Frameworks, frameworks, frameworks…

Today (26 October 2011) is an important watershed date (or not) for Europe.

Will our leaders and the politicians be able to agree an all encompassing Framework to rescue the Euro, or will we need to think about a more modular approach for the future?

We believe that it might be in the Euro’s short-term best interest to look for a more flexible, yet fragmented modular approach. However, the capital markets might not appreciate the continuous uncertainty and political wrangling whilst we keep on looking for a ‘best fit’ modular solution and what that might entail…

theMarketSoul (c)2011

In the Cloud, Structure is everything!

We have been having several conversations with colleagues and practitioners in both the Enterprise Strategy and Architecture space around both Cloud Computing and the Integrated Service IT delivery space.

Our brief conclusion is that Organisational Structure is everything.

We believe that you cannot effectively move IT Service delivery into the ‘Cloud’ and / or integrate some of the hybrid Cloud solutions and other architecture requirements, without fundamentally adjusting / realigning your organisational structure to fit the new model or modus operandi.

Therefore, the first item on the IT Change Management agenda should be a fundamental rethink and adjustment of Structure.

What usually happens is that once IT Services gets delivered into divisionalised organisations, the service quality and cost gets fragmented and ‘scope drag’ and loss of focus and control occurs.

This makes us conclude that maybe the same approach utilised in Natural Gas extraction, namely ‘Fraking’ should be utilised in IT Service delivery, in the absence of Organisational Structure change:

Go in deep and then cut across the silos in order to get to the core solution (service) delivery, because in the absence of structural service alignment, the only other option is to be as scientific and innovative as you possibly can.

theMarketSoul ©2011

Corporate Culture

This question posed in a discussion forum made us pause and think:

“Bosses think their firms are caring and “values-driven.” Their minions disagree. I think it’s hard from top-down, policy-driven firms to switch to values-driven because even the values are enforced top-down and bosses who have never listened carefully to their employees don’t suddenly start to do so – thus, they never know if their values have caught on or not. What do you think?”

Firstly we need to define Values – We will use it in this post in its economic sense, such as Economic Value Added, meaning that both value creation, return and risk evaluation is as such is ‘built into the value based system’.

Most corporate managers / leaders would probably understand values in terms of two different contexts:

  1. Values as guiding principles, morals, a ‘code to live by’, etc., shaping behaviours and norms
  2. Value in terms of the standard Du Pont analysisReturn on Investment (ROI) calculation methodology.

The third (and probably not last) way of viewing the values question is the economic value added approach, capturing:

  1. Economic Profit (including risk)
  2. Guiding principles and behaviours – the bottom up doing the right thing all the time view

Turning to values as a guiding principle, these are the ‘feel-good’ words and phrases we stick on corporate office walls, the intra- and internet “connecting” people inside and outside the organisation to the “emotional-side” and binding them together.

This is the way we believe the Value question has been posed.

Here we have the problem of the ‘generals in the tents’ versus the ‘generals in the trenches’ scenario.

The generals in the tents believe what their eyes and ears are telling tell.  “People look and sound happy, so they MUST be happy”.

The generals in the trenches believe what they ‘feel’ and experience everyday in their leadership roles amongst the ‘troops’ and employees they serve with are the real true values of the organisation.

This is where a disconnect manifests itself.  The two types do not see eye to eye or understand each other.  Charts, reports, statements, observations, facts separate the general in the tents from the raw emotions, feelings, qualitative experiences and ‘Values’ of the general in the trenches.

When they meet to talk, the language and behaviours each other uses and displays are different.  They don’t understand each other and each side leaves the conversation with a sense of an ‘unaccomplished mission’ and frustration.

To conclude and draw this ‘Values’ post together:

Right from the off, there is potentially a misunderstanding as to what is exactly meant by Values.  The corporate leadership may think, warm ‘fuzziness’ or hard numbers and return on investment, yet the employees and middle management layer think, “squeeze some more, but keep on smiling, here they go talking about values again and all I want is some certainty and job security…”

Finally, there has to be the recognition that culture and culture creation in organisations is not easy.  (We are not even talking cultural change here yet).

If it was, then it would obviously not be a problem.  There are many more factors and dynamics at play, so hopefully your question sets off an interesting discussion.

theMarketSoul ©2011

 

The Seven Deadly Sins of the Market

As if last week’s (week ending 23 September 2011) turbulence on the world’s stock markets wasn’t enough of an emotional rollercoaster for millions of market participant’s, we will offer only one bit of reflection this morning on the market conditions.

Remember, the markets live, breath and die by the age old human conditions (seven deadly sins) of:

  • Greed / Avarice (Avaritia)
  • Envy (invidia)
  • Gluttony (gula)
  • Sloth (acedia)
  • Wrath (ira)
  • Pride (superbia)
  • Lust (luxuria

Therefore, the markets are Harsh, as we have written about before, however markets are still the most open, free and fair way to allocate resources, as we are reaching out to establish with our ‘The Market eQuation’, investigation.

All this activity we hope and trust will lead to a new understanding of the market which we will call:

Unbounded Market Rationality

theMarketSoul ©2011

The Ice Age is Cometh

Originally published 4 October 2009:

Information Asymmetry is what drives the market. We alluded to this in an earlier blog posting (see Market Responsibility, Saturday, 18 October 2008). Yet we still hear the socialist agenda mention regularly that if it wasn’t for the recent government interventions to ‘save the market’, the market would have collapsed. We are sorry, but we just don’t buy this. Yes it is true that individual institutions in the market would have failed, but as a mechanism, the market would have wobbled and other participants would have picked up the distressed bits and pieces and carried on.

True, there was a crisis of liquidity in the system, with severe knock on effects, but as a mechanism for allocating resources, effort and reward, we still believe the market would have survived, with or without the ‘nuclear’ option intervention we saw. The moral of this tale is that unfortunately the socialist elite now believe and make the rest of the market believe that they hold the moral high ground and can dictate the agenda for the next several years. Oh well and so the pendulum swings…

Which was entirely a side track to the real intention behind this posting.

‘The Ice Age is Cometh’ was an article headline in the Radio Times edition of 16 – 22 November 1974. A friend of ours came out with the rank smelling edition of the Radio Times of late 1974, that he discovered stuffed in the chimney breast of his new home. Stuffed in that chimney-breast to obviously keep the cold draughts out, as according to the subtitle the next 1,000 years could be very, very cold, with an advance of the polar ice caps and glaciers. Did we blink or something? We will challenge the BBC to dig out the programme aired in the week of 16 – 22 November 1974 on BBC 2, so that we can be reminded how quickly the agenda and the focus can shift, if we take our eye off the ball and let information asymmetry spin the agenda out of our control.

And we suppose we cannot deny the evidence currently in front of our eyes. Polar ice caps are retreating, which is true if you focus purely on an evidence based approach to trying to understand the wider system. But do make your observations and emotive arguments from within the system, or do you need to step outside that system in order to be more objective. And what about intuition? On a purely intuitive level we believe the earth of GAIA is a self correcting system but we do not have enough evidence to conclusively prove this assertion.

So, in the meantime, we swing one generation to the next, waiting for the ‘Information Assymetrists’ (yes our new made up word de jour) to set the agenda and the morals of the market.

As a soul in this market arena we just keep on being amazed, day in and day out. Please just give us the ability to take the long view…

theMarketSoul ©2009

The Market Equation

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The Market eQuation (MeQ):

Today we are commencing our investigation and outreach to discover what we will call the Market Equation.

Basically the idea is to come up with a mathematical equation and rating or ranking system to assess the state and status of various markets.

Whether this will lead to a theory of Markets that can compete with some of the other theories in existence is open to debate.

The basic premise is this:

There should be a methodology to access the Openness and Fairness of any given market versus other comparable markets.  This specific ratio or result should therefore determine the individual participant’s level of engagement and commitment to that specific market.  The result should also be able to be repeatable over time in order to elicit trends and movements of particular markets relative to each other.

The basic equation can be expressed as MA2R4K2E3T3 = OF outcome (Open & Fair).

 

Therefore:

OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3

 

And derives from the Market Equation Table listed below:

 

The Market Equation Table

  

O Open
F Fair
M Multiple
A Accessible Adjoining
R Random Rapid Regular Repeated Regulated Risk
K Complex Connected Competitive
E Effective Efficient Equilibrium
T Technology Time Trade

Key:

Subjective measure
Objective (External)  measure

MA2R4K2E3T3 = OF outcome

Therefore: OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3

 

Our astute readers might already seen through this equation?

By dropping the M (which will always be 1) the letters that remain result in the word raket.  RA(C)KET?

With the additional C, being the complex bit, ultimately the Market Equation becomes a COMPLEX RACKET.

theMarketSoul ©2011

The Economics of Social breakdown

How do we define the state of our nation at the moment?

For a little while now we have been experiencing an ‘unease’ with the communication revolution and the disparate nature of communication tools at our disposal. On the surface it would appear that what is happening is that rather than bind together a society it is having exactly the opposite effect.

The recent riots in the UK is just a small manifestation of this general unease.

From a purely economic and dispassionate analysis of the situation, we would offer the following opinion:

We don’t have a ‘broken society‘, as is such an often uttered phrase, but rather a complete misunderstanding of the disconnect between our ‘old / slow business models’ and the pace at which technology moves and changes the rules of engagement.

The pace of change in organisational design, planning and execution models lags multiple-fold behind the pace of technological advancement. It almost has an exponential relationship and due to this factor, we have not yet come to grips with applying new technology to ‘old world’ thinking, with its checks and balances and control mechanisms.

The disconnect between the pace of the communication revolution and the nature of diminishing returns has led to a massive gap in appreciating the fact the occasionally we have to pause and reflect on where we are and where we want to be.

Both the continuing economic crisis, pace of change, realisation that the future does not hold the same promise and prosperity as the recent past; are all infliction points that have amplified and spilled over into anger and the violence of the past few days.

So what we have is a ‘broken understanding’ of how different factors of production, such as land, labour, capital, enterprise and innovation has drifted further apart and caused unnecessary and unsustainable concentrations of accumulated power and risk amongst differing population groupings in the UK and elsewhere.

Remember, all five of these factors of production listed above need to work in harmony, in order to add, create and manage value and output that are useful and life sustaining necessities for all citizens.

Let’s address the gap between political and civil society to ensure sustainable progress and development for all.

theMarketSoul © 2011