Turning that tanker around
Quantifying home work, negative-equity bombs, too much strip lighting, the end of dynasties, numerous fails, a storm in a pint glass
Hi there!
The big news this week is…the future of work needs to be quantified.
Of course there’s huge gaps in hybrid and remote approaches and education - many business owners were forced to make it up as they went along - but the general outcome has been that it was demanded because of a crisis, it became a new normal, then hybrid/remote established a kind of status quo. Because realistically you can’t fire all your employees, and most bosses have conceded, for example, that for employees with kids and family requirements, the flexibility has made things easier for everyone - and people are generally happier. There’s also, of course, less need to pay office rent - and for a lot of small businesses that was a major running expense.
The current public sector strikes, as we mentioned last week, are about how much we get paid to work, but they’re also about how we work. Public employees were told to work from home, and now they’re being asked to come back to the office. In the years between, they, the employees themselves, carved out new routines with little oversight, found a work/life balance, reworked childcare and elderly care, and began to explore how work could work for them. And it’s the governments inability to quantify these ‘lost’ years that is at the core of the current unrest.
Governments like budgets. They like playbooks. They like to know how things are going to pan out. That’s because they’re heavily audited, and with billions in public money being spent, they need to justify how that money is spent down to the dime. Hybrid and remote work has caused some serious headaches for government. There’s been no ‘long term study’ on efficiency vs spend. There are no models that exist for staffing key departments, or stress-tested budgets for maintaining remote IT systems and operational procedures indefinitely. There’s issues of security, of infrastructure and - longer term - what actually happens to not only the offices the government rents, but the entire ecosystems that surround them. Then there’s the issue of interface. Government is designed to interface with the population regardless of a persons technical know-how - Service Canada, Immigration, Customs - all have a need to physically exist in population centres and provide accessible services for those who need them face-to-face.
This, of course isn’t a problem that can be solved overnight - or over weeks or months. This is an oil-tanker sized problem with billions in budgets that has to find the right solution not only for its workers, but for those that rely on its services. It’s also a political problem, which, as we all know, tends to generate problems more than solutions.
But it is a problem that needs to be solved. It’s not enough to just highlight the problem. The world of work has forever shifted, and regardless of how slow governments typically are to enact change, change inevitably needs to happen - and soon. Otherwise the strikes we’re seeing now will undermine the concept of public service as a career, and we all - as a population - will suffer because of it.
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Top story this week☝️
Office space looking increasingly fragile
News from Manhattan, but it’s effects will be felt in every major city - with people moving away from in-office work, what becomes of the office space? Offices are increasingly empty, and while this is causing issues for the local economies based around those offices, it’s also a ticking time-bomb of negative equity. High interest rates are lingering and more that two thirds of commercial space lending tied up in small to medium sized banks “prompting concern that regional banks might be unable to withstand a wave of defaults if landlords cannot pay off loans.” Link
News 🗞️
Bed Bath & Begone
Bed Bath and Beyond has finally thrown in the full-sized heavy cotton bath towel after three decades of profitability. Recent bankruptcy filings are due to a failure to compete with Amazon, sure, but their failure is something that will inevitably be studied, given that their slide to bankruptcy happened in under four years. Some of the key reasons? They failed to embrace e-commerce. They did not invest in technology. They acquired too many failures. Their stores did not iterate with consumer tastes (why was it still so bright in there!?). They tried to cut costs and bulk margins with own-brand products - damaging customer confidence and annoying their supplier base. The list of executive errors is pretty long. Link
A new season of Succession beckons
You might be tied up in the rolling drama of the final season of HBO’s Succession, charting the rise and fall of the Logan Roy dynasty, but succession is a real issue for family-based businesses. A recent PwC survey found that only a third of small business owners have a succession plan - a plan which is inevitably tied to that owners ability to retire and the ongoing viability of that business. Link
And finally…
DeWalt fail. Link
Twitter fail. Link
Imgur fail. Link
Fox fail. Link
The Data Room 🤖
We said you’d hear more from The Data Room last Thursday, but we meant this Thursday. So sorry about that. Semantics. Anyway, here’s a preview!
A storm in a pint glass
In these 'reactionary times', how do you navigate your business through a storm of knee-jerk controversy and prevent massive losses?
Each time there’s any kind of controversy you inevitably see a headline like “Apple’s $8 Billion Screw Up” or “Disney’s $4 Billion problem” or “Samsung’s $240 Quintillion Supply Crisis” (I made the last one up). Usually some of the laziest and most sensationalist reporting that happens is in the business press. Whenever I see a headline like this I imagine some clickbait writer rolling out of bed, gleefully logging into Yahoo Finance, selecting a date range that fits their agenda and calling it a day. I’m not saying the news cycle doesn’t affect stock prices - that would be stupid - I’m just saying that if you take a multi-billion dollar company that has a 2-5% fluctuation in value, then of course it’s going to amount to billions of dollars of profit and loss. Every single person who’s read anything business related in the past 3 years tacitly knows that we’re in a period of high market volatility – a large company’s valuation will move 3% on any given Tuesday. You never see headlines that amount to “Toyota’s 400 Million Mistake: Because I Decided To Bike To Work Today” or “Ikea’s Multi-Billion Blunder: Because My Neighbour Picked Up A Used Couch Off The Street Triggering Mass-Sell-off.”
A-B Inbev’s recent hiring of Dylan Mulvaney, a notable trans rights activist, as the lead on a new Ad campaign, has picked up some vitriol. Here’s a “go woke, go broke” style headline that has a case of schadenfreude in claiming the stock is suffering a $5 billion loss directly due to this event alone. Some ‘more vocal detractors’ went on to start a boycott of Bud Light - because they came down with such a severe case of transphobia that the only reasonable course of action was to shoot cases of beer and call in bomb threats. In response, the CEO of Anheuser-Busch penned one of the most meaningless press releases ever written. Now - I’m absolutely certain that this boycott has temporarily affected their stock price, no argument there – but honestly: so what? It’s a drop in the bucket that is barely noticeable when you compare it to the last year of A-B Inbev financials - let alone the last 5 years. As soon as you take a bigger picture view, these headlines generally become unremarkable, if not inconsequential, like a storm in…a pint glass.
Check your inbox on Thursday to read more.
Market at-a-glance 📈
BOC Indicators (Link):
BOC Prime Rate: 6.70%
BOC Unemployment Rate: 5.0%
BOC CPI Inflation Rate: 5.2%
BOC $USD Exchange Rate (Link):
Low: 1.3387 CAD [0.7470 USD]
Average: 1.3476 CAD [0.7420 USD]
High: 1.3542 CAD [0.7384 USD]
Best GIC Rates (Link):
1-year GIC: 5.25%
3-year GIC: 4.90%
5-year GIC: 4.80%
Best 5Y Mortgage Rates (Link):
Variable: 5.45%
Fixed: 4.29%
Prime Rates (Link):
TD Bank: 6.70%
BMO: 6.70%
RBC: 6.70%
Scotiabank: 6.70%
CIBC: 6.70%
National Bank: 6.70%
CRA Canadian Pension Plan Rate: 5.95%
CRA Employment Insurance Rate: 1.63%
CRA Minimum Wage per Province: Link