Home Who we are What we do What we sell

Yah-boo to "compelling" propositions

Operatic performances can make "compelling" viewing. So, too, can end-of-season football matches and the screen appearances of the late, great Robert Shaw.

But, please, members of the worldwide business community, don't emasculate this lovely, useful, emotive word by applying it to your "propositions", your "customer experiences" and your "formats".

To join me in saving the word "compelling" from the same sad fate as "solutions" and "drivers" (surely a cigarette-stained guy in a peaked cap who drives rich folk back from nightclubs), please join me in agreeing to cough, splutter or just plain shriek each time you hear the word "compelling" abused in public.

"Compelling" needs us. Together, we can save it.

Pilotless drone

A new approach for all editors: podcast your readers' complaints. This, via the excellent Freakonomics blog, had me crying with laughter. I didn't know unmanned aerial vehicles could be so funny.

Can Scotland deliver?

Over the years, there have been umpteen stories and tomes of research about Scotland's relative failure as an entrepreneurial economy. Here's the latest of those stories. While Scottish youth may have more aspirations to run their own business than ever before, which is undoubtedly a good thing, figures from the SNP show that economic output per head (excluding oil) is well below English rates, R&D spending and patent filings run behind the rest of the UK.

Now let's have a look at how the SNP proposes to address this: Er, exciting, isn't it?

Africa: the entrepreneur's solution

Even by African standards, Rwanda is a hard luck story. Endemic poverty and the genocide of 1994 have left the country in an abject state, with more than 90 per cent of the population living from hand to mouth. But one American entrepreneur has a remarkable plan to leapfrog the country into the wireless age and turn Rwanda into a global internet hub. New year stories don't come much more hopeful than Hilmar Schmundt's terrific article in Der Spiegel.

Employees or prisoners?

The UK now has 80,000 prisoners - a record figure. That's the equivalent of the numbers employed by the UK water industry. Or Lloyds TSB. Or Boots. Or Veolia Environmental Services. Or the Department of Work & Pensions. Or Starbucks.

Just a perspective.

CA's 35 day month

A few years ago, I was asked for my opinion. Would Sanjay Kumar, then CEO of CA (previously better known as Computer Associates), be a good person to speak at a conference on corporate governance? CA, I was told, was keen to get him to appear at "high level" events.

I'm rather pleased to say that I thought the suggestion laughable.

Here's why.

It's worth reading part of the indictment, brought against Kumar, Ira Zar (the CFO), Stephen Richards (Head of Worldwide Sales) and several others. If you ever wanted a tutorial in revenue recognition malpractice, here it is.

Prior to and during CA’s fiscal year 2000,
which ended March 31, 2000, numerous CA officers and executives,
including the defendants SANJAY KUMAR and STEPHEN RICHARDS, Ira
Zar, David Kaplan, David Rivard and Lloyd Silverstein, engaged in
a systemic, company-wide practice of falsely and fraudulently
recording and reporting within a fiscal quarter revenue
associated with certain license agreements even though those
license agreements had not in fact been finalized and signed
during that quarter.  This practice, which was sometimes referred
to within CA as the “35-day month” or the “three-day window,”
violated GAAP and resulted in the filing of materially false
financial statements.

19. The practice was referred to as the “35-day month”
because it involved artificially extending months, primarily the
last month of a fiscal quarter, beyond the true end of the month.
The practice did not, however, only result in months that were
artificially extended to 35 days.  Instead, months were often
artificially extended even longer.  Nonetheless, for the sake of
simplicity, the practice is referred to hereinafter as the “35-
day month practice.”

20. The central goal of the 35-day month practice
was to permit CA to report that it met or exceeded its projected
quarterly revenue and earnings when, in truth, CA had not met its
8 projected quarterly revenue and earnings.  As a result of the
practice, CA reported falsely to investors and regulators during
numerous fiscal quarters, including each of the four quarters of
CA’s fiscal year 2000, that it had met or exceeded its consensus
estimates.  In fact, in each of the four quarters of fiscal year
2000, CA improperly recognized and falsely reported hundreds of
millions of dollars of revenue associated with numerous license
agreements that had been finalized after the quarter close.  In
so doing, CA made misrepresentations and omissions of material
fact which were relied upon by members of the investing public.

21. As part of the 35-day month practice, the
defendant SANJAY KUMAR, with the assistance of Ira Zar and
others, routinely extended CA’s fiscal quarters, normally for
three business days.  This practice, which was known as “keeping
the books open,” was designed and executed so that CA could
falsely record and report revenue associated license agreements
finalized after the end of fiscal quarters.  The period including
three business days after the end of fiscal quarters was referred
to within CA as the “flash period.”

22. As a further part of the 35-day month practice,
the defendants SANJAY KUMAR and STEPHEN RICHARDS regularly met
and conferred with each other and with Ira Zar in the days
leading up to and following the end of fiscal quarters, including
during the flash period.  The purpose of these meetings was to
9 determine whether CA had generated for the quarter just ended,
including during the flash period, sufficient revenue to meet the
consensus estimate.  In each of the four quarters of CA’s fiscal
year 2000, KUMAR, RICHARDS and Zar collectively determined that
the total revenue generated for the quarter by the end of the
flash period was less than needed to meet the consensus estimate.
In each such instance, KUMAR and Zar caused CA to keep its books
open for additional days beyond even the flash period to generate
sufficient revenue to meet the consensus estimate.

23. As a further part of the 35-day month practice,
while CA’s books were held open, the defendants SANJAY KUMAR and
STEPHEN RICHARDS instructed CA sales managers and salespeople to
negotiate and finalize additional license agreements, which were
backdated to disguise the fact that the agreements had been
finalized after the end of the fiscal quarter.  CA salespeople
regularly transmitted the backdated license agreements by
telecopier to CA’s headquarters.  CA then fraudulently recorded
and reported in the earlier quarter revenue associated with the
backdated agreements.

24. As a further part of the 35-day month practice,
numerous CA officers and executives concealed the existence of
the practice from CA’s outside auditors.  Among other things, CA
executives engaged in a practice of “cleaning up” copies of
backdated license agreements before providing copies of the
10 agreements to CA’s outside auditors.  This practice included, but
was not limited to, removing from license agreements facsimile
stamps and other notations which showed the true date on which
the agreements were finalized.  This practice was designed and
carried out to prevent CA’s outside auditors, and by extension
the investing public, from learning of CA’s failure to meet or
exceed the consensus estimates for the given quarter.

How to measure an organisation

At the risk of making flippant use of a desperately serious situation, my first thought on reading about this leaked document from the US Central Command was: this would be a great way of assessing a business - where does we fit on the chart between "peace" and "chaos"?

Chinese masterclass

The recent HSBC Guanxi Lunch (organised by Caspian) provided a masterclass in how UK businesses can succeed in China. According to keynote speaker David Eldon (HSBC’s former chairman in China and the driving force behind the bank’s Asian success), UK companies face huge challenges in China (corruption, increasing labour costs, indeed skilled labour shortages) but, if they develop their connections and understand the cultural issues (ie, resist all temptations to corrupt practices), huge opportunities also loom from an ever more opulent, educated marketplace.

To hear David’s highly illuminating speech, as well as HSBC global economist Janet Henry’s presentation of the long-term issues facing China, click here.

And to hear flamboyant entrepreneur David Tang (pictured); the man behind Arup’s incredible success in China, Peter Budd; CEO of Evolution Securities China, Ying Fang; and David Eldon in a remarkable panel debate about all issues Chinese, click here.

Real Business Insights - now online


The latest edition of Real Business Insights has now been published, in association with IBM, and we've also launched an online version – giving you straight talk about tech and your business. This edition features interviews with City University, NSPCC, The White Company and cover stars Vascroft Contractors Ltd.

Feel free to visit and let us know what you think.

Really really business

Rb_sept_cov_f_25_rgbOur entrepreneurs' magazine Real Business has a whole new look, shape, feel this month – a touch of glamour in the oft-stuffy world of B2B media. It also carries a big interview with Tory leader David Cameron, who gives away his broad inclinations about business policy (but is also often elusive): claw back UK employment/regulatory rights; take a long hard look at taxes on business; a general entrepreneurial bent; but a move away from classic eighties "on your bike" Conservatism. His conclusions are often as you'd expect, but it's important that he chose a magazine for entrepreneurs to outline his business policies, as the rest of the press noted. We'll push for more details in the months ahead.



Feeds etc