Mr Bias and the future of social media

Some days ago one of the most reputed most known Italian contemporary writer, Umberto Eco, passed away. In my view he was very sharp and I like some of his quotes. The one I like most is about books:

“People who don’t read will reach the age of 70 having lived only one life, their own. Those who read will be living 5000 years; they where there, with Adam and Eve in the garden of Eden, they joined when Renzo and Lucia married and where there when Leopardi wrote “the Infinito", as reading brings immortality’.

There is another quote of Umberto Eco (and an interesting comment to it) which keeps me thinking, which I would like to share: 

“Social media gives legions of idiots the right to speak when they once only spoke at a bar after a glass of wine, without harming the community. Then they were quickly silenced, but now they have the same right to speak as a Nobel Prize winner. It’s the invasion of the idiots.” 

Among the many comments to this quote, Dr Jim West  wrote on his blog:

 “… the idiots have the right to speak but they should have no expectation that anyone with sense will listen to them much less take them seriously.  The idiots have as much right to be heard as CNN and the Huffington Post and Fox News and NBC and ABC and CBS and the Discovery Channel and the History Channel.  But like those outlets of infotainment, they have no right to be taken seriously when they speak about matters like theology or history or exegesis or archaeology.

Indeed, the truth is, only idiots heed idiots.  So let them.  Those who wish to know better will seek to know better and those who are satisfied with rank ignorance, stupidity, and misinformation will never care for the truth any more than a person who watches the Naked Archaeologist really cares about the facts.  Their ignorance is invincible.  They should be left to it.  To rot in the swampy stew of their own putrid mindlessness.”

Here my two cents’: I like both comments. Further I believe that one day the social media will collapse and/or implode for the reasons mentioned by Mr. Eco. However I do not share Dr. West’s optimism.

 And that is because of Bias.

 Bias was a politician and legislator of the 6th century BC and was one of the “seven wise men”. Asked several time to write a sentence to be engraved on a temple, Bias refused many times because his quote was “dangerous”. At the end he changed his mind and  provided this sentence:

αʹ οἱ πλειστoι κακoί

“The majority of men is bad”

This sentence is dangerous: if we accept its validity, certain pillars of our western civilization are at risk of  collapse. Democracy, for example. Bias was really a wise man.

Shall we trust democracy? Of course! There is no better system I am aware of.

Shall we always trust the majority? I am not so sure....

Mussolini and Hitler were democratically elected.....

At a closer look we do not always trust the majority of people. In our constitutions we exclude referendums for tax matters because the vast majority would vote to abolish any tax (even if taxes, if properly spent for good purposes like education, roads, health care are the basis of our society).

Even if I hope that Bias is wrong, I do not succeed in trusting the majority of us as able to discern what is good from what is bad in the net. And there is nothing we can do about it. 

As everything which is human, the “invasion of the idiots” as Mr Eco puts it, will come to an end. 

At some point.

The five “T”s of risk management

Few years ago I read a brief article issued by an oil company about risk management[1].

I found it so illuminating that I decided to develop my own version of a tool which over the years has proven very effective when dealing with risks, no matter in which context.

Here is my take:

We live in an uncertain universe and it would be foolish to waste time to think how to eliminate “risks”. The most important thing you can do is to manage risks so that the impact could be mitigated in case the “risk” event occurs. It is important to structure your course of action in connection with your appetite for the risk.

How can you do so?

Think of 5 “T”s. in regard to a certain unfortunate event you can decide to

1.     Take the risk

2.     Treat the risk

3.     Transfer the risk

4.     Terminate whatever you are doing

5.     Take a tea (or Take it easy)

Let us use a concrete example to explain the concept. If you happen to live in Naples who is a large city in southern Italy build very, very close to the Volcano Vesuvius, and want to buy a house you know that you are exposing yourself to a certain risk. Vesuvius is a dormant volcano that has been quiet for a while, but some day, as it did in the past, will erupt again causing destruction.

The risk certainly exists and cannot be eliminated. However you can decide to:

1.     Take the risk. You will buy your house and won’t care much about any eruptions.

2.     Treat the risk. Yes you can buy the house but it will be an anti seismic building close to a motorway, allowing you to leave quickly if anything bad happens.

3.     Transfer the risk. You may decide to transfer the effect of an eruption by taking the appropriate insurance (assuming you find one) and indicate as a beneficiary someone living far away, whom you like very much.

4.     Terminate. If your appetite for the risk is low, you may decide to buy your house somewhere else (which will deprive you from the pleasure of living in the second most fascinating and beautiful place on earth[2]).

5.     Take a tea (or Take it easy). When looking at the risks around you, if you are willing to do an intellectually honest job you should consider leaving politics and emotions out of your risk management structuring. Once you make your considerations, the itchier is your issue, the better is to let someone independent, external to revise your ideas.

I used my extensive tool in contract negotiations and when addressing Boards for difficult decisions many times and I was surprised to see how successful, calming and rewarding a structured approach can be.

As a final input: in Chinese the word for "crisis" (危機) is “frequently invoked in Western motivational speaking as being composed of two Chinese characters respectively signifying "danger" and "opportunity"”. (Wikipedia)

Even if this is etymologically incorrect, I still like the idea.  

Should you need advice or support in these matters, please do contact me.

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[1] I think it was Shell but unfortunately I can’t find anything on this topic attributable to the reputed oil company.

[2] The most fascinating and beautiful place on earth is obviously Salento, the area I come from......

Change Management: heroes and villains

“You know Charlie, in this world everything changes and nothing stands still. In fact change is the logos¹ of the universe”- said Hery.

“ I could not agree more Hery”, “and I would add that organisms either adapt to those changes or evolve or die”- “Cheers”- said Charlie

If we could witness Heraclitus[1] and Charles Darwin[2] talking over a beer in a pub today we would consider their statements as self-explanatory, almost obvious, although in their respective time they meant a disruptive “Weltanschauung” or way of seeing the world.

Are Darwinism and the Logos of the Cosmos theories recognized and accepted all over the world? With the exception of a few rural areas of the U.S. where creationists rule and some other remote areas on other continents, you would think so. Sure? Think again! 

Companies are organisms in a changing world. When conditions change, they need to adapt or evolve, else they will perish. That being said, you may be surprised to observe how in the corporate world such theories are well known and positively ignored at the same time. As for any issue in the business world everything boils down to people.

From what I could see there are 7 types of characters awaking to life when a change management project starts. These people influence (drive, support, endanger and sometime hijack) the process; therefore it is critical for the success of your project that you know whom are you dealing with. You may have the best plan and abundant resources: yet the success of your venture (as the general success of any company) depends exclusively on the quality of people you have on board and on their behavior. In an online Change Management booklet I found a very amusing and interesting description of following main players[3]:

1.     The Visionaries and Missionaries

2.     The Active Believers

3.     The Opportunists

4.     The Waiting Apatheticals

5.     The Underground Fighters

6.     The Open Opponents

7.     The Emigrants

The visionaries and missionaries as well as the active believers are fundamental to the success of the project. Sometime they need alignment and coordination, but in general they are low maintenance. If you are looking for “whynotter” this group of people is where you may find them.

The opportunists will measure the project against their personal interest. In terms of communication they will praise the project with their bosses and criticize it with their colleagues (what else would you expect from opportunists?). Some “yesbutters” are to be seen here.

You will immediately recognize the waiting apatheticals by one sentence sooner or later pronounced: “we have tried several times and everything stays the same”. The more you change the more is the same thing or more charmingly: “plus ça change plus c'est la même chose”. The rest of the “yesbutters” are here.

The most dangerous species though is the underground fighter. The underground fighter will do anything possible and impossible to disturb, damage and possibly stop the project. Without being noticed, of course. If you apply risk management techniques to limit or control the damage, you may consider starting here. -hiding but easy to spot-. Beware particularly of those saying “you have to motivate and convince people”. “Sie müssen die Leute mitnehmen” in German, which translate into whatever you do, someone will be upset.

The open opponents may seem difficult to deal with. However their open critics are often constructive and they may help you identifying weakness and potential in the change management project.

The emigrants are actually a natural thing to have in a change management project. People who understand that they will lose their advantages or position will be looking for a new job elsewhere. As a rule the best go first. A skilled person leaving the company is always a sad story - you lose human capital.

Finally, be cautious about the measures of your success in a Change management: If everybody is happy and pleased, very likely you have done something wrong.

No pain no gain.

In case you need support on Change Management issues in Germany please do contact me.

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[1]Wikipedia: Heraclitus of Ephesus (Ἡράκλειτος, Herakleitos; c. 535 BC – 475 BC) was a Greek philosopher, known for his doctrine of change being central to the universe, and for establishing the term Logos (λόγος) in Western philosophy as meaning both the source and fundamental order of the Cosmos.

[2] Wikipedia: Charles Robert Darwin, FRS FRGS FLS FZS^[2] (/ˈdɑrwɪn/;^[3] 12 February 1809 – 19 April 1882) was an English naturalist and geologist,^[4] best known for his contributions to evolutionary theory.^[I] He established that all species of life have descended over time from common ancestors,^[5]and in a joint publication with Alfred Russel Wallace introduced his scientific theory that this branching pattern of evolution resulted from a process that he called natural selection, in which the struggle for existence has a similar effect to the artificial selection involved in selective breeding.^[6]

[3] http://www.economics.phil.uni-erlangen.de/lehre/bwl-archiv/lehrbuch/kap3/change.htm by Tom Behr, and Tobias Tyll

There is liquidity in the WC

A company which is assets rich and profitable, could yet come into serious troubles if it turns short of liquidity:  if its assets cannot readily be converted into cash it may start delaying payment to suppliers or employees, increase its debt or worse miss essential payments. Starting the negative spiral is never a good idea.

If your company is in liquidity distress, one of the best place to start looking for money is the Working Capita (abbreviated WC). The WC is the operating liquidity available and necessary to a business in order to be able to perform their business.

A WC can be “gross”, when it equals to current assets, or “net” when is calculated as current assets minus current liabilities and is affected by the way a company manages inventories, accounts receivable and payable, and cash.

The effective management of these items infers a close cooperation between finance and sales functions.

Here some examples:

Account receivables: They are good if your clients pay in due time and according to the contractual provisions. Your Day sales operation (DSO), a performance indicator that show how fast or slow your customer pay you is a good management tool to steer the sales. It can vary from industry to industry and from region to region but the principle is: the sooner the client pay, the better. By assessing the reasons why your client are paying you late you learn a lot more about the market, your own company and the quality of your products and services than hours spent in the board room. Sales will hate you for speaking to the client (which is something you should do with their consent) but it shed a lot of light on gray areas. By talking to few customers, I realized that our R&D department was spending money and resources on products nobody wanted. The sales representative should control a dunning list, however if the client is in delay beyond certain limits, finance will need to take over.

Inventory: one of my preferred blocks. If you start analyze inventory (god forbid it) you may find a lot of skeletons, poison bottles and little or horrendous secrets. Your Inventory days ration will tell you for how many days you hold an item in stock. Examples of what you can find: Overstocked items. You may discover that your local guy can order from you or other supply without really any authorisation. Is your signature guideline in place? Is that amount of stock really necessary to run the business or the guy loading the warehouse would like to have a comfortable life, which is independent form lead times? The frequency with which items move will tell you finally how much trash you have which is out of market, returned from your client (often hidden by the sales guys in a dusty corner of the warehouse).

Here my piece of advise: if your company is short in cash, before going to the bank and ask for more debt, you should make sure that you squeeze all the liquidity you can from where it is available. There is liquidity in the WC!

Do not be shy in asking what, where, when, who and why on a regular basis. You may find many surprises but you can be pretty much sure that the money will stop flushing down the drain. 

In case you need support in Working Capital matters or any other finance/Change management issues in Germany please do contact me.