Borys Pawliw

What does the B in BLS really stand for...?

2012-02-10T02:16:00.000-08:00

"You can't believe everything you hear"

Words for the wise indeed.

But given the bovine excrement that the US Bureau of Labor Statistics has just released, maybe we need to reword it to "You can't believe anything you hear."

The US Bureau of Labor Statistics has put out its January 2012 employment data, which has been met with cheering by the markets. But even cursory inspection beyond the headline figures raises serious questions as to what this data shows, how it was arrived at and the overall issue of its credibility.

Firstly, the headline figure of 8.3% unemployment - don't believe it. Look at the fact that around 1.2 million individuals dropped out of the labor force. Huh? Suddenly, 1.2 million Americans died, emigrated or just weren't interested in getting a job anymore - yeah, after 12 months, you suddenly 'give up'. A year ago, 99 million Americans were not in jobs and the unemployment rate was 9.1%. Now, 100 million Americans are out of work...and the unemployment rate is 8.3%.

Sure.

'Seasonal adjustment' - indeed any adjustment - is one of the dark arts of economics, and whilst it has a legitimate place in giving some smoothness to figures, it is something that can seriously mislead if it is abused. And in this case, the abuse is blatant.

But whilst I can poke more holes in this data, I'd like to take you to one of the real end effects, possibly the most serious one. Have a look here.

The Scary Story behind the latest US Employment numbers...

Once again, my friends at Zero Hedge cut through the crap and show you real numbers that tell you the real story.

Look at the raw data. See the raw deal.

What this data shows is that the US may be 'creating' more jobs...but it is collecting less tax. Why? I can give you a personal example of a close friend who used to be a senior engineer in aerospace, earning over USD 200,000 base salary...up until November 2008, when he got laid off. He did not land another full time job until August of 2011...as a regional manager for a restaurant chain, earning a base of barely over half of what he used to get. And this type of story is not uncommon. High paying jobs replaced by lower paying ones, or the same jobs lost on contract terms that should normally be full time.

America in recovery? Don't believe it.

Brand vs Brain...

2012-01-15T05:10:00.000-08:00

An unexpected flying visit back to Sydney saw me make a pilgrimage to my old haunt of Auburn, a place which makes a good training ground for those about to be deployed to Helmund Province. However, the establishment of the second Costco store in Australia there has really made it a must visit for those who want internet prices and a real world store safety blanket. And let's pull no punches - Costco is the finest bricks and mortar general goods store on earth, both in concept and execution. When I want to see lean, mean, smart and efficient in retail, it just doesn't get any better than this.

And with this visit, I caught something which made me realize both the power of branding and the sad state of the consumer mindset in much of the Western consumer...or at least the small numbers of Western consumers who can still afford to be choosy.

One thing you notice about Costco is that it is most egalitarian about shelf space: prince and pauper can easily be housemates. Look at this photo: these are $AU prices for jeans (yes, my American friends, laugh all you want at how much Aussies pay...). On the left, the Hugo Boss and Joes, on the right, Urban Star (made in Pakistan) and Costco's ubiquitous house brand, Kirkland Signature.

I had a good chance to look at all the brands right next to each other. To me, the quality and feel of the denim, the cut, the stitching and everything about the Kirkland and Urban Star jeans were as good - and dare I say better? - than either the Hugo Boss or Joes. Style I can't comment on (I have none, as people keep telling me), but really, they all looked pretty much the same to me. And honestly, do people really stare right at your ass to check out your jeans label?

The choice is rarely as stark as it is here at Costco: you can compare the products side by side. And those prices are mocking you in the face saying "Are you REALLY going to pay THIS much for THIS when you can get THAT for THAT?". The difference in price between the Urban Star and Joes jeans is 750%, a gap that surely makes anyone who has more than 3 neurons firing between their ears go for the absolute bargain choice.

The thing is...many people seem to be thinking the word 'bargain' as defined along the lines of "Wow! Hugo Boss jeans are usually $150...now THAT'S a bargain!". And speaking to the Costco staff, the Hugo Boss and Joes Jeans were selling at a ratio of around 1 to 3 compared to their more pedestrian compeition.

And that is the power of the brand...overwhelming the power of the brain. But that is the reality, and it is something we all need to accept, as hard as it initially was for me many years ago.

Jeans are not cars. The utility and feature difference of a pair of jeans is hardly of the same order or importance to that between a Toyota Camry and Lexus LS460. But many people, when they have the money, place a real emphasis on brand even when the objective utility of the product does not justify it.

To me, clothes exist primarily to stay warm/cool/dry when the weather moves out of the desired upper or lower specification limits...and if the weather is in the acceptable range, about their only justification is to stop me from being arrested for public nudity laws.

But is that the sort of thinking that most people have?

No.

Branding is something I have been working more extensively with for many years, and it's a learning curve for someone who came from a world of statistics, data...the quantitative world of hard, if sometimes hidden, facts. But branding is something that delves into an area where the normal rules of logic and common sense are far less rigid, so it requires a new way of thinking. It's complex and not easy to nail down fully all the time, but it appears that Hugo Boss and Joes Jeans have succeeded, no matter how cheap and equivalent the alternative.

Now that does take some brains...

SharePoint WSS 3.0. Something for nothing that is actually worth something...

2011-01-15T02:24:00.000-08:00

It's very to get something worthwhile for free these days. Just about everyone is trying to wring every last cent from you for every possible minuscule non-event or service they can. One that especially irks me is bank and credit card charges. You make a withdrawal...SLUG! You pay a credit card bill...SLUG! You have to pay these guys...well, I guess for the honor of paying these guys. In Australia, the DEFT guys are more brazen than any...perhaps a function of their Macquarie Bank origins.

And IT companies? Ha! They define the essence of getting blood out of a stone.

So it comes as a pleasant surprise when you actually do get something for nothing from an IT firm. And it comes as an even bigger surprise when that something is from Microsoft, the company that turned the blood-from-stone concept into a high-art. And the biggest surprise of all? What you get is actually damn good.

I speak, of course, of Windows SharePoint Services (WSS) 3.0, the free version of SharePoint. This is a little bonus you get with Windows Server if you don't want to fork out for the more capable MOSS version. And whilst MOSS is certainly one impressive toolset for so many business needs, WSS is something that can truly helpful for so many companies where the IT spend is tough to get signoff on...and these days, isn't that just about everyone?

And yet, so many people don't really utilize it. In more than a few IT departments I have worked with, it sits in the background doing little more than glorified file storage, whilst solutions costing hundreds of thousands of dollars - or more - are sought for project management, enterprise risk management and competitive intelligence, amongst others. And all too often, these solutions are either too advanced for the requirement or too difficult to fully utilize by staff.

Whilst it's generally not going to set the world on fire for multinationals needing full ERP solutions, SharePoint WSS is often a superb solution for smaller to mid-size companies, with development costs that hover barely above "free". And with some good developers, it can often be transformed into a very powerful solution.

Guys, do a double take on this: when I occasionally put on my consultant hat and have a look at various business needs in many companies, SharePoint often comes out as a very effective answer that won't break the bank.

Welcome to China: Avoid Breathing...

2011-01-08T22:47:00.000-08:00

I am happy to say that I never suffered from asthma as a child, unlike a number of my friends growing up in Sydney, but I recently got a taste of what it's like when every breath is like breathing underwater.

I recently returned to Sydney from a business trip to Shanghai, Beijing, Linfen, Datong, Zhuzhou and Xianyang: over 3 weeks in China and despite the charming hosts and remarkable sites, it was a trip I was glad to see the back end of, namely because after 4 days I felt as if I was in WWE choke hold courtesy of the Undertaker.

The phlegm coming out of my nose had enough coal dust to run a power station for a week after I left Datong - I'll spare you the photo. But the end result was that I was very tired and lethargic for a few days, with a mild headache and difficulty in focusing - pretty evident when I read some of my emails. Normally, it's rare for me to get ill and when I do it does not stop me working - colds and flus are nothing. But with this, I was struggling.

And I still remember the drive to an office at a little after midday there...headlights ablaze to see through the smog on what should have been a fine day.

And it's not just that hellhole. The photo you see was taken around 8:50am, on what should have been a cloudless, sunny Shanghai day. I have seen many photos of this skyline with beautiful blue sky and the odd white cloud and I was assured those days do happen, but that when the air currents are not favorable, it is dangerous for many people to venture outside for more than a few minutes.

I realize now that I am more sensitive to air pollution than most people, but I still cannot understand how locals and especially expats can put up with this over the longer term - and I can only imagine what the health consequences will be like for children growing up here.

It seems I will be making ongoing trips to China now for a while; maybe that SCUBA tank won't have to wait for the Maldives after all...

Lead Me Not Into Temptation...Steer Me Away from a Procurement Career.

2011-01-08T20:25:00.000-08:00

I can say with a fair degree of confidence that of all the areas of specialization I have been involved in, the two that have been the most corrupt in the real world have been in privatization of public assets and procurement (I know some of my friends who work in finance may think differently, though I digress). I'll save the privatization one for another time - like when I can afford a B7 armored car and advanced plastic surgery...

Procurement is basically you trying to get a good price from a supplier in return for volume - and you both get certainty.

As you can imagine, with a lot of confidentiality involved with a small group of people looking at large sums, the temptation to resort to the Dark Side can be overwhelming. And often, finding out the evidence for this is just about impossible. And it can be rewarding. For some contracts in the $5-10 million range, a kickback can go into 6 figures. And for contracts in the $100 million level, the payoff is easily 7 figures. On a smaller scale, decisions can be swayed with gifts. This can include dinners and tickets to prime sports events. The trouble is, this is often not seen as bribery but rather hospitality. Whilst the line is blurred, the truth is...it is wrong.

One of the most obvious ones is with Christmas gifts. In many companies, there is a rule that all gifts must be declared and "pooled", to be raffled off to all people in the company. A very real problem is that many individuals then make it clear that any gifts should be sent to people's homes and not work addresses. I recall that in one instance, the buying department of a mid size retailer received no presents from any supplier - zilch. And this was from a business unit which controlled a budget spend of over $100 million. A little investigation soon revealed what really happened. Unfortunately, the end result was not even a slap on the wrist...

In this blog I do not go into great detail about how I resolve complex challenges, but I will state that my experience is that those who work in procurement are in a privileged position and one where temptation is all around them. I am not satisfied that the temptation is resisted effectively.

From what I have seen, so many existing controls are painfully insufficient and more effective ones recommended raise considerable ire as breaches of trust and or privacy. My view is that procurement professionals must realize and accept that they need to be subject to a greater level of scrutiny and accept that this may involve actions which other specialities may not accept.

In the end, it's a balancing act, but one that has for too long given people too much freedom that has been abused. It is high time that procurement professionals recognise that standards need to become tougher - much tougher.

In this game, if you have to have nothing to hide and then you will have nothing to fear.

Memory Lame...First stop, Java Ring!

2011-01-06T04:02:00.001-08:00

It never ceases to amaze me what I find lurking in my old jackets. This little gem triggered an alarm at the airport screening in Berlin but brought back many memories of days when I was a hotshot developer - and fell in love with the Java Ring.

The Java Ring was an encrypted iButton (using 1-Wire) made by Dallas Semiconductor and distributed by Sun at the Java One conference back in 1998 (the one where I ran into a 911 with my Boxster whilst trying to get to...). Basically, it was a little smart card that ran a JVM which could be put to various uses.

I had visions of internet commerce and elite membership focused on this ring, but sadly things never panned out that way with competing priorities that had a much shorter payback period and lower risk.

Whilst I wore the ring for a few months, one thing that surprised me was the pitting shown in the photo: I am a sweaty creature and apparently the pH of my sweat is a little lower than normal, thus acidic. Whilst I was told the shank and signet were all stainless steel (which is normally highly acid resistant), the pitting you see shows a yellowish metal underneath, almost certainly brass - el cheapo! The ring became uncomfortable to wear one morning and I slipped it into a jacket and forgot about it...until now.

Digital jewelery is yet to really take off and the Java Ring may have been dead in the water or just a bit ahead of its time. Either way, an interesting example of what could have been, less so of what may yet be...

PRINCE2 and M&As: The Runaway Freight Train

2011-01-05T00:50:00.000-08:00

As all PRINCE2 practitioners know, one of the key aspects of correctly using the method is to refer back to the Business Case at various stages throughout the Project Life cycle, critically between the various stages, to ensure that the project is still a good idea. And as M&A consultants over the years can attest, the justification for mergers often dissipates as the reality drags on of what exactly everyone is getting themselves into...but at that stage, it is just about impossible to say "Kill it"...

Suffice to say, of the various M&As I have been involved in over the years, whilst quite a few may have been successful from a pure project management point of view (on time, on spec and on budget...with a little tolerance thrown in to be fair!)...but in terms of delivering shareholder value and living up to the justification, well, that has proven far more elusive to achieve, especially within the indicated timeframes.

I have pushed the PRINCE2 method of ongoing Business Case justification during a number of M&As...and have succeeded in making myself hugely unpopular with all the initial pro-merger stakeholders. PRINCE2 stresses common sense - something that made sense a few months ago may not make sense now and even less so in the future. But when common sense runs into vested interests that either don't have to stick around once the M&A is completed or can easily blame other factors when it goes awry (and make a substantial sum in the meantime), then common sense is about as welcome as a Chechen with a ticking suitcase in a Moscow church.

An M&A, once approved, is really like a freight train going at 60km/h with a few dozen fully laden carriages behind it. Whilst the speed is often a little disappointing, the momentum behind it makes it unstoppable. And a Business Case review is at best an annoying formality and at worst something to be ignored and destroyed. Either way, it becomes very ineffective.

Ongoing and truthful Business Case justification is something that needs to happen more often with M&As and it is my hope that independent M&A consultants continue to provide an objective view as to what the reality is. The truth may not be pretty, but it is nowhere near as ugly as the reality of what happens when the merger train runs off the tracks long after the project is over.

Kiev Driving...

2011-01-01T01:32:00.000-08:00

Driving in Kiev is an exercise in risk management. Outside the central city, you have to contend with roads that can do double duty as rally courses, driving skills by natives which make you think that 90% of them bribed license examiners and a general philosophy that drink driving is not a crime, but a past time. However, the real problem you find is road rage, another Western import Ukrainians have taken to with gusto. Not the harmless yelling, screaming and ocassional punching variety, but rather the type which sees you either shot at immediately after something unfortunate happens on the road, or your house set on fire that night...after you've been shot.

Generally, big black luxury cars and American 4WDs should be given a wide berth. Usually, they indicate the driver is:

1) An arrogant prick.

2) A corrupt bastard.

3) Armed.

4) Thinks 'Scarface' is an American business success story.

5) Has access to people who are all of the above, large and enjoy the ability to kneecap you in front of 20 TV cameras and still be found not guilty by the best court system money can buy.

Now, this makes things tough if you drive in certain parts of the city: I have been thinking of what could be a possible solution...and suddenly, a revelation...

http://www.youtube.com/watch?v=LvHMbN_epe4

Problem solved. Where do I get one? :-)

ISO/DIS 31000: Chill and pull up a beer!

2010-12-25T23:34:00.000-08:00

Well, I am breathing easier and so should everyone else who thought AS/NZS 4360 was to be consigned to the scrap heap. With the new ISO 31000 Risk Management draft standard doing the rounds, it is clear now that it is more than familiar to anyone who used the Australia developed standard that has served us so well for the past 12+ years. And that means there is not going to have to be a whole relearning of something that - clearly - seems to have caught the vibe much better than the mercilessly intricate COSO.

Still, whilst there is no need for major revision, risk managers - and indeed all business leaders - should familiarize themselves with what will be a global standard over the next few years. Whilst ISO 31000 is unlikely to be a standard for certification like ISO 9001, it will form the basis of best practice for many industries and thus be a common language for people to speak about challenges.

Whilst it may still be tweaked, what you see is now pretty much what you'll get. And at 26 pages, it somehow has a bit more appeal than a lot of other things on my - and likely your - todo list...

Pop goes the Bubble?

2010-12-25T21:59:00.000-08:00

OK, I know this will sound more than a little strange (hypocritical?) coming from someone who has managed to do reasonably well from property speculation over the past few years, but I am now beginning to see storm clouds on the horizon for many...including myself, which is why I am pulling back now - yes, most (probably not all) of those little prizes I have collected are now going to be up for sale.

In terms of risk, I feel that we may be close to a tipping point as we go into 2008 in the property market in Eastern and Western Europe and especially in the US. True, the market way well hold out until mid to late 2009, but I would rather grab now what I know to be very solid capital gains at what I am fairly certain is close to a peak rather than risk a huge loss for what will likely be a small chance of a small increase.

Why do I believe this? Simply, the more people I speak to, the more I begin to think that the world has gone nuts, that greed has taken over sanity and competence (don't ask) and that the lunatics are not just running the asylum, but the bodies that are supposed to accredit and vet the asylums.

In America, I am simply gob-smacked at some of the people who have obtained mortgages: 100% finance (and in some cases more!) of $700,000 properties by people who have incomes that are barely 1/20th of the loan obtained, with dubious prospects of keeping that job, let alone promotion. And that is assuming any due diligence has been done at all - seems that the paperwork for a lot of these mortgages has been done in a very sloppy fashion. And this is not from some tiny backwater lender, but one of the biggest financial enterprises in the US - whilst I better not name it directly, it seems to be saying Yes far too often...a word whose power can cut both ways. ;-)

I found what I was told impossible to believe at first...then hard to believe...then I didn't want to believe it.

Now, I don't have a choice - I have to believe it. It's real. It's insanity. And it will have to end. And the way it will end could be scary.

So, I now chicken out. Other people are more than happy to buy. Good luck to them.

The EM Drive: somewhere between plausible and crazy lies...?

2010-12-24T21:00:00.000-08:00

One of my less destructive hobbies is research into alternative energy technologies: not solar or wind, but one step further into the twilight zone from that. We're talking the Searl Effect, Biefield-Brown Effect, Hydrinos & the work of Nikola Tesla. I have played with large voltages and interesting frequencies myself and have certainly observed some interesting things - as well as almost killing myself on a few occasions. Air is not as good an insulator as some people think when the voltages are high enough...

This really is the realm of many scam artists, but similarly there are many individuals of great sincerity and also great brilliance, who endure ridicule (and worse) in order to see if it is possible to break out of the paradigm and usher in a quantum shift in the world.

Make no mistake: amidst all the charlatans and the deluded, there is real research going on here that is yielding intriguing - if inconclusive - results. I can more than vouch that many government bodies keep a watch on some individuals, if only on a "just in case basis". They'd be foolish not to.

One so called EM Drive has been generating some comment over the past few years, ever since a New Scientist article generated an specially vitriolic series of comments that touched not only the EM Drive itself, but the entire peer review process.

Conceptualized by Roger Shawyer, this device initially seems crazy...but on further research, you begin to wonder, if only a little. Allegedly, this drive uses a simple magnetron and wave guide (actually more accurately describe as a resonating cavity, shown above) to generate thrust - effectively a reactionless drive. In the process, it is supposedly violating the law of conservation of momentum.

It will take me too long to go through the debate that has raged here, but recently I have become aware that Chinese researchers have picked up on this and have run with it. Whilst second or third hand information must always be treated sceptically, I am in little doubt that the Chinese are taking it more than seriously. Northwestern Polytechnical University is allegedly running a series of parallel projects on the EM drive: one is focused on creating a working model of the device using currently known information, and the other is purely focused on developing the mathematical/physics models and equations that explains what is going on. An intriguing approach that should allow for rapid improvements if they reach a tipping point...

My scam detector is wary but not going off with this one: this guy is definitely onto something, even if the physics is not fully understood and thus poorly used to explain the effect.

One to keep watch on...

Global Corruption Barometer: Ukraine Leads the Charge downhill...

2010-12-12T02:58:00.000-08:00

Transparency International have just released their Global Corruption Barometer 2006 (http://www.transparency.org/policy_research/surveys_indices/gcb/2006) and it makes for interesting reading. As expected, Ukraine features prominently...and not in a good way.

The most interesting numbers are the responses to the question "How would you assess your current government's actions in the fight against corruption". Only 1% of Ukrainians thought it was very effective, 6% effective, 33% said it was not effective at all...but the real interesting numbers were 29% who thought that corruption was not fought at all and - frighteningly - 20% thought that it did not fight but actually encouraged it.

With the Orange Revolution, many people thought that a strongly pro-Western government would mimic what is at least a fair attempt to fight the graft and corrupt practices which are endemic to Ukraine. Alas, that is not the case. For only for a few months after January 2005 was there a real fear among corrupt officials that the game was up, that there was no turning back now...and then they saw that nothing happened. All was then as it was before. And they went back to it with gusto. Sure, there are a few high profile trials, but these reflect internal rivalries for getting their hands in the cookie jar rather than any true belief in virtue.

The reality is that in Ukraine, the powers that be seem to have very little ideology other than as a vehicle for self enrichment. There are not that many true Ukrainian nationalists who believe in a free Ukraine...unless they can get a grant from one of the many Western sponsored organizations here. And there are not that many real Russia lovers here either...unless it means a good gas export deal kickback.

That is the sad truth. Corruption is a part of life here, and will remain so until some extreme measures are taken.

Russia Today: A few grains of salt and it's a decent feed.

2010-12-03T22:30:00.000-08:00

One of my favorite past times when I can spare a few minutes is having a look at the world through the eyes of the Kremlin...and that means tuning in to / logging on to Russia Today. Yet my friends recoil in horror at this, dismissing it as a tool of the Russian criminal elite that strives to push the Russian view of world affairs - how can I waste my time with this? Don't I know it's biased?

Well of course it is. Blatant, obscene, Russo-myopic propaganda masquerading as unbiased news coverage. But that doesn't mean you should ignore it: quite the opposite.

The reality is Russia Today is a very valuable portal for information that is simply not available elsewhere. Yes, it does strive for pro-Russian bias, but it provides a platform for those who are regarded as "conspiracy theorists", where you can get information that is not available elsewhere. All entities of certain power have dirty secrets that they like to hide and that their enemies want to publicize. The challenge is not to ignore it, but digest it and sift the fact from fiction...not an easy task. But one that will give you a true perspective and understanding of what is really going on in the world.

Naturally, I'm hardly going to see a scoop on Putin taking a $25 million payoff for awarding oil concessions to his favorite drilling firms, or find out about the FSB payoffs to local mafia to intimidate or liquidate troublesome journalists; but there are other sources for that.

In many ways, Russia Today is simply the Russian answer to Radio Free Europe and Radio Liberty. Take it with a grain of salt - maybe a tablespoon - but by all means learn from it.

Noise Level: A Ruse to Unlearn the Lie

2010-11-17T01:17:00.000-08:00

This may comes a surprise to many...who am I kidding? It will surprise no one...but I am actually a geek. And a Sci-Fi junkie. Brain somewhere in the Andromeda Galaxy since age 5. Yet, in all the 500 science fiction books I read, there was one short story which I could never find, one that I really wanted to read after a recommendation from Stan Deyo, a man I have greatly respected for over 25 years. That short story was "Noise Level", a Raymond F. Jones piece that came out in late 1952 in Astounding Science Fiction.

I am tempted to tell you a little about it, but I won't, other than to say it is one of the most thought provoking stories I have ever read. I thoroughly recommend you try and find a copy - here's the cover.

Sometimes, fiction is truer than the reality that most believe.

Ammunition shortages: Obama's Clayton Gun Ban?

2010-11-10T02:28:00.001-08:00

It wasn't just a run of bad luck: the ammunition shortage is real and is now having a definite impact on prices. Try 50-120% price increases for both pistol and rifle ammunition. The reasons are many and varied, but my favourite is the conspiracy theory that Obama is about to impose a huge ammunition tax surcharge that will see the prices skyrocket by (take your pick) 100%, 200%, up to 500% and even beyond. Why ban guns (with the likely Constitutional impossibility it rises) when you can tax ammunition out of the reach of most?

The shortage has also reached Europe and Australia, as Americans throw away recession woes and stock up. And many of those people seem to have a justification to do more with internal revolution and/or invasion than anticipated price hikes. Oh well, I guess Red Dawn still lingers in some people's minds more than mine...

Odessa: a close call...

2010-11-10T00:07:00.000-08:00

It's been pretty much a given for at least a few thousand years that port cities around the world suffer from crime rates above and beyond those of their inland cousins. The oportunity for smuggling and contraband, sailors to be serviced by charming young ladies and the general wealth created by trade all add up to an irresistable temptation for the underworld.

Marseille in France is one example - and have I got a few tales to tell of my experiences in that place in the late 1990s - but even that roguish French port pales next to Odessa, which can lay fair claim to being one of the most dangerous cities in Europe. Mind you, tourists and normal people can feel fairly safe most times (though pick pocketing is common). But the organized criminal underworld - roughly divided into Jewish, Russian and Ukrainian groups - is something else.

A few months ago I purchased a very nice apartment in the city for a very low price. As it turns out, the previous owner had to leave in a hurry, namely due to owing money to some unpleasant individuals...the type of individuals who believe that a baseball bat to the kneecaps whilst carving your face off is a far more effective way of ensuring loan repayment than a first reminder letter. I had some of these gentlemen pay me a visit and even though they quickly knew I was not the person in question, they felt that I had an "obligation" to surrender the apartment to them in lieu. Hmmmm....needless to say, I saw things differently...nevertheless, I also like to be able to walk.

Cutting a long story short, I ended up having a chat to the "local businessman" to whom the money was owed, and as so often happens he indicated that the debt had been settled and he was not going to take the apartment away from me...in a way that made me feel the temperature suddenly dropped to below zero. As it turns out, it soon became clear that this guy had a knack of resolving problems in a way that ensured there were no unhappy parties left to complain. I was lucky.

This time.

Lean Six Sigma musings...

2010-11-02T03:25:00.000-07:00

I had the pleasure of an animated discussion (i.e. we were yelling at each other) with a friend (i.e. someone who doesn't know me well enough to hate me yet...) about Lean Six Sigma; essentially my friend was questioning the merits of the system, or more correctly the degree of sustainable success it ensures. He had been through a number of implementations, far more than myself, and was looking back at some projects that he was not happy with.

If I look upon my own Lean Six Sigma projects, I can point to a fair degree of success...in terms of measurable improvements that were sustained over a long period of time. And sure enough, according to most measures they have been fine projects.

But look behind the numbers, and the story becomes a lot less convincing, as much as it pains me to say it. One of the issues I often faced was that of organizational resistance: people feeling that I was telling them how to do their job, that it was insulting to them; that I was about to make them unimportant in the scheme of things. In the end, I was responsible for a huge number of resignations in a number of companies. Part of this was unavoidable, the result of new systems and processes that people who had spent decades working a certain way could not really adapt to, but I have to acknowledge my own approach was sometimes more than wanting in gaining stakeholder engagement.

I got support from the mouth, but not from the heart - and that was my failure. And when you see experienced, skilled people leave, then you have to ask...was it worth it?

Lean Six Sigma has gotten some bad press recently, in my mind undeservedly so: its core tenets are logical, sensible and practical in sustaining long term improvements in virtually any business. But the way it is implemented leaves much to be desired. In some companies it is simple, but in others, it is a struggle. It requires discipline but sensitivity. That is a keen balance that is so hard to achieve, and it was for me. I could get so much right, but with some people, no matter what I tried, it just didn't work for them. And these were not loafers, but skilled, hard working smart and clever people.

I know some LSS people have gotten it right - or close to right. I hope to be one of them soon enough.

Ukrainian justice system public servants: the world's smartest investors...

2010-11-01T04:24:00.000-07:00

I have to hand it to the guys and girls who work at the Ukrainian Ministry of Justice. I mean, those poor souls struggle by with a post tax income of about US$10-25,000 a year for quite senior people. Enough to do quite OK for most people in Kyiv, but geez, these guys are smarter than that! Somehow, that lowly salary doesn't stop them from getting new Mercedes-Benz S600s, BMW 760is and even the odd Bentley Continental. I could not tell if I was in Kiev or Monaco at one stage. Oh, and my first real life encounter with a Richard Mille watch was with someone whose monthly salary was barely enough to cover a days rent...

And these clever cookies still manage to find enough spare change for USD $800K-$2.5 million apartments in the best parts of Perchersk and Obolon...and not a mortgage agreement in sight.

Come on guys, what's your investment secret?

A380 musings...

2010-11-01T03:02:00.000-07:00

Well, I finally made it on the A380. And this Boeing Boy was damn impressed by the new King. Spacious as you would expect, but what really got me was the the sheer quietness of it all: this really is the Lexus of the Skies. Smooth and silent, it was strange to actually hear all the other noises that are normally drowned out by the engines in other aircraft. And business travelers need to be especially cautious: amazing how you can hear a revised takeover offer for being planned by guys who either don't realise how loud they are, how quiet the plane is or how close a nosey little Ukrainian-Australian is...

Bring on the 787...

ISO9001 and China: How far can you trust it?

2010-11-01T00:09:00.000-07:00

In any Western country, an ISO 9001 certificate gives a certain level of comfort when commencing a business relationship with a new company. Whilst it doesn't necessarily mean the product or service will definitely be of superior quality, it does provide a higher level of assurance that will more than likely be the case and especially that there will be a consistency of quality, trending upwards over a definite timeframe. And you can be pretty sure that the certificate was earned and painstakingly verified by an accredited certification body such as BSA, SGS, SAI Global or Bureau Veritas.

But in China, as I discovered a while back...things work differently. Just about any factory manager is able to show you an ISO certificate that is for all intents and purposes legitimate. These are not just pretty papers that came out of a 5400 dpi printer, but fully valid ISO certificates that are registered on the databases of organizations accredited to verify ISO 9001 compliance. But all that they verify is that there is some manager at one of these bodies that likes to supplement their income. I made the initial mistake of only verifying an ISO9001 certificate as being properly registered - it was. But that was not enough. The certificate was nothing but lipstick on one damn ugly pig of a company...

Buyer beware: the ISO 9001 certificate means nothing in China. If you are seriously considering setting up a business relationship with a Chinese partner, you will have to do the verification yourself.

Port Botany: Room for a Third Player?

2010-10-31T06:03:00.000-07:00

A third terminal operator in Sydney for Port Botany is one of those issues which generates a fair amount of contention among those in the game. Importers/exporters, ship operators, governments and indeed the wider population would benefit from having a new operator, but the ferocity with which existing players will defend their turf cannot be underestimated. Indeed, having been involved in this saga, I can more than vouch for how brutal and underhanded some existing players can act: when you are defending assets worth 9 figures and beyond, it tends to make you push the boundaries.

Even after the recent fun and games of the Toll / Patrick / Asciano saga, we are heading into even more turmoil. DP World and Patrick are none too keen to have their cosy duopoly called into question and the third operator is one which will focus their energies for the foreseeable future.

Since I am working with a potential bidder in an advisory capacity there is much I cannot say, but I do believe that it is high time we had more quality competition in the sector. Having seen what is being done overseas, I am pretty comfortable in saying that both existing Sydney operators are a way away from world's best practice...and have little incentive to aim for better.

It's time we let a little heat into the kitchen.

Competitive Intelligence: The Thin, Blurry Line...

2010-10-31T05:32:00.001-07:00

Warsaw, circa mid 1995...there I am, in a huge, stinking dumpster outside the offices of one of the major competitors of a global shipping line, face to face with a rat the size of a leopard (hey, about 15 cm away from your face it SEEMS like a leopard) and wondering what was Polish for "I need a rabies and tetanus shot NOW!"

Welcome to the world of competitive intelligence. When I was asked to set up this capability back then, I initially had visions of casinos sprawling with beautiful, willing women whom I had to seduce to reveal the latest route plans, pricing guidance and terminal negotiations, all the while packing a PPK under my Brioni. However, hot looking women didn't work in shipping, the casino in Warsaw was pretty lame and most of the spectacularly beautiful Polish girls that were in abundance in Warsaw would rather be seduced by a water buffalo than myself.

Despite all this, I did manage to setup a very innovative system that set the standard for a while to come: whilst it certainly was time consuming initially, we did manage to get a consistent ability to act faster and smarter than the competition.

And that is what competitive intelligence is all about: information is one thing, but intelligence is something which I define as information not publicly available that can be actioned to obtain advantage. I still come across people who think having massive volumes of data is intelligence: it’s actually nothing but a recipe for a headache. Nowadays, technology makes information much easier to acquire than the mid-1990s and it is easy to be overwhelmed.

However, I have a word of advice to people entering this field. Many professionals in the area are trying hard to give an extra veneer of respectability to the field, saying things such as dumpster diving are no longer needed or even likely to succeed. Speaking as someone who knows his way around a huge pile of garbage, I can tell you that’s just not true. Despite security protocols, it is amazing what people still throw out. You may not suddenly get a 5 year Business Plan in a Veolia bin, but you will get bits and piece of info that can be composited to give you a real picture of what is happening, or where you should look next. Always obey all laws of course in your jurisdiction and be aware that IT can give you much…but only so much.

Sooner or later, you’re going to have to face down that rat…

ISO21500: And where does that leave PiMPs and Princes2?

2010-10-31T04:34:00.000-07:00

OK, I never really bought into the PMP vs Prince2 fight: I am happy and comfortable with either approach (and like 90% of other people I flavor the deficiencies of one with a sprinkling of the other, depending on the type of project...), but it seems now that we are not that far away from the ISO taking a stab at defining Project Management for all of us with ISO21500.

Ah, I can see you are ready to punch through the screen again: yes, another standard to learn, another few more thousand to be trained and certified, another series of debates about what method to use...

Well, it may end up being not half that bad. Word from the streets in Geneva is that ISO 21500 is going to - shock! horror! - incorporate the best of both. Prince2 and PM-BOK are pretty outstanding systems in their own right, even if their approaches and emphasis do differ quite a bit. I for one would welcome a defining way to marry them both off and produce a beautiful new ISO baby, with the best bits of both parents found in it. And if you know both the current standards, ISO21500 should not be a new horror, but a familiar and logical approach to doing things. And hopefully, it won't end up as inbred as a Balkan village...

We can only hope...and wait.

The Dirty Secret of Aviation is out...

2010-10-31T04:24:00.000-07:00

I have worked out that over the years, I have been on over 600 flights (including connections). That is one hell of a lot of airtime, with just about every plane imaginable: from A380 to Cessna 172, I have flown in all of them. But there is one plane which, over the past few years, I have become a little wary of.

No - it's not any of the old Tupolevs and Antonovs that dot the FSU airscape - I've been terrified of them since Day 1. No, it's actually something a little closer to home...

It's the BAe-146, a 4 engine, mid size regional jet that does a fair bit of duty in Europe. It's actually a pretty unique design: 4 engine planes of this size are pretty rare - and won't be getting any more common with fuel prices. Whilst I - touch wood - have never had a bad experience with it, it does seem to have one flaw which is becoming more widely known...

And that is that this plane has a reputation for being an aerotoxic trap.

What many people don't realize is that the air whilst in flight is topped up from a bleed air system run off the engines. And in some cases, it is suspected that the bleed air is contaminated with the oils and lubricants from the engine. The BAe-146 is supposedly one of the worst aircraft in this regard.

Aerotoxic syndrome is an ailment that has its origins in the air that people breathe whilst in the pressurized cabin of a turbofan or turboprop plane. It generally results in headaches, lethargy, difficulty in focusing and other more serious conditions. Many people pass it off as jetlag and often it disappears in a few days after the body heals. But in a few cases, the symptoms persist to a debilitating level. Pilots, cabin staff and passengers have been affected.

More details are available here http://www.aerotoxic.org.

The BAe-146 is a plane you should avoid if you have a weak immune system. Whilst this doesn't mean that every flight is going to see your life ruined, the risk profile of this plane is just too high.

Take care.

The Argenti System: If only I had the De Lorean with Flux Capacitor…

2010-10-31T04:16:00.000-07:00

Here is my “If only I had this 12 years ago…” moment. I have been working with the Argenti system now for close to a year and I feel like weeping every time I think of the pain that I went through doing strategic planning since the late 1990s. This method is genius; simple, clean, effective. And one of the best parts is, it puts the bulk of Strategy work at the top of the food chain i.e. at CEO level.

But the real beauty of the Argenti System is its essential purity. You read through it, and you understand: here is the culmination of one brilliant man’s decades of experience condensed into a very readable – and usable – format. It filters out the static and shows you what to do, how to do it, at what stage to do it and what to watch out for. And if it’s good enough for Australia’s Wesfarmers, I dare say it will be good enough for most companies…

Details here: http://www.argentisys.com/

I cannot recommend this highly enough; cut through the gibberish and discover what it takes to define strategy in the real world. But remember this: don’t take bits of it and change it. It doesn’t work like that – and I mean that literally. It is a tight, disciplined, focused system that works if you follow it – if you want to try and change it, you are better off doing something else entirely.