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Apr 26

By George, ‘every company is dying’

According to Sir George Buckley, a top quality UK export from the North of England to the USA and now Chairman of Stanley Black & Decker and Smiths Group,  the ‘basic building blocks are the same in all companies’ – he says:

  • ‘At the 30,000ft level, every company needs:

    • A dream

    • To know what it wants to be when it grows up

    • Good people

    • Relentless execution’

  • ‘At the 10,000ft level, senior executives have only five levers to pull:

    • Sales growth

    • Margin expansion

    • Working capital for improvement

    • Tax rate

    • P/E multiple’

That said, he claims many executives ‘do not know’ the above

Indeed, ‘the core of every company in the world is dying because of competitive attacks, the end of life of its products and maybe even cannibalisation of its own products’ – the trick is calculating how fast you are dying and then working out how much more stuff you need to put in at the top to counteract what is leaking out at the bottom’

‘If you only focus on short term results and not on replacing that core or expanding your capabilities, then you die’

He then claims there are only three ways to make new money in the Adam Smith sense of the phrase – via Manufacturing, Minerals and Extraction, and Agriculture – Banking does not make new money, nor Insurance, nor Tourism – they take money – they might expand the UK economy but they do not create new wealth

Reference the UK, his diagnosis of our deficiencies is mainly lack of skills:

  • ‘People should be encouraged to study/ work in STEM subjects – Science, Technology, Engineering & Mathematics

  • And charging people to study them – via student loans – is short-sighted’

Overall, the UK government ‘should foster innovation, support manufacturing and ensure that the education system lubricates the flow of skills that the UK needs’

George, despite having a degree and PhD, claims he gained most of his business knowhow in the ‘School of hard knocks’ where he found out ‘what works’

Most managers, and ministers, would do well to heed what he says

 

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