Thursday, October 18, 2007

When Customers and Shareholders Don't Count

Let's compromise- we'll slice 3% off the rump

What's happening at the BBC is a case study in how the public sector "manages" difficult decisions.

Faced with having to make 3% annual "efficiency" savings and cope with a licence fee settlement that the BBC claims leaves a £2bn black hole, they've decided to top-slice budgets pretty well across the board. Instead of gripping the real issues like closing the near £100m pa crass, audience-lite, commercial-clone BBC3, they're "spreading the misery".

The result is that the so-called public service bits are suffering in-line with the Sky lookalike bits. 10% cuts in new programming all-round, irrespective of what customers may think.

BBC Trust Chairman Michael Lyons has been wibbling just as vacuously and toothlessly as he did over local government financing (see this blog). No wonder he's Gordo's favourite bureaucrat.

Now imagine the BBC was Marks and Sparks- in many ways they fill similar roles in the mythology of Britishness.

In M&S World, a £2bn black hole would scream its presence as a very red bottom line. Angry shareholders would clobber the Board. Nasty debt leveraged sharks would smell blood and close for the kill. Management would face a clear and present choice- grip the problem now or die. A new CEO would be appointed. There'd be sackings, and overpriced supplier contracts would be renegotiated. Product lines would be changed, driven not simply by a blind need to cut costs, but the imperative to grow revenue (aka giving customers what they want). Twiggy would be hired, and that fat naked woman on the hill fired.

Black holes or blood in the water, private sector shareholders will always demand real change. And the only way for management to deliver is to satisfy customers. Because, you see, they're the ones with the money.

In the public sector, things are rather different. The ones with the money are not customers, but politicians. And real change is the last thing anyone wants. "Fair" salami slices of pain all round is always the way to go, irrespective of what customers want.
PS According to Jeff Randall on Newsnight, the Today programme only costs £5m pa, and Newsnight itself £8m pa. Given the bloated packages handed to Pax and Humph etc, that sounds awfully light. Presumably, it takes no account of all those news jockeys sitting in the back room, and all those globe trotting media celebs constantly bigged up on News 24.

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