Category Archives: Business

Anders Dahlvig talks Ikea

What better person to learn about running a successful business from than the man who ran Ikea for ten years from 1999-2009, through one of its most sustained periods of growth?

This is what I thought to myself when deciding to attend last night’s LSE-organised lecture by Anders Dahlvig, and I was not left disappointed.

Dahlvig, a man who came across as likeable, modest, but at the same time aware and proud of what he achieved at Ikea, as indeed he should be, talked for an hour and a half, shedding valuable light on how the cogs behind the company really work. He was not necessary the most natural, animated speaker in the world, but the content of what he was saying was so informative it more than made up for it. And he coped admirably with some truly awful, dull questions from the audience after his allotted speech time was up.

Under his leadership (and before becoming chief executive he had already worked his way up through the company for more than 15 years) Ikea achieved some astounding stats like average growth of 11% and profitability well above 10% every year.

There were a few things from Dahlvig’s talk which I think will really stick with me as I soon embark on setting up a business of my own. Some are likely obvious to many, but coming from a man with the success rate of his, these things have surely now been proven beyond all doubt to work.

1. You do not need to, and actually should not, pay top dollar to recruit and retain the best staff.

While running the England side of Ikea for four years, Dahlvig said he did not lose one store manager, despite being well aware that all of these managers were being approached at least weekly by competitors offering them higher salaries. He said it is the values of the company, and also the level of autonomy for managers in partiuclar, that actually keeps these people at Ikea.

And he also made the pointed out that the company does not want to attract people that are only doing the job for the wage packet – the idea being that the minute they get offered a few extra quid, whatever the job, they will be off.

2. Businesses can benefit hugely from an owner with a long term vision.

Sometimes difficult decisions that may not result in short term profit, in fact which may almost certainly result in quite substantial short term losses, should be made for the longer term good of the company. And if you have an owner or shareholders who only really care about the bottom line over the next year, it can be hard for these decisions to ever be made.

To illustrate this point Dahlvig used the example of Ikea going into Russia at a time when almost all other retailers were leaving. Even though this decision was very risky in the short term, today he says Ikea has some of the best retail sites available, and got them at prices that it never could have negotiated a few years later.

3. Values and vision need to be sustained, no matter what.

Dahlvig spoke for a long time about the comany’s vision and vlaues. These may sound like business buzzwords to many but it was clear he was very passionate about what this really meant at Ikea – where he said following these would take precedent over pretty much everything. And following this through can sometimes mean making tough decisions, he said.

For example, on the subject of staff, he said that occaisionally the company would actually let go of someone even if they were making Ikea profits and hitting or exceding their targets, if this person was not representing the values of the company.

4. Retailers tend to get higher margins and have a lot more power when they sell their own products.

He pointed out that in industries like food where there is power among product manufacturers who are not also retailers (using Nestle as an example), the retailers have a lot less power and therefore much smaller margins. Where this is not so so much the case, such as in DIY, margins for retailers tend to be much higher.

The answer? Try to get as many of your own products into your store as possible. Of course, this is a little bit difficult if all your customers are hooked on Cheerios and Shreddies for life. So Dahlvig, for this and other reasons, reckons with food retail it will only ever be possible for the big players’ items to be 50% their own products.

These were just a few of the highlights from a very informative talk. Dahlvig has recently released a book, so if you don’t get the chance to hear him speak, I would guess the book is certainly worth buying, given the content of last night’s lecture.

On a side note, high street coffee shops and sandwich bars, beware: Dahlvig also said last night that he will soon be joining Pret A Manger’s board. Having listened to him talk last night this is an incredibly smart move by the chain.

By Sophie Hudson

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Why it’s still ok to want to be a journalist

I read a rather depressing article in the Sunday Times today about the current state of journalism. I say ‘depressing’ because it is all about how impossible it is to make your way into the profession, and this is exactly what I am hoping to do this year.

The article, written by Ed Caesar, in general seems to be rather scathing about wannabe journalists. It almost insinuates that any of us who have the audacity for wanting to enter the profession must be either slightly mad or completely ignorant of what the whole process is going to entail.

“Why would anyone choose to become a journalist in this climate?” the article asks. Before explaining that: “In the early years, at least, the hours will be weird, the money derisory, the burden Sisyphean. You will also enjoy the added anxiety of having no idea what the industry will look like in 10 years.”

And Caesar is keen to point out that “next month, around 3,000 students will complete postgraduate diplomas in journalism and media studies, and a further 30,000 will receive degrees in these subjects”. But this, to me, is irrelevant.

Not all of these students will want to enter into the profession. And many of them will not have done well enough in their degree or diploma for it to be worth even adding to their CV. And a degree or diploma does not a journalist make. The majority of them will simply not be determined or good enough to crack into the industry.

And this number probably does not even begin to compare to the amount of economics, business, management and maths graduates who will be wanting to enter into accountancy, consultancy and the like. And this in a time when the recession hit these businesses often just as hard, or if not then possibly harder, than it hit journalism.

Yes, the traditional newspaper print media is dying a slow death. But that does not mean that journalism in general is. I for one have already started to see an increase in the number of jobs advertised on Gorkana in the past few months.

And I can only hope that Rupert Murdoch’s looming experiment with charging for internet content is going to be highly successful. I see no reason why it shouldn’t be, as long as others follow him as soon as possible and the BBC do start to tone down their free internet news content.

On top of this, we have the extra readership the iPad is bound to bring to look forward to and the fact that many magazines have actually recently enjoyed increased readership figures to keep us feeling positive.

I’m not saying it is going to be easy but I am determined to remain optimistic about my prospects. Nothing is impossible. I’ve just been watching BBC Young Musician 2010 and if 14-year-olds are able to train hard and perform music from memory to that kind of breath-taking standard, then I am going to stay positive about my chances of cracking into journalism.

It is exactly these types of ‘scare stories’ which turn journalists into a laughing stock as a profession. I wish there had to be more balance to journalism. Perhaps then we wouldn’t all be dismally ebbing our way towards featuring “somewhere between MPs and estate agents in the sliding scale of disgustingness,” as Caesar himself puts it.

By Sophie Hudson

P.S. Just to be extra optimistic, if you’re reading this and you’re hiring my email is: sophie.i.hudson *AT* gmail.com.

Independent Business Article

My first ever article in a national newspaper can be found here this morning.

And a useful read for anyone wanting a round up of which shares to buy or sell this week, with Diageo as a headline feature.

By Sophie Hudson

Article link: Out with homophobia in our workplaces

An article of mine about homophobia in the UK workplace has recently been published in Personnel Today, click here to read it.

The main message I would like people to take from this is to understand that this is a problem which although improving does still exist.

One of the things which was brought to my attention several times when I was interviewing people for the article was that not being homophobic seems to have become a bit of a ‘fashionable’ thing in recent years.

They said they were worried that when this fashion becomes a bit tired that people’s true prejudices will surface more obviously again and this, quite rightly, scares them.

We’ve therefore really got to work on our unnecessary prejudices as a society a lot more. They don’t do anyone any favours, not the people who hold the prejudices as my article hopefully points out, and especially not the people who are suffering purely because you have unnecessarily stereotyped them.

By Sophie Hudson

Peta ad banned for exploiting Peter

I’m a big fan of the animal rights charity Peta but they have gone a step too far with their latest advert. 

Peta (people for the ethical treatment of animals) have never shied away from using shock tactics to get their message across. And often these tactics work. One of their videos of a sheep being very cruelly slain to death actually encourage me to become a pesco-vegetarian (I’m still working on giving up fish). 

They’re latest poster went a step too far though, showing an image of Baby P’s killer Steven Barker and written underneath is: “Steven Barker: Abuser, Baby Abuser, Rapist. People who are violent towards animals rarely stop there.” Barker apparently tortured frogs and guinea pigs when he was a child. 

But the poster, which appeared on a billboard in Haringey where Baby P lived, has now been banned by the Advertising Standards Authority (ASA) who said it could be seen as “exploitation”.

They added: “We considered that the claim and image used in the ad had been used in a shocking way merely to attract attention and that the reason did not justify the means in this case. We therefore also considered that the ad was likely to cause serious offence and distress to some people.”

I understand that the message they are putting across is a very important one, but, as the ASA rightly point out, the ends cannot always justify the means. Some kind of poster which put across this message without the reference to this suffering, abused baby would have been more than adequate. The use of statistics to prove the correlation on a well designed ad would have done the job and grabbed attention.

I feel that this was the lazy way out for Peta. They saw an opportunity to grab headlines and they used it irrespective of having any respect for the memory or life of Baby P. Basically, this just isn’t a good enough reason to exploit the harrowing life this poor child had to live through and they should have been a lot more creative when putting the ad together rather than just going for the obvious.

On a final note, it is kind of ironic that the advert is getting all of this publicity. Despite what I have said above it’s obvious from this situation and numerous other similarly ‘shocking’ ads in the past, that good advertising seems to merely amount to creating posters which are so outrageous they are bound to get complained about and banned. And then the company in question can just sit back and enjoy the free ride of press they will receive, which is going to be seen and heard by far more people than the advert itself would have ever reached.

By Sophie Hudson

Will newspaper sites ever be able to charge for their content?

I’m not completely certain which newspaper or news organisation was the very first to publish their content for free online, but whomever they are, they are responsible for initiating a very messy situation.

The pay versus free debate is rife and recurring at the moment, with Rupert Murdoch in particular time and again quoted as being on the brink of charging for the online content of his news sites.

And I can understand why. News may seem to generate itself, but the write-up and presentation of it does not. There are people working very hard in these organisations, putting hours and hours into the research behind these news stories and then further time into writing them in a way which will enable millions across the globe to understand what is going on in our fast-paced world.

What the big guys are saying

I have listened to employees at both Channel 4 and The Guardian talk about this issue this week. Both came up with a very similar answer when asked what they thought about future plans to start charging for news and content online.

They argued that for regular news, they could not see how people would ever be willing to pay for this. They argued that it would be very easy for people to get the main headlines and news of the day free somewhere on the internet and it would therefore be a waste of time even trying to charge for this.

However they both argued that where charging for content could work is where you are offering very specialist content. They argued that this is perhaps why the Financial Times has thus far been successful for charging for its specialist, financial news and content.

And this point of view makes a lot of sense. I’ve been thinking about some of the things I like to read, and, very much depending on how much was being charged for it, I think it is the more specialist stuff that I wouldn’t mind having to pay for. As long as it was a simple method of payment and it wasn’t an extortionate amount of money.

Murdoch, who in the UK owns the Times and the Sun, has other ideas though. There’s been rumours that he wants to start charging for all content by June next year.

And I’ve just seen this article, for free, on The Telegraph website, which says that Rupert Murdoch is ready to “block Google’s access to his sites soon”. There are murmurings in this article that it could happen ‘within months’.

It’s going to be very interesting to see what happens with all this.

We’re all used to things becoming cheaper, not more expensive. And surely, for it to have any chance of working, all the news corporations are going to have to agree to play ball. Otherwise, if only a few continue to publish content for free online, this is going to result in huge hits for them, therefore enabling them to charge a lot for advertising and they will then see no reason to need to start charging readers.

For once everyone’s going to have to just not be greedy, all for the greater good and for the survival of online news and journalism as a whole. And quite frankly I’m not sure if it’s possible for everyone not to be greedy. This is certainly something I’ll be keeping a very close, interested eye on…

By Sophie Hudson

Why the Royal Mail, just like everyone else, must accept modernisation to survive

So the Royal Mail strike began today, with further strikes set to take place tomorrow. And, personally, I really can’t see that any of this is going to do any good for anyone involved.

We all won’t get our post, in turn we’ll start to use the post even less, and that in turn will jeopardise even more Royal Mail jobs than necessary or will jeopardise the entire Royal Mail as a business all together. So, for the first time in a while, I agree with Gordon Brown, who said that “the strike will be self-defeating if all it means is that less people use the Royal Mail”.

And as much as I sympathise with the post workers who feel they have been ‘mucked around’ over the last few years, I also can’t help but see this from a business point of view and think about the numerous workers in other sectors and businesses who have also been made redundant, had their pay or hours slashed or feel as though they’ve been badly treated by management because of the effects of changing times and new technology.

Changes in other professions

What about the countless heads which have rolled in the world of journalism, particularly in the past few years? Journalists have had to roll with the punches in a time when newspaper and magazine circulation is largely falling, the internet is becoming ever more popular as a source of news, and advertising revenues have fallen due to the credit crunch.

And it’s not just the big publications where the headcount has been slashed, all the smaller, regional titles have also had to dish out numerous redundancies, in fact, according to a Guardian article written back in March,  “More than 900 regional journalists have been made redundant since July – with further cuts to come”.

So, in every industry, in every business, these things can and do and will happen, and giving us all another reason not to use the Royal Mail to correspond with each other is going to do Royal Mail employees a lot more harm than good.

Alienating their audience

I’m the kind of person who actually quite likes using the post for certain things. If I can, I would rather settle bills by sending cheques through the post and for me sending birthday cards or letters by post can often seem more personal than an email or ‘e-cards’.

But I’m not going to feel like doing this if I’m worried my payment could be late, or I could miss someone’s birthday because workers at The Royal Mail are unhappy about their working conditions.

And businesses are starting to follow suit as well. According to the BBC’s very useful Q&A article about the strikes, “business organisations are recommending that their customers by-pass the postal system completely for important things such as paying bills”. And indeed John Lewis announced that it is “switching the business to other carriers” in order to not be affected by the strikes.

As far as I can tell technology is available, (known as the “walk sequencing machine”) to make the postal system quicker and cheaper, and able to operate with less staff than Royal Mail currently utilises. Therefore, if Royal Mail is unable to utilise this technology, it can only be a matter of time before someone with plenty of money and good business sense will take it upon themselves to start their own national postal delivery service, using this technology from word go, therefore offering a cheaper and more reliable service to its customers and in turn this will slowly kill off Royal Mail all together.

As much as I feel for the Royal Mail workers, as indeed no one likes to feel that their livelihood is in jeopardy, this is just business. These days you have to be able to adapt with the times otherwise both your own job and possibly even the company you work for will just fall flat on its face. As a fan, I do hope these strikes so not spell the end of the Royal Mail, but, with my business hat on, I can’t help but worry about their long term prospects right now.

By Sophie Hudson