A Bubble Promoted with Anti-values


The impact of “ambiguity of purpose”, necessitated to mask the loss of values, led to conflicting strategies, misaligned objectives and, therefore, convoluted and complex processes. These impact the manageability, effectiveness and profitability of the system.

This is manifest in the corruption(!) of the structured information-flow across systems, as increased risk/excessive complexity and impaired resilience.

via A Bubble Promoted with Anti-values.

Corporate Culture:: it is better to be wrong and to change


Although the main focus of this article is the American Auto Industry, the examples of failing Corporate culture across sectors are plentiful. Whether resistance to change is borne out of inertia, ignorance, arrogance or any one of many other reasons, IF the environment in which a Corporation exists, has changed and it fails to adapt, all the “tried and tested” means of manipulating financial data to present a “healthy” outward appearance can only mask the truth for so long!

Creative accounting, “innovative marketing” (of re-packaged products and services) or improved gross margins (as a result of technology, reduced costs) can deliver better results but are unsustainable and may do little more delay the inevitable.

Organisations that persist with the hierarchical management structures intended to manage people and, predominantly, linear processes in the Industrial era are inviting disaster.

Why did Blockbuster idly watch Netflix destroy its business? Why did Kodak let digital cameras drive a once-mighty industrial giant into penny-stock territory?

Ask Jeff Stibel, and he’ll tell you: because that’s what troubled companies do. Stibel, once an aspiring cognitive scientist in Brown’s graduate program, is now a serial entrepreneur who has led turnarounds at Web.com and Dun & Bradstreet Credibility Corp. “Once the human mind has set out to do something, or has gotten in the habit of doing something,” he told me, changing it is “very hard.” When you add group dynamics, it’s even harder. You don’t need to be a brain scientist, of course, to know that people resist change … and yet, even knowing that, you’d be surprised at how many firms keep driving toward inevitable disaster at top speed.

Governance–Risk–Compliance: accept responsibility to reap the rewards!


We know we can’t make reliable predictions about our environment..but it doesn’t stop us from spending enormous amounts of money to do so. Then to pay for the consequences of getting it wrong!

Introspection needs to get serious and, to do so, go beyond, “how can we improve our margins?” Apparently we don’t like to indulge in too much self-analysis, even though identifying and addressing “flaws” at source makes so much more sense. We can influence, manage or control what we do, why and how we do it. There is very little we can influence outwith our immediate environment. BusinessRisks

To put this into a business context and convey the message about how complex any business can become, consider the following table:

If this is insufficient to convince you that there are enough risks associated with behaviour to be getting on with please consider how many of these could be addressed by a robust Operational structure!

If you still have doubts, perhaps this extract, from a very interesting paper, will help. It was the result of a collaboration between US National Academies/National Research Council and the Federal Reserve Bank of New York on an initiative to “stimulate fresh thinking on systemic risk”.

Catastrophic changes in the overall state of a system can ultimately derive from how it is organized — from feedback mechanisms within it, and from linkages that are latent and often unrecognized Read more of this post

Insurance: Feed the beast but ignore the elephant


Insurers are so desperate to maintain GWP that they will forego underwriting profit in its pursuit!

Every time the premium bar rises it benefits them but hurts individuals, households and businesses…in short the whole economy! This is how skewed the “logic” of the prevailing culture in financial services has become. And, believe me, they are comforted by the fact that Politicians, FSA and the general public concern themselves with “effect” rather than dealing with “cause”:

A morally corrupt corporate culture.   

The secondary industries that have sprung up around insurance claims – in particular motor accidents – bear testimony to this culture. Massive costs come back around to policyholders in the form of increased premiums. No surprise there then but did you know that much the costs come about as a result of insurers’ desire to secure income from lawyers who are happy to pay for details of claimants. Still not too shocking!?

How about if the insurer who may end up making payments is the same one that  is selling the details of a third party intent upon pursuing a claim, (for damages, personal injury) against them??? That’s right. Read it again if you need to but that is how it is!

An interesting article in a recent issue of Scotland on Sunday: Scottish drivers pay price for English law, touched upon the wider issues but contained this “alarming” quote from one company spokesman:

“someone is going to make money out of this referral. If there is going to be a claim anyway, it might as well be us.”

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