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Megaprojects! Why do they fail?

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Why do Megaprojects fail? A short but a very interesting study on causes of biggest project failures with an excellent example of Seattle tunnel drilling.
Worth seeing as it briefly analyse root causes of typical Mega failures, unfortunately very typical and easy to predict…

Megaprojects ! Should we start them at all ?

Chińskie smoki vs. czarne łabędzie (video)

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chińskie smoki

Chińskie smoki ? Ciekawy film z znanego zapewne dla wielu Czytelników portalu TED pod frapującym tytułem: How can we predict the next financial crisis, Jak przewidzieć następny kryzys finansowy.

Warte bardzo naszym zdaniem obejrzenia 17 minut, bo ekonomista z Uniwersytetu Stanforda w niezwykle interesujący sposób dowodzi, że przewidywanie kolejnych kryzysów finansowych, kolejnych baniek inwestycyjnych, to wcal nie jest jakaś czarna magia. A na przykład dane, sygnały pokazujące, że nadciaga kryzys 2007-8, czy obecne problemy na rynku chińskim były dostępne wprost “na stole”, dla każdego. Wystarczyło “chcieć” patrzeć….

Mówca twierdzi również, że koncepcja czarnych łabędzie (black swans) onegdaj spopularyzowana przez Nassima Taleba jest mocno naciągana bo wiele masywnych ryzyk nie jest wcale trudna, ale wręcz bardzo łatwa do przewidzenia. Tylko inwestorzy i inni decydenci z przyzczyn czysto kognitywnych, behawioralnych, albo po prostu tak-sobie nie chca ich widzieć.

Oczywiście posiadanie takiej wiedzy ma niezwykle istotne znaczenie dla funkcjonowania rynków finansowych, choć jak wtajemniczeni wiedzą nawet jeżeli byłoby to prawdą, to sama wiedza i nadchodzącym kryzysie jeżeli powszechna mogłaby taki kryzys przyśpieszyć a wręcz wywołać. I ten problem również został zadresowany w wypowiedzi.

Na koniec i Redakcja Ryzykonomi musi dorzucić swoje trzy zgode grosze. I my niejednokrotnie analizując różne ryzyka, także z naszymi klintami mieliśmy wrażenie, a nawet pewność, że czarne łabędzie sa naprawdę niesłychanie rzadkie, ba, któż je wogóle widział i wiele ryzyk jest wcale nietrudnych, ale wręcz bardzo latwych do przewidzenia. Taka prawda. A więc może wielkie chińskie smoki pożarły czarne łabędzie?
A jeżeli nawet nie pożarły, czy nie powinniśmy być  bardziej ostrożni w wyrażaniu pochopnych, a jakże łatwych do artykulacji i komfortowych dla zarządzających opini, że “tego ryzyka się nie da przewidzieć”? Otóż, częśto da się, dane są na stole wystarczy tylko wysilić mózgownicę i – po prostu chcieć.

Więc raz jeszce polecamy film, tylko 17 minut, z tlumaczeniem, a dla chętnych – bez. I jaki piękny french-english !  Chińskie smoki atakują !

Risks of a lean superduper

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risks of lean

A lean management concept is based upon the elimination of everything that does not bring added value to the respective product or service from the supply, production and sale process. And… please accept my deepest apologies for this simplification, Dear lean management experts, or whoever is reading this article…

Firstly, Toyota

Normally, as the best benchmark of a successful lean implementation, proponents of this idea point out the TPS or Toyota Production System. Lean processes are constantly excelled in the Toyota Corporation resulting in the well-known reliability of this company’s products. Of course, we can also mention other roots of a lean idea. These are the organisational improvements and inventions of Henry Ford, the father of the modern automotive industry and mass production in general.
I must confess here and now, that I am not an expert in lean management, but only in risk management. Thus, when a discussion titled “defects of lean management” appeared on my “radar screen” some time ago, my attention was drawn to the word “defects”. From “defects” (I thought) there is just one step to “risks”, and, after all, that’s what tigers do best!
Firstly, I dare say that at least some protagonists of a lean approach I have seen believe that this System (or solution, or idea, or managerial philosophy, whatever you call it) has a risk management component already included. Lean is so perfect and all-problem-solving super-duper, that no separate risk management is needed. Fact?

Poohsticks

News about ideal risk-free circumstances is always good news because, for a risk manager, as Donald Rumsfeld, the once US former Secretary of Defence remarked in his ironic speech: “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” And, we could also quote here another famous thinker: “…the more he looked inside, the more Piglet wasn’t there.
And here you are! Even before considering the known and unknown advantages of lean management, just some simple research of easily available sources such as The Financial Times or The WSJ shows that… The risk is still there and, what a surprise! The best example is indeed the Toyota Production System itself!
Sources indicate, for example, that the slimming of the supply chains of the world’s largest auto maker that embrace the elimination of an “excessive” number of suppliers results in a simultaneous increase of a “classic” supply chain risk. That relationship was dramatically demonstrated during the tragic tsunami in Japan in 2014.

Another manifestation of “lean” philosophy is a specific approach to product design, which allows automakers to use the same elements in different car models. By the way, this is indeed a global trend, because all cars lookalike, don’t they?
Of course, from the point of view of production and cost efficiency, lean is good and brings profits but assume that something dramatic happens with a “lean” supplier of a very small but very important part and in a moment, production of all Toyota models Yaris, Corolla, Lexus is affected. Well, maybe, not Lexus and Yaris together, apologies for simplifying (as a lean management and Lexus non-expert).

These long chains

Unfortunately, a nasty and hidden risks of lean management not only creates a threat of supply chain interruption (or even total business interruption) but also immediately sets off a reputational risk. Every journalist appreciates the good news of bad news coming from top business names, as Toyota is. And carmakers are undoubtedly on the top of their “Breaking news” agenda.
Of course, the competition, politicians and other risk “stakeholders” are not going to miss an opportunity. Just think about the scandal of alleged “self-accelerating” Toyotas. Incidentally, the case appeared to be faked and simply not true. It was finally explained in favour of Toyota but… who remembers it today, in a world of an electronic public opinion, mindless social media bringing a verdict of “guilty” in seconds?
Another “lean related” risk, that is common and important for business today, not only just manufacturing, is product recall. This is again a big headache for the automotive industry – see the “Das Auto” problem. Of course, product recall threat is well known everywhere, so we can repeatedly read about electrocuting hair dryers, contaminated infant food and lethal toys.

Only human

Last but not least, a risk related to lean management arises from a “human” factor. There are sociological studies pointing out that lean, as the most modern approach to work organisation, also brings de-humanisation of labour. Within global lean production chains employees can be perceived as another “brick in the wall” sacrificed for the sake of growing “value added” optimisation. Remember Charlie Chaplin in “Modern times”? Lean is king, so stay in line and produce, produce, produce…
Thus, even a quick review of the lean risk landscape shows that there are a number of not so “lean” risks related or even created by lean management itself. That is, on the other hand, no surprise because risk is everywhere and usually man-made. And for the protagonists and lovers of “clean” lean management, without a separate risk management process we can recommend Toyota’s corporate web page, where you can easily find a dedicated and separate risk management framework. As well as such typical ERM functions like CRO, Chief Risk Officer and Board Risk Committee. Because each new, even more sophisticated management solution in addition to new opportunities creates new risks of lean to manage.

risks of lean   risks of lean    risk of lean   risks of lean   risks of lean