Enabling and incentivising self-organised productivity


Whilst I confess to knowing little about Nemetics but I know enough about Complexity to appreciate the content of this excellent blog. It isn’t terribly different to what I (and my colleagues at Ontonix) have been saying and demonstrating since 2005.

The message for Business Leaders…Before you attempt to apply the tools and techniques of Business and Risk Management or feel inclined to refer to a book on Management from the 20th Century (with the possible exception of 7 Habits… or Principle-centred Leadership) you MUST gain a deeper understanding of the business system over which you preside”.

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Dilbert does Credit Agencies & Capitalism


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John Kay:: don’t blame luck when your models misfire


There are still legions of smart people recruited into FS to be put to work on building models that attempt to predict the future…WHY???

We will succeed in managing financial risk better only when we come to recognise the limitations of formal modelling. Control of risk is almost entirely a matter of management competence, well-crafted incentives, robust structures and systems, and simplicity and transparency of design

Basically, according to this quote, what we need to do is, almost exactly the opposite to what we have done for so many years!

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Damning verdict on City: ‘No longer fit for purpose’ – The Independent


The Liberal Democrat Treasury spokesman on a v...

The Liberal Democrat Treasury spokesman on a visit to Cambridge today. (Photo credit: Wikipedia)

A report commissioned by business secretary Vince Cable was made public earlier this week and finds a financial sector that is no longer fit for purpose. Professor John Kay, a leading economist, has made his recommendations after scores of submissions and interviews with top business and investment people.

In particular, Prof Kay says that regulation needs an overhaul and that traders seeking short-term profits are not acting in the wider interests of the public and should be marginalised.

His review comes when the stock of the banking sector has never been lower, given a seemingly constant run of scandals involving rogue trading, interest rate fixing and global money laundering.

The report finds that short-termism is an underlying problem in UK equity markets, principally caused by a misalignment of incentives within the investment chain and the displacement of trust relationships by a culture based on transactions and trading.

 His recommendations, which are aimed at key players in UK equity markets, as well as Government and regulators, look to:

  • Improve the incentives and quality of engagement, including by establishing an Investor Forum to foster more effective collective engagement by investors with UK companies
  • Restore relationships of trust and confidence in the investment chain, including by applying fiduciary standards more widely within the investment chain
  • Change the culture of market participants, including by adoption of ‘good practice statements’ by company directors, asset managers and asset holders that promote a more expansive form of stewardship and long-term decision-making throughout the investment chain
  • Realign incentives by better relating directors’ remuneration to long-term sustainable business performance and better aligning asset managers’ remuneration to the interests of their clients

Damning verdict on City: ‘No longer fit for purpose’ – Business News – Business – The Independent.

Forget rating agencies: how YOU can determine if a company is “investment-grade”


In the current economic climate it is probably easier to decide not to invest…who, what can you trust in the midst of such uncertainty? But opportunities do exist for those who can establish where NOT to invest.

In many cases, the decision is made by examining a corporation’s financial and balance statements and, of course, its rating. In theory, an investor can look into any public company’s books. In practice this is close to impossible. The rating process is also not excessively transparent. What can a private  investor do? Are there any mechanisms which would safeguard an investor from making an investment into a company that, on the surface looks good but in reality hides a nasty surprise. The answer is affirmative. Today it is possible to get a quick estimate of a company’s resilience by analysing its financials. Now resilience says nothing of how well the company’s stock is doing, or how likely the company is to pay its obligations. What it does tell you is if the company is able to withstand shocks and extreme events (known as Black Swans).

Since shocks and extreme events are becoming more and more common, this seems to be a good idea. Want to read more? Click here

Want to check out our simple on-line process? Click on the image below.

Risk rating on internet