Why not “constructive transparency”?


I recently came across a very interesting article that brought to my attention a phrase I hadn’t come across before: constructive ambiguity.

Isn’t that an oxymoron???

The article is here and it touches upon a topic and writers I have written about before in relation to business as war. If you like you economics with a social conscience and a philosophical perspective Ashwin’s your man.

“The interaction between the market participants, and for that matter between the market participants and the regulators, is not a game, but a war.”

Rick Bookstaber

However, in this article ‘constructive ambiguity’ was being used in terms of preventing moral hazard within a regulatory regime.

That’s when it struck me! Why not constructive transparency?

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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

What every leader needs to know…but can be too afraid to ask!


I have come to the conclusion that it isn’t terribly important that Business Leaders grasp what complexity is, as long as they “understand” and reap the rewards of managing it for the benefit of their stakeholders.

Whilst Academia indulge in “mental masturbation” and wrestling with competing definitions, the impact in the commercial world required a solution. That is what Ontonix have developed.

Check your ego at the door

Although a Business Leader doesn’t need to “totally get complexity” there is still a major challenge and that is to recognise that he/she doesn’t know as much as they would like to think they do! But it is the same for all of us,  to such an extent that it may be better to “unlearn” aspects of what has been accrued over many years…

Failed approaches Progress has made novices of us all!

Click on the picture for a fuller explanation of the problem:

Business knowledge and intuition come from experience. BUT, if that experience – like statistical risk data accumulated, in some instances, for centuries – relates to period that bears little or no resemblance to the current era it could be as much use as an A – Z for the wrong city!

Ontonix DON’T leave our clients to “get lost”. We provide, otherwise hidden (silo free), insight into the business structure, pin-point accuracy and a unique map, prepared from current (real-time if required) data: no assumptions; no models but a rigorously tested, 100% quantitative, means of interrogating data relevant to the system and its environment…

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In modernity, technology has transformed the nature and pace of business, in some instances, way beyond the capability of conventional techniques. The frailties of making assumptions or relying upon the wrong analyses have cost this and future generations dear. Yet, still, many business decisions are judged upon the outcome rather than on the quality of the decision…

 

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Leadership urgently required: Sustainable value or race to the bottom?


I make no apologies for promoting the thoughts and text of someone, whose thinking (on a wide range of financial matters) I have come to respect enormously. Nick’s article (below) reminded me that, if all we do is look address what we observe – treating symptoms – we can expend too much time, effort and money applying patches or plasters (in the form of legislation, regulation, processes) without actually EVER identifying and tackling cause(s). Add a time horizon of years or even decades and the ability of a system to perform the task(s) for which it was originally intended…

Complexity decl marg returnsIs this how successive Governments have allowed the Public Sector to become excessively complex: structurally fragile, morally and financially bankrupt, monuments to institutional neglect?

– why “users” and frontline services suffer in the face of budget cuts whilst layers of management indulge in self-preservation?

Is this why Corporate rewards that are results-driven rather than strategy-led have increased moral hazard?

Why Financial Regulation failed and is “too complex” to pursue those responsible – but not, apparently, accountable – for destroying the global economy? Read more of this post