July 2007

The Century of Self and The Trap: why regulation doesn't work

July 30, 2007 Marketing

If you’ve not seen the Adam Curtis series of BBC documentaries called The Trap then I believe they should be required viewing along with his earlier series The Century of Self…. Ethics and an understanding of WHY there is such conflict between people like myself, Richard Murphy, Prem Sikka and Francine McKenna on one side and the Big Four on the other. And WHY ICAEW, PCAOB and other regulatory bodies have such a hard time bringing the profession into line.The underpinning theory goes something like this: In The Century of Self, Curtis argues that the PR industry, invented by Sigmund Freud’s nephew Edward Bernays is based on the presumption that people can be manipulated and controlled by feeding their hidden desires and wants. Today, that is interpreted to represent a form of liberty where business taps into people’s emotional responsesBusiness has used psycho-analytic derived techniques to tap into the notion that people fundamentally behave out of self-interestIn The Trap, market democracy provides the route to individual freedomPeople are viewed as relatively simple machines that respond to these base needsPoliticians have abdicated power to business on the theory that liberty is best preserved by keeping people happy and supplied with an endless set of choices that meet their current needsIn this world, there is no place for society or community because selfishness is the normIt’s not quite that simple and along the way, there have been many unforeseen consequences…. Regulators have not fully realised that the main purpose of the professional in its world view and as conditioned over time is to ruthlessly exploit the notion of self interest…. I have long felt that the 30 plus year dissatisfaction felt by many small practitioners about the dominance of ICAEW Council by the interests of what is now the Big Four would one day lead to a boiling over of the pot…. My belief is based on the fact I was fortunate enough to have undertaken my degree right at the time when the current dominant economic, social and psychological theories were getting a full head of steam in the real world…. A post from Pirillo on stuff he knows nothing about lead me to theories being worked out by the very people he thinks know diddly squat in the first place.

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Vodafone roaming charges – ouch!

July 30, 2007 General

I received my first Vodafone (Spain) bill to include my GPRS plan. In the billing month, I’d been to Ireland, UK and Denmark…. Excluding tax, the charges tipped in at €125 with voice charges coming in at another €73. All plus tax at 16%…. Bear in mind that Vodafone UK and ES are essentially the same company and there’s no concession on those charges you can imagine that I am pretty cheesed off. Oh – and let’s not forget the hotel wifi access charges while I was away. Does anyone else agree with me that if you do travel outside your own country then telecoms charges feel like date rape?I’m traveling to the UK next week. I’ll be using GPRS VERY sparingly.

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Big Four – bringing the profession into disrepute

July 30, 2007 Tax and Ethics

Nigel Harris reports that PR material from three of the Big Four implies that KPMG, PwC and E&Y are all ‘number 1′ in the UK…. On a very strict interpretation, Nigel’s analysis could be described as tongue in cheek but there is a more serious point. Under the ethics rules, you can be guilty of bringing the profession into disrepute if you make false or misleading claims…. As we all know, companies often make claims that don’t really stand up but we usually recognise them for the BS they are. I believe professionals have a special duty of care here because they are regarded as trusted advisors. They must therefore ensure that advertising statements are truly meaningful. I wonder what ICAEW ethics committee has to say about this?I can hear the pleadings already. Using the language of obfuscation, each would probably roll out the PR/marketing wonks to justify their position, bamboozling the Wise Men at Moorgate Place.

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Banning Facebook in business is futile

July 29, 2007 Innovation

Neville Hobson points to reports from the Daily Telegraph indicating that:[…] More than two thirds of employers are banning or restricting the use of Facebook and similar sites over fears that staff are wasting time on them when they should be working, a survey found. Several companies have also warned employees that accessing the site during office hours is a sackable offence.More than 70 per cent of businesses, including banks and law firms, have barred the sites. City firms are taking the lead, with Credit Suisse and Dresdner Kleinwort both banning employees from accessing them…. Until recently, JP was CTO at DrKW and remains a firm advocate of social computing tools like Facebook. In a recent post JP has a hunch, suggesting that at least some of the bans have happened by accident but:The trouble with decisions like this is that the larger the company, the harder it is to overturn default decisions.You’d be surprised how often stuff like this happens.I’m not so sure. This is reminiscent of so many past ‘bans’ like use of phones for personal calls, email and as Neville points out – most recently blogging…. Is management so badly trained that it behaves like Pavlov’s dog every time something ‘new’ comes along to threaten the command and control hierarchies of which so many are enamoured?… Social networks and Facebook in particular are with us. Get over it, move on and take advantage of what it offers.

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Mike Moran: accountant, engineer, marketer

July 28, 2007 Marketing

Robert Scoble has this fascinating vidcast with Mike Moran of IBM. Mike talks about the ‘new’ marketing and how this is fundamentally different from the ‘old.’ But check his background – accounting major, then became a self taught software engineer and is now into marketing.

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The curse of over exuberance

July 28, 2007 General

I am deeply troubled by Jeremiah Owyang’s assertion that an IT Toolbox survey with the statedStudy Goal: determine how IT decision-makers and influencers worldwide use social media tools anduser-generated content to aid purchasing decisionsis:This is by far the most important report I’ve seen this year for the IT industryLooking at the comments and pingbacks, it was almost a forgone conclusion that marketers would be all over this like a rash. It plays directly towards the many exhortations for marketers to get in on the ‘social media’ hoopla. If that wasn’t worrying enough, the survey begs a lot of questions:What kinds of IT purchasing decision are we talking about?What are the variations among different sizes of company that participated?

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Arctic Systems – oh heck!

July 28, 2007 General

It’s good to see the small business person win in the battle for common sense in the Arctic Systems case…. If HMRC is taking any notice at all, it would do well to note the deep concern those readers and commenters feel about HMRCs pronouncement on the matter…. In this context, Nichola Ross Martin’s comments are apropos:Given the contribution of small business to the economy and the chaos of a small business tax policy in the last ten years (which appears to be totally driven by knee-jerk reaction such as the above statement), I had honestly hoped for something a bit more mature under the new Chancellor. Unmarried couples share things, business partners share things and of course married couples do the same. Change the rules and you simply end up discriminating against one group.In the ensuing debates, it will be interesting to see how this works its way out…. It will be interesting to see how tax justice proponents like Richard position themselves on this issue. If Nichola is right, then it is difficult to see how the government’s current position is tenable without offending against the very issues of social justice that Richard holds dear. It will require some genuine innovation on the part of the tax legislators to come up with a policy that is fair to all forms of civil partnership because having raised the issue as one for amendment, it can hardly duck out without raising fresh questions.

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PCAOB remains opaque while KPMG blunders

July 28, 2007 General

In its recent inspection report on KPMG, PCAOB found a number of what I can only describe as basic audit errors…. What is more interesting to me is the way in which PCAOB goes about its business and KPMGs response.In its inspection report, PCAOB says:A substantial portion of the Board’s criticisms of a firm (specifically criticisms of the firm’s quality control system), and the Board’s dialogue with the firm about those criticisms, occurs out of public view, unless the firm fails to make progress to the Board’s satisfaction in addressing those criticisms.In other words, play the game and we won’t tell. Give us a hard time and we go public. At a time when investors are demanding increased transparency from public companies, shouldn’t the same be true for those that audit those companies? What gives the audit profession special privilege? None apparently, except at what amounts to PCAOBs discretion.Now to KPMGs response. Unless I am sadly mistaken, they have completely missed the point when they say:In the past several years, we have enhanced the processes by which we ensure high quality, made fundamental changes to our operating and risk management structure, and put cultural and governance reforms into effect that reflect the highest ethical standards. We have taken these actions mindful of our responsibility to the capital markets.Auditors are responsible to stockholders and not markets.

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TSG survey indicates disconnect between professionals and business

July 24, 2007 General

Rather than repeat what’s already been found I’ll concentrate on a few disconnects:A third of the early respondents identified lack of IT skills as a major source of pain and expense. This skills shortage was more acute for businesses (39%) than accountants in practice (31%), which was reflected by other survey responses which showed that businesses tended to take a more strategic view of technology than their business advisers.I’m not quite sure of the connection here between skills shortage and strategic vision. The Sage Pulse report I commented upon last week said that business respondents overwhelmingly consider their accountants as important or critical to the business. If TSG is correct, then the same is not true from an IT perspective where a strategic view about technology can be the difference between good and bad choices…. When they did spend money on IT during the past year, 86% of businesses came in on or under budget, compared to 67% of accountants.In other words business is almost 25% better at managing IT spend than their professional counterparts…. More from John:Managing directors of commercial businesses were more likely to view IT as critical to the business (42%) than their financial director colleagues (33%), while practitioners took a more relaxed view about it, with 30% citing technology as “very important” rather than critical.Professional accountants both in business and in the profession have appreciably less of an understanding about the value IT can deliver back to the business…. There is clearly a ways to go before professionals are up to speed on issues like cost reduction, utility computing and other value adds that can be obtained through judicious choices. All of which begs the question – how the heck can business trust professional accountants to recommend IT solutions when a significant majority are not on the same IT planet as their business counterparts?

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