Steven Mugglestone

The more I learn, the less I know

Does the FIFA World Cup Decision Surprise the Home of Britain’s Got Talent & The X Factor

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Does the FIFA World Cup Decision Surprise the Home of Britain’s Got Talent & The X Factor
(some lessons in business)

Most of us are all seriously upset at England not getting the World Cup for 2018 and (at least on the decision day) appear to be bemused at why FIFA chose Russia for 2018 and Qatar for 2022, when clearly England had by far the best bid.

Perhaps it is that FIFA and the way that it chooses where the World Cup is hosted has more similarities and areas in common to the business models of Britain’s Got Talent (BGT) and The X Factor (TXF).  As a business blog it may be interesting to review this area, as well as reflecting on how both organisations appear to have elements of democracy and group decision making, with both organisations headed by a strong and dominant Chief Executive.

The Business Model

I think that it is fair to say that BGT and TXF are business models and this can be outlined.  It is also fair to say that both BGT and TXF are not really talent competitions.  Whilst the winners have talent, the selection of the program does not necessarily choose talent, good singers, great performers, they are choosing contestants to make an entertaining program, some the strange and unusual, but many with a “back story”, the creation of ordinary person from Tesco/small Scottish village/family man/orphan/recent bereavement/you name it, the creation of a story to sell to the media is the powerful selling tool, central to the program’s success.  The consumers buy into the idea that BGT and TXF are searching for talent across the UK and we buy into the idea that the judging panel are seeking out this talent themselves, but anybody who has read Ben Elton’s Chart Throb will know, “Do the Maths,” and you quickly conclude that there is a serious level of embellishing the message,

What does that teach us about a successful business model?  It says that the initial purpose of the program, i.e. a show to identify the best talent, is second to the entertainment of the show itself and second to the creation of a powerful back story to sell to the consumers/customers the product and it is they who are paying for the product.

How does this business model compare to the business model of the FIFA World Cup.  I think there is possibly a key comparison that being the best does not mean at all that you will be included on the show.  FIFA President, Sepp Blatter, SB, reportedly had already said that England’s bid was practically faultless, yet England came last.

Perhaps like BGT and TXF, FIFA were not, and are not going to look for the best talent and the best bid, perhaps they are creating their show with the best back story to sell the World Cup product to the World Cup customers (the 208 FIFA member countries).  It is also fair to note that Australia had an incredibly strong bid for 2022, yet lost to Qatar, an oil state just over half the size of Wales (which apparently is a standard measurement for land area), with a population of 1.4m, no real football history, but lots of oil.  I am not intending to be political, just stick to the business model review.

So in comparison football talent or history is not what matters at all.  FIFA is possibly selling a back story for the world to consume, just as BGT and TXF does.  South Africa was a great back story and Russia appears to be another.  Cynically you could also go on to say, does that mean that the host will be in FIFAs pocket and at their beck and call in the future and will be dumped as soon as the next big thing comes along, just as BGT and TXF appears to do, get your 15 minutes of fame and fade away as soon as you no longer can produce money.  Well, I really would not like to comment on that one.

The destruction of future talent and desire

We all either know people or know people, who know people in the music industry in some form (6 degrees of separation would confirm that one).  People who I have spoken to have said that there is a genuine problem that that new bands and talent do not get spotted as they did in the past, by doing constant and gruelling gigs in small clubs and venues, and hoping that their agent/manager can get the appropriate talent scout and A&R person from a record label to spot the talent and sign them up.  Interestingly the very job that Simon Cowell, SC, had at EMI (but it helped that his dad was an executive at EMI at the time).

Many in the music industry are now openly saying that to get on, you have to be part of the whole reality TV and talent show route and doing the apprenticeship in clubs and small halls can no longer be seen as a sensible route to securing a record deal.  Rather than Britain’s got Talent or The X Factor, it can be seen that BTG is destroying Britain’s talent.

Is there an analogy to FIFA and world football here as well? Australia is an up and coming footballing nation, who I recall have beaten England 3-1 in 2003, but hopefully not at cricket this year.  How are they feeling losing to Qatar, who has never even been to a World Cup? Is this not stifling and restricting the development of football throughout the world.  Surely a country should get the World Cup as a developing footballing nation, not just because there is a good back story, or lots of oil (sorry no politics).

Interestingly there are comparisons here with SC and SB in that SB is pretty much a sports administration professional and has been involved in the development of a number of sports over a significant period.  Both of them used to develop the business and now control it and neither of them really had any significant professional interest in doing it, professional administrators being the key phrase, initially responsible for the development of talent, now controlling and owning it.

The overriding question, however is that, are both organisations actually destroying the talent that they rely on to trade in the future.

Control by Committee v Control by a Board

There is another interesting comparison as to how a business is run.  An SME owner managed business is generally driven and controlled by one person and everything that they say goes.

As a business becomes more complex and larger, with aims to progress beyond the OMB, that business has to take on more senior skills at a board level.  If the business wishes to become a large company or listed company or even to enhance the value to sell to a third party, the business has to be structured to trade without the all-encompassing control of the original owner manager.

The first introduction externally at a board level is probably a Finance Director, who will look to set areas for improvement covering support, operational and strategic areas and will look to structure the improvements in these areas, to be able to drive the business on http://wp.me/pQyUg-j.

Initial challenges and pressures can present themselves at this point as the owner manager sometimes faces robust challenges to their decisions and direction for the first time within their business.  The key point that this is leading to, is that as a business progresses and becomes larger and more developed, its systems and senior management team become more developed.  A full established and advanced board of directors will seek to drive the business as a board, making decisions as a board, setting strategy as a board and utilising their complimentary skills, as a board.

The next question and observation is to look at an organisation controlled and lead by committee and it sometimes can be very different.  Decisions are not necessarily made by the contribution of the unique skills of each member contributing to the strategic direction of a business, whilst each member in turns leads the area that they are uniquely responsible for.  Leadership by committee tends to be either by majority of opinion or by a controlling chair making all of the strategic decisions, with the committee only playing a supportive role.

Another comparison then, well both BGT and FIFA wish to appear to be democratic.  They both want to look as if a group of specialist and key individuals are combining their skills and knowledge to lead the organisation.  However, it appears that the latter structure highlighted above is how both organisations operate, with their own chairs/chief executives in SB and SC making all of the strategic decisions with the committee only in support.  At a smaller local level, you sometimes see this in the operation of school governing bodies or parish councils with the will of the chair to take the decisions wherever they like, with no opposition or real debate from the remainder of the committee who in many occasions may not have the skill set to challenge the chair.  Could SB and SC be the despot in this analogy and could they be using the committee structure to look as if there is a democratic decision, possibly, either way it is not really the way a successful and sustainable business operates.  As a business it has more in common with an owner managed business than an advanced public company.

Fooling some of the people, some of the time

An entrepreneur does not necessarily create something new or gives the market what it wants all of the time.  An entrepreneur spots an opportunity in the market to exploit and makes money and may well recognise that this may not last forever.  All products have a life cycle.  Businesses have to either re-invent or change to continue to be successful.

There are some key and famous sayings that come to mind that include a lesson here.  The saying, “You can fool some of the people all of the time and all of the people some of the time, but you can’t fool all of the people all of the time,” is sometimes attributed to Abraham Lincoln, but actually was said by PT Barnum, the circus showman and entrepreneur.  PT Barnum is also attributed to saying that there is a sucker born every day, but apparently he himself denied that one.  Both are pretty relevant.

What is the lesson here, well in BGT and TXF we have a business that is doing its best to fool most of the people, most of the time and there appears to be cracks appearing in the business model, which may lead to either business failure or change of strategy.  Chinks in TXF armour have recently been exploited by Facebook campaigns to ensure that Rage against the Machine became Christmas number 1 in 2009 and this year ensured that Wagner continued on the show, long past his original use.  Given this, there is evidence that the public and consumers are fighting back and this may continue.  As Barnum says, you can’t fool all of the people, all of the time.

Is this going to happen to FIFA and its leader SB, given recent comments made by the UK sporting media (and not just Panorama or the Sunday Times), this possibly could happen.  The customers of FIFA are the individual member countries, 208 member countries represented by 22 committee members for the selection of the World Cup.

A Facebook campaign as the consumer strikes back may ultimately change the business model for TXF and BGT; 208 member countries of FIFA are a far more powerful consumer and if directed could well start the changes to the FIFA business model as well.

Light-hearted but pertinent business observations written whilst recovering from man-flu

Steven Mugglestone BA FCA
Director
McGregors Corporate

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Written by Steven Mugglestone

December 3, 2010 at 4:18 pm

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