Upper case, lower case, or head case?

As promised, something on Mercator.  Or should it be mercator?

Within the Emirates Group, Mercator travelled along a pretty rocky path.  I cannot comment with authority about events prior to me joining Emirates in July 2006 but, by all accounts, the situation was far from straight forward.  At some stage, the Emirates IT department was known internally as Mercator and, right up until I left in 2010, many people in the business areas of the group referred to us as Mercator.  I was told that this identity was part of an ill conceived plan to outsource IT from the Emirates Group – a plan which (again, I was told) was enthusiastically supported by Gary Chapman but was thankfully vetoed by the Chairman at the eleventh hour.  Once EG-IT was formed in 2006, Mercator was clarified as a separate entity for external sales, under the EG-IT umbrella.

Prior to joining Emirates, I read about the Mercator arrangement which generated income by providing solutions and services to third parties.  Initially I flinched at the proposition.  Supporting your own customers’ IT needs is always a challenge so I could not see the logic in introducing a conflict of priorities.  My previous experience of such an arrangement was limited, but lasted long enough for me to appreciate the challenges.  In a company I had worked for previously we tried to utilise spare consultant capacity when our own business went through a difficult period.  We tried to keep our resources utilised so we could retain them during what we thought (wrongly as it turned out) would be a temporary situation.  The immediate problem was to balance the need to offer our more experienced staff to external clients (to get the initiative rolling) versus the internal demand for the most efficient solution at an extremely difficult time for our business margins.  It was not long before each of our two sets of customers felt that they were getting a raw deal!

But once I had understood the concept of Mercator within the structure of the Emirates Group, I felt a bit more relaxed.  The idea, initially, was simple – generate income (from external sources) from applications which had already been developed for our own internal businesses.  However, Gary Chapman showed a strong desire to ‘grow the external business’.  I am not sure how much enthusiasm for this impetus came from Patrick Naef.   As was often the case in the duplicitous world of Patrick Naef, we never knew where the direction was really coming from.  If challenged, Patrick Naef would say that the target (as well as the overall EG-IT/Internal/Mercator financial model) came directly from Gary Chapman and, if anyone had a problem with it “you should talk to Gary”.  As always, Nigel Hopkins agreed with Patrick Naef.  All of us in the IT Executive signed up to meeting the targets that had been set.  Indeed some of us even expressed an (admittedly very long term) aspiration to recover all our IT development costs through Mercator.  An ideal business model – get others (many of whom were our industry competitors) to pay for our own developments. 

But, as most of us are able to recognise, the real world will throw up many challenges.  An obvious one was balancing priorities, but the most fundamental one was the allocation of costs and income.  As the business areas regularly pointed out to me – they paid for the development, but Gary Chapman took all the income. Unsurprisingly, I never heard anyone in the Emirates Group business areas support this approach.  Yet we were reliant on their support, not just on the issue of competing resources but also on agreeing the specifications of developments.  As an example, if we (EG-IT) only had enough resource to implement one enhancement to a product, which one would we choose?  The one requested by internal customers or the one that Mercator felt would make the product more marketable externally?  Either way the internal customer would pay for the enhancement, but any subsequent income generated from Mercator would appear on Dnata’s bottom line.

As was often in the case in EG-IT, a sound basic concept was totally unhinged by a narrow approach which allowed no flexibility and no debate.  Patrick Naef overflows with contradictions:  he speaks in five languages, but listens in none;  he craves friendship, but treats people like dirt;  and, although he is intelligent, he often acts like a complete clown.   And when Mercator was involved, he certainly had his clown hat firmly on, the one fitted with added blindfolds and ear defenders.  It is good to set demanding objectives and often valuable to have some form of conflict built in to them.  Patrick Naef’s favourite consultants had a term ‘conflict by design’, but they weren’t dressed up as clowns when they explained it.  There has to be compromise and flexibility as options.

All of us in the IT Executive had shared responsibilities for delivering EG-IT’s objectives and we were formally measured on them.  This was Patrick’s idea and one which I fully supported.  None of us could just focus on our own patches and objectives – if any one of our own objectives were not met, all of us were given a ‘developing’ score in our annual appraisal.  It naturally meant that if Mercator did not meet its profit targets, then all of us were penalised. I had no problem with that, after all we all signed up to the target.  (As an aside, it also gave Patrick Naef an excuse to fire someone – I have no doubt that he fobbed off the legal department when disposing of me by saying I had failed in one of ‘my’ objectives, i.e. the Mercator one.  Whether that is the prime motive for his approach to shared objectives one will never know.  There is no point in asking him!)

Here is an example of how challenging it was working in the Mercator framework.  We had a member of staff who was an expert on one of our applications and well respected by our customers, both internal and external – I will call him Fred.  One day, I was sitting with a business leader in EGHQ who demanded that Fred should be assigned to his business’s latest project exclusively.  I knew I could not meet that request because it was inevitable that Fred would be needed for external Mercator work too.  As always, a difficult conversation ensued but I had to stand my ground – high priority, yes; exclusive, no.  Meanwhile, on the same day but in another continent, a colleague of mine in Mercator was closing a sale to an external customer who had a demand.  They wanted Fred to be exclusively assigned to them for the duration of the project and it was not negotiable – full time Fred or no deal.  So it was agreed.  Now this should not have happened and I had a right to be somewhat miffed, but this sort of thing does happen when unworkable structures are set up and set in stone.  It is all very well churning out the same old macho stuff – ‘the target must be met’;  ‘aren’t you up to it?’;  ‘failure is not an option’; etc. but, meanwhile, back in the real world, we are dealing with real customers and real staff.  In this case we were left with no option but to fudge the situation.  I had to go back internally and clarify the word ‘priority’, Fred was told that he needed to be (even more) flexible and not to tell any of his customers what he was doing when he was not with them.  Understandably this put him in a very difficult situation and thinking all sorts of negative things about his management (none of which I could disagree with!). 

Such events had a serious negative impact on our internal businesses and created a lot of strain in EG-IT’s relationship with its business colleagues.   Another example was the Tour Operating System (holidays etc.).  I will just summarise, because to explain the fiasco in full detail here is not practical.  The project started before I joined the company and was still going (nowhere) when I left nearly five years later.

The business wanted to purchase a package, but the IT department at the time favoured developing it in house (the usual argument!).  IT’s rationale was that an in house development would give their colleagues all the functionality they wanted, but the business believed that IT would take too long and it would cost too much.  And, critically, IT saw an opportunity to market this system through Mercator.  As always with such a conflict in the Emirates Group – IT won the argument.  One internal business leader described the group finance model to me – ‘IT does what it likes, sends us the bill but gives any external income received to Gary Chapman’.  Naturally, the TOS specification would be set by the business, but also by Mercator (based on what they believed the market would want).  So the internal business had to pay (and wait) for the system which was intended to give them a competitive edge.  But, crucially, the system would also be developed with Emirates’ competitors in mind, thus nullifying one of the main objectives of the initiative – competitive edge.  Finally, to add salt to my business colleagues’ wounds, any income from Mercator sales of their application (which they paid for) would go to Dnata. 

There were numerous problems with the project and many of the delays cannot be laid at the door of Mercator.  Once EG-IT was born it was clear that there was an enormous gap between demand and our ability to deliver (across all business areas).  It is true that Mercator put additional strains on resources but, even without Mercator in the equation, projects like TOS would have suffered.  We tried a number of solutions to our resource problems, including engaging off shore partners, and some of these worked better than others.  Unfortunately for our business colleagues, our chosen partner for TOS was not one of the successful ones.  I know everything always looks much clearer with hindsight, but I do not believe any individual could be blamed for the TOS debacle.  Certainly, my business colleagues felt that one or two individuals in IT were responsible for making the wrong decisions when the project was first conceived.  But, for me, failure was inevitable because of the impossible attempt to satisfy too many masters at the same time.  Without the demands for Mercator income, my predecessors in IT would surely not have pursued the proposal for an in house solution. 

TOS was just one example (of many) which made life with our business colleagues more difficult than it should have been.  My internal customers generally supported the principle of bringing in additional income to the Group, but not at a net expense to the Group and certainly not at a direct cost to their own bottom lines.  The demands of Mercator cemented what was a deep seated level of mistrust regarding costs between the Group’s businesses and EG-IT.  I think there were those who felt that some EG-IT senior personnel had often put their own personal needs above their customers’ requirements but, generally, I think they knew that the vast majority of EG-IT staff wanted to do what was best for the Group.  But that sentiment did not extend upwards.  I heard only negative comments about how Gary Chapman controlled the IT finances within the Group.  As an example, when I was in front of a senior business leader defending our need to make EG-IT staff redundant (and thus reduce the level of support to his area) in order to meet Gary Chapman’s reduced budget, he responded with scorn – “Go ahead, save Gary Chapman his money.  And what will he do with it?  I’ll tell you.  He’ll go out and spend it on a ****ing cricket pitch.” 

As in any company, the model in Emirates (at least on paper) was that internal business units had strong partnerships with their colleagues in EG-IT.  Requirements identified by the business were developed by EG-IT, but IT staff should have been heavily involved in that identification process.  Therefore it was vital that EG-IT was fully engaged when the business set its strategy.  When I took on responsibility for Customer Solutions I discovered that one business unit held its departmental strategy planning meeting without the involvement of anyone in my team.  I found this oversight strange and met with the appropriate business leader to express my concern.  I went primed with the obvious question “As it was an all day affair, why didn’t someone realise the error and call us in?”.  I was horrified to discover that it was not an oversight.  EG-IT was specifically excluded from such meetings!  The key people needed to help in scoping, prioritising and delivering IT projects were barred from discussions about the overall business strategy.

The reason was Mercator.  That particular business unit took great exception to the fact that they came up with industry leading initiatives which were designed to give them a competitive edge, only to have the resulting application sold to its competitors.  But they could not do anything about this.  If they had a problem with it, the answer was “talk to Gary Chapman”.  And it could have been worse for them.  During the strategy meeting they would naturally come up with more ideas than they had the budget to develop, so some would be shelved for the following year.  But they felt that, given EG-IT had an objective to grow the Mercator business, it was possible that we would use that intelligence to initiate our own development.  The ‘good idea’ that they could not afford may have ended up with their competitors before them!  Obviously that would not have happened but, to put it bluntly, our business colleagues did not trust us and it was the Mercator model which provided the foundation for that mistrust.

The Mercator strategy included ‘growth by acquisition’ and Patrick Naef was very keen to find companies to buy.  At a high level it made sense as, when organic growth is likely to be too slow, acquiring another company may be a good option.  I am sure many of you have done what I have - gone to the mall with a loved one who has a specific purchase in mind.  Before the tedium sets in I take an interest so that, by the time we leave the third store, I know roughly what we are looking for and that, so far, we have not seen it.  Gradually patience wanes, my interest takes a dive and we end up, late in the day, revisiting stores that earlier did not have what we were looking for.  I am now expected to know the entire layout of the mall and, not only know the quickest way between stores, but also which shop had “that blue one that was a bit dear but not a bad fit”.  The first thing we ask as we enter stores now is “What time do you close?”.  It is at this time that I realise that we are no longer shopping for a specific item – we are going to buy something, anything!

This is exactly how Patrick Naef behaved when he ended up in Bangkok.  He had been looking for months, time was running out (out of what, I do not know, I can only assume he had given Gary Chapman some sort of promise), there was nothing else available so it was this company (which became Mercator Asia) or nothing.  And it certainly was not going to be nothing.  We were going to buy something, anything!  It was the wrong choice but once Patrick Naef decides that something is going to happen, it has to happen.  Out comes the clown’s outfit, on go the blindfolds and ear defenders.

I know at least three business cases were put together.  The first two were signed off by Patrick Naef but rejected by Gary Chapman.  Both were described as “rubbish” by Patrick Naef but I do not know if that was his view, or Gary’s.  Certainly Gary Chapman was not happy with them and Patrick Naef was obviously happy with them before the presentations.  (I can hear that age old question being raised again – ‘Why on earth does Gary let him get away with it?’.)   After each of the so called “rubbish” business cases were rejected, Patrick Naef made changes to the team involved in the project.  He removed anyone that did not come up with the answer he wanted (‘buy it’) and who presented anything other than a rosy view of the benefits to Mercator.  This left a small team limited to individuals who Patrick Naef knew would do exactly what he told them to do.  Incredibly, the acquisition was made without the involvement of the head of Mercator!

Although the head of Mercator had the biggest right to be concerned, there were also three others (I was one of them) who were very interested parties in any acquisition.  In my case, the biggest concern was adding demands on an already strained department and the inevitable negative impact that would have on my internal customers.  I know for a fact that one other person, in addition to me, raised concerns to Patrick because I witnessed it.  I would be disappointed if the other interested party did not do the same.  I was told that the project was nothing to do with me and it proceeded in secret.  In the make believe world of Patrick Naef, every major decision is supposedly taken after full discussion within the IT Executive team.  This is where the true meaning of ‘rubbish’ comes into play.  In the IT Executive there were seven individuals (not including Patrick).  Clearly, we all had an interest and responsibility for everything that EG-IT was involved in but the weightings of interest would obviously vary depending on the topic.  If you ranked our interest (1 to 7) in the Mercator Asia acquisition then the head of Mercator would naturally have been number 1.  The order of numbers 2 - 4 could be argued about, but the three members would not be up for debate (I was in this group).  But who did Patrick Naef include in his project team?  The answer is - numbers 5 and 6.  He specifically excluded numbers 1 to 4.

The timing of the Mercator Asia purchase was very unfortunate as it was just before one of our regular ‘reflections’ meetings.  I have covered these meetings in an earlier update but, in summary, they were how we (the IT Executive) spent the last afternoon of each working week.  There was never a formal agenda but we did have a list of topics which we wanted to discuss and the format evolved into:  first a social chat as we devoured the food we had picked up on the way to EGHQ, then we would go through our list of topics and decide what we wanted to talk about that week, then we talked for about three hours and, finally, we would go away and get on with some real work.

This ‘post Mercator Asia agreement’ reflections meeting was, for me, undoubtedly the worst ever.  The initial social chat immediately focussed on the recent acquisition and we never moved off the topic.  We had to endure three hours (though it felt like 33) of endless self congratulating anecdotes from the recent venture to Bangkok.  I did understand their elation, it is a feeling we all have when a challenging project is completed, or high impact incident is resolved.  And they firmly believed it was the right thing to do (albeit because Patrick Naef was wearing his clown’s outfit and the others were doing what they were told).  But thirty minutes would have been more than enough.  Inevitably a few meaningful details emerged from the anecdotes and alarm bells began to ring.  Exchanges of concerned glances (within the ‘1 to 4 group’) were followed by Patrick Naef swiftly moving the conversation on.

In the following days those alarms bells became more frequent and louder.  Someone outside of EG-IT who had involvement was quoted as saying the whole episode had been “totally unprofessional” and being extremely concerned about matters.  There was one clause in the contract (which I cannot elaborate on as it would breach an individual’s confidentiality) that was, in my experience, unprecedented and not at all in the interests of Mercator, Dnata or any part of the Emirates Group.  I am told that the ‘external to EG-IT’ individual was as horrified by this clause as I was.  In due course, the alarm bells proved justified as problems surfaced.  I will not identify these because they all crystallised after I left, so I would have to rely on evidence from others.  (Make no mistake, those individuals are totally reliable and I am in no doubt that what they tell me is true, but nothing ever goes into this blog that I am not personally able to defend in any forum, even in a court of law.  I will never rely on evidence from others, even if they are willing to publicly support me.  This is my blog and I will stand by everything in it on my own.)  I also heard later that, across the industry, surprise was expressed about this acquisition along the lines of ‘it just does not make sense’.

As problems emerged, Patrick Naef’s usual approach of ‘blame everyone except me’ kicked in.  He is forceful and manipulative enough to make that stick on post acquisition events (such as poor sales) but anyone who has accepted any claims from him that the acquisition was not his responsibility is a fool.  The acquisition and formation of Mercator Asia was totally Patrick Naef’s idea.  Gary Chapman may have initially rejected “rubbish” proposals but he was totally supportive of the acquisition.  I was present, at the regular Dnata senior management meeting when Gary Chapman proudly announced the acquisition and complimented Patrick Naef on ‘his determination to achieve something that he believed in’.  Inevitably, Mercator Asia was a total failure and eventually disposed of at considerable cost to the Emirates Group.  And, I understand, at considerable embarrassment to the Group too, as the transfer process was riddled with errors and became a farce.  Right up to the end of Mercator Asia, Patrick Naef could not get it right.   

And Mercator itself failed to meet its objectives.  I do not know how much money Gary Chapman paid his brand consultants to come up with the idea of dropping the well established tradition of ‘first capitals for proper nouns’.  Indeed, when he told us that he would fine anyone caught typing Dnata instead of dnata, I wondered if his plan was to make us pay for it.  I guess my account regarding this folly will not look too healthy, but I am quite clear – Dnata recruited me, Dnata fired me and Dnata broke its contract with me.  Dishonest, with a capital D.  Those of you who know me will not be surprised that I do not have a lot of time for ‘brands’.  I concede that, regrettably, brands matter a lot in the artificial world that we find ourselves in, but I always thought that doing something as trite as using only lower case characters would be limited to encouraging teenagers to buy something that they don’t need to impress people they don’t like.  Handbags - yes.  Airport services – surely not.  So, overnight, Mercator became mercator, but CIO’s were not seduced and sales figures did not improve. 

Obviously, I was not party to any discussions that led to the abandonment of Mercator, but it seems that Gary Chapman finally got the plot.  When I went through the farce of my appeal meeting, I had hoped to explain a few things to Gary that he obviously was not aware of.  But he was not interested.  It is a shame really, because in about half an hour I could have told him what it seems to have taken him several years to discover.  Had Mercator been allowed to sit (in terms of priority) sensibly in the Emirates Group and had the greed for profit (which, in Group terms, was paltry) been subdued, it could have made a valuable contribution to the Group in terms of product development, staff opportunities and a measurable contribution to cost containment to our businesses.  Instead Mercator had to be sold.

                                                       

But Patrick Naef sees every event, even a disaster of his own making like this one, as an opportunity.  He will have seen that whilst disposing of Mercator, he had an opportunity to dispose of some people he did not like too.  From a management point of view, working in the Emirates Group is very much like it was working in the UK in the late 1980’s.  Macho management techniques ruled, the Trade Unions had been neutralised and employment laws had not yet caught up with what was going on in the real corporate world.  Patrick Naef would have had a field day, though not had such a free hand as he has today.  After all, the UK did have employment laws then and no company was in a position to ignore them.  So, back in those days, when an outsourcing deal was on the horizon, no-one had to say anything but the goal was obvious – move all the good people out of the area to be outsourced and move all the dead wood and trouble makers into it.  A sort of ‘virtual sheep dog’ emerged and, as if by magic, by the time the outsourcing plans were crystallised and in the public domain, as far as the company was concerned, everyone was in the right place.  Fair minded managers and effective HR departments did their best to ensure fair play and eventually legislation was introduced to outlaw the practice.  Of course, in the Emirates Group, Patrick Naef does not have to concern himself with employment regulations and the HR department, which is charged with the responsibility to apply effective governance and support for staff, is not fit for purpose.

(I must provide some clarity about Emirates HR department.  I will identify a couple of examples that demonstrate that it is not fit for purpose.  It fails to protect staff from bullying managers and it does nothing to enable staff to have an effective voice in the company.  Worse still, it pretends it does do those things by maintaining comprehensive employee regulations (which can be ignored at the whim of any senior line manager) and by carrying out a supposedly open staff survey (only to bury the true results and produce nothing more than a cynical summary).  But that is the fault of the senior managers, there are some wonderful people working very effectively nearer the coal face in HR.  I worked closely with many of them and they have my respect.  These include two HRM’s (who were very effective, committed to supporting staff and were willing to challenge Patrick Naef – sadly, both left the company), numerous HR support staff and members of the recruitment department who not only supported my desire to appoint people solely on ability and merit, they championed that approach anyway.  Certainly in the HR Business Support area, people deserve to be praised for their professionalism in dealing with the EG-IT redundancy exercise in 2009.  This was the first time for them and therefore particularly challenging.  Thankfully, they were given strong support and guidance from the HRM at the time (who was, in turn, well supported by Malini Johnson) and I tried to assist where I could.  However, I never saw Sophia Panayiotou anywhere near this exercise - I assume she was playing the ‘nothing to do with me, this is too messy’ card that Patrick Naef was playing.  So, I stress that it is the management of HR, right up to and including Gary Chapman, who are responsible for HR not being fit for purpose.  The staff in HR, as in EG-IT, deserve much better.)  

                                                                                                     

Not being present, I do not know exactly how he went about it, but certainly Patrick Naef has left a lot of people feeling very bitter about how they were manoeuvred into positions that did not want to be in.  There would have been no need for any sheep dogs – the rottweiler is far too efficient to require assistance!  As always, Patrick Naef’s motives would have been totally self centred with the needs of staff and the company being of no consequence to him.  Patrick Naef’s criteria in assessing the value of staff is also out of line with reality so, as well as wasting many years on a doomed mission, pouring even more money down the EG-IT drain, Patrick Naef has caused the Emirates Group to lose yet more valuable staff.  I have received a number of complaints from people feeling that they have been badly misled by both Emirates and the new owners.  Given no choice but to sign up to the new company or resign, some found their jobs under immediate threat as soon as they joined.  Someone summed it up to me by saying that, in contrast to the regular claim from Emirates of taking pride in supporting its staff, in reality EG-IT staff (Mercator or not) were treated like commodities whilst Patrick Naef, along with others responsible for the failure of Mercator, survived.

At least the Group’s businesses will be better off without the distraction of Mercator.  But yet again we have failure, money wasted, unsavoury practices regarding people and claims of unfulfilled promises and misleading information leaving a very bad taste.  And, yet again, Patrick Naef is at the centre of it all.