Saturday, 7 May 2011

Bloop Award - 2009 Winner Reaps the Whirlwind

In April 2009 we awarded Bloop of the Month to National Express for the shambles it made both failing to run the East Coast line as a viable business, and then on its messy expulsion. We asked whether there had been a triumph of ego over competence and whether anyone had attempted to properly assess the Competitive Strength of the business before or during the debacle.

Well, it is “Told You So” time again – from The Times on 6th May 2011

Yesterday National Express admitted that it may not have a future in the railways.

The admission by the company’s chief executive follows the recent failure of National Express to make the Department for Transport shortlist for a new East Anglia franchise, the London Liverpool Street-based operation that it currently operates.

The East Anglia rejection means that National Express has only one train franchise left — the smaller c2c commuter service between London’s Fenchurch Street and Southend. ………..

Questioned on the comments made in a statement to the London Stock Exchange, Mr Finch told The Times: “This is a reflection of the reality. Not so long ago this company had nine rail franchises. It will soon be left with one.”

Mr Finch conceded that the failure to upgrade its management systems to the EFQM European benchmarking standard (my bold emphasis) demanded by the DfT meant that National Express had effectively “disqualified itself” from retaining the East Anglia franchise. “We scored badly on the DfT’s management modelling. Others scored better,” he said.

As we repeatedly point out in our Excellence Quartet blogs, it is a fact, proven by the most robust research, that companies that win Excellence Awards massively outperform the average in every financial dimension. These awards encompass not just operational competence but also management and staff commitment, attitudes, behaviours and values. Modern business leaders are beginning to understand the real significance and impact these “intangible” human factors have on the potential survival and prosperity of their business.

Recently they have come under pressure from a major "activist" shareholder, Elliott Management, who have accused the board of "lacking drive and ambition". We don't believe this is the real problem. What is totally clear that the current management of National Express are as uninformed as their predecessors since they point to this massive loss of business opportunity and shareholder value – not being able to run your core business is an enormous and truly shocking failure, make no mistake – as being down to a “Compliance Failure”! They are demonstrating that they see EFQM scoring merely as “some form of benchmarking” – rather than a fundamental understanding of the most powerful value adding way to run a business. This shows that they cannot even spell the word “Quality” let alone understand its commercial value. For any business leadership in 2011, such ignorance is almost as astounding as believing that Elvis is Alive.

National Express is a business that we had thought could be rated as Comfortable, at best. It is now clear from its leadership attitudes, behaviours and values that its Comparative Competitive Strength is at the bottom end of Constricted – the gateway to The Abyss. Any potential investor will need to be very cautious indeed – if the same attitudes, behaviours and values permeate the organisation this is a very high risk environment.

So we award our first business Bloop Award of 2011 to National Express – the company that can demonstrate, right from the very Top, that it really does not understand the significance of Quality.

If you have not yet found out why Quality matters, read more of our blogs (the links are in the right hand column) or contact us at Business Breakthrough Coaching.

(Click here to read the 2009 article)

Business Bloop Award is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching International where we help businesses to learn different thinking to enabledifferent actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Exceeding Expectations", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

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