Even when the DNA is similar “we can’t fix today’s problems with yesterday’s tools”:: Part 1


This quote is from David Cole (Chief Risk Officer, Swiss Re) and, needless to say, he wasn’t talking about fixing his 30 year old VW Golf! He was actually talking about our current “economic ills” and the quote appeared in relation to the 2012 Global Risks report from WEF…but the Principle readily applies to both.

Circa 35 years ago, the engine of a popular family vehicle was a complicated machine, that could be maintained, faults identified, performance improved and mechanical repairs undertaken, even at roadside, by an enthusiastic amateur. Observation, diagnosis or intervention at the appropriate stage in the process was possible. However, in a relatively short period of time, these machines have evolved into highly complex systems. The complexity is such that, even a skilled motor mechanic armed with 30+ years knowledge and tools that have changed little, can be rendered helpless.

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“ERM is not enough”:: How to prepare for a Black Swan [Booz & Co]


Great to know that there are still major Consultancy firms ready and willing to wade-in to help firms understand the type of risks that could “kill” an enterprise but about which too little is widely known, less is understood and next to nothing is done to extend the current “risk horizon” or to build RESILIENCE into the Commercial/Corporate defences.

Of course the following perspective is certainly not the only one available…”Black Swans”, Systemic Risk, Complexity, Uncertainty are topics that I have covered in this blog on MANY occasions…but it is worth a read. It may answer some questions or prompt new one’s, either way, you will have given the matter further thought and, if it leads you to a more resilient enterprise, the benefits will be communicated to others…and you can thank me later!

These events can threaten a com­pany’s survival, and boards and senior leaders are responsible for protecting shareholders and other stakeholders. They must ask, What else can go wrong?

A Disrupter Analysis Stress Test

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Simplifying organisational complexity:: inspired infographics – The Art of Complex Problem Solving


Interactive Infographic: The Art of Complex Problem SolvingClick for interactive version

I’ve never met Marshall Clemens but can state emphatically that I love his mind!

As anyone who has read my blog before will know, simplifying and conveying the message about an abstract concept like complexity is not easy.

Add to that the fact that there is no single/common definition and, apparently, little scope for agreement – certainly not amongst Academics!So not much chance of a common language…UNLESS Marshall has provided an inspired starting point.

“Translating” the scientific and applying it in terms that relate to a business environment is difficult to communicate and, until I found this, difficult for many business-people to visualise. Although excessive complexity can seriously damage both wealth and health!

There are considerable risks associated with conventional, hierarchical, organisations, as well as the management style and associated culture. NOT all of these risks e.g. excessive complexity, are visible…but that does not mean that they are not there! Just that we require the appropriate tools to identify them.

The FACT is, that unmanaged, *self-generated [endogenous], risk is a source of systemic risk and is communicated, using business connections (e.g. financial networks, supply chain) as the conduit, to other entities (large and small; individual and corporate) across industries, communities, borders and domains:

by our inaction WE are adding to the very financial uncertainty and market volatility that we so desperately need to address!

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The Inevitable Next Economy


The Human Productivity Chart

Courtesy of Dan Robles (Ingenesist

Human civilization has progressed through many stages.  Each stage arose from the “integration” of the tools developed in the prior stage.  Believe it or not, the next economic paradigm will arise from the integration of the tools being developed in the current stage of human development. Let me explain:

Hunter -gatherer:

We started as hunter-gathers who travelled from place to place to follow animal migrations and seasonal flora.  People would collect fallen branches and burn them for heat or cooking.  Then people started to sharpen rocks that could be used to hunt food better than a dull rock. They sharpened rocks to chop down trees for warmth and shelter.  Soon they sharpened rocks to till soil.

The agrarians

The arrival of the agrarian age came when the arrow, the axe, and the plough were integrated; that is, the output of one became the input of another – allowing people to conserve energy and increasing productivity. The emergence of communities led to the division of labour as people specialized their skills. People soon developed tools and techniques for forging metals, building structures, and harnessing of forces such as wind, sun, water, and domesticated animals.

City-states

The arrival of City-States arose when division of labour, harnessing forces, and transportation became integrated.  Spare time became available to experiment in ideas such as governance, laws, civil services, and currency. Travel allowed for trade of goods, services, and the spread of knowledge across great distances.

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Economics & Ecology:: the lessons of complex systems


Scientists, sometimes in cooperation with economists, are taking the lead in a young field that applies complexity theory to economic research, rejecting the traditional view of the economy as a fully transparent, rational system striving toward equilibrium. The geophysics professor and earthquake authority Didier Sornette, for example, leads the Financial Crisis Observatory, in Zurich, which uses concepts and mathematical models that draw on complexity theory and statistical physics to understand financial bubbles and economic crises.

Get "fit for randomness" [with Ontonix UK]

The following extract is taken from a thought-provoking article from McKinsey. Power curves are much loved by authors, such as Clay Shirky, Seth Godin, Charles Leadbetter to illustrate the potential for conversation, collaboration and innovation, through adoption of: web 2.0; social media; crowdsourcing; collective intelligence, etc.
They are, therefore, very much “in vogue” and, I suspect, will continue to be so for some time to come…probably not a great surprise that economic theory is enjoying a renaissance in difficult times!
However, from the perspective of “financial regulation” in UK, it is difficult to believe that, if FSA chose to IGNORE the warning signs [generated by financial modelling] about Northern Rock and HBOS, they would be any more effective by monitoring “the system”!!!
“Make the system the unit of analysis. You can’t assess the behaviour and performance of a specific agent—for example, a financial-services company—without gauging the behaviour and performance of the system in which it…

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