WORLDVIEW: Boardrooms embrace Fisher’s Scuttlebutt turning rivals into allies

I have no particular insight into yesterday's surprise decision by Liberty CEO Thabo Dloti to resign over a "disagreement" with his board of directors. Except that it must have been pretty serious. Because Dloti was on a rather well paid gig – the latest annual report shows he earned R24m in 2015 and R19m last year..Even though Liberty hasn't exactly flourished under his direction, there is little doubt Dloti will land on his feet. The gentlemanly days when corporations resisted recruiting each other's executives are long gone. Dloti, an actuarial science graduate, was himself poached from rival Old Mutual seven years ago..In the same vein, my visit to Sanlam's London office earlier this month coincided with a similar one by Paul Hanratty. Not long ago he was among the last people I'd expect to see there. After 31 years with Old Mutual, its COO was universally regarded as a "lifer" at Big Green, Sanlam's fiercest rival..___STEADY_PAYWALL___.But in April this year Hanratty became the latest addition to the Sanlam directorate and was in the London office as part of the responsible reconnaissance expected of a new board member. He quietly resigned in September 2015 after missing out on the top job at Old Mutual – a position which, ironically, went to Dloti's one-time rival for the Liberty corner office, Bruce Hemphill..This crazy merry-go-round reflecting altered executive loyalties has become commonplace. MTN found its new CEO at Vodafone. Absa poached its head of retail banking from Standard Bank. Everywhere, it seems, the arch-enemy's camp is the first place companies look nowadays when appointing top brass..That says something about the increasingly mercenary approach of managers in a world with ever escalating executive remuneration. But it is also a reflection of a growing appreciation for the value of "scuttlebutt" – intimate knowledge only known to corporate insiders. Especially when it's about competitors..One of Warren Buffett's two role models, the great Californian investor Philip Fisher, popularised the term in his classic bestseller Common Stocks and Uncommon Profits. At two and a half pages, the Scuttlebutt chapter is the shortest in the 278 page masterpiece. But it's also one of the best read..Fisher advised investors to tap into the business grapevine where they can acquire "an amazingly accurate picture of the strengths and weaknesses" of companies. He found provided they know you won't quote them, most people happily share their work experiences and will talk freely about their own company and competitors. These insights provide an edge for investors..And Scuttlebutt is highly prized, too, among those who congregate in boardrooms. You can be sure when Sanlam faces a major competitive issue with Old Mutual, Hanratty will be the first person the brains trust taps. We used to call this kind of thing industrial espionage. Nowadays, it's apparently good business.

WORLDVIEW: Boardrooms embrace Fisher’s Scuttlebutt turning rivals into allies

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