Ontonix: KPI’s and the "Supply Chain"

Project 365 #237: 250809 Fingers Crossed!

Image by comedy_nose via Flickr

Supply Chain vulnerability has not been more graphically illustrated than it has been by a succession of nature disasters and Geo-political upheaval experienced in recent times. We are all paying a price…some considerably higher than others! The question is: “What will we learn from devastating floods, earthquakes and tsunamis?”

Whilst, in our busy lives, we cannot afford to pause for long to consider the devastation and loss suffered by so many, we cannot ignore the lessons that these events teach us as individuals, families, communities and nations.

From a business perspective we cannot overlook the simple truth that, although we have become very good at identifying and managing risk, without preparation, our whole way of life and much of what we take for granted can be destroyed in minutes by “rare events” AND natural disasters.

In modern business there are so many activities that require to be closely monitored that the task, in itself, can create even greater uncertainty unless simplified. That is what we, at Ontonix, attempt to create for our clients…

Specific KPI can be defined for Marketing, IT, Sales, production, etc. The problem, in any event, appears to be a subjective one, namely that of choosing the right parameters and, most importantly, understanding the business well. In KPI definition the so-called intangibles are avoided since they cannot be measured.

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Living with Black Swans: balancing the books in uncertainty

OK I’m a self-confessed fan of NNT but early on in this interview with his former Professor he again hits the nail on the head. He reminds us of the lessons that every business (and political!) leader needs to learn..

“…You have to avoid debt because debt makes the system more fragile. You have to increase redundancies in some spaces. You have to avoid optimization. That is quite critical for someone who is doing finance to understand because it goes counter to everything you learn in portfolio theory…. I have always been very sceptical of any form of optimization. In the black swan world, optimization isn’t possible. The best you can achieve is a reduction in fragility and greater robustness. You may have heuristics, but not an optimization rule. I hope the message will finally get across because I haven’t succeeded yet.

People talk about black swans but they don’t talk about robustness, which is the real lesson of the black swans.”

Business Leaders of the current culture are not, generally, “agents of change”. As I have said before we need to cultivate Risk Leaders. Those who, not only,  recognise the flaws of the current culture but are motivated to create, champion, execute and capitalise upon new models and strategies.

Apart from the clamour, from better informed and more demanding consumers, for greater transparency, accessibility and demonstrable sustainability, the pressing NEED is for this new breed to embrace the concept that robustness (or NNT’s anti-fragility) can ONLY come from by creating (and maintaining) a sound business infrastructure…from the bottom up or, as I feel is even more appropriate, from the “inside out”: i2o”.

The relevance of scaling and causality

Such problems as Taleb highlights can only be addressed if the owner can view the business (or system) at the appropriate “scale”. Otherwise how would one know where and by how much to “increase redundancy” to build RESILIENCE in order to survive unforeseen and unforeseeable future events?

After all redundancy and robustness cost NOW and need to be maintained, so, have an ongoing impact upon profitability.

We live in an age of “promissory materialism”

As it is in science and the theory of evolution, so it is in commerce and, particularly, finance…

There has been a regrettable tendency of many scientists to claim that science is so powerful and all pervasive that in the not too distant future it will provide an explanation in principle for all phenomena in the world of nature, including man, even of human consciousness in all of its manifestations. [Karl] Popper has labeled this claim as promissory materialism, which is extravagant and unfulfillable.

Sir John Eccles

via What Evolutionists don’t want you to know | hydrogen2oxygen.

Ontonix: Complex Systems Management

Excessive complexity may seriously effect  the business performance of a company. The following case illustrates how high complexity of  the business model, of a large utility companiy and in particular the policy and strategies of unit price of its services, leads to less revenue per customer.

The above figure illustrates very eloquently how complexity, when monitored on a daily basis, establishes a very powerful early-warning system which helps an enterprise to improve its decision-making processes, strategy and, last but not least, improve the profitability of its business.

via Ontonix – Complex Systems Management, Business Risk Management.

The Complexity Conundrum: MBA business-speak a source..?

Here is an extract from an article that makes so much more sense than does the modern business-speak that I must confess to “understanding” and using! In my defence can I say that I hear it as a foreign language, interpret it and, on occasion, respond in that language ONLY to make myself understood.

On refection that last statement isn’t actually true! Sometimes I respond in this alien language to test the range of vocabulary and/or actual (useful) knowledge of the other person. Once the façade starts to crack good old (BS free) down-to-earth English can have the impact of a WMD…**BOOM**…get the contract or “I’ll get my coat and leave you with your (bruised) ego”!!!

…”The strange thing about my utter lack of education in management was that it didn’t seem to matter. As a principal and founding partner of a consulting firm that eventually grew to 600 employees, I interviewed, hired, and worked alongside hundreds of business-school graduates, and the impression I formed of the M.B.A. experience was that it involved taking two years out of your life and going deeply into debt, all for the sake of learning how to keep a straight face while using phrases like “out-of-the-box thinking,” “win-win situation,” and “core competencies.” When it came to picking teammates, I generally held out higher hopes for those individuals who had used their university years to learn about something other than business administration”…


This is THE question that grabbed my attention…and how! Are MBA programs up to the challenge of developing leaders who can manage complexity well? via The Complexity Conundrum – BusinessWeek. Unfortunately there just wasn’t enough space for my full response. So, here is the unabridged, unedited, version: Put simply…”NO”. Of course I am not in a position to pre-judge every MBA course BUT, on the basis that Academics cannot agree on a common la … Read More

via Get “fit for randomness” [with Ontonix UK]