Intérêt Europe

For all those who are playing the intellectual game, here is a warning. I am going to use stereotypes and I will generalise. Stereotypes are called just that for a reason and generalisation on basis of individual viewpoint sometimes may provide a sound basis for an argument.

I am a Finn. Despite having lived almost half of my life abroad, I know how a Finn thinks. A Finn thinks of the Greek crisis this way:

Greece is in deep trouble. Greeks don’t seem to care. They just fight between themselves and cannot agree on anything. Nothing much seems to have changed. Why should I give my money to guarantee loans to such a people? They will default and I will never get any of the money back. Let them reap what they sow.

A Dutchman will think pretty much the same way. A Swede thinks like this. A German would have thought that in times of distress, people unite – they don’t start petty electoral fights.

Let me put this simply. Any sensible person realises by now that Greece’s leading classes are failing. They are in fact failing completely. That leads us to only one conclusion: Der Untergang will follow unless something happens immediately. It is as Mrs Damanaki put it. Either we decide to fight, or we distance ourselves from Europe. It is ultimately Greece’s own choice, let’s not kid ourselves.

Until the end of the last week, I have been promoting the idea that Greece can come out of this crisis reinforced, changed and more powerful than it was before. I sincerely thought that Greek politicians would finally see the light. I don’t anymore.

Boys and girls, men and women, politicians and voters, this is it. You – we all – had enough of excuses of the past to give us some extra months of goodwill by the lenders. Seeing the disarray, populism, misinformation and stubbornness, I am not sure how we are going to pick up this fight.

In the past 18 months, no Government controlled company has been sold. No public services have been shut down or outsourced to private sector to provide. All we managed to do was to pick up the low-hanging fruit and raise taxes and cut salaries horizontally. No structural changes were made. Nothing genuinely different, fast and cheap apart from tobacco tax increase was even tried. And taking some not-so-bizarre ideas further, none has discussed long-term lease of islands or vast areas of land for development. Why not? Why would we sell the land, if we could rent it out?

Measures that the Government takes for liberalising or opening the markets are either not fully implemented or they are late. In addition, many of them are half-measures which protect some, create opportunities for others and close the doors for those who seem somehow foreign to the establishment. Even Greek companies have problems in investing in Greece. Foreign money is needed, but why would someone come here right now?

I could go on with the list, but it is futile. Everyone in Greece knows that Greece has failed. The trouble is that everyone outside starts to understand it too. And their patience is running out quickly. If I didn’t live in Greece, I would suggest that everyone stopped lending and let Greece fall. But we are doing just fine, aren’t we? 

The Finnish elections provided a landslide, a big bang, a grand slam, a grand fart or whatever one wants to call it in the Finnish political system. While on one hand I would like to believe that nothing much changed other than the pecking order, perhaps something will somewhere in the deeper layers of the polity. The fact that the True Finns were so successful and that everyone else lost, cannot go unnoticed in the months and years to come.

The results in terms of seats, as far as I am concerned, are clear. There is only one party that can be said to have won. I can see several problems in this outcome. First problem is that out of the four largest parties, only one is, in its core, really European. Even social democrats are currently hesitant about Finland’s role in the international arena. The True Finns campaigned on anti-EU messages and the Centre Party is pro-European only due to circumstances.

Second problem is that the coalition of the three first seems to be the only reasonable basis for the new Government. This means that the current pro-European stance of the Government will have to undergo a shift to accommodate to new reality.

If the shift to a less international and a less pro-EU approach is big enough and lasts at least the following four years, Helsinki will become more peripheral than it has been. This, from the perspective of a small country in a geographic periphery, sounds bad. And it sounds worse when one keeps in mind the fights, both internal and external, which were needed for the country to arrive to the point where geographical distance means little and it really can sit at the tables where the future is decided.

Many said that the True Finns’ success was driven by the European financial crisis. It certainly was one of the opportunities for the former small opposition party to pass its different message to potential voters. However, equally important is the disenchantment of the Finnish people in politics as it has been. For them, True Finns promised something different. Voters wanted people like themselves in the Parliament. They wanted to give the ruling classes a lesson. They were frustrated. And their anger made a difference in the results.

Their disenchantment with politics and disappointment with the system should now have disappeared. But let me bet. It has not and it will not. This election outcome will not make their Finland happen. Many have been led to believe that they can, alone, change everything. They cannot. This will be the biggest disappointment of this whole election: la grande illusion. Finland will not leave the EU, nor will it return to the Finnish markka. Even if the financial stability mechanisms may have to be partly renegotiated, Finland will not have a choice but to accept at least to some extent to take the risk of a lender. It’s time that someone said it, clearly.

True Finns’ victory is my loss – in order to run the country forward, we all must compromise more. I am disappointed, but I am not disenchanted. My disappointment will not last very long. In the end it will be the better ideas that prevail and the international Finland that will take the lead. It is unfortunate that we will have to put breaks on for a while, but perhaps that allows us to regroup and reorganise. As the results show, quite a few people in Finnish politics should reconsider their future in the helm. There aren’t many who have the legitimacy to pretend otherwise.

Once upon a time, there was a small country called Dimosio. Life in Dimosio was generally going quite ok. In Dimosio, there was a group of professionals, let’s call them magkes, working in one of the key sectors of the economy. The companies were led by men called lamogia. All of them had a special deal with the State of Dimosio. All work in this sector was done, more or less, as needed to be – with little inspiration, expensively, and always according to the tradition.

The economic situation of Dimosio had started to worsen, but despite all odds, some investors from abroad saw an opportunity. They wanted to enter the closed market ruled by the lamogia and put some new money down the line. They proposed more flexible solutions for the work. Their young, trained and enthousiastic employees were not just magkes but hard working ordinary men and women keen on taking learnings from abroad.

The new prices, new services, flexibility and approach to business seemed to excite the markets. However, the lamogia got upset – and with them the magkes. They didn’t seem to be interested in allowing anyone to come into their game. Instead of looking for alternative solutions, the lamogia and the magkes declared a strike.

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The Government of Dimosio didn’t know what to do. It felt only logical that the new investors should be allowed to enter the markets and that the lamogia and the magkes should revisit their business models. After all, in most other countries such changes had taken place years if not decades ago. But the Government felt powerless in front of the unified lamogia and magkes.

The new investors were wondering what was happening. Dimosio was paralysed by strikes – and not only in this particular sector. Others joined the cause. After all, the business of magkes was everybody’s business. Soon, after that it seemed as if Government couldn’t sort the situation with the lamogia and allow for free economy, the foreigners left.

Dimosio was not well. Its economy was sluggish and the fact that the foreigners started to drop out following the episodes caused by the lamogia and the magkes didn’t help. Several of the lamogia couldn’t keep their business running and many magkes became unemployed.

Since Dimosio was a welfare state, it had to pay some unemployment benefits to the unemployed magkes and the lamogia. Because of the strikes and non-realised investments, the work in this particular sector was more expensive than ever. Some unemployed magkes did also black work and therefore, with the unemployment benefits, those magkes got about the same money as before, but worked less and paid also less tax. Lamogia found new ways to make their money, just as they always had.

The end result was that the competitiveness of Dimosio got even worse. All sectors suffered as the employees realised that they too should get the same benefits as the magkes and the lamogia. Taxation was increased and costs for making business in Dimosio sky-rocketed.

Dimosio turned more and more introvert. Nobody seemed to remember those investors who wanted to come and inject some money. Nobody remembered those young to-be employees, who never got a chance. It is no use to be enthousiastic in Dimosio, and most of all, there’s no point in investing in Dimosio, they would have said, if someone listened to them.

On 28 October, the Greeks celebrate their No-Day, the non-agreement between the Greek and the Italian Governments in the eve of the Second World War. The No that the Greeks gave to the collaboration with the Italians led the country immediately to the war. Today the Greeks are voting for local and regional representatives in an election which in reality has turned to a vote of confidence to the current Government. And this vote could well end up being a No at many levels.

One of my very first bosses, Liz Spencer, a friend and a good mentor gave me a lesson on public policy way back in 1996. She told me that in developing better policies No is not an amendment. According to her, a No will not change policy, a No will not drive things forward. A No is just an empty effort to put breaks on a process, to protest or deny without proposing any alternatives. And, she told me, it doesn’t work.

In my life as a lobbyist, I have seen business, trade associations, NGOs and individuals sticking to the No when things have got difficult. In almost all cases, their resounding No has not helped, at best it didn’t matter. Often, it made their lives more difficult in the end. A No doesn’t work, because it leads nowhere, because for all of those who want to improve policies and people’s lives, it is the negation of improvement.

The polling stations are closing in a quarter of an hour. I am not going to predict any outcome. We will see that in a few hours. However, as I said in an interview in To Vima Newspaper about a week ago, Greeks must believe that things can change – and that they should change. This country is not destined to be at the bottom of the list of the 27 EU countries by any measurement.

Whatever the results will be, I sincerely hope that it will not turn out to be a No; not a No in the short term nor a No in the long term. No is not an amendment. The one who wins should keep that firmly in his mind.

Yesterday, I was at the Expedia Partners Summit and 2010 Awards event (disclaimer: Expedia is a client). Speaking to many of those who participated, and having learned to know what Marilena Zagana, Director of Market Management Greece and Turkey, thinks that the future brings for the Greek tourism, one thing is clear: online reservations from outside Greece are growing at a very fast pace.

Since 2006, Expedia has increased the number of travellers to Greece by 330% while the cost per hotel night has remained almost the same. The growth in visitors outside Athens has been even greater than in the capital area.

It’s interesting to note that, on basis of the presentation by Marilena and her team member, Christina Argyrou (Market Manager Greece), the travellers booking online tend to stay in Greece longer now than they used to. The average time spent by such a traveller in Athens has grown from two and a half days to four and a half and in the islands and outside Athens from just under four days to almost a week while the prices of overnight stays have stabilised.

At the same time, the travellers in Athens tend to book their holidays over three months in advance whereas the travel in other Greek destinations is booked closer to the travel date.

According to Marilena, online bookings and internet are a great opportunity for Greek tourism. Expedia’s  40 % year on year growth in the last couple of years and the prediction that online bookings in 2011 will grow by 36 % indicate that it is important for hotel owners to be present in this global market place.

One of the pioneers of the online hotel business in Greece, Spiros Georgiou of Airotel Group, told me that the untapped resources are still huge. We need more information, more education and tons of hard work. The rewards are there, but the work must start right now.

The Greek kiosk owners and smoking product sellers are under pressure. Since the beginning of the year, they claim, their turnover is down by third and profits by 2/3 (I wonder, if this still means that they are profitable). It is no wonder given the two increases in VAT and the drastic increases in tobacco excises. The latter, I think, makes perfect sense for many reasons, but we could discuss tobacco policies later.

What really strikes me is the way in which the sector is fighting back. In the last years, kiosks in Greece have become small supermarkets in the corners of the streets. They have fridges with fresh milk, yoghurt, soft drinks, water, freezers with ice cream, press stands and then, of course, the usual stuff that kiosks sell from cigarettes to chewing gum, from nuts to metro tickets.

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Now, it seems however kiosks have stopped evolving. They have gone on a campaign trail against to Government, but instead of targeting the Government, they shoot themselves.

They advertise that just like the dinosaurian 60 million years ago, the kiosks are now dying… Hold on a second, yes, there you go… kiosks are now dinosaurian – unable to renew themselves, unable to answer to change, to show that there innovation is possible even in this kind of age-old business. They are bound to die and disappear. I wonder who the smart advertising executive was that got this brilliantly bad idea.

You see, instead of making yourself look like a prehistoric relic in modern times and complaining about the excise taxes, the obligation to provide receipts upon purchase (sic!) and all other restrictions, why not use something a little bit less self-defeating as message?

It may be that the room for maneuver in kiosk business has become very small indeed. It may be that there will be lots of casualties and that we will not see kiosks every 100m or so when walking around the town. I have said this several times: in a Darwinian world, it’s not the strongest but the most adaptive to change that survives. Kiosks have shown that they can change. The fact that they are here, unlike in many other European countries, proves that the buying public, kiosk owners and authorities all have agreed (in practice that is) that kiosks are a business worth having around.

One of my first bosses said that no is not an amendment to Government proposals. I would hasten to add that any public communications campaign that likens you to well-known losers is no communications campaign.

Since the story that I published last week, several colleagues and non-colleagues have shared their frustrations about the situation that professional services companies are facing in Greece. The problem goes far beyond the communications sector. It applies to all those who charge their creativity, professional intelligence and knowledge, service products and time, be it lawyers, business consultants, ICT advisers etc.

I don’t think it is useful to revert back to some events of the past week which showed exactly how difficult budgeting of professional services is – and how much unclear the process can be for an someone not familiar with the income and cost side of this business. Nor is it useful to think of restrictive market practices such as the lawyers have. Many of them would like to have the bar reference pricing gone as it limits competition.

What would be useful, however, is to think how we can better educate our own people, our clients and decision makers how we make or lose money. The better our business models are understood by those who buy our services (and us theirs likewise), the better the chances are that we are going to be able to make business that protects both sides’ interests and gives both the providers of services and the client better satisfaction over a long-term relationship. In this respect, professional services are like a real-life relationship. The better you know one, the more likely you are to make right choices.

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Below are some pointers to how we make money:

Hourly fees. We charge time – even when we give a client a project fee or a flat monthly retainer. Every level of seniority has a corresponding cost of time from a junior account executive to the Chairman of the company. These fees cover both the employment costs of the person, the rental and equipment, administrative costs (in most cases at least) and other professional third party costs that an office needs to be able to operate, such as lawyers, accountants etc. The fees also contain a small profit element.

Timesheets. We keep our time tracked by quarter of an hour. We don’t necessarily record every single hour that we think of our clients in the timesheets, but we should, because timesheets are not only a way to ensure accurate billing and profit/loss analysis for each account. When they are kept daily and can be found online, they also help in managing the workload of the whole agency.

Billable time. When we work for a client project, the time is marked for that client. In the end, however, it is the account director who decides if all the hours recorded can or should be billed – or get accounted for the profitability of the account.

Billing ratio. This is the percentage of time of any consultant that is billed to clients. It varies from the level of seniority so that the younger the professional, the more of his/her time should be billed. In practice, it varies from 80-90 % to 30-40 % of the top management of any agency who will spend time in management, business development, marketing etc. If you think that there are about 1,800 – 2,000 hours to be worked every year (grossly calculated), you get an idea how many hours a profitable consultant would be billing.

Costs. The biggest cost in professional services is the employment cost. Therefore, we should pay close attention to ensuring that we have stripped all the unnecessary other costs to be able to both pay fairly and attract stable and good staff. If we forget the cost and just guess the level of income needed, we either get ridiculous projects, unstable business and/or angry clients. In any of these cases, I don’t forecast a good future for the company doing it.

Now, let’s get to it and start doing the business as we should: on basis of a real economy where there are costs and income, profit and loss.