Monday 21 September 2009

Would you drink Coke with Gherkins in it?

The one thing this blog most certainly doesn't do is give financial advice. I've made a lot of money in my working life, but none of it has been through investments, just plain hard work. I've got a stack of shares I bought a few years ago, mostly in banks, because someone persuaded me that they were a safe bet. I'm currently sitting on a £10,000 loss. Clever old me.

I've heard all of the investment strategies known to man. I've read all of the arguments for investing in certain sectors. The conclusion I've come to? That picking shares is like picking horses. There are professional gamblers who make money, but for the rest of us it's pure luck.

So why has the Barnet Eye decided to talk about investments today? Well unlike me, there is a bloke who has made pots of money out of investing. His name - Warren Buffett. I heard him explain his strategy a few years ago. He said he picked solid companies which are leaders in their field. As an example he mentioned Coca Cola. He said that they do what they do and do it very well. If the market changes, they bring new products but concentrate on their core customers first. That is why they still make a pot of money out of Coke Original. When they realised the market had changed and there was a market for Diet Coke, they didn't stop making Coke Original they just expanded their range. That way they had 2 market leading products. Now I've no idea if Coca Cola is a good company to invest in or not. As I said this blog doesn't do financial advice, but this blog does cover Barnet Council.

As everyone knows, Barnet Council spent millions on a team of highly paid consultants, some on well over £1,000 a day wages. They scoured the world looking for a company to model Barnet Council on. They chose Easyjet and Ryanair. They said they were examples of how we must constantly change to evolve. Mike Freer made national press with is examples of how his Easycouncil will work. "Get a smaller bin and we give you £100".

I've been mulling this over. Then the sad truth struck me. Easyjet and Ryanair haven't evolved from big lumbering airlines. They are relatively knew players that have emerged due to market opportunities. Mike Freer says "Doing things the way we've always done them is not an option".

Well my proposition is this. Warren Buffett says invest in companies like Coca Cola because they know when it's sensible to change and when it's sensible to keep things as they are. Mike Freer says we must destroy the Sheltered Housing Warden Service because "We have to change". Does Coca Cola say "We must put Gherkins in Coke Original because we must change". Of course they don't. They know that the people who like the product are happy. If they felt there was a demand for Coke with Gherkins in, they'd launch a new product, but they'd make damn sure that people knew it was a new product and make sure it was kept well away from their core business.

You may think Coke with Gherkins in sounds revolting. You may think "no one would want that". If Coke did a product evaluation and 85% of the people who tried it said "Thats horrible", they'd shelve the idea. Barnet Council asked the residents of Sheltered accomodation whether they wanted to lose their wardens. Over 85% said "No". Did Barnet Council react like a well run company such as Coca Cola did? No, they said "Ah but we know best". Sadly for the residents of Sheltered Housing, they can't do what the customers of Coca Cola would do if they found that there were bits of Gherkin in their tin of Coke. They have to drink from Freer's poison chalice, or so Mike Freer thought.

Fortunately a resident of the Barnet's sheltered housing, Mr David Young a sprightly and feisty 78 year old said "I'm not having that" He contacted Solicitor Yvonne Hossacks, who specialises in these cases and sought a judicial review. You see Mr Young had signed a contract with Barnet and felt that for Barnet to unilaterally change the deal was illegal.

The High Court agreed last week and Barnet was told to shelve it's plans pending a full review. I advised all of the officers in Barnet who were implementing this policy to look for another job. It is a big black mark on the CV to have lost a case such as this. It's not too late though, the case hasn't come to court. Surely it's clear that this terrible policy benefits no one.

I've no idea how the full review will turn out, but I do know that whatever industry you are involved in, be it local government or selling fizzy drinks, if you neglect the people who you are meant to be looking after, you shouldn't be in the job.

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