RSS feedsJust a couple of months ago our cover story asked the question, are companies better managed than they used to be? The basic idea was that, while managers may, in many respects, be better qualified than they used to be, there was some evidence that this enhanced skill base just wasn't delivering shareholder returns which, over a 40-year period, demonstrated a remarkable reluctance to show any serious improvement. And we wondered if there were any rules or certainties in business that could help ensure managers and their companies succeed and grow.
So whether it was prescience or just the stockmarkets sticking two fingers up at us, it's heartening to see the indices finally breaking new records. This thought came to mind the other day when talking with Aidan Smith, finance director of the property company Liberty International. Smith has been with the company for 20 years - FD for the past eight of them - which makes him something of an anachronism these days: our salary survey in this issue reveals that the average tenure of a FTSE-100 FD is about four-and-a-half years.
Have a look at the share price chart for Liberty International and you'll see an impressive performance: the share price quadrupled over a time when the market as a whole doubled. Now look more closely at the chart and see if you can spot the dotcom boom-and-bust. Smith recalled the days when clicks-and-portals were said to be about to wipe out bricks-and-mortar.
What was most striking about that period was the unrelenting, doomed faddishness of it all – the fanciful notion that the old rules of business were being ripped up. They weren't, of course, but the internet has created a new way of doing business – and it's created new businesses. The phenomenon can be seen in everything from Argos to Amazon. But remember that while the airplane and the internal combustion engine also created new businesses, they didn't change the rules of business (though it's often been said that, from a shareholder value perspective, it would have been better if the Wright brothers had crashed and broken their necks in their 1903 ‘Flyer').
So what are the rules of business? We're going to try to find out. As we join our friends from Richmond Events on the Finance Directors’ Forum, we will be running a series of think tanks with FDs on board, setting ourselves the ambitious aim of trying to create a white paper of best practice for company management. Are there a handful of key rules that companies shouldn't break if they want to create value? Are there some immutable laws that can help pre-determine whether a venture will succeed or fail? No idea. But it will be enlightening – and fun – trying to find out.
