Jun 29, 2010 | Change, Leadership, Personal Rant
Despite the optimistic nonsense coming out of the Government in Canberra, and the shrill response of the opposition and mining industry, we need to consider the proposed new mining tax in a wider context.
I am not an economist, so perhaps am not trained to come up with sage explanations about why what happened in the past did not comply with my predictions, but is seems to me that in a global context, at some point the financial music will stop, and the piper will have to be paid the bill for decades of public sector overspending in most developed economies. At that time, the money will not be there, as Greece is finding, and I suspect Spain is about to discover, and so the solutions are pretty painful, savage reduction of immediate spending, and substantial increases in taxation, which in some economies will need to be draconian to address the debt.
In this country, we have been partially insulated by the demand for resources. However, the source of debt finance for the rest of the world has been the trading surpluses of our resource export customers, and at some point they will stop lending, and at that time, their demand for our resources will drop substantially. That is when the do-do will hit the political fan, so it appears better to start to claw back public costs, and increase public revenues in ways that will ease the pain that will otherwise come.
Charging a premium for the once only use of Australia’s natural resources over and above corporate tax rates appears to be a pretty good option to me, and has been successfully done in petroleum, and by way of the Federal Resources Rent Tax (which was going to end the world when proposed, according to the industry), and the poorly managed state based mining royalty systems.
Clearly (to me at least) the extension of the resources rent tax in some form to mining is a very good way of addressing the financial molehills we have before they become the mountains Greece has built as it is morally and economically defensible. Pity the Government has so abjectly failed to sell it, and the political opposition and mining industry response has been so successful in the short term, to our long term cost.
Jun 6, 2010 | Communication, Leadership, Social Media
As we grapple in this country with the notion of Canberra putting filters on the net, as has happened in China, and the various businesses and groups having their say, perhaps the most useful being Google, who have had the guts to take a stand that compromises their short to medium term position in China based on their corporate values, what we lack is a philosophical framework that describes the “why” and acknowledges the downsides.
All we are getting is the “we must protect our children” arguments, few would disagree, but it leaves us with a shallow virtually non existent populist “debate” without any real foundation.
A short time ago the US Secretary of State, Hillary Clinton put forward such a framework, agree, or disagree, at least there is a sensible framework to debate. One of the best commentators on the net, and what is happening, and why is Clay Shirky, and I have linked to his edited version of Clintons speech to make life easier rather than reading the full transcript, but the full text is available on the US department of State website.
Jun 2, 2010 | Change, Leadership
Management involves a huge amount of compromise, and hubris amongst all the more usual stuff you see about strategy, vision, performance measures and the like. We are all human, and often seek the easy way out, the low risk option.
Often, this involves telling others what they want to hear.
Making a difference in any environment usually means being prepared to be different, to rock the boat, take a risk, and offer others an alternative to consider, and to tell it as you see it, be prepared to be wrong, but work hard to bring a different perspective to the table.
This is usually a pretty uncomfortable place to be, particularly in an environment of so called collaboration where conformance is valued, which is most organisations I see.
Real value is rarely added by conformance, the best that can bring is more of the same, perhaps done a bit more efficiently.
What we need in a world changing at the rate it is, are people who do not conform, who are prepared to take risks and have a go, and welcome the consequences.
Jun 1, 2010 | Change, Leadership, Personal Rant
Increasingly it would appear that Australians are prepared to sit back and leave the social problems we have to government to solve, and in the process are becoming increasingly cynical about the ability of governments to make any positive difference at all. Indeed, the recent comment that the Federal Government could not sell heaters to Eskimos rings true with most of us.
Over the last few days there has been a vigorous debate about the closing of hotels earlier in an effort to reduce alcohol fuelled violence. Listening to the babble, I was reminded of the thoughts of Peter Drucker, who 40 years ago foresaw the increasing reliance of western society on Government responsibility at the expense of personal responsibility, and concluded that there was little, if any impact government could have on the core of the problem, all they could do is allocate the bandages. Rather, he saw the corporate sector as being a more effective mechanism for the implementation of programs to address problems, simply because it was in their long term best interests to do so, in order to have orderly markets, educated and engaged employees, and stakeholders willing to extend credit.
Recent events would cause me to consider that something in the corporate sector has also gone array, as it seems some individuals in senior positions have lost any sense of wider responsibility in the quest for more, and more personal assets.
It is my view that essentially the solution of social problems remains with each of us to do our bit express our views, and importantly take those small individual and group actions that cumulatively make change happen. Leaving it to others, whoever “others” may be, is an abrogation of personal responsibility, and diminishes us all.
May 31, 2010 | Leadership, Operations
The disastrous oil leak in the Gulf of Mexico will generate a welter of written material, both legal and managerial as the causes, responsibilities and therefore liabilities get sorted out, and those responsible seek to put in place a set of rules that prevent a recurrence, classicly bolting the stable door after the horse is long gone .
From a managerial perspective, the finger-pointing has started, and appears to be very aggressive. Each of the three parties, BP, the well owner, Halliburton, the contract driller, and Transocean, the owner of the rig, are all busily pointing fingers at each other in an effort to cast the blame onto the others.
Also in the mix are the US regulatory authorities, the Federal Minerals and Management Service, that is charged with the responsibility to promote safety, revenue collection and exploration, a classic conflict of interest.
This fiasco has the potential to be as absorbing as the blame game after the Wall Street meltdown 18 months ago.
It seems to me that the lesson is that as systems become more and more complex, and are therefore more and more likely to break down somewhere, we as a society need a new way to articulate where the responsibilities lie, and what are the sanctions for breaching them. In order to achieve this we need a mechanism that has at its core a simple, unambiguous statement and understanding by all parties to a system that then drives behavior throughout the system in accordance with an overriding purpose for the system to exist.
In the current context, the probability is that the Chairman of BP America Lamar McKay may keep his job, but worst case, gets fired with a financial cushion, Tim Probert, Halliburtons responsible executive will continue to be able to peddle his nonsense, and there will be lots of “tut-tutting” in Washington about the role of the MMS, shareholders in the various companies will be stuck with the financial and litigation bill, whilst the state governments of Florida and neighboring states are stuck with the cleanup, and nobody will carry the can, and none of the root causes of the disaster will change, or perhaps they will change sufficiently at the margins to satisfy a few voters for a while.
Most reasonable people would consider this an unreasonable outcome.
May 23, 2010 | Alliance management, Innovation, Leadership, Operations, Strategy
The momentum of innovation in the auto industry has picked up a notch, as a resurgent Toyota allies with Tesla to re-open the NUMMI plant closed earlier this year to produce a mass market electric car.
Toyota got the ball rolling 10 years ago with the Prius, and still leads by a mile in the eco car market, but the competition is emerging. This alliance with Tesla in the plant where Toyota allied with GM for its first plant outside Japan, demonstrating comprehensively that the quality of Japanese cars was not a function of some cultural phenomena peculiar to Japan, but simply a function of good management (a lesson GM never really got) may be just as significant.
It is reassuring to those of us who have watched Toyota transform the manufacturing mentality of the world over the last 30 years with their development and wide sharing of TPS, that after the recent stumble over quality, a stumble some predicted as the Toyota juggernaught seemed to be taking over the auto world, that they have been able to embrace the alliance, and return to the basic values that made them great.
With luck, they will be as open about the engineering and operational evolution of the JV electric car, and the lessons they learn from the alliance with Tesla, as they have been in the past. If so we will all learn a whole lot more.
