The business pages look more like the TV or gossip columns every day. Sir Alex Ferguson is teaming up with Sir David Frost to get into the property business. Simon Cowell gets together with Sir Philip Green to launch an entertainment empire. Sir Alan Sugar, the rough-talking host of The Apprentice, is hired by Prime Minister Gordon Brown as the government’s Enterprise Tsar.
At this rate, Cheryl Cole will be drafted in as the woman to re-build Northern Rock, Davina McCall will be Sir Stuart Rose’s successor at Marks & Spencer, and Katie Price will be appointed the next governor of the Bank of England.
It is all nonsense – and damaging nonsense too. The ‘celebritisation’ of British business is the very last thing it needs. Sir Alex Ferguson is a fine football manager, and Sir David Frost a distinguished television interviewer.
The pair now believe they can turn that experience into a £1bn property company. They have set up aAim [sic] Capital Finance with backing from Middle Eastern investors to buy up real-estate assets at bargain prices. But there is very little evidence to suggest that the pair have anything to bring to the table except for some well-known names.
Likewise, it is hard to see why the duo of Cowell and Green secured such hyperbolic coverage for their television ambitions. Being rude to teenagers from Wigan hardly makes you the man to challenge the might of the Disney empire. Green is an astute trader of assets, and very skilled at working the debt markets to his advantage, but he isn’t an entrepreneur in the sense of setting up new businesses. Top Shop and BHS had been around for years before he got control of them.
Meanwhile, beyond grabbing himself a few headlines at a tough time, it’s hard to see what Brown thought he was doing by appointing Sugar as Enterprise Tsar. Leaving aside the obvious point that ever since 1917 anyone with the title ‘tsar’ has been virtually powerless, it’s hard to see how Sugar could be the right man for the job. In the 1980s, he was an astute, calculating entrepreneur, with a good eye for a market trend, even if he turned out to be better at jumping on bandwagons than creating world-beating businesses. But The Apprentice has played to the worst stereotypes of business, portraying a cut-throat world of bullying and opportunism that has very little to do with how successful corporations are actually built.
This isn’t to say that business can’t learn anything from TV and pop personalities. The celebrities who fill up the pages of Heat magazine know more than most marketing departments about branding. They know how to position themselves in the media, to create a compelling narrative, and to keep coming up with new products. There’s nothing wrong with businesses wanting to keep in touch with the modern world, nor should they ignore what is happening outside their industry.
But in general, the problem for the UK over the last decade has been too much froth and bling, not too little. Debt was built up to extravagant proportions, among consumers, firms and, perhaps most of all, by the public sector. The property market was pushed to ridiculous heights on mortgages that were far too easy to obtain. Buy-to-let tower blocks were thrown up overnight by get-rich-quick speculators in city centres where there were few affluent young professionals to fill them all. Shopping malls were filled up with ‘fast fashion’ made in the Far East and paid for on store cards. It was an economy driven by shopping, debt and boasts.
Underneath it all, however, there was very little of any real substance.
One of the striking aspects of the boom of 1997 to 2007 – the longest uninterrupted expansion of the British economy in more than a century, as Brown kept rather tediously reminding us – was how few genuine entrepreneurs it created. In the 1980s, we saw businesses such as GlaxoSmithKline or AstraZeneca rise to the top of the pharmaceuticals industry. In the 1990s, firms such as Vodafone rose to global prominence in telecoms.
But it is very hard to think of a new British company that has taken the world by storm in the past decade. Instead, the business pages have been dominated by City financiers, private-equity houses, and corporate bosses on acquisition sprees, such as the Royal Bank of Scotland’s Sir Fred Godwin. It has been about trading assets, not creating them.
That needs to change. The next decade will be about hard work. Britain needs to pay off vast quantities of debt, both personal and public. It must create new industries to fill the gap left by financial services and construction, and do so against a backdrop of rising taxes and tight credit. It will have to get used to living without the easy wealth created by constantly rising house prices. And it will need to learn how to save more and spend less.
It is going to be a slog. We’ll need to be disciplined, sacrificing, and austere. And a fresh wave of celebrity-driven business launches will have very little to teach us about that.