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Home Blog Page 7715

Towards a Better Global Credit Rating

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Since May when we blogged on the Illusion of Global Investment Risk, we have been looking for Credit Rating agencies that will possibly give a challenge to the trio of Fitch, S&P and Moody’s. Together, these agencies facilitated the global economic crises through allocation of ratings that are dubious to securities and sovereign debts. We were worried that pragmatic nations like Botswana and South Africa will have the same ratings as Greece which was basically bankrupt.

 

But good enough, the Chinese are in town and something good is going to happen in the rating industry.  Dagong Global Credit Rating just published their first report on international sovereign debt and the numbers made sense. In its July 11, 2010 report, it correctly put China ahead of US, UK and Japan in credit rating.

 

Though the big three will contest that, we think Dagong is in line with what we have been asking in our blogs. The risk profiles of nations have evolved and must follow the new realities of the 21st century. The big three are doing nothing but awarding numbers based on ideology and beliefs, especially punishing emerging economies that are driving the global recovery without any major reason than subjectivities and perceptions that have been built for decades.

 

The changes from these nations are not recognized.  That is why South Africa may be a bad place to do business than Greece.  So at the end, these developing nations suffer through higher interests when they seek funds in the market because of the numbers the big three have assigned to them.

 

Instead of looking at economics, they focus on politics and per capital GDP which though important miss important points. Dagong comes out with what we think and have advocated in our blogs. Looking beyond the old perceptions and measuring realities. Dagong focuses on wealth creation ability, foreign currency reserves and fiscal health. In the mix of these three categories, China beats US, Japan and UK and certainly deserves better ratings. So, we agree with Dagong.

 

We congratulate Dagong and hope that SEC will approve and recognize them as accredited rating agency in the US. It will be a media war as the big three will not fade easily. We see the progress made in most African nations captioned by Dagong than the big three. We want cheaper sources of funds for our growths and we welcome Dagong.

 

original pub – Aug 2010. Just if you missed it in the other retired blog

Open Innovation Calls for Open Leadership Because Social Media Is Shaping Open Democracy

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Since democratic system of governance was invented many centuries ago, the present transformation or redesigning phase it is experiencing across many nations is noticeable. From America to Africa, technology is restructuring how citizens relate with their leaders. With readily available information, the citizens have become more informed and active in the affairs of the nation.

 

Leadership has morphed into a very simple two-way feedback system that is cheap, efficient and timely. And that has come through the powers of social media networks which enable interactions between any interested citizen and the leaders. From American President to his Nigerian counterpart, Facebook provides a platform for dialogue. Citizens can go online and post simple questions and expect the leaders to take note.

 

This evolving trend is possible because communication systems have become cheaper and accessible. In the old network TV model, only the very influential people could get on the TV to make suggestions on how the country could be managed. But today, what is important is an idea-have an idea on what government could do better, then visit the necessary website and post it. It turns out that if they ignore it, another website will escalate it until they notice it.

 

It is not just the political leadership that is using this citizen energy. Businesses are increasingly sourcing and sharing ideas from the consumers of their products. They get insights that help them shape future products. And the consumers also pass across their feelings when they do not get the products rights. In this piece, I will focus on the political leadership.

 

Never before is the citizen exerting more influence than what we have today. And the future looks more exciting because Moore’s Law will guarantee us more access to networks of more people as technology prices continue to go down even with more efficiency and performance.

 

In the midst of this development is a challenge for government to be ethical. Every citizen is a pseudo journalist and control over the media empires will not stop any bad act to be transmitted across the globe.

 

It used to be, take care of the big networks and any scandal will never be made open. It does not work anymore because there are many avenues to break news without the media houses. And those can move faster with devastating impact that even retraction makes no sense since the digital footprints are always there.

 

This implies that governments must be mindful that in the era of modern democracy, it has become more open. And this openness brings a challenge to act ethical at all times. There is no more a season of deals because anything can appear on the web. Technically, there is no secret.

 

Governments must understand that the tripod relationships between them, citizens and institutions have changed drastically over the years.  Globalization makes it possible to have access to information for benchmarking what other constituencies are doing. And immediately, firms and people change their expectations from their governments.

 

Over the course of many centuries, governments have moved from central, regional, then central, and now to citizen government, especially in democracies. The self-aware citizens do not accept polices hook, line and sinker. Even in feudal systems, the citizens are asking questions and that old dominance has since been challenged for accountability.

 

In America, the citizens could organize under a Tea Party umbrella; in Nigeria, they have Enough is Enough. Despite their different names and modus operandi, these organizations and many that can be found in any democracy are pushing leaders to be more open, accountable and responsive. And they honestly think that directing the future of the nation must not be left alone to the politicians. They want to influence dialogue and the nation’s trajectory. They ask questions on areas of national concerns and they want change.

 

Forty years ago, they may appear to be ill-informed. Not anymore! They have access to information that used to be seen by only government officials as technology has made dissemination easier. From Think Tanks to universities to non-governmental organizations, anyone could read their analyses online, free. Even the government’s own writings are easily available and suddenly that secrecy that leaders enjoyed over things that shaped their policies is eroding. People now challenge them with data and can authoritatively make their points for new directions.

 

Leadership in this era provides an opportunity that a star could be born overnight as performance news pass across boundaries. It offers an opportunity to be ethical and honest in dealing with the citizens. One understands the difficulty leaders face in trying to engineer the nation to long-term prosperity when most of the citizens are interested in the short-terms. How you communicate the need for minor pains today for major joy tomorrow will depend on how trustworthy you are. Citizens will believe an honest leader and can give concessions for the good of the nation.

 

As the opportunity is also the threat. It is easier to see politicians resign quicker and faster after scandals are broken. The bad news go through the same pathway the good ones pass.

 

In open democracy, what is truly leadership? Can we argue that China which shortened a century of western innovation into a quarter century under no internationally accepted democratic norm is not displaying leadership we could envy? No open democracy, but the world, especially Africa is looking towards China. They envy that state capitalism where the leaders build world class public institutions that Wall Street gladly accepts even when they criticize governments going into business in America and Africa. From banking to energy, we have pseudo government-run empires in China that best investors welcome though successful IPOs.

 

The reality is that under a citizen government, economic vibrancy is not the only gain of governance. People want freedom, by nature. Nonetheless, leadership and good one minus other externalities is not only found in democracy.  However, to the people, denying them the right to attain that position of leadership, if they choose, shows the leader is not a good one. It is about having rights to exercise wishes under the law. And every person irrespective of birth can fulfill a dream. Under this hypothesis, many African leaders that oppose elections are designated as bad leaders by the West irrespective of their efforts in other areas. By acculturation, the West thinks that a political leadership should be expressive and open.

 

Finally, I conclude that I dream of a world whose governance is open and transparent with a vista not only to economic greatness, but individual rights. It must be one where citizen energy is exerted in the affairs of the nation and leaders stewards not only to the citizens, but the nation.  And those leaders taking the opportunities that technology brings through openness and continuous improvement  to restore the dignity of man.

The US-Europe Bridge to Africa is Broken, China Now Runs Most Shows With Their Ready Bag of Cash

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It is happening. I never thought it could be this fast and quick. The old century bridge constructed by the Europeans and Americans to Africa is collapsing. These old empires are making way for the Chinese who are buying over Africa.

 

A new trade link has emerged and it is running from China to Africa to Latin America. The biggest buyouts in Africa are done by the Indians and Chinese. The Americans and Europeans are nowhere.

 

The Indians, Bharti Airtel, recently bought over Zain, a major mobile network in Nigeria.  Tata Group is also investing big in the continent. The diminished nature of America and Western Europe in Africa is very noticeable. While Brazilian Vale is investing $2.5 billion in Guinea for iron ore, the Russians are buying over steel projects in the content.

 

A new report from Tekedia noticed that most technology projects in Nigeria are funded by either Indians or Chinese. The power projects, the dams, satellites projects, the railway projects are all handled by the duo. It estimates that India and China control more than 65% of technology related FDI projects (but oil) in Nigeria.

 

Tekedia notes that most of the big machinery used in critical engineering projects in Nigeria are supplied by China. Since it got the node to design and implement Nigeria’s satellite project, NigComSat, the Chinese have moved deeper into all key aspects of the economy and increasingly, the West are being displaced. However, Tekedia notes that the West still control the petroleum industry in the nation.

 

The consultancy estimates China to dominate Africa’s alternative energy market. As China leads the world with 40% of all wind turbines and 80% export of those, Africa will increasingly depend on China than US or Europe for its future alternative energy need.

 

Nkpuhe thinks that in five years, most African leaders will care less about Washington than Beijing as they will most likely seek counsel from China than US. He who pays the piper dictates the tune.

You Build a Company with Vision, The Board Fires You. Why? You Have No Structure Based on Management Books

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For me, firms need to measure and guide people to achieve, but it does not mean that you have to pile theories endlessly in courses on them. Those theories are structured based on a monolithic understanding of management. That happens to be the problem. It assumes that those concepts are great but it prevents freedom to innovative management.

 

The world has become much fragmentized and leadership evolution points to disparity in concept. You cannot have creative disruption of firms under most of our management theories because it is based on preservation and nurture. That capacity to carefully destroy and invent a firm is not that prominent in these programs both in schools and firms. We like the status quo but technology will not support us here.

 

Recall that some of the best companies on earth are not managed by these management czars. Apple ranks among the best in innovation. Yet, Jobs rarely finished school. Oracle’s Ellison, Microsoft’s Gates, Dell’s Dell, are other examples.

 

So instead of wasting time much time on offsite management training, firms should spend time on giving potential future captains responsibilities and measure them under a practical mentoring system. And how you decide who gets chosen must be broad and untangled because the same metric that worked for turbine business may not be best for a social business. Arguably, there is need for order and management must provide that through organic practical process that does not disconnect from responsibilities.

 

There is need for mutability in management. We have to destroy to recreate it today. Wall Street will hire all the top MBA students and yet will get messed up. The problem is the education is focusing on concepts and structures and few of the students have opportunities to be free in thinking. Coupled with the fact that the tools they use to evaluate their performances are obsolete, we come to see firms collapse under these management systems. Why not? MBA is about building; rarely teach disruptive mutation of firms. In reality, firms are supposed to grow and grow. But when growth stops, understanding how to transmute becomes a challenge.

 

I am not writing about M&A, I am talking about carefully destroying firms so as to re-invent them. It is mutation where a better firm emerges internally and organically. I call it Intelligent Mutability Management because you do not allow it to become a process that is not under control.

 

They praise icons like Jack Welsh of GE because he was firing 10% of bottom performers. Unfortunately, I will not be happy to hire people I will fire. Why not hire those that are good so you have no need to fire. There is nothing good in spending less time during hiring and then wait to fire. I will hail the boss who does not fire the bottom 10% of staff because he does not have under-performers. Remember these have been introduced as management constructs in American capitalism where firms hire and fire anyhow to shareholders’ delights.

 

We have a system where firms fail to understand that a staff makes bottom 10% in a department does not mean it cannot make best 10% in another department. But we fire staff to appease shareholders when firing could have been seen as poor management.

 

The same applies to when firms hire entrepreneurial minded staff who wants to get things done than waste time on protocols. They lose the human content and you fire them. After five years, their firms become your main competitors.

 

This is exactly what happens throughout the life of Steve Jobs where he was fired in his firm because his mindset was different to the executives. But they brought him back and he engineered Apple into a renaissance. The management that examines the traits is flawed because they missed them.

 

My concern is the system that measures those traits is flawed because man can find more than 35 traits for management and/or leadership. But in most cases, the human resources department use only the most important they think which may not be that important. GE measures five growth traits: external focus, clear thinking, imagination, inclusiveness and expertise. That seems very balanced. But I will add entrepreneurial, not for GE but for those smaller firms. If you miss that energy, you will be bought over in months.

 

So the big question is this? Does management education give bloated ego that makes common sense wasted sense?  Read the Distinguished Professor of Risk Engineering, New York University, Nassim Taleb, the author of Black Swam: “Humans can be extremely rational in ordinary circumstances. The minute you give them MBA, though, they start using these forecasts and these financial tools in ways that contradict their own behavior”

 

To conclude this piece, May 23, 2010 edition of Bloomberg Businessweek reported S&P 500 CEOs as per undergraduate alma mater; the result has those that attended School of Hard Knocks (euphemism for dropouts) tied at 12 CEOs with University of California. Harvard has 11 and Princeton 8 CEOs. This means that life struggles produce more CEOs than any of the top universities in the US, except University of California (clusters of schools though).

 

The world needs a new management philosophy which I am calling Intelligent Mutability Management (IMM). It is what will help the world, private and public, to understand that we can rebuild by destroying. Holding on to the past when the future is here creates a resistance that deprives the world growth and innovation. If we can understand how to intelligently and carefully allow some old era industries to collapse in order to make way for new ones, we will navigate out of our present economic crises better. A philosophy that looks at strength in learning how to destroy to succeed is what will help. We need intelligent mutability in managing the global affairs.

Google Analytics Presents Web Traffic Sources and Operating Systems – Windows Commands 85% OS Market Share

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From an email from Google Analytics, we are happy to present the web traffic sources and operating systems.

Traffic Sources

Traffic sources below are identified by how the “source” and “medium” parameters are received by the Google Analytics collecting servers.

% Visits from Sources 11/1/09 – 2/1/10 11/1/10 – 2/1/11 Difference
Direct 36.5% 36.8% +0.3%
Referral 21.0% 19.4% -1.6%
Search Engines 27.0% 28.0% +1.0%
Other 15.5% 15.8% +0.3%

Operating Systems

Browsers and Operation Systems (OS) are identified by the “referrer” string sent by users’ browsers.

% Visits from OS 11/1/09 – 2/1/10 11/1/10 – 2/1/11 Difference
Windows 89.9% 84.8% -5.1%
Macintosh 4.5% 5.2% +0.7%
Linux 0.6% 0.7% +0.1%
Other 5% 9.3% +4.3%

 

Tekedia thinks that by next year, Chromse will debut directly in this table. Windows is still the deal and it does not seem its reign is ending anytime soon.