Communicating the message is important. It is not always sufficient, but if you are unable to communicate frankly, you are not going to make the right decisions for your business.
Nokia owned the mobile phone market in the first decade of this century. Early on in that period, they sold over half the units bought on the world and by the end of the decade they still sold north of a third. As they reflected on their 2010 performance, chief exec Stephen Elop, told employees the company was “a man standing on an oil platform in the North Sea and facing a raging fire on multiple fronts, who has no choice but to jump into freezing water to survive.”
Elop knew what the future had in store for his mobile phone business, as did the execs at Google, who were gaining round with Android, and at Apple, where the iPhone had already made an impact. That North Sea platform analogy was lacking in taste, but Nokia needed a major change of direction and an analogy that cut through with people was necessary.
Unlike Nokia, Newco are not the leading player in their market, but they are also standing on a proverbial burning platform. Instead of explaining this to their stakeholders, a different message was promoted with their annual accounts, “Profit”, we were told, although the word was qualified by “operational”. “Loss” was the effective word used in the accounts, for those who can understand a P&L, although few news reports got that far.
Hearts were the same yesterday, proclaiming “season 2022/23 saw the club post a record turnover of £20.8m”. This is correct and Hearts were able to report they have more money in the bank than their Glasgow cousins.
Fan comments after the news was almost universal: ‘spend more money’ but wait! Hearts record turnover came because of Europa League qualification, which didn’t happen this year. Even that was not enough to keep them out of the red, they relied on Donations of over £6m (30% of that turnover) to pay their bills.
Hearts have a shock coming in the post. Income will fall away without the Europa League. That £6m donations figure is made up of £1.6m from Foundation of Hearts members and £4.5m from other benefactors (believed to be James Anderson).
Call me cynical, but the Sugar Daddy thing is unwise. Football fans cannot rely on a rich benefactor, the game is littered with morality tales. They also cannot rely on donations from ordinary fans to hold up at the same levels as Edinburgh mortgage payments rise next year.
Stephen Elop ended his talk to staff by saying, “The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.”
He was unable to reverse the decline of Nokia’s mobile phone business, but today they employ 92,000 people with a turnover of €23bn. Shift behaviour, step into an uncertain future – that is the message which should be coming out of clubs living precariously close to the edge, not this ‘everything is great’ nonsense.