George Osborne’s Autumn Statement on December 5 promises to be rich in content. We will learn how close, or how far, he is from meeting his fiscal rules, and to what extent his recent accounting wheeze – taking back some £35 billion in profits the Bank of England has made on its quantitative easing programme – has helped his cause.

 

One thing we will not get, even if the Office for Budget Responsibility declares that more needs to be done to meet the rules, is immediate tax hikes and spending cuts. The Chancellor of the Exchequer will surely decide that these can be left for later.

 

 We can also expect the announcement of a successor to Sir Mervyn King, as Bank of England Governor, either on December 5 or before. The governorship, for which Paul Tucker, one of King’s deputies, is favourite, changes next summer.

 

We will also, and this is where the latest Richmond Business Panel research comes into it, hear a lot more about growth. The 1% bounce in gross domestic product in the third quarter has not eased the pressure on the government to do more to stimulate growth.

 

Lord Heseltine’s review, commissioned by David Cameron, came up with some ideas. The review, No Stone Unturned: In Pursuit of Growth listed 89 different recommendations, for which there is not the time or space here to go into detail on all of them.

 

The broad strands will, however, be familiar. Britain needs to improve education, skills, training, infrastructure, levels of business investment and – you would expect nothing else from Lord Heseltine – devolve much more economic decision-making to local level.

 

 It also highlighted the importance of research and development (R & D) in generating future growth and prosperity. R & D, perhaps more than any other aspect of business spending, is what business does to ensure its future. Without innovation, we are nothing. Without new products and processes, we stagnate.

Much of the recent debate on the economy seems to have missed the real point. The issue is less about recession, which ended in Q3 2009, than why the recovery has been so fragile, erratic and faltering. No recovery since 1945 has been a straight line upwards – there are always bumps in the road. This time, however, there have been rather more bumps than usual and given the unprecedented stimulus to activity from the authorities in terms of monetary (interest rates and QE) and fiscal (government spending) easing since 2008, a more robust upturn might have been expected.
 

The main reason goes back to the nature of the recession. It was debt-induced, and recoveries from financial turmoil take a lot longer than from the usual stop-go cycles that peppered the post-1945 period. The personal sector, which accounts for almost two thirds of the UK’s £1.5 trillion GDP, went on a spending and borrowing spree in the years up to 2008, underpinned by the housing market. The government, which accounts for just under another quarter of spending and was already running a deficit before the recession, then stepped up its spending at a time when its tax receipts were under pressure. Borrowing filled the gap.

These debt-related problems have not yet been unwound. Low interest rates have certainly made them more manageable and there would have been many more casualties had the Bank of England listened to the inflation hawks last year and tightened monetary policy when the Consumer Price Index was rising at 5%. But the debt is still there.
 

At one stage, household debt stood at £1.5 trillion, or the equivalent of 160% of annual earnings. This meant everyone on average owed about 19 months pay, which made the UK consumer the most indebted in the western world. This has eased back to a little over 140% of incomes but is still above the comfort zone. For its part, government borrowing soared once the personal sector slowed and in one fiscal year, the government borrowed £161 billion. This was just the latest in a series of deficits that pre-dated the recession which added to cumulative debt. Today, national debt stands at £1,065 billion, or 68% of GDP, and this excludes the ‘temporary’ cost of supporting some banks. In 2002, the UK’s national debt to GDP ratio stood at just 29%.

With  households and consumers still boxed in by the debt overhang, the traditional drivers of spending in the UK are effectively becalmed. If the 1% increase in GDP in Q3 is the start of a slow upward move back to ‘business as usual’, the economy needs to find a new source of growth, and attention is now being focused on the corporate sector. Unlike the other parts of the economy, it has cash and will need to spend, but it must spark growth rather than respond to it.
 

Despite the recession, and a number of high-profile casualties, the corporate sector has weathered the worst of the recession pretty well. According to government statistics, the net rate of return of non-financial companies dipped sharply after Q3 2008. But from a low of 10.9% in Q4 2009, it has picked up and has been above 12% for almost two years. From another data series, the gross operating surplus of these companies rose 12.5% between 2009 and 2011, and first six months of this year were better than the first half of 2011.

The highest proportion, around a third of the panel, don’t have a specific research department yet allow whoever comes up with a new idea / product to research it themselves.
 

Of those that do, the majority (55%) of the panel have only between 1 and 5 employees working as a part of the research function. This can be explained by organisations’ propensity to use external research/insight agencies.   
 

On average the panel has 21 people employed within their research function.  
 

The average amount the panel commits to R&D as a percentage of their overall turnover is 4%.
 

81% of the panel say they purchase from external market research agencies, 20% regularly and 60% sometimes. 
 

Unsurprisingly, organisations tend to undertake research more frequently with their customers than non customers. 
 

In terms of with their customers - over half carry out research on an on-going basis. As for the rest, 20% do it annually and 11% on an ad-hoc basis. 4% of the panel say they never carry out research with their customers…………
 

In terms of undertaking research with non-customers 36% do it on an ad-hoc basis, with a further 25% doing it continually. Somewhat surprising is that almost 1 in 4 organisations don’t undertake any research with their non-customers; presumably they’re happy for them to remain non-customers.
 

Very pleasing to see that the majority of the panel are positive in their views towards research.
 

Almost one third say it keeps them up with or ahead of competition whilst over half feel it greatly increases effectiveness / product development.

The tone was set early for this year’s Marketing Forum in La Jolla California when Dr. Keith Piques asked the question “Do your customers make more money doing business with you?”
 

His keynote address focused on realizing the answer to this question and how it can help you build measurable and valuable customer relationships, outperform the competition, and unlock profitable growth. 

 

Dr. Piques continued: "companies are blind to opportunities for profitable customer relationships without a deep understanding of how they create customer value relative to competitors.
 

With a rigorous and measurable understanding of how customers make more money today and in the future with you, combined with supporting plans and tools to align the entire organization for success, a company can win and win big."
 

Winning with Customers (his book)offers a step-by-step playbook to help companies develop this capability for themselves, act on it, build a culture around it and sustain it over time. The playbook includes case studies, interviews, and tools from leading B2B companies who have demonstrated success.
 

Written by recognized business thought leaders and practitioners, this book will guide you to profitable growth. The book also serves as a launch point into a community of like-minded executives that includes a companion website which offers exercises, access to thought leaders, and other tools help you win with customers.
 

Other popular US conference sessions included:-

The recent Richmond forums CIOs and IT Directors in San Diego in the US and on board Aurora in UK showed a few differences in terms of what is interesting IT professionals on each side of the Atlantic.

 

The programs were developed separately on the basis of research with the participants, and the most popular sessions were simply those that most delegates wanted to attend.

 

Being a better CIO was most popular ranking 1 & 2 in the US and number 1 in UK. 

 

Social media was understandably well-attended at both events, ranking 5 and 3 respectively.

 

US delegates also learnt about leadership and technology relevant to business partners, rated 3 & 4, whilst UK counterparts were more interested in BYOD, business continuity and the global economic situation, rated 2, 4 and 5. 

 

Most popular US conference sessions were:

Dirk Helbing opened the Security Conference in Zurich talking about the Science of Systemic Risks.

 

Our increasingly complex world brings with it new types of risk and with it new attempts to understand and manage systems and scenarios.

 

Dirk talked us through various jargon and terminology: The science of systemic risks; the theory of complex systems; the predator prey dynamics of models; game theory applied to markets; and network dependence of spreading dynamics.

 

With fascinating insight, Dirk compared stop-start traffic to economic cycles, explained crowd disasters as systemic failures and looked at the November 4, 2006 European power failure and the US banking cascade as modern problems of our coupled and interdependent world.

 

Further, he showed that the current financial crisis, rather than resulting from lack of regulation, may be the result of greater connectivity of financial institutions worldwide and a tendency just to cheat a little more with more remote organisations with which one has fewer important relationships. The correlation between connectivity and financial problems was striking.