The news that ‘Pope Emeritus’ Benedict XVI has returned to live in the Vatican means that there are now two Popes living in the same palace. This might sound like the set-up for a bad sitcom, but it highlights a problem that is all too familiar in the small business sector.

Scholars have identified the problems of ‘succession’ or ‘generational transition’ as a major cause of the collapse of otherwise successful businesses. In the case of a family business, it might mean a patriarch or matriarch handing the business to the next generation. In a larger business, it might mean that growth has reached a point where the entrepreneurial founder has to bring in professional management to run it.

Whatever the reason it has to happen, ‘letting go’ is psychologically very difficult for most people, but doubly so for the sort of people who head businesses. They are the sort of people who like being in control, and they may have strong emotional attachments to businesses they built themselves and/or run for a long time. They also get used to the power, the perks, and trappings of being the boss, and are loath to give them up.

Some go into denial. They remain in charge even when their judgement is no longer up to it, with predictable results. Even if they hold on to the very end, the business might die with them because they refuse to put arrangements in place to ensure it survives them. Others might accept the need to transfer power in theory, but prove unable to live with it in practice. They insist on hanging around afterwards, interfering and offering unwanted advice.

They usually claim that their experience is a useful asset and it would be a shame to let it go to waste. Maybe... but the reality is that they really want a position where they have power but not responsibility. That is unacceptable in any organisation. Power and responsibility should be united in one person, the current chief executive. He should be able to make his own decisions, knowing he will bear the consequences.

In the Vatican, that person is Pope Francis. He needs to make that clear. It was a mistake for him to visit his predecessor soon after his election, and it is a mistake now to welcome him back to his old workplace. It is in everyone’s interest for someone to tell Benedict that it was his choice to resign and he owes it to his successor to keep out of his way – everyone’s interest including Benedict’s: he needs to move on himself. Also it is not exactly helpful for him to use the unprecedented title of ‘Pope Emeritus’ and keep wearing the Pope’s trademark white. Saying this frankly might hurt Benedict’s feelings a little but, of all people, he should understand.

Even those of us who did not agree with everything she did cannot deny the achievements or the influence of Margaret Thatcher. While there is room to debate whether Caesar, Napoleon, Churchill, or whoever, is the Greatest Man in History, when defined purely in terms of personal accomplishment, it is hard to think of any serious challenger to Margaret Thatcher as the Greatest Woman in History by that definition.

For a commoner from a modest background to become the first ever female Head of Government of a major power would have been triumph enough in itself, but it was what she did with that office that set her apart from every other British politician since Churchill.

For better or for worse, she changed Britain completely – and if there was, as with all politicians, a bit of both, on balance the better far outweighed the worse. When she came to power in 1979, Britain was still generally viewed as Konrad Adenauer’s bankrupt millionaire who had not yet realised that he had lost all his money. By the time she left office in 1990, Britain was again an economic powerhouse, the envy of other nations and even their role model.

She also changed the world. She played a pivotal role, along with Ronald Reagan, Pope John Paul II, and Mikhail Gorbachev in bringing the Cold War to a triumphant and surprisingly peaceful conclusion.

However, her greatest legacy may be the re-establishment of Britain’s enterprise culture. In the 1970s business was actively scorned and persecuted by the British government. It was the grocer’s daughter who showed how abolishing exchange controls, cutting taxes, privatising state assets, and reducing overly politicised unions to their proper role could benefit the economy as a whole. Perhaps she could have gone further in cutting red tape, but what she did was enough to encourage a whole new generation of entrepreneurs, many of them people who would never have dreamt of owning their own business before she came along.

Not only did it become possible for almost anyone to be an entrepreneur – it became positively fashionable. To that extent, all entrepreneurs in Britain today – and in countries influenced by the ‘Thatcherite’ British model – are, like it or not, Margaret Thatcher’s Children.

It is the nature of things that strong, healthy children often clash with their parents, but in the end they are usually grateful to them and for them. That is as good as summary as any of Britain’s complex relationship with the Iron Lady – we have had our differences with her but today, in the end, we are grateful.

When the French government needed someone to invest in the failing Goodyear tyre plant in Amiens, Maurice Taylor, Chief Executive of the Titan Corporation, seemed an obvious person to approach. His refusal took the form of a letter lacerating French business practices which, probably as intended, caused outrage in France – mainly because most of what it said was true and everyone knows it.

He criticised French trade unions and working hours. Even when the workers were actually in work, he said, they only worked an average of three hours per working day. The rest of the time they were either talking or having lunch.

He said that French workers were quite open about this and told him, “That’s the French way!”

Now it is tempting for the – patriotically British – authors of the blog to leave it at that, and let the national stereotype hang in the air. However, honesty obliges us to point out, albeit through gritted teeth, that the number of technological innovations and successful businesses that have come out of France suggest that the French are not a lazy people.

They have their own way of doing things, but it can be very effective. Just as the apparently slothful Spanish afternoon siesta allows more productive labour in the morning and the cool of the evening, so French lunching and talking may be beneficial, so long as they are not taken to extremes. Research confirms that well-fed and well-rested workers are more efficient, and having everyone talking about a problem is more likely to find the right solution.

The French malaise is therefore not national laziness but a broader national inefficiency. French workers are capable of excellence but Dark Ages business practices give them little incentive to aspire to it. The trade unions are unreconstructed. The State interferes constantly, despite the fact that it is run, irrespective of the party in power, by an inward-looking oligarchy with hardly any experience or understanding of business. The net result is that France is a country to which one goes for pleasure, not for business. That is fine if your business is pleasure, but not for a country that still imagines it is major industrial power. France is a mess and getting worse.

In common with other EU states, France coasted for many years, very comfortably, on its natural advantages and its inherited glories. Increased competition from China and Russia means that will not be an option in future. Instead of being offended by Mr Taylor, the French should pay attention to what he is telling them for their own good.         

When the French government needed someone to invest in the failing Goodyear tyre plant in Amiens, Maurice Taylor, Chief Executive of the Titan Corporation, seemed an obvious person to approach. His refusal took the form of a letter lacerating French business practices which, probably as intended, caused outrage in France – mainly because most of what it said was true and everyone knows it.

He criticised French trade unions and working hours. Even when the workers were actually in work, he said, they only worked an average of three hours per working day. The rest of the time they were either talking or having lunch.

He said that French workers were quite open about this and told him, “That’s the French way!”

Now it is tempting for the – patriotically British – authors of the blog to leave it at that, and let the national stereotype hang in the air. However, honesty obliges us to point out, albeit through gritted teeth, that the number of technological innovations and successful businesses that have come out of France suggest that the French are not a lazy people.

They have their own way of doing things, but it can be very effective. Just as the apparently slothful Spanish afternoon siesta allows more productive labour in the morning and the cool of the evening, so French lunching and talking may be beneficial, so long as they are not taken to extremes. Research confirms that well-fed and well-rested workers are more efficient, and having everyone talking about a problem is more likely to find the right solution.

The French malaise is therefore not national laziness but a broader national inefficiency. French workers are capable of excellence but Dark Ages business practices give them little incentive to aspire to it. The trade unions are unreconstructed. The State interferes constantly, despite the fact that it is run, irrespective of the party in power, by an inward-looking oligarchy with hardly any experience or understanding of business. The net result is that France is a country to which one goes for pleasure, not for business. That is fine if your business is pleasure, but not for a country that still imagines it is major industrial power. France is a mess and getting worse.

In common with other EU states, France coasted for many years, very comfortably, on its natural advantages and its inherited glories. Increased competition from China and Russia means that will not be an option in future. Instead of being offended by Mr Taylor, the French should pay attention to what he is telling them for their own good.         

Then Balaam had to listen to a load of prophecies which were ridiculous, even for a donkey.

Sometimes good advice comes from the strangest sources. The classical Greek playwright Aeschylus said a man may learn wisdom even from a fool. In the Bible Balaam was put right by a talking donkey – anyone so inclined can insert their own jokes about politicians, or perhaps about speaking out of his ass.

Those of us who came of age in the 80s got a great deal of useful business education from watching the American television drama Dallas, and its arch-villain “J.R.” Ewing in particular. He was hardly the best of role models but at least he showed how business could be fun.

He was also the best thing about the recent revival of the show, and it is difficult to see how it will survive the passing of the actor who played him, the unique Larry Hagman.

Perhaps its place will be taken by the oddly similar Nashville, with its villain Lamar Wyatt, played by the ever-watchable Powers Boothe, assuming the mantle of the late, great J.R. In the opening episode, he was given a speech which, if spoken by a great statesman or a learned professor rather than a character in a soap opera, would be carved in marble on public buildings:

“Fate is what befalls a man who fails to act. Destiny is for men who refuse to accept their failures as their fate. We’ve all had failures... Do not let them define you. Let them refine you.”

Leaving aside the source, and the whole theological debate about free will and predestination, there is a great deal of truth in this. In business, we are not masters of our fate – however well we research and plan and prepare there is always an X-factor beyond our control – but we can choose how we respond to our fate. That is perhaps our only freedom – and our responsibility.    

HMV stands for “his master’s voice”, to which a small dog listens as it emanates magically from a gramophone. The famous image was originally a powerful statement of the wonders of modern technology. Now HMV itself looks as dated as the gramophone.

Last week saw HMV going into administration, recently joined by fellow High Street giants Jessops and Blockbuster. Is this a crisis in British retailing or a long overdue restructuring?

One of the great strengths of the free market, as opposed to state control, is that the markets reward those who provide what people need or want, or think they need or want. The other side of this coin is that those who do not provide are forced out of business. Bankruptcies are therefore not always undesirable. They are the means by which resources are reallocated from failure to success. The process is often painful, but in the long term resources are allocated where they are needed and wanted most, which is both efficient and morally right.

That is clearly seen in these three businesses. HMV has long been uncompetitive: CDs and DVDs can not only be bought cheaper on-line, they are archaic media being replaced by downloads. Blockbuster had also been pricing itself out of the market, failing to grasp that overcharging for rental, whether in store or online, made downloading a more attractive alternative. Jessops is largely a victim of the triumph of digital photography.

In each case a static business model was undermined by technological change. Given the choice of adapt or die, they failed to adapt. So their demise is not unjustified or unexpected.

The more fundamental question is to what extent these three particular failures represent a more general shift from the High Street to on-line retailing. Certainly this Christmas saw a growth in internet shopping at the expense of old-style physical shopping, and we can expect that to continue.

However, there may be more than the healthy processes of the free market at work here. At least part of the uncompetitive pricing by High Street retailers is due to Government intervention. On-line businesses do not have to pay crippling business rates on city centre properties, or the spiralling administrative costs of employing a direct sales force. Many local authorities have failed to address parking problems because they imagine their failure encourages shoppers to use public transport! The reality is that such policies only encourage consumers to go on the internet and avoid central shopping districts altogether.

This week sees HMV being taken out of administration by new owner Hilco. All the old business model problems remain though, and Hilco will have to be creative in reinventing the business if it is to have a sustainable future.

Even then, all the aforementioned problems of physical retailing remain. We will miss our city centres when they are gone.

There is serious concern that the sale of new cars in the UK will be reduced in the coming year because superstitious people want to avoid the 13 numberplate. Practical people may dismiss this as credulous nonsense but the prejudices of consumers, right or wrong, are still in their own right economic facts with which business has to deal.

In any case, even among the practical – especially among the practical – it is difficult to find anyone with serious business experience who is unworried about the year ahead. The euro looks shakier than ever. Italy’s technocratic but unelected government has retained the confidence of the markets but is in its last days: it will probably be replaced either by a leftist coalition under a former communist or possibly by the return by Silvio Berlusconi – neither a force for stability. In Spain, a new government trying to cope manfully with the consequences of its predecessor’s free spending faces huge unemployment. France’s attempt to develop an alternative to German austerity has been undermined by its reliance on a 75% top tax rate. The flight of that epitome of all things French, Gerard Depardieu, across the border to Belgium is symbolic of a general flight of confidence.

Any one of these three giants going the way of Greece and Ireland would be a greater catastrophe than both the latter put together – and any or all of the three could go next year. It will be a minor miracle if none of them does.

Before that, there is the small matter of America’s “fiscal cliff” to avoid. In a squalid bargain that does credit to no one, Democratic President Barack Obama and Congressional Republicans put off tough decisions on the budget deficit until after the elections. Now the elections are over, and tax cuts passed under the younger President Bush are set to expire. Almost no one in Washington wants that to happen, but President Obama, flushed with victory after his re-election, has initiated a very dangerous game of chicken.

He says he will veto the renewal if it includes the tax cuts on higher earners. Republicans who control the House of Representatives are pledged to apply the tax cuts to everyone. Whether they were wise to make such a pledge is beside the point: the political fact of the matter is that everyone remembers how the elder President Bush never recovered from going back on his equally unviable pledge of “no new taxes.”

Compromise is still possible, but there is very little trust and goodwill between the two sides. In any case, this is no way to run a global economy. Whether it is initiated in America, France, Italy, Spain, or one of a dozen other danger points, a crisis in 2013 is more likely than not, and this one will be down to the politicians, not the bankers and borrowers as it was in 2008. Hold on: it may be a rough ride in the coming year.

Before we consider what lies ahead in 2013 – not a pleasant subject – we really ought to take a moment to reflect on 2012, if only to remind ourselves that we have had much for which we should be grateful.

That is especially true for those who, like the authors of this blog, live in the United Kingdom, because 2012 really was Britain’s Year.

According to something called Monocle magazine – no, we’d never heard of it either – Britain is currently the most influential country in the world, at least in terms of “soft power”. This means cultural influence, not real power – British politicians should not kid themselves that we matter militarily any more – but it does have significant economic benefits which British business can and must exploit.

No country has had more positive international publicity this year. First there was the Queen’s Jubilee, which turned even Britain’s infamous rain to advantage by showing Britain’s old stoicism is not dead. Then came a British victory in the Tour de France and a British men’s finalist at Wimbledon – he lost, of course, but that he was there was triumph enough. That led on to further glory, some of it surprising, in both the organisation and the medals tables of the London Olympics and Paralympics. The Bond franchise was revived to great acclaim in the autumn. Finally, the Duchess of Cambridge fell obligingly pregnant.

Britain continues, in Lord Hurd’s memorable phrase, to “punch above her weight”. Although her population is less than 1% of the global total, she has always been disproportionately influential. It helps that not long ago she had the greatest empire the world had ever seen. It helps that she is still a major financial centre. It helps that English is the second language of the world. It helps that she is the country of Shakespeare, Dickens, Conan Doyle, and, yes, Rowling. It helps to be the country that generates popular music that has, from the Beatles and the Sex Pistols to the present day, entered global consciousness and challenged the mighty American music industry. It helps that her actors project an image that appeals to the social aspirations of Americans.

All this helps, but it did not stop Britain becoming “the sick man of Europe” in the 1970s. She remains in a vulnerable position, not least due to excessive government borrowing. Austerity is necessary but unpleasant. Yet a glance across the waters to our nearest neighbours puts things in context. The UK is not Italy or Spain or Ireland, and tax exiles flooding in from France, like aristocrats after the Revolution, tell their own story. If Britain continues to grit her teeth and push her signature brands – from Sherlock Holmes and single malt Scotch to Downton Abbey and Rolls Royce – she is in a stronger position than most to weather the year ahead.

The selection of Mark Carney, Governor of the Bank of Canada, to take over as Governor of the Bank of England next July is welcome news on several levels.

First and foremost, it is good practice for any organisation to be able to look beyond itself to find the best person for any job, whether that organisation is a small business or the government of a major economy. An inward-looking mentality can be a fatal disease, and a transfusion of new blood is the best treatment.

In the particular case of the Bank of England, indeed the whole British Establishment, such a transfusion is long overdue. The growth of meritocracy that characterised the UK from the 1960s to the 1990s seems to have been thrown in reverse in the last decade or two. All power seems to be concentrated in the hands of a few thousand people, sharing the same basic outlook, who dominate politics, the civil service, public appointments, and the media. It is not a question of coming from the right family, the right school, or the right university so much as knowing the right people.

This was reflected in the names of the “usual suspects” who were being mentioned in connection with the Bank job: the current Deputy Governor, Paul Tucker; Lord Turner, Chairman of the Financial Services Authority; and Lord Burns, Chairman of Santander UK and a retired civil servant.

The net result of all this mutual back-scratching is the lack of vision and imagination that permeates almost every aspect of Britain’s leadership today.

The same cannot be said of Canada. All the major economies were – and, in most cases, still are – guilty of the financial laxity that led to the 2008, Canada no exception. Indeed, Canada was one of the worst offenders, so that its loose living caught up with it even before 2008. This forced the Canadians to take drastic action to reduce government expenditure, restructure the public sector, and rebalance the whole economy. It was bitter medicine but it worked. Canada got off relatively lightly in 2008 and now has one of the strongest economies in the world.

Mr Carney was part of that process. Although some favourable reviews of his appointment exaggerate his role a little – the major credit belongs to the people of Canada who elected politicians prepared to make hard choices – he is a man with first hand experience of turning a country around who knows exactly what it took. That experience and knowledge are now available to the leaders of Britain. They must not neglect it.

Reading this blog can make you rich! Honestly, your contributor invested in one of his own predictions and made a return of 20% in 48 hours.

All right, before this sounds too much like a scam, a few words of explanation are necessary. Having predicted consistently that President Obama will be re-elected, it seemed only ethical to follow the ancient principle of “put your money where your mouth is” and a fairly substantial sum was placed at the local bookies at 5-1 odds on. The low odds, far from being a turn-off, were the whole point: making relatively small margins on near-certainties is a far more effective strategy than betting at long odds.

It is in effect the strategy pursued by the bookies themselves – which is why the purpose of this post is not to encourage anyone to become a professional gambler but the complete opposite. It is all too easy for one successful punt to blind someone to the mathematical fact that, over time, the odds always lie heavily with the bookies.

It was noticeable that everyone in the betting shop – except your contributor of course – looked poor and depressed. Gambling is visibly not a short cut to wealth and happiness. Yet the gaming industry is thriving in recession because it offers the – illusory – hope to people who have no hope in anything else. One hears even experienced entrepreneurs saying “if I win the lottery” rather than “when my business succeeds”.

It is clearly in the interests of both the individual and the economy as a whole for people to apply their money, their attention, and their hopes to building viable businesses rather than to betting unproductively against the odds. Yet public policy encourages gambling and discourages economically-desirable enterprise. On-line “casinos”, targeted at the most vulnerable, are allowed to advertise on British television. Gamblers face none of the paperwork that demotivates entrepreneurs, and if they happen to win the tax regime favours them rather than entrepreneurs. It is a recipe for insanity.

Meanwhile, your contributor understands that his success this week was a one-off: Mr Obama’s re-election was so probable that Irish bookies Paddy Power started paying those who bet on him the day before the American people voted. Otherwise, he remembers what his old economics master said about gambling – “Never bet with money you can’t afford to lose ...cheerfully.”

The teacher counted the stock market as gambling. Your contributor still has “blue chip” Lloyds TSB share certificates to prove how right he was.