Self-help for business: "better questions, new answers" [free White Paper]
Tuesday, 22 March, 2011 Leave a comment
So you’re an SME and you reckon you know better than your Bank Manager, Accountant or some Business Consultant, what is good for your business. Instinctively, you’re probably right…but how do you know?
How can you determine that YOU’RE RIGHT AND THEY ARE WRONG?
If you want to find out how to do it without spending a fortune, opening up your business to someone (who may have an excellent CV) who doesn’t know you or your business OR handing-over “control” to people who assess the worth of a business in terms of £’s – read on.
After all, your Doctor will always tell you what you should or shouldn’t do – eat – drink but, whilst you don’t ignore health advice, I doubt you let them run your life!?
I am not advocating self-medication but I am certainly recommending some self analysis before spending big or risking the decision being taken out of your hands. You don’t even have to have any great concern about the health of the business…just a desire to know more about its “hidden” structure OR the determination to make the business the best that it can be. To: measure; monitor; manage and demonstrate it.
To begin you don’t even have to get up…or panic about spending large sums of money! Just grab the kind of financial data you give the accountant and follow the instructions in this link:
If you want some more background information before checking this out, there’s more:
The conventional “financial yardstick” for a business is the company’s past performance or performance of its peers and competitors. Its bases are the accounting measurements required by Accounting Standards or Revenue demands. The following are typical of the type of “samples” used for many SME’s:
Overall Main Financial data at Company Level 1 Orders 2 Backlog end of period 3 Value of production 4 Revenues 5 Costs for purchases 6 Costs for services 7 Personnel costs 8 Financial expenses 9 Trade receivables 10 Other Receivables 11 Inventories 12 Work in progress 13 Cash and cash equivalents 14 Trade payables 15 Others Borrowings 16 Net debt Sizing/Company Volume by Product or Service Business Lines 17 Total number of clients (last 12 months) 18 Total number of suppliers (last 12 months) 19 Total employees 20 Total part time employees 21 Total number of overtime hours 22 Total number of customer orders transactions 23 Total number of orders at warehouse 24 Total number of goods/services 25 Total number of customer transactions 26 Unsold goods/services (gap between closing stock and opening stock)
But, if your business is deemed to be “sick”, are you happy that this is determined based upon a comparison of samples measured against past performance &/or the performance of others? How it has been:
Wouldn’t you want to know about YOUR current state-of-health, NOT how it is compared to historical or peer data?
Don’t you want to know the cause of the illness – after all how can it be determined that any treatment is dealing with cause rather than symptoms?
”Imagine assessing the robustness of the electricity grid with data on power stations but not on the power lines connecting them”
How it Is and will, increasingly, be:
Any Consultant (medical or business) is going to have to determine that the “patient” is well enough to be treated and…
…every patient wants to know the nature, side-effects, duration and cost of any treatment…as well as the likelihood for success.
Always more questions than there will be answers! But, just in case you thought that I was “splitting hairs” merely to make a case for Ontonix and the solutions we offer, you may wish to consider things from another perspective…
It may seem like a quantum leap from talking about a business to the human body! Trust me, it isn’t when you think of both as types of complex systems: each is completely reliant upon the effective, INTERDEPENDENT, working of their many parts and the ecosystems within which they exist to enable them to grow, adapt to survive and innovate (recreate) to multiply and thrive.
Perhaps what we need as a society is a better understanding of "efficiency", since it is such a key aspect of all complex systems. Take the human body, for example, which is perhaps the most complex life form that has evolved on Earth. After increasing specialisation and inter-connection of various bodily components through millions of years of evolution [not my words!], the systems of the human body have become extremely efficient at their specific functions. The arteries, veins and capillaries of the cardiovascular system have evolved an intricate fractal design that competently delivers oxygen and nutrients to all of the body’s cells as necessary.
What’s important to understand is that every systemic component of the body has a specific function that serves to keep the body alive, growing and relatively stable over periods of time. These functions take place without any regard to concepts of fairness or equality. If my individual skin cells had an emergent sense of self-aware conscience (like me), then they would probably be very upset with my brain cells, which are much fewer in number and receive a disproportionate share of my resource intake (the brain receives 20% of the body’s blood). In fact, the comfortable brain cells typically remain alive for a person’s entire lifetime, while the average skin cell lasts for about a couple of weeks before it dies off and is replaced.
This systems theoretical framework of understanding applies just as well to our global economic, social, cultural and political structures. These evolved systems are amazingly efficient at keeping the overarching human civilization "alive", growing and relatively stable. Consistent material growth is achieved by exploiting limited resources and concentrating such resources in centralised structures through various mechanisms of action. Just as a biological species must eventually adapt to its surroundings or go extinct, human socioeconomic systems that are inefficient at promoting consistent growth/concentration will be marginalized, modified or replaced…
The full article is here.
Complexity IS the problem-solving capability – the power-lines – without which the system cannot function. Poor internal communication, “silos”, inefficient or mis-aligned processes, ambiguous strategies, poor financial structure, etc. EACH can add to the complexity that underpins functionality. The effectiveness of information-flow within a system is critical in maintaining functionality.
There hasn’t been much of an incentive to ask questions about complexity before. Because, without the means to interpret or analyse the data and to measure, monitor and manage its impact the answers would be redundant!
I hope this graphic illustrates WHY conventional analyses won’t provide the answers you seek and the significance of what Ontonix have developed.
Although none of us is able to predict or model the future with any degree of accuracy, as fluctuations in complexity are the pre-cursor to systemic change, measuring complexity serves as an early warning, or “crisis anticipation” of endogenous (internal) change. This can take the form of sudden step-changes (bifurcations) when the system reaches a “tipping point”.
According to conventional wisdom it is only with the benefit of hindsight that we can observe the triggers of “low probability, high impact” (Black Swan) events but our technology has established that this is not necessarily the case.
Follow the link for more Complexity Facts. Alternatively, if this all makes good sense here is the link to take you to our on-line solution…I promise it is an awful lot more straightforward than it can (sometimes) be to grasp the concepts of Complexity Theory and “systems-thinking”. So, if you would like to know more about characteristics of complex systems please complete the form below – after you have checked out the "Rate-A-Business" website – and I will email you a copy of my White Paper: "Complexity in a non-linear World"…
…here is a little sample:
“Understanding and interpreting the lessons of Complexity and Systems Theory can bring benefit to the business – and wider – community by building resilience into the inter-connected ecosystems”.
Conventional management theories and “classical” economics are being similarly challenged as a result of globalisation, de-centralisation and the lessons of Complexity Science.
We can no longer afford to repeat the mistakes of wrong assumptions or over-reliance upon flawed methods. If we don’t, our “ignorance” can be as much a source of risk, compounding our exposure to uncertainty in every domain within our Global ecosystem.
Whilst we now have an array of tools and strategies to help with the mitigation or management of risk, conventional assessment and rating methodology have not kept pace. The Financial Sector maintains its blind faith in “risk modelling” techniques served a purpose during the, post-industrial [linear] era and relatively benign global economic climate but have already been exposed as woefully and dangerously inadequate in an inter-connected and turbulent economy.
The ability of banks to socialise their losses and to carry on as before should be evidence enough that we can no longer rely upon Financial or Political institutions to provide leadership – these “elites” have too…
Complete this and I will email the White Paper as soon as possible