often there are ideological differences between one party and another, clear divides on issues like taxation of the rich, regulation of business, the size of government, the NHS etc. That’s good for aiding the choice of where to vote but bad for the perceptions of representation afterwards for those whose vote goes to a losing candidate. Whither now their representation?

For people to feel enfranchised they need not just to have an opinion, but also to see that it has been heard, and feel that it has been taken into account. No issue has been as divisive as Brexit, and the challenge of people feeling their view, their opinion, has not been heard, not been taken into account, has never been stronger, on both sides of that argument. That’s just a clearer, starker, example, though, of something that happens, more or less, on every issue. It highlights the challenge for our representatives of connecting with the electorate in a way that enables them to feel that they are being listened too.

The societal covenant.

Implementing action which is closely aligned only to a narrow segment of people yet having it accepted by society as a whole is the very essence of politics. It requires a skill that is essential for consensus to be created and a rare one. Mostly, that’s about perceptions, not agreement. Perceptions of having a means of changing direction in the future if it proves to be a mistake, and perceptions of having had a voice, and still have one.

Where power resides.

A number of changes to British politics have made a difference in the way elements of our governance are perceived. Most changes that have affected perceptions are, apparently unrelated, and yet they do change those perceptions. The biggest, I think, is the distance between voters and the decisions which affect them, and that, in most things, has widened. Another example is the fixed-term parliament act, designed to protect a coalition, yet it has had an unintended side effect of making it much harder for a poor government to be forced to return to the people. The subconscious impact on the sense of powerlessness is itself powerful, and negative, in the perceptions of voters. Some people may feel (subconsciously probably) that they have lost a lever of control over parliament, and that lever was removed by parliament itself. What is the cumulative effect of parliament making small changes that shift power, perceived or real, from the people to themselves?

Subsidiarity and the reach of power.

One aspect of government is that it is multi-layered, decisions are taken in a variety of places, not just Westminster. Westminster is the seat of law but that’s only the legislative branch and the executive branch affects the people far more and is much more distributed. I live in a small village north of Chepstow, it has local (Tidenham) parish council, responsible for very local matters, Forest of Dean district, and Gloucestershire county, before we get to Westminster, and long before we get to the EU. If I lived just two miles south then the same structure would exist but with a devolved Welsh assembly having a say on some Welsh aspects. Add to that some other roles such as Police Commissioners, also elected, who affect decisions on local societal matters and it’s clear that ‘democracy’ delivers power to a variety of people in a variety of roles.

Over the years powers have been centralised and then devolved, mixed and confused and then redistributed again. There are anomalies all over the place which make little sense to the 1% who understand what they are and are opaque to the rest of us.

Social media and its impact.

Social media has completely rewritten the rules of communication. In the past communicating with representatives could be achieved by lobbying in the House of Commons, meetings at MP surgeries or in private, and by letter. Most people did not but knew that they could. Then social media arrived. Now MP’s have made themselves available, particularly on Twitter, but other platforms too and receive thousands, perhaps hundreds of thousands of replies to each comment they make. They reply to a few.

For those engaging on social media, there is a sense of ‘talking to’ their representative, but there is very little sense of being ‘heard’. It is my contention that this is a significant driver of voter dissatisfaction. Politicians in a private or written exchange can discuss and explore a topic in ways that in 280 characters they cannot. They tend to set out a position, and never waver. That never wavering is also a by-product of social media’s ability never to forget. Any politician whose opinion shifts is immediately attacked for the change, with ‘evidence’ of historic tweets. It’s a febrile sense of accountability that is fossilising views into their first iteration. How often are our first instincts what we end up running with? Views evolve, but social media often denies that possibility, curtails debate, restricts room for manoeuvre and locks in opinions too early. It’s not good for Governance.

Voters responsibilities (whether accepted or not).

Informed choice…

If the system relies on the representatives to do a good job of representation, then that puts a responsibility on voters to chose someone with the skills and capability to deliver that.

Yet to a great extent they do not take notice of the day to day activities, nor read the speeches, not lobby, nor write. Many voters expect to be represented yet make no effort to indicate what form that representation should take. Instead, they turn up, or not, on polling day, and vote.

When we make any choice without direct experience we tend to be influenced by tradition, habit, family, friends, peers and those of a high profile with whom we agree. These are proxies for experience. They are not reliable, and we, at one level, know this, so we may also look to see what is promised. Manifestos take on a minor significance (We don’t generally read them either, but rely on what the media, selectively, report from them). Often simple party allegiance can carry the most weight.

from a pool of “capable” people…

The ballot paper contains the names of the candidates, chosen, not at random, but by the party they represent. That selection is often opaque and risks criticism. The procedure varies by party but there’s always a suspicion of it favouring both compliance and loyalty over competence and experience. Less about individual skill at representation and service, more about reliable compliance with the party. Yet from these people, the voters must make a choice on quite different criteria.

The voting system

We currently operate a first past the post (FPTP) system for national elections. We also operate a variety of either FPTP or Proportional representation (PR) systems for other elections, from multi-member super constituency closed lists for European elections, to the alternative vote system.

Proportional representation purports to provide a result that is more in proportion to the votes cast. That, of course, predicates the argument for such a system with an assumption that, as an outcome, it will deliver something “better’.

Any voting system will be subject to voter unpredictability. Voters seek to get their preferred result and will make judgements on how others are likely to cast their ballot in reaching a decision. Voting is designed with the intention of voters casting their votes for the candidate or party they prefer, but in reality, they will often cast a vote against other candidates, or to stop particular results.

In some areas of our voting system, there are conventions that impact the rights of the people too. For example, by tradition, the representative chosen to be the Speaker of the House of Commons will be elected unopposed if an election is called. Equally, seats with a ‘safe’ majority for the current MP, may not have as much talent to choose from on the ballot paper if parties choose to put their energies and ‘best’ candidates in more ‘winnable’ seats.

In considering any change to the voting system we need to think about more than just the impact on the perceptions of representation. We need to consider the nature of representation itself. Perhaps we also need to think about those considering standing for election, on the parties, on the legislature and executive and to the connections of the various layers of government.

Single-member systems

With Single Member constituencies the voting system elects a single candidate to represent a single area, or constituency, decided by using a voting system that requires a candidate to get to a threshold of votes.

First Past the Post is a system of voting where the winner is decided by reaching a threshold of ‘the largest number of votes cast’. The alternative is AV – Alternative vote – to redistribute the bottom candidate votes to the voter’s second preference until a 50% threshold is reached.

In the UK we had a referendum to consider changing to a system of AV and rejected it. Yet in some areas of our decision making it is used. Police Commissioners use this system and it is used, for example, in the Labour Party to elect its leaders. It rarely delivers a different result from FPTP but there is a different feel to the outcome. Those who vote for a minor candidate get to express that preference in the likely knowledge that their vote will be redistributed, maybe more than once, but those who vote for the eventual winner, and in most cases the second-placed candidate only have their first opinion checked. That can feel to supporters of minor candidates that they have more say in the outcome. The impact of that is to encourage more extreme views to get a louder voice. People can vote for someone they ‘know’ will lose, knowing that it’s their second preference that really counts, at least whilst they do that in isolation.

None of that changes nor addresses any of the structural issues discussed above, and simply ‘feeling’ more enfranchised whilst not actually being so, is, at least in part, why this suggestion was rejected.

Multiple member systems

Here larger areas with more voters elect multiple members to parliament. There are many ways to achieve this, but some aspects are similar. Firstly constituencies are much larger, with 3 or more representatives returned. European constituencies, for example, return between 3 (Northern Ireland) and 10 (South East) MEP’s. How they are chosen depends on which multiple member system is chosen. There are open list and closed list systems. The European elections used a closed list system where the parties choose who their candidates are AND the order in which they are elected. Voters choose a party not a representative, and, using an allocation system the MP’s are chosen from the lists. (Europe uses a system called D’Hondt allocation). Others use an open list where parties nominate candidates and voters select the one(s) they want the most. A candidate vote counts as a party vote.

The aim of both is that the representatives in the large constituencies are more closely aligned to the voting preferences of the electorate. Currently in the South Each constituency the people are represented by 4 Brexit Party MEP’s (40% of seats | 36% of vote) 3 Lib Dems, (30%|26%) 1 Green (10%|13%) 1 Conservative (10%|10%)1 Labour (10%|7%). In total 8% of votes were for candidates that were not elected.

Mixed Systems

There are some areas who have single-member constituencies and a list system to balance out the results so that the parliament is more closely aligned to the overall balance of votes. This is how the Scottish Parliament is elected. It has 73 constituency seats and 56 regional seats

Unaddressed issues

Whose names appear on the ballot paper remains out of the control of the general electorate. Whilst some of these systems provide clarity about who will be elected, some put far more control into the hands of the parties. The impact of that can be to reward loyalty over principle. In some sort of Faustian pact those who wish to be elected need to be at the top of the list, only then are they subject to any form of public scrutiny. Of course, this is an issue for FPTP systems too, which are, in effect, a closed party list of one.

In FPTP some constituencies are so strongly skewed to one party or another than those who support a different party can feel that casting their vote has no impact, that it is ‘wasted’. In reality, all individual votes have little impact on their own, whether one person votes or not in isolation will only in the rarest of situations have any significant impact on the result. Yet every vote does measure the level of opinion in that constituency, and so all votes have some value. Making their true value perceived is a hard challenge for any democracy.

On party list systems the Electoral Reform Society says ”Party-list systems can be very proportional, but if voters can’t pick their representatives, the politicians don’t have a strong link with their voters” – Nowhere is this more starkly an issue that with the EU where MEP’s seem so distant from voters that there is a real sense of a democratic deficit. Why is that?

When we want to contact “our MP” we know who to go to, but if we want to speak to our MEP we will tend to go to the representative we like, or who is from our favoured party. There are many issues with this. Each representative can believe that others should be addressing that issue. There’s no ultimately responsible person. My experience of engaging with local councillors to MEP’s the place where there is the most engagement is where there is the one to one relationship, with MP’s – where there are multiple people the responses can bounce me from one to another. The other risk in multi-member constituencies is that for each party representative the exposure they have to ‘constituents’ is far more aligned to their party, and that leads to an echo chamber effect and an unrepresentative view of what the broad base of all constituents actually think.

In mixed systems, the parliament is more proportional, but some MP’s represent the electorate and others don’t. It’s unlikely that a non-constituency representative can be as much of an influence on local issues, but for a voter who supported a different party from their local MP, to whom do they turn?

These systems all create complexity in the connection between electorate and representative, and complexity is a distraction. They create a sense of democratic deficit. Ultimately, if it is the flaws in the constitutional protocols of parliament that create the sense of a failing democracy then changing the way we choose people to operate within that flawed system won’t deliver any benefit.

Complexity also has an impact on turnout. Turnout in Scotland for their assembly elections with its complex mixed system was 56% but in the 2017 General Election run on FPTP it was 66% – European elections have a dismal turnout. These impacts can’t be ignored in a proposed change to the voting rules.

What I think does matter is aligning the voting system to the constitutional requirements of the system. Once the roles of local, regional, national and Westminster parliaments, as well as any supranational bodies to which the people elect representatives (like the EU), are clear then the appropriate voting system to use should become clear. Our current single-member constituencies electing a single representative would mean first past the post, or AV systems are really the only contenders. Given that choice the people chose FPTP.

If the nature of parliament, the size of constituencies, and the issues of subsidiarity are changed then it makes sense to review how we choose our representative. To design the whole system to work more effectively and fairly. Then, but not until then.


This analysis is not suggesting that FPTP should be retained, nor that it is ‘better’ than all the possible variations of PR. It is, however, suggesting that the perceptions of a failure of democracy are caused by elements of the constitution that a change in the electoral system will not address, or are only addressed by impacting perceptions.

I’m in favour of a change to the voting system as part of wider reforms in the whole process of collective decision making. There are elements of subsidiarity and where power should, and where it does, reside that need to be reformed. Parliamentary voting is anachronistic and open to abuse (which is another topic). Political transparency, the means of gathering opinion, the right to and manner of lobbying, constituency governance, the separation of powers and much more all need reform.

I am, though, convinced that changing the voting system without addressing the other constitutional issues will make those other issues worse. Far worse.

South East Region – 10 MEPs | MEPs & Elections | European Parliament Liaison Office in the United Kingdom

Tactical questions, a business lesson from Brexit.

Tactical questions, a business lesson from Brexit.

We can argue about the merits of the Brexit referendum all day long, indeed some days I do. The divisions that have resulted remain unresolved by time and are embedded in the country. That’s because, at least in part, the way the decision was taken, constrained the decision makers in ways they could not have anticipated.

Asking a question in the wrong way can leave a business equally disrupted, divided and constrained.

Strategic questioning.

In business we often ask questions to help guide our strategy and in particular the implementation of it. Great businesses ask many questions. They take time to consider contexts, and understand the views of a wide variety of people that the business touches. Its employees, customers, shareholders, and others in its markets and beyond. Those diverse views tend to open up insight into alternative ways of implementing strategy.

The Brexit question, focused as it was on one particular outcome set the country on a trajectory which has continued to create significant difficulties ever since. Imagine instead if the government had taken time, after Cameron’s renegotiation, to listen to the country, and create a decent dialog through a series of questions. A national conversation. If they had asked about strategic objectives and then planned the possible courses to follow before asking the final (referendum) question, then I suspect now the country would be united. We may still have voted to leave the EU, but we would have done so strategically rather than tactically, and with consideration of consequence.

Avoiding costly mistakes.

In business we achieve more when we ask searching questions about our markets; pricing; quality; design; and customer service. Sometimes in implementing the strategy that follows there may be conflicts between elements. Having enough flexibility to choose a balanced path is critical.

Closed binary questions about one aspect of our business will eliminate flexibility. For example, if we chose to commit to a (tactical) price point such as £99, rather than a (strategic) ambition such as ‘best possible value’ then we are constraining product design, service levels and more. Strategic questioning is much more about providing a framework to give context to the complex, interdependent elements of the business model. Questions should focus on the generality of the outcome that is sought, rather than the specifics of the detail of achieving it.

In the final analysis any hard binary decision (eg setting a price point) is an ‘experiment’ rather than a solution, something to be tested, not fixed.

How the business risk landscape has changed.

How the business risk landscape has changed.

I can’t really remember a time when the political landscape was as uncertain as it is today. For most of my life politics and business mixed on long timescales, political decisions set the tax regime and the regulatory environment. Changes are discussed in advance and implemented with reasonable time scales that allowed well run, strategically operated businesses to plan for change. More than that, the best businesses took the time to plan how to use those changes to leverage competitive advantage and unlock sustainable profits that others missed.

Today, politics and business are mixing on daily timescales. Uncertainty on what is coming is greater than ever. Planning is difficult and the risks of undertaking projects to be ready, for example, leaving the single market, is that the end result will be very different from the current sense of direction. Do you act quickly and risk getting the basis of your actions wrong, or act slowly and miss the opportunity to take advantage of others caution. The cost of a mistake could be very high, the benefit from success is less predictable than ever.

That’s a very different risk management landscape than many businesses have ever faced. Are you embracing, bemused, untouched or ignoring it? Are you competitors acting differently?

What’s the biggest risk that the current uncertainty brings to your business?

[Tweet “Is political uncertainty putting your business at risk?”]

Credits: Photo by Romain Peli on Unsplash

How to create certainty in six shrewd steps.

How to create certainty in six shrewd steps.

I can’t really remember a time when the political landscape was as uncertain as it is today. Most of the time politics and business mixes on long timescales, political decisions set the tax regime and the regulatory environment, and changes are discussed in advanced and implemented with reasonable timescales that allow well run, strategically operated businesses to plan for change. More than that, the best businesses will take the time to plan those changes to leverage competitive advantage and unlock sustainable profits that others miss. Many business owners don’t engage with the politics, it’s simply not relevant to the business to do so.

Today, politics and business are mixing on daily timescales. Business owners have to be aware of the possibility of major external change in relation to their strategy. Uncertainty about what is coming is greater than ever; planning is difficult and the risks of undertaking projects to be ready, for example, for leaving the single market, is that the end result may still be very different from the current sense of direction. Business strategy is always about aligning to long-term goals. External, and political, change can take you off track, so the best strategies are adaptive and know when to react to guarantee to reach the goals you set. Yet the costliest mistakes often result from being too eager to make changes only to find later that the basis of the original decision was inappropriate or redundant.

What to do in order to avoid costly mistakes?

  1. Focus on what you can control. If you have already planned a change that won’t be affected by other matters, get on with it.
  2. Concentrate on what is already working, so that you maximise the current value you are creating for your clients.
  3. Get even more clarity on your business model, so that you can be agile with changes as soon as there is greater certainty on the impacts of political change.
  4. Identify the risks of the principle outcomes of the elements you can’t control, such as political change, or competitor reaction to the business environment. Plan your mitigations and take any actions that are independent of the outcome of external matters.
  5. Learn where to find the reliable sources of data about the changes that could affect your business and watch them carefully.
  6. Identify how you will determine that you are certain enough to trigger action or conclude a decision.

Could the current political risks damage your business? How are you mitigating those risks? Have you delayed decisions that affect your ability to achieve your goals?

Uncertainty, Election(s) Blues and what Business Leaders do next

Uncertainty, Election(s) Blues and what Business Leaders do next

Elections always create a hiatus and more uncertainty than most would wish for, this one has been no exception. One thing to note is the more predictable the results of an election seem, the less predictable it is. For business leaders, the results haven’t made the future more assured, and some things need to be considered in strategic planning as a result.

Firstly, Collaboration is going to be an essential political skill, and it’s mostly absent.

The May government characterised its campaign with a personal presidential style top-down hierarchical control driven agenda, on the manifesto, on the campaign, on Brexit. The result has pushed Mrs May into needing to influence and accommodate the views of others, to build relationships, to find common ground and to accept change. That’s likely to show strains early, and I think this parliament has a limited life. As business owners who recognise a need for collaboration this is a time to focus on meeting the uncertainties by working more closely with our teams and partners. Take the opportunity to build more strength in networks, in bonds with clients, suppliers and associates. Be ready to flex around the uncertainties that may result.

Secondly, Economic change is inevitable, but it will be small and slow.

The May government’s general direction on the economy won’t  change much in the short term. Brexit negotiations will take attention from day to day economic matters so that we can expect continued low-interest rates and slightly rising inflation. Your market is likely to remain as it is regarding the activity. The time decision makers take won’t change, the pressure on pricing and profitability will still be there. Tactically you can plan with your existing knowledge of the landscape, for at least the next six months or so. Business is mostly likely to be ‘as usual’.

Finally, What matters is what happens, not what might.

Elections always lead us to speculate about the future, to see many demons in the darkness, to worry about the possibilities so much that we lose sight of the realities. Be alert, look out for what is happening, be ready to spot a change in attitude or mindset in your clients, but act on what happens and not what might.

Unless that is you want to see a change, in which case act as if it has already occurred, and you’ll find that it probably will.

Politically the next few months will be interesting, exciting for some, engaging for many.

Don’t let it stop you leading the best business you have ever run.