Rating Agencies: updating and democratising rating – a “AAA” theory

Like most right-minded people I dislike intensely the thought of individuals and firms escaping justice when they are “guilty”! But that is what WE are TOLD to accept by Governments, Regulators and the judiciary…none of whom can be relied upon (any more) to express objective “opinions” as far as the current predicament that the power-brokers of the global economy have created!

This would simply not have been possible had it not been for the opinions and strategies of those who stood to benefit most at the expense of their fellow citizens.

Are we doomed to, merely, accept that the nature of change (if any!), for the good of the majority, will be determined by the same institutions whose power and wealth would suffer!?

Turkeys voting for Christmas does spring to mind!     

In mechanical engineering, for example, things like mass, strength, energy, stiffness or margin of safety are computed according to laws of physics which are the same all over the World. The PoD does not obey any such laws. It may have become a standard but it is not a law of physics. So PoD must be replaced by something more relevant.  Something that not only has its roots in physics, but which is also more in line with the turbulent character of our times. Let’s not forget that ratings have been invented a century ago. The world was very different then.

So, instead of a PoD-based rating, we propose a resilience-based rating. Resilience is the capacity to withstand extreme and unexpected events and is a measurable physical quantity (for example there exist standard tests in engineering to determine the resilience of materials). In our turbulent economy, which is fast, uncertain and highly interdependent, extreme and sudden events are becoming quite common. Therefore, companies and investors should be more focused on resilience (survival) than on sheer performance. Resilience can be measured based on another physical quantity – complexity (complexity as function of structure and entropy, not the romantic “order-on-the-edge-of-chaos” version of complexity) – and on critical complexity (another physical property of systems).

Resilience of a business should be measured on a monthly or quarterly basis, not once a year! Things change very fast nowadays.

A web-based system for measuring the resilience of companies already exists:

How resilient is your business? Can you afford not to know?

via Ontonix – Complex Systems Management, Business Risk Management.

Presentation: deeper understanding by thinking in systems

“Systems thinking” can help with the understanding of so much in our lives that, we either take for granted, or are content to leave in the “domain” of Academics, experts and specialists. I thought this an excellent presentation on the subject and one that may “whet the appetite” to learn more about the complexity of non-linear systems.


Business owners, finance and risk professionals who continue to think predominantly in terms of linear processes will only succeed in increasing uncertainty in the environments in which they operate…and beyond!

Why? Because it is much easier to stick with an engrained belief system (Mental Model), particularly one that is widely accepted, understood  and applied than it is to question or challenge the norm. Contrarians are as welcome as whistleblowers in firms with something to hide!

What systems thinking illustrates is that, we need to reconsider much of what we know – or thought we knew – about “risk”. We don’t exist in a “Gaussian world” that fits neatly into a bell curve. The fact is that “outliers” in data cannot be discounted. Rare events do happen and their impact can be disproportionately large. Read more of this post

Facilities Management: Sustainability + “intelligence” = Smart asset strategy

Think of a building as a system (or man-made ecosystem) that may be unable to function if one of its sub-systems fails.

Each sub-system is inter-connected, either physically, or by the purpose for which it was constructed or is occupied. At best, the loss of one sub-system can lead to a temporary partial or full closure. At worst it can cause unseen damage to another sub-system or systems.

So, if the overall system is reliant upon interdependent sub-systems: WHY are interdependent functions only measured independently?

”Imagine assessing the robustness of the electricity grid with data on power stations but not on the power lines connecting them”

Ontonix technology offers the solution. By, effectively measuring the complexity of the (eco)system, each interdependent sub-system and the evolving relationship amongst them. The result is an early warning system providing “crisis anticipation” that supports the old adage that “prevention is better than cure”…it is also much more resilient, sustainable and profitable!!!

Sustainability + “intelligence” = Smart asset strategy Take the smart technology associates with modern construction, facilities or asset management and then…. …add a “brain” in the form of a real-time (remote if necessary) complexity management system from Ontonix. Rents and Occupancy Higher for Green Office Buildings The real estate sector can play a significant role in a low-carbon economy. Not only do investments into more sustainable business practices and technologies benefit the environment an … Read More

via Get “fit for randomness” [with Ontonix UK]

Management Consultants: “Capitalising on complexity”

I have accumulated quite a collection of “papers” advising business how to deal with complexity and am happy to share them…so long as everyone understands that I am not endorsing any of them!

For your delectation I am pleased to add to the list of what, in the main are “qualitative management consultant-speak” that, even when referring to research, interviews, etc. read (to me at least) like documents produced on a topic, primarily because it is topical and offers a further opportunity to secure some well paid consultancy work.

This latest publication is from Celerant Consulting. Make up your own mind…then take another look at the Ontonix website.

Call, email me or get an objective, quantitative, insight into complexity for  FREE!

It really makes my day when other people do a marketing job for Ontonix! OK, so there is never a specific recommendation to contact us but we are happy to settle for the next best thing. That is to identify where complexity IS already costing and will, increasingly, cost through: the impact upon clients, customers, employees and “the bottom-line” budget to identify, measure, manage and monitor on an ongoing basis reduced ROI on assets and facilit … Read More

via Get “fit for randomness” [with Ontonix UK]

What is holding back your business…it may be YOU?

I have had the following graphic for so long that I can’t be absolutely sure that I can attribute it to McKinsey but they are the one’s getting the credit.

The truth is that everyone that I have shown this to can recognise the inherent wisdom…but then go off and, promptly ignore the “inconvenient” bits then wonder why “Growth & Change” remain illusive whilst their stakeholders question the ability of management to achieve stated goals and smart competitors seize the advantage!!!

Firms determine what results they want/need, commit the resource to existing or new people, so when it comes to a clash of culture (old v new), the descent into chaos and confusion is assured.

That is one reason why “change management” tends to be a long, slow, painful and costly exercise for many.

Any idiot can “manage” then find multiple excuses for failure (it’s normally someone else’s fault and it will be they that pay the price) but, if you are going to build something worthwhile and sustainable, it is a bottom-up or inside-to-out (i2o) process.

A business is a complex “system” with many component parts each of which has a role to play in enabling achievement of the purpose for which it was created…

Courtesy of (amongst other things) the human element, a business system will continue to “work” even when it is badly broken. However, for it to realise or exceed its potential requires the component parts to work interdependently. Unless the culture and people (in that order) are able and willing to play their part, underachievement – or worse – is assured.

Follow the link if you want more Complexity facts.

Ontonix understand complex systems and are the ONLY company able to reveal the structure hidden in the data it generates.