UPDATED: Reducing complexity – should finance directors be leading the way?


Since writing this article I have, finally, succeeded in obtaining a copy of the GSI 2010 report. It can be found here. It is certainly worth a read as, like so many reports on the subject (a range of Consultancy reports can be found here), it throws more light upon a subject that can only bring benefit from improved understanding.

HOWEVER, worryingly, the common denominator is not the definition or approach but the lack of an objective, quantitative, solution. Unsurprisingly, this is NOT something lacking in the Ontonix proposition.

That complexity is a source of risk has been established beyond any doubt. As is the fact that, conventional risk management does not possess the tools to distinguish cause from effect in complex business systems.  So, identifying sources and mapping non-linear interactions – that, otherwise remain “hidden” within the data – offers a unique insight to the “observer”, enabling the business owner to:

  • gain “crisis anticipation” iro endogenous events
  • reduce risk exposure at source
  • reduce uncertainty
  • improve operational effectiveness
  • improve profitability
  • build-in redundancy
  • maintain resilience

…and create a more sustainable enterprise – economy – world.

“In a complex system, learning how all the pieces—constant and variable—interact gives a depth of understanding that averts catastrophe. That is what we mean by humancentred design—understanding the interfaces among technology, people, communities, governments, and nature. This is what makes complexity manageable”

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Rok: Another one bites the dust…


Of course it is sad when, yet another UK firm, that for so long was a real success story, collapses. When I read this it triggered a memory regarding worse than anticipated results and the suspension of a Director. The CFO who had been there for over 5 years.

This happened in August and it struck me at the time how our Ontospace technology would have helped a company like this identify emergent issues rather than to have to wait for the numbers to tell them it was too late. Little did I know that “it would come to this”.

We can’t tell the future but we can let a company establish how “fit” they are and, through complexity analysis, identify (otherwise) hidden areas of weakness within the organisation that may be worked upon BEFORE the cause irreparable damage.

Building firm Rok set to enter administration

Rok specialises in maintenance and employs more than 2,000 people across the UK Rok, the Exeter-based building services company, has said it is to place itself into administration.

In August, the company – which employs more than 2,000 trades people – reported a £3.8m loss for the first half of the year

Just one week before the results, the group said it had uncovered "serious failings" in financial and operational controls.

I am not suggesting that we possess the solution to business woes in such turbulent financial times but, as BBC reported at the time, there were “serious failings” in their “financial controls”. If a business has the ability to monitor its current financial health (structural robustness) in an objective and transparent manner they possess the ability to manage that proactively.

Otherwise managing the finances falls to those suitably qualified to do so and, for a variety of reasons, they don’t always get it right. It should never require an “independent review” to unearth issues related to the financial well-being of an organisation. Are we to believe that the CFO operated unchecked? I am not suggesting anything improper but, at best, there has been failure at the highest level within the Company.

You may find this blog post from July relevant and of interest. There are also some good links on there:

If “Risk Leaders” don’t know…how can their bankers and insurers?

 

“Running a company based on just the financials is like driving a car by only looking at the rear view mirror!”

With Ontospace we are able to map internal operational interdependencies and effectiveness as well as external supply chain robustness. We can provide the same in depth analysis and, if required, real-time monitoring of critical operations or processes.

COMPLEXITY is not an imaginary foe dreamt up just to make life more difficult than it already is for modern business. It is the inevitable consequence of the advancements we have made. We view a business as the dynamic (non-linear) complex “system” that it is and needs to be.