The Death of Taxes (or the End of Life as We Know It?) – Forbes


I can relate to the “desperation”  that is apparent in the Author’s tone!

Virtually any company I have seen, with just a little coaching and prodding, can increase their bottom line by at least a full percentage point.  Since most companies only make about 5% after tax, that one point is a 20% improvement.

And still they don’t react; they don’t change; and if they do, they do too little and only do it once.  But complexity is like weeds in a garden.  It keeps coming back again and again, and needs to be monitored, controlled and repeatedly removed.

Ironically, the systems that may fail first due to excessive complexity are not corporate systems.  They are the incredibly complex systems that we call “government.”

The Death of Taxes (or the End of Life as We Know It?) – Forbes.

Particularly in tough economic times, the opportunity to build better, more profitable and resilient enterprises, and economies, makes supreme sense. Read more of this post

Risk: ignorance isn’t an excuse for clients and is inexcusable for insurers


I have lifted this text from a recent Linkedin discussion – once I establish the source I will share that too – and wonder what will it take for the insurance industry to tackle known limitations?

“Recent experience in the Americas has shown that the hidden indirect costs of ignored or unforeseen risks are between five and ten times higher than claims payments which implies an inability to see, anticipate and measure the scope of risk interdependence in complex business environments by clients, brokers and underwriters alike.”

This is precisely the point that I have been making and WHY I WILL persist with my attempts to make COMPLEXITY ANALYSIS & MANAGEMENT a cornerstone of future insurance rating.

I am far from alone in highlighting (1) the problem (2) the potential impact. In 2010 and, again, in 2011 Mactavish Consulting produced really worrying reports. The commentaries from PwC and Citi should have very loud alarm bells ringing…I can’t hear them! Rather the findings are labelled as “inconvenient truth” and swept under a well-worn carpet in the hope that the spark, that will betray the increased fire risk, doesn’t happen on the current watch!!!

Are the Strategic risk functions and shareholders being kept in the dark whilst “wider economic climate” is readied as the excuse for the inevitable losses?

British firms contain new risks that have not been properly understood or reflected. As a result of this combining with existing pressures on insurers, the insurance sector and the companies it serves could be facing a perfect storm that would form another phase of the financial crisis.Our research suggests that company managements, insurers and investors all need to wake up to face this reality.”

Read more of this post

Strategy under uncertainty: McKinsey Quarterly – Strategic Thinking


Revisiting a McKinsey article from 2000. If business leaders haven’t realised that we are facing, at least, Level 3 uncertainty they may just be stupid or lucky enough to “muddle through”…not much of a strategy though!

Whilst I agree wholeheartedly with the sentiment behind this article it is worth remembering: whilst we have a single history, we have multiple futures

Chart: The four levels of residual uncertaintyAt the heart of the traditional approach to strategy lies the assumption that executives, by applying a set of powerful analytic tools, can predict the future of any business accurately enough to choose a clear strategic direction for it. The process often involves underestimating uncertainty in order to lay out a vision of future events sufficiently precise to be captured in a discounted-cash-flow (DCF) analysis. When the future is truly uncertain, this approach is at best marginally helpful and at worst downright dangerous: underestimating uncertainty can lead to strategies that neither defend a company against the threats nor take advantage of the opportunities that higher levels of uncertainty provide. Another danger lies at the other extreme: if managers can’t find a strategy that works under traditional analysis, they may abandon the analytical rigor of their planning process altogether and base their decisions on gut instinct.

via Strategy under uncertainty – McKinsey Quarterly – Strategy – Strategic Thinking.

Socio-economic lessons from nature: Interdependence NOT overdependence


Here is the “full” Nassim Taleb conversation, at The Royal Society with David Cameron – no need to give any extra kudos to the leader of the Conservative Party as a result of his “participation”.

Financial inter-connectedness, or globalisation, has become the economic form of the “planetary eco-system”, or environment. These systems, like the human body, are undeniably complex. It is true of any system that greater complexity equates to more functionality but each has their upper limit around which the “system” becomes unstable, unpredictable and difficult to manage. Beyond the point of “critical complexity” functionality is lost, sometimes rapidly…the system crashes.

It is true of our bodies, the global economy, the environment as it is of a business entity, its eco-system, IT systems, etc.

So, whether we are talking about the our “ personal systems”, or the individual in the context of any of the – interdependent – four pillars of a sustainable society: SOCIAL; CULTURAL; ECONOMIC; ENVIRONMENTAL, each system needs to be robust to be best able to cope with “the unforeseen.” Call it “randomness”, call it “black swan”, call it whatever you like! But “outliers” within data CANNOT be discounted in the manner that they have been by those involved in financial modelling, forecasting, etc. “Conventional wisdom” is no longer enough…

This is not, necessarily, news and elements of the argument are [and will continue to be] disputed…witness the disputed facts re globally warming, etc.

But the age old problem has been:

“HOW DO YOU MANAGE (something so complex) THAT YOU CAN’T MEASURE?”

That is why the QUANTITATIVE COMPLEXITY MANAGEMENT solutions from (link: Ontonix srl) that I will shortly be rolling out in UK, are so exciting. NOW we can confidently state that, with the appropriate data:

“YOU CAN MEASURE, ANALYSE AND MANAGE”

Please take a look at the main website there is no shortage of information. I will post further information including some updated case studies in the coming days but if you would like to discuss any aspect please call me [+44 (0) 7919 917150], leave a comment or email me: david@ontonix.com

Without Ontonix:

“YOU CAN’T MANAGE WHAT YOU DON’T MEASURE”