Sky City outlines a clear future plan

Today's newsletter to Sky City Entertainment [SKC.NZ] shareholders got me a little excited for the company and its future direction, and that hasn't happened for a few years.

The content of the newsletter outlined the direction that CEO Nigel Morrison wanted the company was to proceed towards, how it was going to get there, and a time frame to stick to.

The language was clear, to the point, and had none of the "management speak" of past shareholder communication.

It reminds me somewhat of the management at Mainfreight Ltd [MFT.NZ] and their no nonsense approach to ramming their point home.

Now whether management achieve their stated goals is another question, but previous management were truly awful communicators; to their shareholders,within the company and definitely to their customers and the market.

A clear way of communication in business often translates into positive results. Uncomplicated communication gives a clear direction for employees and can translate into a more productive and happier workforce and hopefully a better bottom line.

Morrison has also made practical moves towards the stated company goal, new management have been hired to grow individual casino businesses and a focus on organic growth is emphasised throughout the shareholder communication.

The direction the company is headed is most directly apparent in the outlook for 2009.

"Our shareholders have made it clear to us that they want us to focus on maximising the performance of the assets we operate. This is what we will be doing. as we have said previously, we expect to achieve this within an 18-month time frame. We will retain tight control over capital and not expend capital unless we are very confident of healthy returns for shareholders".

Lets hope the follow through shows some concrete results in the following 18 months.


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Business Gobbledygook puts up Barriers to Communication

At the end of the day, when all is said and done, with all things considered, in the fullness of time and taking the long-term view-urrrggghh-all we want is a straight answer in the simplest way possible.

Nowhere is this more appropriate than in the business world. While speaking to customers, talking to employees, and communicating a message to shareholders. Your message should be clear, precise, unambiguous and be free of unnecessary verbosity and complicated language and "corporate-speak".

My piece today was inspired by two news items of late and they rekindled this subject which has been in the back of my mind for years. The first situation was some of the language used by Telecom New Zealand(TEL) to explain to customers why they had mismanaged a software upgrade to their Xtra Internet unit and the other news story was about Sky City Entertainment's(SKC) explanation of areas of last weeks complicated 2007 FY profit announcement and the confusion that it caused amongst analysts.

In the first instance with Xtra, a spokesman explained that customers were not let down or disappointed with the break in "service" but were instead suffering from "negative surprise". Callers to the Xtra helpline were told in clipped tones when they got testy with Telecom employees over the wait for resumed service that they were experiencing "service disconnection anxiety".

What this kind of language does of course, is to first of all fudge the real issue and spin the heat off the main protagonist, Telecom, and make the customer feel guilty, secondly it has the added bonus of frustrating the customer so much that he gives up on the reason for his call in the first place. This is exactly why this process is used of course because the offending company really doesn't care that much at all about your problem but cant really come out and say that straight.

Telecom are well known for using this kind of spin to run their business, within and outside the company when communicating with customers. For a communications company Telecom NZ don't communicate well at all and indeed there always seems to be a "negative surprise" waiting at the end of the line when one calls the 123 Help line.

Elmar Toime had to spin for his life today to explain issues surrounding last weeks Sky City Entertainment profit announcement:

"The information that was available when I stepped in as manager wasn't enough to assign budgets to individual responsibility areas of the business."

Translation: I didnt do my homework properly.

The SKC profit announcement contained such gems as this one:

"A strategic development plan has been completed for SKYCITY Adelaide which has verified the value of this business and established the path for delivering incremental shareholder value from this property."Huh? we really mean we will try and increase profit but it is going to take a long time and may never happen under my watch.

Don't laugh:

"...a peer review of the Auckland gaming performance and strategy has been undertaken and plans put in place to actively address opportunities..."Does Management usually inactively "address opportunities" ?The word incremental seems to have been carefully chosen because here it is again:

“Most importantly, we are now positioned to ensure that this delivers incremental value to our shareholders and a sustainable future for our people."

Websters dictionary meaning: A slight, often barely perceptible augmentation. In conjunction with the management speak word of the year , the meaningless "sustainable," this sentence really means that profit growth will be small and management don't really know what outcome that will have for the business.

I could trudge through this announcement and pick up more unnecessary management bullshit but even I have a life to lead. You get my point though don't you. Why jazz up communications to shareholders with hackneyed management spin and written clutter?

To be fair to Toime and his company though, this sort of language and company announcement is not rare in New Zealand or overseas. Some companies are much worse and some are better. Mainfreight(MFT), a listed New Zealand trucking company is one enterprise that doesn't indulge in this stuff and I am a well informed and happy shareholder as a result.

When a business, profession or individual chooses to communicate to others in an unnecessary way, as I have explained above, one has to suspect the motives of the communicator. Their verbosity and over complication is probably hiding something. When communicating to shareholders it could be glossing over profits or company prospects, in the case of Telecom ,spin and complication is used to frustrate or fob off customers because of shortcomings in the business structure and with professions such as lawyers, doctors and real estate agents complicated communication is often used to exclude others for economic reasons. If one cannot understand what others are saying someone usually gets paid to decipher this information and it is usually you that pays!!

Politicians are masters at it and we all know they have to be because the skeletons they are hiding require a fair degree of verbal and written dexterity.

In business though, it is most important to "cut the crap" and get to the point quickly and in the most efficient way one can.

In my opinion one can tell the quality of a business by the way they communicate to shareholders, customers and employees. If the communication is fast and efficient the company is likely to be run in the same way.

Of course the opposite is also true.



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Disclosure: I am a shareholder in SKC and MFT




c Share Investor 2007