Philanthropist Seymour Schulich has an MBA school named after him at York University. But when it comes to giving career advice, the former stock analyst who struck it rich with his gold company in Nevada is anything but academic.
In Get Smarter, written with The Globe and Mail's business columnist, Derek DeCloet, he ladles out homespun wisdom in two-to-four-page crisply written, anecdote-laden chapters aimed at 30- to 40-year-olds, but golden at any age.
He starts with the decision-making tool that he began to wield back in university days and continued to employ in the decisions that helped him to become a billionaire. It's a variation of the pro-con method, but with weighting that allows you to strip away emotion and examine the importance of all the points at stake.
Here's how it works: Start on one piece of paper listing all the positive things you can about the issue in question, giving each item a score from zero to 10 -- the higher the score, the more important it is to you. Then move on to the negatives, scoring them from zero to 10 as well, only this time 10 refers to a major drawback.
Now add up the scores on each sheet. If the positive score is at least double the negative score, you should do whatever is under consideration. But if the positives don't attain that two-to-one advantage, you shouldn't tackle it -- or, at least, you should think twice.
"Yes, it is ridiculously easy. But one of the great fallacies of modern life is that decision-making has to be complicated to be effective," he says.
Picking a field to work in is just as easy, to his mind. Go for a business with high profit margins since the jobs usually pay more, have fewer layoffs and bankruptcies, and are less stressful. He spent a good chunk of his life in oil and mining, where the great advantage is that you can double or triple the value of a company with one drill hole. "No other industry can create wealth as rapidly," he observes.
But stay away from foreign oil plays, where you can run into expropriation. Closer to home, given the poor margins, he warns against airlines, auto parts, retailing, biotechnology, grocery stores, chemicals, wholesaling, machinery manufacturing, paper and forest products, auto manufacturing, restaurants, appliance manufacturing, trucking, any manufacturing competing with China, and telecom service.
"Don't misunderstand: You may be able to find fulfilment and a rewarding career in any of the above. But you're more likely to find satisfaction and superior financial rewards in industries with superior economics," he says.
You also want to be wary of four enemies of business people:
Ego: This destroys more people than any other single thing.
Greed: It can lead you to lose everything, he warns, as with the dog in Aesop's fable clutching a lamb chop in its jaw that crossed a stream and lunged at his reflection, hoping to get the second chop but dropping the first.
Alcohol and drugs: These two can destroy many an executive career.
Assistants who are sexually attractive, or, as he crudely puts it, "assistants with big breasts":Men have lost their career and fortune by succumbing to this temptation.
At the same time, he adds an important rule learned during 50 years of observation: Don't take your spouse or "significant other" to business meetings out of town or on tours. They aren't interested, and don't want to be there. They also can be a giant distraction, and can create havoc if they interact poorly with others.
But it helps to have a partner as a sounding board, both on the home front and in the office.
Many of the greatest start-ups in the past 30 years -- think of Apple, Oracle, Berkshire-Hathaway, Yahoo, and Google -- started as teams of two.
Mr. Schulich has worked all his life with partners, and recalls the many times he woke in the middle of the night with a brilliant idea that the next day his partner patiently talked him out of by listing many factors he had ignored. "Good partners are a blessing!" he says.
To keep them, you need to abide by the Golden Rule of Partnership: mutual veto power. If you cannot agree on a major proposition, you don't do it.
In the introduction, he states his hope that each reader who invests time and money in the book will leave with 20 to 30 ideas -- some that can help transform or shape their lives.
That seemed like a bold statement, but, in fact, he delivers enough solid, diverse advice to meet that goal for many readers.
It's also an interesting approach to a memoir, since he confines himself in the main part of the book to offering business advice and leaves his own experiences with his mining company, Franco-Nevada Mining Corp., to the second appendix (the first appendix, showing his sense of what appeals to readers, lists his top 10 all-time movies).
Wednesday, August 22, 2007
Monday, August 20, 2007
Clash of generations: Myth or mainstream? - Harvey Schachter
The conventional wisdom is that the different generations in our workplace clash because they each want different things. But Jennifer Deal, a research assistant with the Center for Creative Leadership, says studies show we all want the same basic things at any age. "Conflict has less to do with age or generational differences than it does with clout - who has it and who wants it," she writes in Executive Excellence. Leaders therefore need to take advantage of the common ground between the generations:
All generations have similar values
Family is the value cited most frequently by all generations. Other common values include integrity, achievement, love, competence, happiness, self-respect, wisdom, balance, and responsibility.
Everyone wants respect
Older people talk about respect in terms of "give my opinions the weight I believe they deserve" and "do what I tell you to do," while younger respondents characterize respect more as "listen to me" and "pay attention to what I say."
Leaders must be trustworthy
Individuals of all generations trust the people they work with directly more than they trust their organization (and their organization more than they trust upper management). All generations expect their leaders to be worthy of trust.
People want leaders who are credible and trustworthy. They want managers to listen, and to be farsighted and encouraging.
Internal politics is a problem at any age
Individuals of all generations are concerned about organizational politics, being recognized for the work they do, and getting the resources they need to do their job. At the same time, they recognize political skills are needed to move up.
No one really likes change
The stereotype is that older workers dislike anything about their workplace being changed while younger people relish change. But few people say they actually like change. "Resistance to change has nothing to do with age; it is all about how much you have to gain or lose as a result of the change," she stresses.
Loyalty depends on the context
People of all generations don't think that being loyal in the old sense is good for their careers. However, people closer to retirement are more likely to want to stay with the same organization. The time a worker puts in each day has more to do with position than age.
Everyone wants to learn
People are interested in gaining the skills to move to the next level. They want development in leadership, skills training in their field of expertise, problem-solving and decision-making, team building, and communication skills.
All generations have similar values
Family is the value cited most frequently by all generations. Other common values include integrity, achievement, love, competence, happiness, self-respect, wisdom, balance, and responsibility.
Everyone wants respect
Older people talk about respect in terms of "give my opinions the weight I believe they deserve" and "do what I tell you to do," while younger respondents characterize respect more as "listen to me" and "pay attention to what I say."
Leaders must be trustworthy
Individuals of all generations trust the people they work with directly more than they trust their organization (and their organization more than they trust upper management). All generations expect their leaders to be worthy of trust.
People want leaders who are credible and trustworthy. They want managers to listen, and to be farsighted and encouraging.
Internal politics is a problem at any age
Individuals of all generations are concerned about organizational politics, being recognized for the work they do, and getting the resources they need to do their job. At the same time, they recognize political skills are needed to move up.
No one really likes change
The stereotype is that older workers dislike anything about their workplace being changed while younger people relish change. But few people say they actually like change. "Resistance to change has nothing to do with age; it is all about how much you have to gain or lose as a result of the change," she stresses.
Loyalty depends on the context
People of all generations don't think that being loyal in the old sense is good for their careers. However, people closer to retirement are more likely to want to stay with the same organization. The time a worker puts in each day has more to do with position than age.
Everyone wants to learn
People are interested in gaining the skills to move to the next level. They want development in leadership, skills training in their field of expertise, problem-solving and decision-making, team building, and communication skills.
Monday, August 13, 2007
That next promotion could be at your fingertips - AMY VERNER
Are you wondering why you might not have nailed that potential new account despite having stellar storyboards and a thorough understanding of your client?
Maybe the problem wasn't so much in the presentation of your proposal as in the presentation of your hands.
Regular readers will know that I'm a strong proponent of the word "polished." It's difficult not to be when the word's various definitions include refined, cultured, flawless and skillful - all qualities exemplified in a role-model employee.
Today, I will address polish in the context of nail care - and this applies to men, too
Consider some highly possible scenarios: You're meeting your lawyer and he's thumbing through some documents. You notice chewed nails. Red flag No. 1: You think he's way too anxious.
Alternatively, you notice crud underneath his nails. Red flag No. 2: You think, if he doesn't notice that, then what else isn't he noticing?
Or, if your lawyer's a lady, you are concerned that her nails are the colour of oxblood and so long that they resemble talons. Red flag No. 3: You wonder whether she's passive-aggressively saying, 'Don't mess with me or I'll claw your eyes out.' "
All this is to say that people don't realize how quickly they judge others based on the hard layer that protects the tips of your 10 digits.
"A lot of people associate clean hands with being more trustworthy," says Ashley Cox, a lead aesthetician and manager of the Men's PowerSpa in downtown Toronto.
There, construction workers and executives spend 30 minutes and $40 for the "Essential Hand Care" treatment that includes cut, shape, cuticle work and massage. In other words, a manicure, which ironically sounds too feminine.
Handling paper and working in dry offices can be dehydrating. Some customers come in as often as twice a month because, as Ms. Cox points out, "Your hands and your face are your best business card."
Vancouver image consultant and personal shopper Diana Kilgour says men will only pay attention to their own hands once they see what a difference a manicure can make.
A little pampering in the name of looking professional seems reasonable enough, but women have been known to treat their nails as mini-canvases. Airbrushing on long, artificial nails makes it possible to create detailed, multi-coloured designs. But only women who own stock in the tools responsible for these techniques should consider arriving at work with sunsets or paw prints on their nails.
Ms. Kilgour is a proponent of polish, even more so when women have large nail beds. She is adamant, however, that certain looks work better than others. Black polish has transcended its association with Goth-obsessed teens and is now considered progressively fashionable. Chanel's Vamp and OPI's Lincoln Park After Dark lacquers have been popular enough over the years to spawn waiting lists.
Just remember Ms. Kilgour's advice: "If you are brilliantly groomed in every way and doing a wonderful job, then yes, I suppose you can have dark polish on short nails if it's always on," she says. "But there's nothing less attractive than dark polish that's half on, half off. That's just a nightmare."
A much safer option is the French manicure, where the nail attached to the skin gets a pinkish coat not far from its original shade and the white end is emphasized with white polish. Irene Lee, owner of Pure Nail Bar, which has five locations across Vancouver, says women can get 10 days out of a French manicure ($25) depending on how often they use their hands.
For Ms. Kilgour, the bottom line is not what people can get away with, but measuring up to a standard. "When someone else is writing our paycheque and doing performance reviews, the rule would be, 'Are your hands speaking louder than you are?' "
So now raise them up if you'd like a raise.
Maybe the problem wasn't so much in the presentation of your proposal as in the presentation of your hands.
Regular readers will know that I'm a strong proponent of the word "polished." It's difficult not to be when the word's various definitions include refined, cultured, flawless and skillful - all qualities exemplified in a role-model employee.
Today, I will address polish in the context of nail care - and this applies to men, too
Consider some highly possible scenarios: You're meeting your lawyer and he's thumbing through some documents. You notice chewed nails. Red flag No. 1: You think he's way too anxious.
Alternatively, you notice crud underneath his nails. Red flag No. 2: You think, if he doesn't notice that, then what else isn't he noticing?
Or, if your lawyer's a lady, you are concerned that her nails are the colour of oxblood and so long that they resemble talons. Red flag No. 3: You wonder whether she's passive-aggressively saying, 'Don't mess with me or I'll claw your eyes out.' "
All this is to say that people don't realize how quickly they judge others based on the hard layer that protects the tips of your 10 digits.
"A lot of people associate clean hands with being more trustworthy," says Ashley Cox, a lead aesthetician and manager of the Men's PowerSpa in downtown Toronto.
There, construction workers and executives spend 30 minutes and $40 for the "Essential Hand Care" treatment that includes cut, shape, cuticle work and massage. In other words, a manicure, which ironically sounds too feminine.
Handling paper and working in dry offices can be dehydrating. Some customers come in as often as twice a month because, as Ms. Cox points out, "Your hands and your face are your best business card."
Vancouver image consultant and personal shopper Diana Kilgour says men will only pay attention to their own hands once they see what a difference a manicure can make.
A little pampering in the name of looking professional seems reasonable enough, but women have been known to treat their nails as mini-canvases. Airbrushing on long, artificial nails makes it possible to create detailed, multi-coloured designs. But only women who own stock in the tools responsible for these techniques should consider arriving at work with sunsets or paw prints on their nails.
Ms. Kilgour is a proponent of polish, even more so when women have large nail beds. She is adamant, however, that certain looks work better than others. Black polish has transcended its association with Goth-obsessed teens and is now considered progressively fashionable. Chanel's Vamp and OPI's Lincoln Park After Dark lacquers have been popular enough over the years to spawn waiting lists.
Just remember Ms. Kilgour's advice: "If you are brilliantly groomed in every way and doing a wonderful job, then yes, I suppose you can have dark polish on short nails if it's always on," she says. "But there's nothing less attractive than dark polish that's half on, half off. That's just a nightmare."
A much safer option is the French manicure, where the nail attached to the skin gets a pinkish coat not far from its original shade and the white end is emphasized with white polish. Irene Lee, owner of Pure Nail Bar, which has five locations across Vancouver, says women can get 10 days out of a French manicure ($25) depending on how often they use their hands.
For Ms. Kilgour, the bottom line is not what people can get away with, but measuring up to a standard. "When someone else is writing our paycheque and doing performance reviews, the rule would be, 'Are your hands speaking louder than you are?' "
So now raise them up if you'd like a raise.
Friday, August 3, 2007
To get ahead: Tried and truisms - WALLACE IMMEN
The book shelves groan with volumes of the latest fad theories. Plenty of coaches are eager to impart their advice. And there's always a mentor to search out for guidance from the perch of experience.
So who does James Dale turn to for wisdom on how to advance his career successfully? Why, himself.
And what magic formulas has he come up with? None. For Mr. Dale, it's the tried and true that count. He's learned that the most effective strategies are the ones you already know.
"In fact, the secrets to career success aren't secrets at all but, rather, ideas, values and strategies most of us know so well that we tend to ignore them," says Mr. Dale, who credits applying the principles imparted by his parents, teachers and church leaders as major factors in his rise to chief executive officer of Detroit-based advertising agency W.B. Doner & Co. from 1991 to 1995.
His new book, The Obvious: All You Need to Know in Business. Period. is laced with advice like:
Simple is better. Don't look for complications that will distract you; stay focused on the goal and throw out mental trash that gets in the way.
Mean what you say. Exaggeration and embellishment undermine your credibility.
Honesty is the best policy. There's no such thing as a good liar and the truth invariably emerges. So take responsibility and apologize rather than hiding behind excuses.
If you don't know, ask. Don't be arrogant or afraid to admit that you don't understand. It saves making a lot of uninformed mistakes.
Yet, "we can tend to ignore such time-tested truths because they are obvious," says Mr. Dale, now a partner in management consultancy Richlin/Dale LLC in Baltimore. "Human nature is to look for miracles and magic shortcuts."
But in order to state and apply the obvious, you still have to find ways to tap your inner knowledge, career coaches say. So books and advisers can still be essential for shaping our thinking. The key is not to get sidetracked by following the latest fads.
You have to keep up with the current thinking, if only to remind yourself of what you already know, says Toronto-based career coach Nina Spencer, president of Nina Spencer & Associates, and the author of Getting Passion Out of Your Profession.
Self-help books and coaching can help you develop insight because they make you focus on what you are doing well and what you need to improve on, she says.
And no matter how seemingly new career fads may sound, "in reality, they are based on long-standing truths about human nature, told from different perspectives and in different ways," she says.
People may hear versions of obvious truths again and again - but ignore them until they are ready to use them. "There is always someone who is reaching a position to put the advice to immediate use," Ms. Spencer says.
At the same time, "jumping on every fad can distract you from what your our life experience, intuition and common sense can tell you should be done," says Steve Mitten, president of Principal Evolutions Coaching and Training Inc. in Vancouver.
By making the effort to distill the lessons that emanate from your life experience, intuition and common sense, you will develop an inner management expertise, he says.
"It takes work," Ms. Spencer adds. "It is not as easy as saying 'I know that.' You have to discover what you know, but are not paying attention to."
She suggests delving into books you may not have gotten around to reading that explore professional and personal values. "The original self-help books are religious texts we still lean on, whether it is the Torah, the Bible or the Koran. It can also be classics of motivational literature or current bestsellers about leadership and productivity," Ms. Spencer says.
Reading them isn't enough: "You also have to make a conscious effort to apply the truths you discover and step back regularly and examine what you are doing and how it relates to what you value and believe in," suggests career coach Irene Gardiner-Harding.
And it is easier than ever to get sidetracked in the modern workplace, says Ms. Harding, a partner in the coaching company playsthatwork Inc. in Victoria.
"We lose track of our intuition because of the hectic pace of daily tasks and being told what to do by the boss," Ms. Gardiner-Harding says.
"You can end up not knowing what you want because of all the clutter in your mind and the conflicting advice from people around you who say they know better," she adds.
But, invariably, she finds, when you go with your gut instinct, you'll get an answer that's good for you.
"You may still makes mistakes along the way, but they are based on your knowledge and experience, and you can learn from these mistakes better than you can from making mistakes based on what someone else tells you," Ms. Gardiner-Harding says.
That's the approach Mr. Dale advocates.
People have a terrible fear of failure and would rather rely on someone else's advice than their own instinct they because they don't trust themselves.
But "you can learn more from failure than you do from success because it points out what needs to be done the next time around and gives you the fuel for success," Mr. Dale says.
His favourite example is that Babe Ruth is remembered for setting a record number of home runs. But he actually also struck out a record number of times.
"Ignore the obvious at your own peril," Mr. Dale advises. "Learning and applying what you know requires long-term effort rather than an overnight fix, but the reality is that these truths are miraculous because they work. And nothing is better than something that works."
Stating the obvious
Truisms that are easily overlooked can be key to advancement, says James Dale, author of The Obvious: All You Need to Know in Business. Period.
Here are some of his favourites:
Obsessive-compulsive isn't all bad. Being on time, returning calls, proofreading, editing and rerunning the numbers should never be beneath you. "If you just do the details right in your job, you will put yourself ahead of about 95 per cent of your competition."
Be on time. People who are late develop a reputation for being late, which takes away from anything else they may have to offer in a meeting. Promptness builds an impression of reliability.
Work is a challenge, or it should be. "You perform at your best when you're tested. So, if you're good at what you do and if you can almost do it blind-folded, stop doing it and raise the stakes. Even if you fail, you fail at something hard, not easy, and you learn something you didn't already know."
Keep an open mind. "It isn't just a 50-year-old who gets set in old ways. You can get hardening of your thinking in your twenties if you aren't open to new ideas," he says. "The career implication is that if you are resistant to change and change is the norm, you're destined not to survive long in the organization." He recommends getting into the habit of noticing and entertaining new ideas, fashions and technology. Whether you like them or not, you have to know the current trends and why they have appeal because they will have influence in the future.
Failure is good. Fear of failure leads to inaction, which leads to failure. By taking a chance, you either come out with a success, or at least knowledge you can apply to the next chance you have to take.
Consistency beats a hot streak. If you watch somebody at the gambling table, hot streaks end sooner or later - and they can turn into cold streaks. So, if you hit a big win, don't get carried away with your success.
Don't be a jerk. The person who consistently commands respect is reasonable, kind, decent and fair - in a word, nice. "There are a remarkable number of people in management who believe the route to success is to be a bastard, take no prisoners and be tough," Mr. Dale says. But that's not being smart because people will fear you rather than respect you, he adds.
Life isn't fair. Get over it. There is no upside in dwelling on slights or missed opportunities.
Cut your losses. Not everything works out. If it isn't working, try to fix it; if it still doesn't improve, move on because the situation is unlikely to get better.
So who does James Dale turn to for wisdom on how to advance his career successfully? Why, himself.
And what magic formulas has he come up with? None. For Mr. Dale, it's the tried and true that count. He's learned that the most effective strategies are the ones you already know.
"In fact, the secrets to career success aren't secrets at all but, rather, ideas, values and strategies most of us know so well that we tend to ignore them," says Mr. Dale, who credits applying the principles imparted by his parents, teachers and church leaders as major factors in his rise to chief executive officer of Detroit-based advertising agency W.B. Doner & Co. from 1991 to 1995.
His new book, The Obvious: All You Need to Know in Business. Period. is laced with advice like:
Simple is better. Don't look for complications that will distract you; stay focused on the goal and throw out mental trash that gets in the way.
Mean what you say. Exaggeration and embellishment undermine your credibility.
Honesty is the best policy. There's no such thing as a good liar and the truth invariably emerges. So take responsibility and apologize rather than hiding behind excuses.
If you don't know, ask. Don't be arrogant or afraid to admit that you don't understand. It saves making a lot of uninformed mistakes.
Yet, "we can tend to ignore such time-tested truths because they are obvious," says Mr. Dale, now a partner in management consultancy Richlin/Dale LLC in Baltimore. "Human nature is to look for miracles and magic shortcuts."
But in order to state and apply the obvious, you still have to find ways to tap your inner knowledge, career coaches say. So books and advisers can still be essential for shaping our thinking. The key is not to get sidetracked by following the latest fads.
You have to keep up with the current thinking, if only to remind yourself of what you already know, says Toronto-based career coach Nina Spencer, president of Nina Spencer & Associates, and the author of Getting Passion Out of Your Profession.
Self-help books and coaching can help you develop insight because they make you focus on what you are doing well and what you need to improve on, she says.
And no matter how seemingly new career fads may sound, "in reality, they are based on long-standing truths about human nature, told from different perspectives and in different ways," she says.
People may hear versions of obvious truths again and again - but ignore them until they are ready to use them. "There is always someone who is reaching a position to put the advice to immediate use," Ms. Spencer says.
At the same time, "jumping on every fad can distract you from what your our life experience, intuition and common sense can tell you should be done," says Steve Mitten, president of Principal Evolutions Coaching and Training Inc. in Vancouver.
By making the effort to distill the lessons that emanate from your life experience, intuition and common sense, you will develop an inner management expertise, he says.
"It takes work," Ms. Spencer adds. "It is not as easy as saying 'I know that.' You have to discover what you know, but are not paying attention to."
She suggests delving into books you may not have gotten around to reading that explore professional and personal values. "The original self-help books are religious texts we still lean on, whether it is the Torah, the Bible or the Koran. It can also be classics of motivational literature or current bestsellers about leadership and productivity," Ms. Spencer says.
Reading them isn't enough: "You also have to make a conscious effort to apply the truths you discover and step back regularly and examine what you are doing and how it relates to what you value and believe in," suggests career coach Irene Gardiner-Harding.
And it is easier than ever to get sidetracked in the modern workplace, says Ms. Harding, a partner in the coaching company playsthatwork Inc. in Victoria.
"We lose track of our intuition because of the hectic pace of daily tasks and being told what to do by the boss," Ms. Gardiner-Harding says.
"You can end up not knowing what you want because of all the clutter in your mind and the conflicting advice from people around you who say they know better," she adds.
But, invariably, she finds, when you go with your gut instinct, you'll get an answer that's good for you.
"You may still makes mistakes along the way, but they are based on your knowledge and experience, and you can learn from these mistakes better than you can from making mistakes based on what someone else tells you," Ms. Gardiner-Harding says.
That's the approach Mr. Dale advocates.
People have a terrible fear of failure and would rather rely on someone else's advice than their own instinct they because they don't trust themselves.
But "you can learn more from failure than you do from success because it points out what needs to be done the next time around and gives you the fuel for success," Mr. Dale says.
His favourite example is that Babe Ruth is remembered for setting a record number of home runs. But he actually also struck out a record number of times.
"Ignore the obvious at your own peril," Mr. Dale advises. "Learning and applying what you know requires long-term effort rather than an overnight fix, but the reality is that these truths are miraculous because they work. And nothing is better than something that works."
Stating the obvious
Truisms that are easily overlooked can be key to advancement, says James Dale, author of The Obvious: All You Need to Know in Business. Period.
Here are some of his favourites:
Obsessive-compulsive isn't all bad. Being on time, returning calls, proofreading, editing and rerunning the numbers should never be beneath you. "If you just do the details right in your job, you will put yourself ahead of about 95 per cent of your competition."
Be on time. People who are late develop a reputation for being late, which takes away from anything else they may have to offer in a meeting. Promptness builds an impression of reliability.
Work is a challenge, or it should be. "You perform at your best when you're tested. So, if you're good at what you do and if you can almost do it blind-folded, stop doing it and raise the stakes. Even if you fail, you fail at something hard, not easy, and you learn something you didn't already know."
Keep an open mind. "It isn't just a 50-year-old who gets set in old ways. You can get hardening of your thinking in your twenties if you aren't open to new ideas," he says. "The career implication is that if you are resistant to change and change is the norm, you're destined not to survive long in the organization." He recommends getting into the habit of noticing and entertaining new ideas, fashions and technology. Whether you like them or not, you have to know the current trends and why they have appeal because they will have influence in the future.
Failure is good. Fear of failure leads to inaction, which leads to failure. By taking a chance, you either come out with a success, or at least knowledge you can apply to the next chance you have to take.
Consistency beats a hot streak. If you watch somebody at the gambling table, hot streaks end sooner or later - and they can turn into cold streaks. So, if you hit a big win, don't get carried away with your success.
Don't be a jerk. The person who consistently commands respect is reasonable, kind, decent and fair - in a word, nice. "There are a remarkable number of people in management who believe the route to success is to be a bastard, take no prisoners and be tough," Mr. Dale says. But that's not being smart because people will fear you rather than respect you, he adds.
Life isn't fair. Get over it. There is no upside in dwelling on slights or missed opportunities.
Cut your losses. Not everything works out. If it isn't working, try to fix it; if it still doesn't improve, move on because the situation is unlikely to get better.
Living up to the challenge - MARCIE GOOD
The collection of old warehouses, industrial buildings, an auto body shop and empty stretches of pavement southeast of Vancouver's Main Street and Terminal Avenue is hardly a utopian vision.
In the minds of a team from Stantec, however, it is.
A group of 12 architects, engineers and urban designers from the Vancouver company recently won second place in the "most visionary" category in an international contest sponsored by the Seattle-based Cascadia Region chapter of the U.S. Green Building Council, which includes member offices in British Columbia.
The 19 entries in the competition had to meet the criteria of the so-called Living Building Challenge, which calls for ultra-green sustainable buildings capable of meeting their own energy and water needs using renewable resources. Two winners were chosen in each of the "most visionary" and "realizable" categories. Stantec, the only B.C. winner, picked up $1,000 (U.S.) for its prize.
For their entry project, the Stantec team chose a rundown, seven-acre Vancouver site that is ripe for renewal. The model they envisioned features 16 buildings offering residential, light industrial and commercial components, all of which would make maximum use of rainwater, daylight and solar power to meet energy, heat and water needs.
The design team focused not only on reducing waste but also reusing it, outlining methods to collect compostable material from kitchens and restaurants and transform it into heat, power, vehicle fuel and soil. The end result was an ideal community that could provide its own energy, heat and water, with enough surplus to sell to others.
It might sound like an Al-Gorian pipe dream, but according to Stantec intern architect Max Richter, this kind of community is closer than we think.
"We wanted to push the envelope, but at the same time we wanted it to be feasible," Mr. Richter said of the Stantec entry.
"We're using technology that exists. We're not relying on NASA to develop something that would make this work."
Along with the sustainable energy and water measures, the Stantec team proposed planting trees on the site to help improve the soil after decades of industrial pollution. It also scored points for choosing a site close to the Main Street SkyTrain station and locating workplaces in a high-density area.
Rather than tearing down the old warehouses on the site, the Stantec designers proposed making them more energy-efficient with a covering of photovoltaic panels and recycled glass. The skin would collect water and act as a ventilator, responding to changes in airflow, humidity and temperature. This idea was particularly noted by one of the competition's three judges, Jason McLennan, executive director of the Cascadia Region chapter who drew up the guidelines for the Living Building Challenge in the mid-1990s.
Among the 16 criteria for a living building is the need for "net zero water," meaning that the building's annual water allotment is the amount that falls on the site; it might draw from a municipal supply sometimes, but must contribute an equivalent amount of water to other sites. It also treats its own water on site.
Similarly, the criterion for "net zero energy" means the building provides for its own power needs through renewable energy generation, such as solar or wind. When sunlight is low, it might draw from an outside power grid, but it can also sell excess power.
Other requirements include that the building generate no pollution, and that it improve the health and diversity of the local ecosystem. Each of the 16 criteria have been demonstrated in existing buildings, but a living building that meets all of the standards has yet to be built.
However, Mr. McLennan expects to see one within the next 18 months: a classroom building at Cambrian College in Sudbury, Ont., is in the final stages of design while three projects in Portland, Ore., are vying to be the first.
"There would be no barrier, technologically, to these buildings — we've proven that," Mr. McLennan said.
"The biggest barrier is attitudinal, or human-based, barriers. Right after that would be economic ones."
Because ultra-green buildings cost more at the outset, Mr. McLennan says the most likely candidates to build them are institutional. That's part of the reason the Stantec group chose the Main and Terminal site: It's owned by the City of Vancouver, and thus their theoretical project could conceivably go ahead some day. (A Stantec study of a living building concluded that, over a 100-year period, it would cost less to build, operate and take down than a structure built to LEED Gold standards.) Stantec's current projects include the Vancouver Aquarium expansion and the Greater Vancouver Regional District's water treatment plant, both of which are aiming for LEED Gold rating. The water plant design collects methane from waste and uses it to generate power and heat, an idea that was used in the competition entry for the Main and Terminal site.
The team from Stantec, which has 390 employees in its Vancouver office, spent about a month on company time designing their entry. Mr. Richter said they took part in the Living Building Challenge contest to encourage other designers and developers to expand their ideas about what a sustainable building or community could be.
That, too, was the rationale behind the Living Building Challenge. For most of the 20th century, Mr. McLennan explains, building practices reflected architect Le Corbusier's famous line that houses are "machines for living," guzzling energy, heat and water and spewing out waste. When he drew up the guidelines, Mr. McLennan replaced the machine metaphor with that of a flower, envisioning structures that would be as much a part of their natural environment as a perennial plant.
The Living Building Challenge was recently endorsed as a national program by the Canada Green Building Council, which notes that buildings currently contribute 30 per cent of this country's greenhouse-gas emissions.
In the minds of a team from Stantec, however, it is.
A group of 12 architects, engineers and urban designers from the Vancouver company recently won second place in the "most visionary" category in an international contest sponsored by the Seattle-based Cascadia Region chapter of the U.S. Green Building Council, which includes member offices in British Columbia.
The 19 entries in the competition had to meet the criteria of the so-called Living Building Challenge, which calls for ultra-green sustainable buildings capable of meeting their own energy and water needs using renewable resources. Two winners were chosen in each of the "most visionary" and "realizable" categories. Stantec, the only B.C. winner, picked up $1,000 (U.S.) for its prize.
For their entry project, the Stantec team chose a rundown, seven-acre Vancouver site that is ripe for renewal. The model they envisioned features 16 buildings offering residential, light industrial and commercial components, all of which would make maximum use of rainwater, daylight and solar power to meet energy, heat and water needs.
The design team focused not only on reducing waste but also reusing it, outlining methods to collect compostable material from kitchens and restaurants and transform it into heat, power, vehicle fuel and soil. The end result was an ideal community that could provide its own energy, heat and water, with enough surplus to sell to others.
It might sound like an Al-Gorian pipe dream, but according to Stantec intern architect Max Richter, this kind of community is closer than we think.
"We wanted to push the envelope, but at the same time we wanted it to be feasible," Mr. Richter said of the Stantec entry.
"We're using technology that exists. We're not relying on NASA to develop something that would make this work."
Along with the sustainable energy and water measures, the Stantec team proposed planting trees on the site to help improve the soil after decades of industrial pollution. It also scored points for choosing a site close to the Main Street SkyTrain station and locating workplaces in a high-density area.
Rather than tearing down the old warehouses on the site, the Stantec designers proposed making them more energy-efficient with a covering of photovoltaic panels and recycled glass. The skin would collect water and act as a ventilator, responding to changes in airflow, humidity and temperature. This idea was particularly noted by one of the competition's three judges, Jason McLennan, executive director of the Cascadia Region chapter who drew up the guidelines for the Living Building Challenge in the mid-1990s.
Among the 16 criteria for a living building is the need for "net zero water," meaning that the building's annual water allotment is the amount that falls on the site; it might draw from a municipal supply sometimes, but must contribute an equivalent amount of water to other sites. It also treats its own water on site.
Similarly, the criterion for "net zero energy" means the building provides for its own power needs through renewable energy generation, such as solar or wind. When sunlight is low, it might draw from an outside power grid, but it can also sell excess power.
Other requirements include that the building generate no pollution, and that it improve the health and diversity of the local ecosystem. Each of the 16 criteria have been demonstrated in existing buildings, but a living building that meets all of the standards has yet to be built.
However, Mr. McLennan expects to see one within the next 18 months: a classroom building at Cambrian College in Sudbury, Ont., is in the final stages of design while three projects in Portland, Ore., are vying to be the first.
"There would be no barrier, technologically, to these buildings — we've proven that," Mr. McLennan said.
"The biggest barrier is attitudinal, or human-based, barriers. Right after that would be economic ones."
Because ultra-green buildings cost more at the outset, Mr. McLennan says the most likely candidates to build them are institutional. That's part of the reason the Stantec group chose the Main and Terminal site: It's owned by the City of Vancouver, and thus their theoretical project could conceivably go ahead some day. (A Stantec study of a living building concluded that, over a 100-year period, it would cost less to build, operate and take down than a structure built to LEED Gold standards.) Stantec's current projects include the Vancouver Aquarium expansion and the Greater Vancouver Regional District's water treatment plant, both of which are aiming for LEED Gold rating. The water plant design collects methane from waste and uses it to generate power and heat, an idea that was used in the competition entry for the Main and Terminal site.
The team from Stantec, which has 390 employees in its Vancouver office, spent about a month on company time designing their entry. Mr. Richter said they took part in the Living Building Challenge contest to encourage other designers and developers to expand their ideas about what a sustainable building or community could be.
That, too, was the rationale behind the Living Building Challenge. For most of the 20th century, Mr. McLennan explains, building practices reflected architect Le Corbusier's famous line that houses are "machines for living," guzzling energy, heat and water and spewing out waste. When he drew up the guidelines, Mr. McLennan replaced the machine metaphor with that of a flower, envisioning structures that would be as much a part of their natural environment as a perennial plant.
The Living Building Challenge was recently endorsed as a national program by the Canada Green Building Council, which notes that buildings currently contribute 30 per cent of this country's greenhouse-gas emissions.
Wednesday, August 1, 2007
London vs. New York smackdown - Peter Gumbel
To understand why London thinks it's beating New York in a race to become the financial capital of the world, walk across the Millennium Bridge toward St. Paul's Cathedral and count the number of cranes that clutter the skyline. The City, London's financial district, is in the midst of its biggest redevelopment boom since the Blitz, one result of the $100 billion in foreign investment pouring into the British capital annually.
The money is coming from the Middle East, Russia, India, China, and the U.S., and it's padding wallets, filling restaurants, pushing real estate prices through the roof, and fueling a feeling of self-confidence that spreads from coffee shops to Mansion House.
That's the ornate official residence of the Lord Mayor of the City and the scene of an annual black-tie dinner for bankers. This year's banquet in June seemed more like an Olympics celebration (yes, London beat New York in landing the 2012 games) as Gordon Brown, just days from becoming Prime Minister, rose to declare victory.
"Today over 40% of the world's foreign equities are traded here, more than New York," he said. "Over 30% of the world's currency exchanges take place here, more than New York and Tokyo combined. And while New York and Tokyo are reliant mainly on their large American and Asian domestic markets, 80% of our business is international." This is an era for London, Brown boasted, "that history will record as the beginning of a new Golden Age."
New York is hardly in a Dark Age. But by comparison it seems stricken with self-doubt. Mayor Michael Bloomberg and Senator Charles Schumer commissioned a McKinsey report earlier this year that highlighted weaknesses in the city's position as a financial center, including too much litigation and heavy-handed regulation, and warned that New York will lose its global preeminence in a decade if they are not addressed. Governor Eliot Spitzer has convened a blue-ribbon commission to figure out solutions. In Washington, Treasury Secretary Henry Paulson is calling for significant changes aimed at strengthening the competitiveness of U.S. capital markets, and Christopher Cox, chairman of the Securities and Exchange Commission, is talking bluntly about the need for the SEC to rethink the way it works.
There's no shortage of evidence to underpin the contrasting moods in the two cities. Statistics about the amount of funds raised by foreign firms are especially jarring: In 2001, 12 of the top 20 global IPOs were listed in the U.S., according to Dealogic; last year, just two of them were. An upstart over-the-counter market in London called AIM raised as much in IPOs last year as Nasdaq. MasterCard is just the latest organization to publish a study, in June, which ranked London ahead of New York as the world's top center for commerce. Even Hollywood is getting in on the act: 20th Century Fox is reportedly basing the sequel to Wall Street, the hit 1987 movie in which Michael Douglas declared "Greed is good," in London.
How come? The view from the British capital is that while New York has been riding the now faltering U.S. economy, London is riding an even bigger tiger, the booming global economy. While the U.S. is weighed down by the 2002 Sarbanes-Oxley Act and other post-Enron financial regulation - so the argument goes, although it's far from clear that the controversial act itself is the main problem - London has put in place a new, lighter, and altogether more flexible regulatory approach that makes it easy to do business, regardless of nationality, currency, or accounting system. While the U.S. built walls after 9/11, London is wide open and welcoming, notwithstanding its own concerns about terrorism.
The U.S. has class-action lawsuits, frivolous or otherwise, that act as a deterrent. Britain has a fiscal system that attracts well-heeled foreigners. (Residents not officially domiciled in Britain are taxed only on their British income, not their worldwide earnings.) "It's going to be very difficult for New York to get back into the game," says John Ross, financial advisor to London mayor Ken Livingstone. Only half-joking, he adds, "Someone said the other day that all New York needs is a total change of the U.S. political system and a total change of the U.S. legal system."
So is this triumphalism justified? Is London really beating New York at its own game? The short answer is yes, in some ways, but in other ways, not at all. London has become a magnet for firms from emerging economies looking to raise capital and is the most important financial center in Europe. In fields including over-the-counter derivatives, foreign exchange, and metals trading, it has taken a worldwide lead. And it is catching up in private equity and hedge funds - 21% of global hedge-fund assets are now managed out of London - pumping new wealth into Mayfair and St. James, two smart West End districts that used to house the British upper class. New York still towers over London in the total amount of funds its firms manage and in the size of their compensation packages, but Gotham is discovering for the first time that it is not indispensable. As capital flows become global and competition heats up, it needs to fight to retain its role.
Yet not everything is going London's way, as financial markets adjust to a fast-changing world. Just ask Henk van Dalen. He's the CFO of TNT, a $17.4 billion Dutch mail and express-delivery company that announced in May it had decided to end its listing on the New York Stock Exchange. Several other big European firms, including British Airways, have also taken advantage of a change in SEC rules that makes it easier to delist from U.S. exchanges. TNT says it can satisfy its current and future capital requirements outside the U.S. and that it made the decision "after taking into account the regulatory, legal, reporting, and governance complexity" of maintaining a U.S. listing.
But in this case, New York's loss wasn't London's gain. TNT had pulled its listing off the London Stock Exchange a year earlier and is focusing all its efforts on its home market of Amsterdam. TNT still depends on international investors, especially U.S. institutions, but in these days of electronic trading and increased investor sophistication there has been an important shift. "Most investors now buy their positions in Amsterdam," van Dalen says, "so there's no need to be listed elsewhere. It's just a cost burden."
TNT isn't alone. Since 2000 the number of foreign companies listed on London's main exchange has dropped by almost 200, or 40%, and some of those withdrawing, including Nestlé and Nokia (Charts), have done so for the same reason as TNT: At a time when capital markets have become increasingly global, large firms can be selective about their geography. Even lesser-known firms such as Poland's Millennium Bank are pulling out. It says most of its stock trading takes place in Warsaw.
The reason London's IPO numbers look so good - and New York's, by comparison, so poor - is that the British capital has been nimble in attracting hundreds of smaller firms from around the world, including the U.S., to its less prestigious markets, especially the AIM exchange. It has also moved aggressively to capture listings from firms in Russia and other former Soviet republics. About 17% of London's IPO volume last year came from the flotation of Rosneft, a Russian oil company that became the country's biggest by acquiring the assets of Yukos, a private-sector rival driven out of business by the Kremlin.
For the moment Chinese entrepreneurial firms still seem to prefer New York as the place to get their international exposure, while Indian firms split down the middle. It can get complicated: One of the big New York Stock Exchange IPOs this summer was of Sterlite, the subsidiary of an Indian company that is listed in London.
The battle is far from over. In fact, it's just heating up. NYSE and Nasdaq are moving aggressively to extend their global reach through mergers with London's European rivals. They are being helped by the SEC's recent acceptance of International Financial Reporting Standards that differ from U.S. Generally Accepted Accounting Principles and by an official clarification it issued in May relaxing the costliest and most controversial part of Sarbanes-Oxley, Section 404, which requires that outside auditors monitor internal controls. Senator Schumer is relieved. "We feel very good about the progress," he says. "It'll be a big shot in the arm for New York."
In some ways, however, casting the shifts in global finance as a battle between New York and London is missing the point. Much of the expertise and part of the money helping fuel London's boom is American. Four of the top five dealmakers in Europe last year were U.S. investment banks, and KKR was easily the most active private equity firm. Moreover, U.S. institutional investors are buying a significant share of the stock offerings in London and elsewhere in Europe through private placements that bypass SEC regulations and that now dwarf IPOs in volume. Last year about $40 billion was raised on NYSE in public offerings; so-called 144A private placements, by contrast, raised a total of $137.7 billion, or more than three times as much.
"London has a creative energy that far outstrips its international infrastructure," says Hendrik du Toit, chief executive of Investec Asset Management, a South African firm. "Yet the U.S. capital market is still half of the world's money, so you can't avoid it if you want to do big things."
The real question facing New York and London is not about which city is winning a two-way race but how both can position themselves to continue prospering even as a legion of wannabe financial centers around the world try to grab that international business. Those are places like Mumbai and Shanghai, but also Warsaw, Dubai, and São Paulo - all growing fast in both volume and sophistication. That's the story the big international investment banks are monitoring closely. "New York has had its day, London is having its day, and Shanghai and Dubai will emerge," says Michael Philipp, who runs Credit Suisse's business in Europe, the Middle East, and Africa.
Jonathan Chenevix-Trench, chairman of Morgan Stanley International, agrees: "There's a natural and inevitable tilting away from New York because the world is more global. But it's absurd to call London the global financial center. We'll end up with an orbit of perhaps four to five dominant centers and some key ancillary ones around them."
How quickly that happens will probably depend on what happens to the global economy. One of the dangers to London is that it has become so reliant on international flows that it's particularly vulnerable to a downturn. Dominic Rossi of British fund manager Threadneedle Investments reckons that any significant correction in world capital markets "will hit London instantly - and we're talking about days not weeks." Jim Gollan, chairman of electronic exchange Virt-x that trades Swiss blue-chip stocks, concurs: "It's always worth remembering Warren Buffett's dictum that it's only when the tide is out that you can see who is swimming naked."
The front line in the battle for global IPOs runs through Rue Cambon in Paris, near Place de la Concorde. This is where Catherine Kinney, who oversees the listings business for NYSE, has her new office. As of July she has been based in the French capital, one of the changes arising from the Big Board's merger this year with Euronext, the French firm that groups the Paris, Amsterdam, Brussels, and Lisbon bourses. The combination is supposed to provide a range of options to companies looking to go public. One of the big selling points is the "SOX-less" listing: the opportunity to be on a market affiliated with NYSE but not policed by the SEC or subject to Sarbanes-Oxley corporate-governance rules. Nasdaq is trying to pull off a similar feat with a proposed merger with Stockholm's OMX, which groups seven Nordic exchanges.
Listings have become a huge focus of attention in the New York vs. London battle, unlike, say, derivatives, because it's easy to add up the numbers and see how New York is losing. One chart in the McKinsey report speaks volumes: It shows that the U.S. accounted for 57% of IPOs valued at more than $1 billion in 2001; in 2006 that share was just 16%.
Kinney flips through a presentation she has just given to the board. One slide highlights the value of stocks traded daily on NYSE and Euronext together. It is almost triple the volume of the London Stock Exchange. Another boasts that 79 of the world's 100 largest public companies have their home on NYSE Euronext. Then comes the slide marked "The Center for Global IPOs." It's rather less convincing: Measured by the total capital raised, NYSE narrowly beat London in 2006, but that's only by including Euro-next, which it didn't own. And the U.S. missed the three biggest offerings of the year - Rosneft in London and two Chinese bank IPOs that went to Hong Kong. "It's clear that the U.S. has lost some ground," Kinney says. "The regulatory environment in the U.S. has made it less competitive."
Across the English Channel, in London's Paternoster Square, Tracey Pierce turns the same argument to her advantage. Pierce is in charge of international listings at the London Stock Exchange. When she and her people are on the road pitching to prospective companies, she says, they always start by stressing the advantages of a London IPO. Only then do they stick the knife into New York. "We believe in the highest standards of corporate governance, but we have a principles-based model, which is more flexible than one that is rules-based," she says. What she means is that the London regulators, unlike the SEC, do not impose a one-size-fits-all regime on prospective listing companies. She's unmoved by the recent U.S. initiatives to tinker with Sarbanes-Oxley requirements. For New York to fight back, she says, "they would have to make large headway in repealing or diluting these rules and regulations, and I don't see much political will for that."
How big a deal is all this for listing companies themselves? That depends on what they're looking for. When Chinese solar-power company Suntech Power decided to go public in 2005, chairman Shi Zhengrong had no hesitation about picking New York, because he hopes the U.S. will become an important market for the firm's products. Yes, complying with U.S. regulations costs a bundle. But being able to meet the stringent standards makes Suntech shine. "It's good for companies to have strong internal controls," Shi says. "It helps them live longer, and we want to live to be 100."
For Kishore Lulla, by contrast, New York was never an option. "The general consensus is that a U.S. listing is more cumbersome than a London one," he says. An Indian, he runs Eros International, a Bollywood movie-distribution company that does a lot of business in the U.S. But he had no hesitation about listing on AIM last year. "London was the obvious choice," Lulla says. "It's the financial capital of the world."
AIM is a big selling point for London. It focuses on small and midsized growth companies that have difficulty raising capital in more established markets. Listing is a deliberately simple procedure, with no prospectus, no minimum float, and no financial history required. AIM firms aren't even subject to the Financial Services Authority, the London regulator, but instead are vouched for by an approved financial firm known as a "nomad," or nominated advisor. If something goes wrong, the nomad's reputation is at stake. Big Board CEO John Thain and others in the U.S. grumble that regulatory standards are too lax, but so far the number of failures is in line with more regulated markets.
Liquidity is a bigger issue, as Aqua Bounty, an aquaculture biotech firm in Waltham, Mass., that makes a feed additive for shrimp, has discovered. Aqua is one of 63 U.S. firms on AIM, and CEO Elliott Entis says he is "very pleased" with the listing, which raised $40 million. "When you try to work with Wall Street, you get 15 minutes to tell your story, and very few firms are interested in the size of the deal that interested us," he says. "You get a better opportunity to tell your story in London." But Aqua's stock is so thinly traded that when one big investor sold its stake, the price collapsed. "I would be upset if we were looking for a follow-on listing," Entis says, "but we think that over time the price will recover."
Nasdaq, which failed in its bid to acquire the London Stock Exchange last year, has taken the hardest beating from AIM but claims not to be fazed. "Those $5 million to $10 million companies - we don't do that in the U.S.," sniffs Charlotte Crosswell, who's in charge of global listings for Nasdaq. Instead, the exchange is going after the much larger 144A private placements by creating a new trading platform for them. NYSE is taking the competition from the small fry more seriously. Through its merger with Euronext it can now offer a European small-cap listing that directly rivals AIM, although the regulatory rules are slightly more stringent. London isn't sitting still either. Last month it agreed to acquire the Italian bourse and, working with authorities in the City, has been spreading the word about its advantages. In the past year big British delegations have visited China and India. Next up: Brazil. "We are targeting the cream," says Pierce.
***
London hasn't always been so cocky. In the 1990s, in the aftermath of scandals that included the collapse of BCCI and Barings Bank, it worried about losing its preeminence in Europe to Frankfurt, the German financial center that became home to the European Central Bank. Canary Wharf, built as an alternative to the City in the East End Docklands, even filed for bankruptcy. Today it's bursting, with an occupancy rate of 96%.
Howard Davies says a key to London's changing fortunes was that it deliberately geared itself toward attracting international business. He's dean of the London School of Economics, and he played a major role in regulatory reforms in the late 1990s as head of the FSA, the single London regulator that emerged from that era for banking, insurance, and all other financial activity.
"The whole mindset here is that international business is an important part of the national economy," Davies says, "so we'd better make sure the regime is conducive to it, or it might go away." Until recently, he says, that attitude has been absent in New York and Washington. But it's changing. "I don't expect Goldman Sachs to close down in New York, and I don't think properties in the Hamptons will plunge in price," he says. "The two markets will coexist comfortably for some time to come."
That may be true, and there's no guarantee that the current self-confidence in London will last forever. But the City is sure of one thing: It has found the magic formula for today's increasingly global capital markets. It has opened up to the world, and the world has come flocking. The question is how long it will be before New York and a host of other cities follow suit.
The money is coming from the Middle East, Russia, India, China, and the U.S., and it's padding wallets, filling restaurants, pushing real estate prices through the roof, and fueling a feeling of self-confidence that spreads from coffee shops to Mansion House.
That's the ornate official residence of the Lord Mayor of the City and the scene of an annual black-tie dinner for bankers. This year's banquet in June seemed more like an Olympics celebration (yes, London beat New York in landing the 2012 games) as Gordon Brown, just days from becoming Prime Minister, rose to declare victory.
"Today over 40% of the world's foreign equities are traded here, more than New York," he said. "Over 30% of the world's currency exchanges take place here, more than New York and Tokyo combined. And while New York and Tokyo are reliant mainly on their large American and Asian domestic markets, 80% of our business is international." This is an era for London, Brown boasted, "that history will record as the beginning of a new Golden Age."
New York is hardly in a Dark Age. But by comparison it seems stricken with self-doubt. Mayor Michael Bloomberg and Senator Charles Schumer commissioned a McKinsey report earlier this year that highlighted weaknesses in the city's position as a financial center, including too much litigation and heavy-handed regulation, and warned that New York will lose its global preeminence in a decade if they are not addressed. Governor Eliot Spitzer has convened a blue-ribbon commission to figure out solutions. In Washington, Treasury Secretary Henry Paulson is calling for significant changes aimed at strengthening the competitiveness of U.S. capital markets, and Christopher Cox, chairman of the Securities and Exchange Commission, is talking bluntly about the need for the SEC to rethink the way it works.
There's no shortage of evidence to underpin the contrasting moods in the two cities. Statistics about the amount of funds raised by foreign firms are especially jarring: In 2001, 12 of the top 20 global IPOs were listed in the U.S., according to Dealogic; last year, just two of them were. An upstart over-the-counter market in London called AIM raised as much in IPOs last year as Nasdaq. MasterCard is just the latest organization to publish a study, in June, which ranked London ahead of New York as the world's top center for commerce. Even Hollywood is getting in on the act: 20th Century Fox is reportedly basing the sequel to Wall Street, the hit 1987 movie in which Michael Douglas declared "Greed is good," in London.
How come? The view from the British capital is that while New York has been riding the now faltering U.S. economy, London is riding an even bigger tiger, the booming global economy. While the U.S. is weighed down by the 2002 Sarbanes-Oxley Act and other post-Enron financial regulation - so the argument goes, although it's far from clear that the controversial act itself is the main problem - London has put in place a new, lighter, and altogether more flexible regulatory approach that makes it easy to do business, regardless of nationality, currency, or accounting system. While the U.S. built walls after 9/11, London is wide open and welcoming, notwithstanding its own concerns about terrorism.
The U.S. has class-action lawsuits, frivolous or otherwise, that act as a deterrent. Britain has a fiscal system that attracts well-heeled foreigners. (Residents not officially domiciled in Britain are taxed only on their British income, not their worldwide earnings.) "It's going to be very difficult for New York to get back into the game," says John Ross, financial advisor to London mayor Ken Livingstone. Only half-joking, he adds, "Someone said the other day that all New York needs is a total change of the U.S. political system and a total change of the U.S. legal system."
So is this triumphalism justified? Is London really beating New York at its own game? The short answer is yes, in some ways, but in other ways, not at all. London has become a magnet for firms from emerging economies looking to raise capital and is the most important financial center in Europe. In fields including over-the-counter derivatives, foreign exchange, and metals trading, it has taken a worldwide lead. And it is catching up in private equity and hedge funds - 21% of global hedge-fund assets are now managed out of London - pumping new wealth into Mayfair and St. James, two smart West End districts that used to house the British upper class. New York still towers over London in the total amount of funds its firms manage and in the size of their compensation packages, but Gotham is discovering for the first time that it is not indispensable. As capital flows become global and competition heats up, it needs to fight to retain its role.
Yet not everything is going London's way, as financial markets adjust to a fast-changing world. Just ask Henk van Dalen. He's the CFO of TNT, a $17.4 billion Dutch mail and express-delivery company that announced in May it had decided to end its listing on the New York Stock Exchange. Several other big European firms, including British Airways, have also taken advantage of a change in SEC rules that makes it easier to delist from U.S. exchanges. TNT says it can satisfy its current and future capital requirements outside the U.S. and that it made the decision "after taking into account the regulatory, legal, reporting, and governance complexity" of maintaining a U.S. listing.
But in this case, New York's loss wasn't London's gain. TNT had pulled its listing off the London Stock Exchange a year earlier and is focusing all its efforts on its home market of Amsterdam. TNT still depends on international investors, especially U.S. institutions, but in these days of electronic trading and increased investor sophistication there has been an important shift. "Most investors now buy their positions in Amsterdam," van Dalen says, "so there's no need to be listed elsewhere. It's just a cost burden."
TNT isn't alone. Since 2000 the number of foreign companies listed on London's main exchange has dropped by almost 200, or 40%, and some of those withdrawing, including Nestlé and Nokia (Charts), have done so for the same reason as TNT: At a time when capital markets have become increasingly global, large firms can be selective about their geography. Even lesser-known firms such as Poland's Millennium Bank are pulling out. It says most of its stock trading takes place in Warsaw.
The reason London's IPO numbers look so good - and New York's, by comparison, so poor - is that the British capital has been nimble in attracting hundreds of smaller firms from around the world, including the U.S., to its less prestigious markets, especially the AIM exchange. It has also moved aggressively to capture listings from firms in Russia and other former Soviet republics. About 17% of London's IPO volume last year came from the flotation of Rosneft, a Russian oil company that became the country's biggest by acquiring the assets of Yukos, a private-sector rival driven out of business by the Kremlin.
For the moment Chinese entrepreneurial firms still seem to prefer New York as the place to get their international exposure, while Indian firms split down the middle. It can get complicated: One of the big New York Stock Exchange IPOs this summer was of Sterlite, the subsidiary of an Indian company that is listed in London.
The battle is far from over. In fact, it's just heating up. NYSE and Nasdaq are moving aggressively to extend their global reach through mergers with London's European rivals. They are being helped by the SEC's recent acceptance of International Financial Reporting Standards that differ from U.S. Generally Accepted Accounting Principles and by an official clarification it issued in May relaxing the costliest and most controversial part of Sarbanes-Oxley, Section 404, which requires that outside auditors monitor internal controls. Senator Schumer is relieved. "We feel very good about the progress," he says. "It'll be a big shot in the arm for New York."
In some ways, however, casting the shifts in global finance as a battle between New York and London is missing the point. Much of the expertise and part of the money helping fuel London's boom is American. Four of the top five dealmakers in Europe last year were U.S. investment banks, and KKR was easily the most active private equity firm. Moreover, U.S. institutional investors are buying a significant share of the stock offerings in London and elsewhere in Europe through private placements that bypass SEC regulations and that now dwarf IPOs in volume. Last year about $40 billion was raised on NYSE in public offerings; so-called 144A private placements, by contrast, raised a total of $137.7 billion, or more than three times as much.
"London has a creative energy that far outstrips its international infrastructure," says Hendrik du Toit, chief executive of Investec Asset Management, a South African firm. "Yet the U.S. capital market is still half of the world's money, so you can't avoid it if you want to do big things."
The real question facing New York and London is not about which city is winning a two-way race but how both can position themselves to continue prospering even as a legion of wannabe financial centers around the world try to grab that international business. Those are places like Mumbai and Shanghai, but also Warsaw, Dubai, and São Paulo - all growing fast in both volume and sophistication. That's the story the big international investment banks are monitoring closely. "New York has had its day, London is having its day, and Shanghai and Dubai will emerge," says Michael Philipp, who runs Credit Suisse's business in Europe, the Middle East, and Africa.
Jonathan Chenevix-Trench, chairman of Morgan Stanley International, agrees: "There's a natural and inevitable tilting away from New York because the world is more global. But it's absurd to call London the global financial center. We'll end up with an orbit of perhaps four to five dominant centers and some key ancillary ones around them."
How quickly that happens will probably depend on what happens to the global economy. One of the dangers to London is that it has become so reliant on international flows that it's particularly vulnerable to a downturn. Dominic Rossi of British fund manager Threadneedle Investments reckons that any significant correction in world capital markets "will hit London instantly - and we're talking about days not weeks." Jim Gollan, chairman of electronic exchange Virt-x that trades Swiss blue-chip stocks, concurs: "It's always worth remembering Warren Buffett's dictum that it's only when the tide is out that you can see who is swimming naked."
The front line in the battle for global IPOs runs through Rue Cambon in Paris, near Place de la Concorde. This is where Catherine Kinney, who oversees the listings business for NYSE, has her new office. As of July she has been based in the French capital, one of the changes arising from the Big Board's merger this year with Euronext, the French firm that groups the Paris, Amsterdam, Brussels, and Lisbon bourses. The combination is supposed to provide a range of options to companies looking to go public. One of the big selling points is the "SOX-less" listing: the opportunity to be on a market affiliated with NYSE but not policed by the SEC or subject to Sarbanes-Oxley corporate-governance rules. Nasdaq is trying to pull off a similar feat with a proposed merger with Stockholm's OMX, which groups seven Nordic exchanges.
Listings have become a huge focus of attention in the New York vs. London battle, unlike, say, derivatives, because it's easy to add up the numbers and see how New York is losing. One chart in the McKinsey report speaks volumes: It shows that the U.S. accounted for 57% of IPOs valued at more than $1 billion in 2001; in 2006 that share was just 16%.
Kinney flips through a presentation she has just given to the board. One slide highlights the value of stocks traded daily on NYSE and Euronext together. It is almost triple the volume of the London Stock Exchange. Another boasts that 79 of the world's 100 largest public companies have their home on NYSE Euronext. Then comes the slide marked "The Center for Global IPOs." It's rather less convincing: Measured by the total capital raised, NYSE narrowly beat London in 2006, but that's only by including Euro-next, which it didn't own. And the U.S. missed the three biggest offerings of the year - Rosneft in London and two Chinese bank IPOs that went to Hong Kong. "It's clear that the U.S. has lost some ground," Kinney says. "The regulatory environment in the U.S. has made it less competitive."
Across the English Channel, in London's Paternoster Square, Tracey Pierce turns the same argument to her advantage. Pierce is in charge of international listings at the London Stock Exchange. When she and her people are on the road pitching to prospective companies, she says, they always start by stressing the advantages of a London IPO. Only then do they stick the knife into New York. "We believe in the highest standards of corporate governance, but we have a principles-based model, which is more flexible than one that is rules-based," she says. What she means is that the London regulators, unlike the SEC, do not impose a one-size-fits-all regime on prospective listing companies. She's unmoved by the recent U.S. initiatives to tinker with Sarbanes-Oxley requirements. For New York to fight back, she says, "they would have to make large headway in repealing or diluting these rules and regulations, and I don't see much political will for that."
How big a deal is all this for listing companies themselves? That depends on what they're looking for. When Chinese solar-power company Suntech Power decided to go public in 2005, chairman Shi Zhengrong had no hesitation about picking New York, because he hopes the U.S. will become an important market for the firm's products. Yes, complying with U.S. regulations costs a bundle. But being able to meet the stringent standards makes Suntech shine. "It's good for companies to have strong internal controls," Shi says. "It helps them live longer, and we want to live to be 100."
For Kishore Lulla, by contrast, New York was never an option. "The general consensus is that a U.S. listing is more cumbersome than a London one," he says. An Indian, he runs Eros International, a Bollywood movie-distribution company that does a lot of business in the U.S. But he had no hesitation about listing on AIM last year. "London was the obvious choice," Lulla says. "It's the financial capital of the world."
AIM is a big selling point for London. It focuses on small and midsized growth companies that have difficulty raising capital in more established markets. Listing is a deliberately simple procedure, with no prospectus, no minimum float, and no financial history required. AIM firms aren't even subject to the Financial Services Authority, the London regulator, but instead are vouched for by an approved financial firm known as a "nomad," or nominated advisor. If something goes wrong, the nomad's reputation is at stake. Big Board CEO John Thain and others in the U.S. grumble that regulatory standards are too lax, but so far the number of failures is in line with more regulated markets.
Liquidity is a bigger issue, as Aqua Bounty, an aquaculture biotech firm in Waltham, Mass., that makes a feed additive for shrimp, has discovered. Aqua is one of 63 U.S. firms on AIM, and CEO Elliott Entis says he is "very pleased" with the listing, which raised $40 million. "When you try to work with Wall Street, you get 15 minutes to tell your story, and very few firms are interested in the size of the deal that interested us," he says. "You get a better opportunity to tell your story in London." But Aqua's stock is so thinly traded that when one big investor sold its stake, the price collapsed. "I would be upset if we were looking for a follow-on listing," Entis says, "but we think that over time the price will recover."
Nasdaq, which failed in its bid to acquire the London Stock Exchange last year, has taken the hardest beating from AIM but claims not to be fazed. "Those $5 million to $10 million companies - we don't do that in the U.S.," sniffs Charlotte Crosswell, who's in charge of global listings for Nasdaq. Instead, the exchange is going after the much larger 144A private placements by creating a new trading platform for them. NYSE is taking the competition from the small fry more seriously. Through its merger with Euronext it can now offer a European small-cap listing that directly rivals AIM, although the regulatory rules are slightly more stringent. London isn't sitting still either. Last month it agreed to acquire the Italian bourse and, working with authorities in the City, has been spreading the word about its advantages. In the past year big British delegations have visited China and India. Next up: Brazil. "We are targeting the cream," says Pierce.
***
London hasn't always been so cocky. In the 1990s, in the aftermath of scandals that included the collapse of BCCI and Barings Bank, it worried about losing its preeminence in Europe to Frankfurt, the German financial center that became home to the European Central Bank. Canary Wharf, built as an alternative to the City in the East End Docklands, even filed for bankruptcy. Today it's bursting, with an occupancy rate of 96%.
Howard Davies says a key to London's changing fortunes was that it deliberately geared itself toward attracting international business. He's dean of the London School of Economics, and he played a major role in regulatory reforms in the late 1990s as head of the FSA, the single London regulator that emerged from that era for banking, insurance, and all other financial activity.
"The whole mindset here is that international business is an important part of the national economy," Davies says, "so we'd better make sure the regime is conducive to it, or it might go away." Until recently, he says, that attitude has been absent in New York and Washington. But it's changing. "I don't expect Goldman Sachs to close down in New York, and I don't think properties in the Hamptons will plunge in price," he says. "The two markets will coexist comfortably for some time to come."
That may be true, and there's no guarantee that the current self-confidence in London will last forever. But the City is sure of one thing: It has found the magic formula for today's increasingly global capital markets. It has opened up to the world, and the world has come flocking. The question is how long it will be before New York and a host of other cities follow suit.
Snack-happy workers fall face down - VIRGINIA GALT
When their energy flags on the job, 42 per cent of working Canadians grab a coffee or scarf down a sugar-loaded snack to get themselves over the hump, according to a new survey.
Pop is another popular pick-me-up, Workopolis found in a poll on workplace eating habits.
However, the buzz from these snacks and beverages is short-lived and can leave employees feeling even more sapped than before, added Workopolis, which commissioned nutritionist Kristen Schiener to analyze the survey results.
“Many Canadians are resorting to a pop or sugary snack when they're feeling tired and then experiencing the yo-yo effect — they have a brief surge in energy, followed by a substantial crash,” Ms. Schiener said.
The survey of 577 working Canadians, conducted for Workopolis by Decima Research, found that 30 per cent rely on coffee alone to kick-start their workday.
Six per cent are “starved for time” and skip lunch.
“Fast food fanatics make up 5 per cent of the Canadian workforce and rely on hot dogs or a slice of pizza for energy,” Workopolis reported, and 10-per-cent eat a sandwich or a salad on the run.
Ms. Schiener said the good news is that 62 per cent of working Canadians pack a healthy lunch at home. Even so, few take enough time to savour it.
Only 9 per cent indulge in a leisurely lunch, the survey found.
Ms. Schiener said unhealthy eating habits take a toll on productivity.
“Skipping breakfast or running on coffee alone is like trying to drive a car on fumes, which we all know is not sustainable,” she said. “Grab a piece of fruit on the way in. It's easy to eat on the way into work and is the perfect answer for anyone claiming they have no time for breakfast.”
Take some healthy snacks for later in the day as well, she advised.
More than half of those surveyed indicated that their workplaces do not provide any healthy snack or beverage options, added Workopolis president Patrick Sullivan.
“Vending machines are a fixture in many Canadian workplaces; the contents of which are contributing to our waistlines and not our companies' bottom lines,” Mr. Sullivan said.
Ideally, employees should aim for balanced meals and snacks throughout the day to maintain their energy levels, and drink plenty of water, Ms. Schiener said.
“A lack of fluids can lead to difficulty concentrating, and increased effort for physical work.”
She also recommended that more Canadians join the ranks of the leisurely lunchers.
“Even if you don't have a full hour to go out to lunch, take the time to make lunch a priority,” Ms. Schiener said.
“Spending a few minutes mid-day on lunch will give you a much greater return on investment in terms of energy later in the day.”
Pop is another popular pick-me-up, Workopolis found in a poll on workplace eating habits.
However, the buzz from these snacks and beverages is short-lived and can leave employees feeling even more sapped than before, added Workopolis, which commissioned nutritionist Kristen Schiener to analyze the survey results.
“Many Canadians are resorting to a pop or sugary snack when they're feeling tired and then experiencing the yo-yo effect — they have a brief surge in energy, followed by a substantial crash,” Ms. Schiener said.
The survey of 577 working Canadians, conducted for Workopolis by Decima Research, found that 30 per cent rely on coffee alone to kick-start their workday.
Six per cent are “starved for time” and skip lunch.
“Fast food fanatics make up 5 per cent of the Canadian workforce and rely on hot dogs or a slice of pizza for energy,” Workopolis reported, and 10-per-cent eat a sandwich or a salad on the run.
Ms. Schiener said the good news is that 62 per cent of working Canadians pack a healthy lunch at home. Even so, few take enough time to savour it.
Only 9 per cent indulge in a leisurely lunch, the survey found.
Ms. Schiener said unhealthy eating habits take a toll on productivity.
“Skipping breakfast or running on coffee alone is like trying to drive a car on fumes, which we all know is not sustainable,” she said. “Grab a piece of fruit on the way in. It's easy to eat on the way into work and is the perfect answer for anyone claiming they have no time for breakfast.”
Take some healthy snacks for later in the day as well, she advised.
More than half of those surveyed indicated that their workplaces do not provide any healthy snack or beverage options, added Workopolis president Patrick Sullivan.
“Vending machines are a fixture in many Canadian workplaces; the contents of which are contributing to our waistlines and not our companies' bottom lines,” Mr. Sullivan said.
Ideally, employees should aim for balanced meals and snacks throughout the day to maintain their energy levels, and drink plenty of water, Ms. Schiener said.
“A lack of fluids can lead to difficulty concentrating, and increased effort for physical work.”
She also recommended that more Canadians join the ranks of the leisurely lunchers.
“Even if you don't have a full hour to go out to lunch, take the time to make lunch a priority,” Ms. Schiener said.
“Spending a few minutes mid-day on lunch will give you a much greater return on investment in terms of energy later in the day.”
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