28 OctInfrastructure. Lessons from Bill Shankly and Boris Johnson

Infrastructure. The Cinderella Function and the forgotten asset; not just in banks.

Inspiration for this week’s post comes from three sources that are poles apart, both in time and style. For all the differences, the stories help make a point that is near and dear to me; the value of robust infrastructure and the need to invest in it.

The first source of inspiration comes from the great Bill Shankly, the manager of Liverpool Football Club who brought the club back from the doldrums of the old second division and built the foundation for its domination of English and European football in the 70’s and 80’s. In his case the use of the word “great” would have to be the greatest understatement ever. Starting in 1959, Shankly had work hard to rebuild the club and make the place somewhere the fans wanted to be. One of his first commands to the directors was that they fix the toilets at Anfield for the fans. Plumbing matters. More seriously though, after the England victory in the 1966 World Cup, Shankly demanded that the directors hire the then England goalkeeper and World Cup winner, Gordon Banks. The directors were incredulous at the thought of paying 60’000 pounds for a goalkeeper. They quizzed Shankly; trying to make a footballing argument about Banks not scoring goals. They thought 60’000 pounds was not a bargain, they thought it was robbery. The great man made the point that having Banks in the team, as the goalkeeper, meant he could expect the team to concede something like twenty fewer goals and keep clean sheets. No matter, the directors refused. That was in December 1966. Liverpool did not win what was then the First Division again under Shankly until 1973.

Boris Johnson, the current Mayor of London, is the second source of inspiration. The complete polar opposite of Bill Shankly; academic, flamboyant and not averse to publicity. But, his hot topic for 2013, infrastructure. Of course, Boris has been making a fuss about building a new airport in the middle of the Thames. Whether that is the right tool for the job, I will leave to other wiser heads to judge, but categorically I will state that airports matter period. Boris is on the warpath on the general need for infrastructure, not just airports, when he laid out his Vision 2020 in the middle of 2013, urging the central government not to cut back on infrastructure investments (Click here for the article in the FT)

London’s plight has much in common with that of an individual FI. The country’s capital and its economic engine, which generates some 22% of gross value added, is dependent on forces outside its control for investment in its infrastructure. Only limited activities are within its own control.

Lessons Learned: Top line growth is important; if you are a football team, the headline number is goals scored. If you are Mayor of London, you might be interested in local sahre of GDP, or even the murder rate or some other crime statistic. If you are a private equity executive, you might measure gross operating profit, headcount or even average cost per employee. What they miss is other key metrics that deserve their place on any MIS dashboard: investment in infrastructure and in capacity.

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