Masters of Business Awareness

So now I’m two thirds of the way through my MBA, not counting the dissertation. Have I learned anything? Yes, I have. I wrote previously about how useful I found the class on statistical analyses, but I’ve also now got a good appreciation of accounting and finance. By way of a benchmark, I didn’t even know the difference between accounting and finance before, nor sales and marketing for that matter. Now I probably haven’t learned much more than the basics, but it nevertheless allows me to look at companies quite differently. I also understand a lot more of the terminology which gets used in financial reporting.

I’ve also completed a good class on strategy, something I didn’t think I’d find very useful for some daft reason. I found the difference between commodities and other goods interesting, as well as the different strategies companies pursue in attempting to gain competitive advantage. We did a lot about competitive advantage, and how some companies do well and others fail. Underpinning all of this was a Capsim strategy simulation we played over the term which involved selling electronic sensors while balancing R&D, sales and marketing, production, and financing. I was skeptical at first but once I’d figured out how it worked I got stuck right in, and I came out the other end knowing an awful lot more about competitive advantage and how commercial enterprises work at the strategic level. Alas my team didn’t win the competition; we had in our class a young Ukrainian who was extremely gifted at figuring this stuff out and he left us for dust, but we easily came second.

What this has shown me is how unusual the oil industry is. For a start, there’s just so much money kicking around. I’m studying cases regarding the financing of investments of around $5-10m, which in Exploration & Production represents the money wasted because a manager didn’t want to change a wrong decision because he’d look bad in front of his boss. The first big oil project I was involved in, Sakhalin II, started off with an $8bn budget, it rose to $12bn and eventually came in around $20bn. Nobody really knows. I don’t know what the original budget of Kashagan was, but the main dispute now is whether the final price was $50bn or $80bn. Again, nobody really knows. If any other industry outside of government spent money this way, they’d go bankrupt within weeks.

The oil industry is also unusual in that the main players are partners as well as competitors. In any oil and gas development there is one operator and several partner companies. In the North Sea ExxonMobil often had an equal share of a development alongside Shell, who would operate the thing. This is done to reduce risk and make raising capital easier, but it’s equivalent to Boeing and Airbus teaming up to develop a new fighter for the US Air Force. When we studied flat and tall corporate structures and the characteristics of each, it was obvious which category my former employers fell into. I knew this already of course, but I didn’t realise quite how hierarchical oil companies are compared to other major corporations (one or two readers might find it interesting that the companies most often used to compare tall versus flat organisations were IBM and Intel).

The other thing which struck me about the oil industry is how unbelievably slow and bureaucratic the decision-making process is. In my previous place of work, decisions would take months and sometimes years, involving endless meetings up, down, and across the organisation. There may be good reasons for this, but most commercial operations don’t have this sort of time to waste. During one of the seminars I spoke to a chap who worked for a big pharmaceutical company in Switzerland, and he showed me the app he uses for processing and submitting his expense claims. He scans the receipts, clicks send, and it’s automatically approved within hours. Hotel bookings, flights, and ground transport work much the same way. If someone brought that into an oil company they’d summon witchdoctors to cast out the demons within. Booking tickets and processing expenses in my last place of work involved dozens of people, umpteen signatures, and half a forest for each trip.

Sixteen years in the oil industry has sheltered me from a lot of things, and my MBA is making me see the world in a different way. I’m also beginning to sniff out potential opportunities here and there. That was the primary purpose of doing it, of course.

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Boeing down the pan

I can’t say I’m overly surprised by the troubles Boeing is having with its 737 Max aircraft, which is now grounded until they can figure out how to stop it crashing. While the problem ultimately sounds technical (see also this post at the Continental Telegraph), this is the sort of thing which in the past proper business processes and management would have ensured didn’t happen.

I can’t claim to know how Boeing is run, but if they’re anything like most modern corporations they’ll prize unwavering loyalty to management diktat over and above competence, experience, honesty, courage, and character. Decision-making is likely to consist of bright young things in nice clothes giving PowerPoint presentations to their bosses telling them what they want to hear, and those bosses will do the same for their bosses right up through the hierarchy. If an engineer pipes up that something is badly wrong, he’ll be told in no uncertain terms to get with the program and realign his attitude or his career will suffer. In addition, it’s likely that as Boeing’s business became more about buttering up government and lobbying the FAA to turn a blind eye, they got worse at making planes which didn’t crash.

Back when I worked for an oil company they failed to deliver an expansion project in Russia on the third attempt. Twenty years before, when doing business in Russia was an order of magnitude harder, they’d managed to get the original facility built. Somewhere in the intervening period the company had lost substantial capability, not that anyone would admit it. I suspect the reason was experienced people retiring and being replaced by yes men and power skirts molded by a modern system of management which rewards aesthetics and compliance over getting stuff done. In other words, as companies increasingly obsess over process, diversity, and values they forget how to do their core business. On their corporate website Boeing boasts of:

Diversity Councils are integrated groups of site leaders, managers and employees, who work to improve employee engagement, provide learning and leadership opportunities, increase communication, and facilitate implementation of organizational diversity plans. Diversity councils are supported by a local executive champion. Boeing has more than 40 Diversity Councils.

40 diversity councils, and 2 catastrophic accidents of a new aircraft in the space of 5 months. Now air crashes are nothing new, but I can’t help feeling these two statistics are related. I also don’t think this is the last time we’ll be hearing a household name with a long history of excellence grappling with disasters that were wholly avoidable.

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Queen to Bishop

A few days ago a 17 year old Australian walked up behind a politician and planted an egg on the back of is head, filming as he did so with his phone. He promptly got filled in, firstly by the politician and then his mates. Due to the politician being right wing and having said nasty things about Muslims, and also because women these days think a 17 year old is a child, otherwise sensible people are leaping to the defence of Egg Boy. Here’s the founder of Quillette, for example:


If the new rule is we can make physical contact with people we don’t like if our intent is not to wound, merely humiliate, things are going to get interesting indeed. Where this will leave women I have no idea: I can think of a dozen ways a man can utterly, appallingly humiliate a woman if the only restriction on physical contact is that he must not wound her. Has anyone asked the #MeToo lot about this? Can men go around egging women or not?

I suspect what we’re seeing here is Lehmann making sure she and her publication are positioned within the boundaries of polite society, edgy enough to upset the SJWs but not enough to cause the polite middle classes to start wringing their hands. Note the I’m not a fascist, but he is gambit. As Quillette grows in stature and comes under increasing attack from the hard-left, we’re going to see a lot more of this. These days if you’re anywhere to the right of Lenin and you want to keep being invited onto podcasts and TV shows, it’s important to signal you’re not an SS officer on a regular basis.

Speaking of signaling one’s morals, here’s Oliver Kamm:


The irony is this kind of moral pronouncement and surety of one’s righteousness would be quite at home in the houses of any religion. As I’m fond of saying, religion never went away, it was just replaced with other dogmatic belief systems complete with preachers, true believers, heretics, witchfinder generals, and those constantly passing moral judgement on anyone who disagrees with them. What’s amusing is their practitioners consider themselves progressives.

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Universal Basic Idiocy

I’m about half an hour into Joe Rogan’s podcast with Andrew Yang, an American presidential hopeful who’s main platform is a universal basic income (UBI). I find discussions of a UBI to be useful and sometimes fun in philosophical terms, but as a policy idea it suffers from fatal flaws which ought to be obvious but for some apparently aren’t. The ZMan points out one, which concerns price inflation:

Imagine the government decides to help BMW sell more cars, so they offer every citizen $5000 if they spend it on a BMW, rather than some other car. BMW is now facing a wave of people coming into American dealerships toting a $5,000 check payable to BMW. The logical thing for BMW to do is raise the price of their low end models by $5000. That way, they don’t increase production costs, but they increase the profit per car. In effect, the floor for entry level buyers was just raised by $5000 by the government.

There’s a pretty good real world example of this. The government decided to do something to help working class people get into college. Since many need remedial help, before taking on college work, the scheme was to offer a subsidy to be used for community colleges. The students would use the money to prep for college then head off to a four year university, presumably using loans and aid at that level. The result, however, was the community colleges just raised their tuition by about 65% of the subsidy.

But I don’t think even economic arguments do the most damage to the idea of a universal basic income. UBI comes from the libertarian fringe of politics and they have a habit of falling into the same trap they frequently accuse communists of: they ignore human nature. The reason welfare programs came into existence a few generations ago is people decided it was immoral for someone to be left to starve or die through illness or bad luck. The reason there are giant, all-encompassing welfare states today is people now think it immoral for anyone to suffer the consequences of their bone-headed actions. Proponents of a UBI think we’re still in some bygone era, rather than an age where couples with no job pump out seven children each and suffer no social opprobrium, even as they moan their taxpayer-funded house is too small.

The idea behind a UBI is it would partially replace other forms of welfare, but the reality is this money would disappear from the hands of the feckless quicker than #MeToo campaigners at the mention of Monica Lewinsky. They’d then be worse off than before and the same people who declared their situation intolerable and campaigned for the original welfare programs would pick right up where they left off. The idea that the society which constructed today’s welfare state would ignore the plight of some idiot who blew his UBI on crack and step over him while he starved in the gutter is ludicrous; the original payments would be restored, and the UBI a handy bonus for professional grifters who fancy a new set of alloys for their E36 M3s.

The fact this doesn’t get acknowledged by proponents of the UBI makes me wonder if they know much about the societies they claim to inhabit. The best that can be said is this makes them indistinguishable from most other politicians.

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Dark Continent

Last summer, Cape Town suffered severe water shortages. While the global media ran interference blaming global warming, an article in Nature magazine – hardly a hotbed of climate change denialism – explained why:

Since the 1980s, South Africa’s major conurbations have used systems models to guide their water management. These models, run by the national government, are considered world-class. They map links between river basins, reservoirs and transmission channels and use historical hydrological data to predict probable stream flows. Those are then matched to projections of demand to assess how much storage is needed. The models support real-time operations of the water network as well as planning for development. Crucially, they allow planners to assess risks of supply failures to different categories of users and evaluate the effectiveness of responses such as restrictions.

For two decades, policymakers heeded the models. They guided managers, for example, on when and where to tap sources and build reservoirs to enable the Western Cape Water Supply System (WCWSS) to meet rising demand from urban and industrial growth.

But dam building stalled in the 2000s, when local environmentalists campaigned to switch the focus to water conservation and management of demand. Such opposition delayed the completion of the Berg River Dam by six years. Eventually finished in 2009, the dam helped to keep the taps running in Cape Town this summer.

South Africa is repeating what’s happened across much of the English-speaking world and mainland Europe: contemporary politicians inherit a perfectly adequate system which has worked for decades and, through the application of ignorance, fanaticism, and arrogance in equal measures, proceed to f*ck it up completely. Unfortunately for South Africa, they seem to be taking things to the next level:

Blackouts in South Africa intensified to a maximum level on Saturday after the state power utility said it lost additional generation, including electricity imports from Mozambique.

The power cuts, first implemented over the weekend to replenish water and diesel designed for surplus generation, were raised to so-called Stage 4, removing 4,000 megawatts from the grid, Eskom Holdings SOC Ltd. said in a statement on Saturday. It marked a third consecutive day of outages rotated throughout Africa’s most industrialized nation.

Eskom’s operational and financial woes stem from years of mismanagement and massive cost overruns on two new coal-fired power stations that should have been completed in 2015. The utility is seen as one of the biggest risks to the country’s economy.

It is tempting to blame this on an African government that’s reverting to type; they can certainly ask their brothers up in Nigeria for advice on living in a place with unreliable, intermittent electricity.

However, if this has been brought about by affirmative action policies, general incompetence of the political class, and religious-like commitment to environmental dogma foisted on them by supranational bodies and Geneva-based NGOs, how is this different to what’s going on in the developed world? The governments of France, Germany, the UK, and Australia have all decided to throw their electricity generating capacity into serious jeopardy by embracing windmills and closing nuclear plants, all for the purpose of impressing their peers at jamborees in resort towns. How long before supposedly developed countries are suffering brown-outs, or watching other parts of their infrastructure collapse? Italy can’t even keep its bridges from falling down, and I don’t think there’s a government anywhere which is capable of building anything without years of delays and quadrupling of costs. HS2, anyone? And it’s not as if South Africa is the only country in the world where people are appointed to senior positions based on skin-colour or other characteristics unrelated to experience, skills, and competence. Western organisations not only do this, they openly brag about it on their websites and give each other trophies for their efforts.

It used to be said that South Africa was a third-world country with first-world infrastructure. If they can’t even manage to keep the lights on, I think it’s fair to say that label is now obsolete. But what’s more concerning is the number of first-world countries which seem determined to have third-world infrastructure.

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Failblazing

During strategy lectures you’ll often hear the term “first mover advantage”, which refers to a company being the first one to enter a market and carving out a dominant position for itself. This does exist, although examples are more rare than you think. Sometimes it’s easy to forget that Yahoo and AltaVista were the number one search engines before Google showed up with a better algorithm and consigned them both to the rubbish bin.

While there can be advantages of going first, there are also drawbacks. The reason almost every modern underground system is better than London’s is because London went first and built tunnels that were too small and stations that were too curved. They had no idea in the 1860s that this thing they were building would become the main method of shuttling millions of people around major cities; had they done so they may have planned it better. By the time Moscow (1930s), Paris (1900s), Tokyo (1920s), and New York (1900s) came to build theirs, valuable lessons had already been learned. Alas, it was too late for London whose underground is still hobbled by design decisions made with no experience to draw on. No doubt there are other examples of pioneers helpfully making mistakes their rivals won’t have to, and readers are welcome to share them in the comments given I’m too lazy to think of them right now.

Anyway, a tweet by Lord Ashcroft reminds me of the benefits those who come later can draw from those who went first:


It’s not inconceivable that a second EU member state will look to leave in the next ten years. One would hope that, unlike ours, their political classes are at least on board with it and actually want to leave but it is likely to be as divisive as Brexit has been for the UK. The lesson future leavers will draw from the Brexit experience is to prepare for a No Deal well in advance of invoking Article 50, as there will be no guarantee the EU will agree to anything which can be sold to the public. The EU has made it plain they want to make leaving as painful as possible for Britain pour encourager les autres. What in fact they’ve done is give any would-be leavers a good look at their strategy, and allow Brexit to become a training manual on what not to do. As a minimum, I expect the next country to leave will put in place robust rules regarding former ministers and non-government politicians meeting with EU negotiators outside the formal process. They may wish to include a set of gallows to accompany that.

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Online Poke Her

I found this interesting:

[An] experiment with Tinder that claimed that that “the bottom 80% of men (in terms of attractiveness) are competing for the bottom 22% of women and the top 78% of women are competing for the top 20% of men.”

A couple of years back I saw another analysis of one of the big dating sites which showed that most men considered something like 70% of the women to be attractive enough to date, whereas most women saw only 20% of the men the same way. The two studies suggest women who go on dating sites are unrealistically fussy, especially considering they’re on a dating site in the first place. Men, being men, appear to be more open to compromise on looks if it means getting laid and (possibly) having a relationship. None of this will be new to those of us who are over thirty and walk around with our eyes open.

The trouble is, I’m not sure women quite understand the dynamics of dating sites, which the statistics above confirm. I recently had occasion to watch a couple of young women swiping away on one of the dating apps, and they got all giddy over a dashingly handsome young Italian complete with a tailored suit and designer stubble. I expect they imagined the possibility of a romantic relationship, but what I saw was a chap who’s probably having a whale of a time ploughing through those 78% of women dumb enough to think he’s boyfriend material. Unfortunately, anyone who didn’t match this guy’s looks got immediately discarded. What’s even more unfortunate is one of the girls was about hot enough to attract a guy like that. I suspect this has always been a problem for pretty girls, but it’s likely to be accentuated in the era of dating apps: they’ll attract the attention of the best looking guys, who will find them average rather than special and have few qualms about ditching them in favour of the next one. While many women talk about their disappointment with dating apps, I’d imagine for good looking women it’s a rollercoaster of flattery followed by inexplicable rejection.

I’m not sure even those who run dating apps quite know what’s going on, or if they do they pretend they don’t. One of the biggest problems is men who sit there all day carpet bombing women with “hi how r u sexy?” messages or dick pics. Any woman will tell you that within weeks of joining a dating site in London or Paris, her inbox is full of vulgar messages written in atrocious English from manual labourers in Turkey, Egypt, and the United Arab Emirates. Tinder attempted to deal with this by limiting “swipe-rights” to 100 per day, or something. Bumble took it one step further and made it such that only women could initiate a conversation, but as the statistics above show, all that does is fill up the inboxes of the top 20% of men while the other 80% wait in vain for the slightest interest, unable to chance their arm even with the biggest hound on the whole platform. In other words, they’ve sold rejection to the already rejected. The simple solution is to restrict men to initiating two or three contacts per day, but the business model is to get men using it for hours at a time and pestering them with ads, so they’re not going to do that. But if they were serious about hooking people up, which they’re not, that’s what they’d do.

I also get the impression women like their inboxes full of unsuitable proposals because it gives them an excuse for not making an effort. Every woman I’ve spoken to about her experience on dating sites says “Oh, I don’t have time, I get so many messages I can’t be bothered to go through them all.” From what I’ve read on blogs which cover this stuff, the sort of women who go on dating sites have a habit of not responding to genuine proposals for days or weeks, and only then grudgingly agreeing to a date because their days are crammed full of work, weekend breaks, yoga sessions, or after work drinks with the girls. One of the most peculiar aspects of modern dating is middle aged, professional women citing as a priority their desire to find a lifetime partner, but refusing to make the slightest effort to find and accommodate one. If women joined dating sites and found one or two serious, well-written introductions dropping into their inbox each week, they might be forced to accept their reasons for not responding were shallow indeed. Better to hide behind the avalanche of dick picks and conclude they’re above all that. By contrast, even the most eligible, suitable men who fall outside the top 20% must spend considerable effort writing thoughtful introductions only to receive a response once in every fifty or hundred attempts (I’m not exaggerating here).

If we are to believe dating sites aren’t the best way of showcasing your suitability as a mate, let alone finding one, the problem is compounded by the fact that most people below a certain age don’t know any other way. A few weeks ago on the recommendation of William of Ockham I listened to a Spectator Radio podcast which discussed the impact dating apps are having, and they speculated that da yoof spend all their time building online personalities at the expense of those they display in real life. This not only makes them reluctant to meet people in the flesh, but also pretty useless when they do, i.e. they have no idea how to flirt and interact romantically in the offline world. I can’t claim to understand the younger generation but I do meet a few of them these days, and I occasionally wonder if they put as much effort into developing communication skills and an interesting personality as they do their Instagram feeds, they may not need dating apps at all. One of the more amusing aspects of this era is when you hear a couple say they met in real life and they make it sound like a freak occurrence. Unfortunately, you more often hear a girl say she met her last five boyfriends on Tinder, without any idea of what she ought to deduce from that statement.

Me, I’m kinda glad I was born in 1977.

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Beta O’Rourke

I’ve got my fifth and final exam of the week today, so I’ll keep this short. In case anyone is interested they’ve gone well so far, mainly because I’m not dumb enough to fork out for an MBA then flunk the exams because I’m too lazy to study. My observations tell me that if I were 22 and my wealthy family were paying for it this might be the case, but alas it isn’t.

Anyway, here’s a video of presidential hopeful and darling of divorcee Democrats Beto O’Rourke:


He comes across as one of those corporate types you meet who’s waited ten years longer than his peers for his first chance at management, and when it finally arrives he takes his subordinates to the pub and gives them a rousing speech without realising he’s addressing seasoned, middle-aged professionals not teenagers.

In fact, he looks and sounds an awful lot like my ex-boss.

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Robinson Screwed So

Yesterday while in the car I listened to James Delingpole’s podcast with Tommy Robinson. Unless Robinson is lying through his teeth, which I doubt, it appears he has been the subject of highly illegal treatment at the hands of a panicked ruling class acting in concert with the police, courts, and media. What’s worse, the government gets away with it because they can count on the support of the middle classes. Nobody’s going to stand up for a far-right, racist thug, right?

Hence when he was wrongfully imprisoned, rather than the darling lawyer of the internet pointing out the gross injustice, he or she used the situation to signal their own virtues while slandering Robinson’s supporters. When the truth came out and he was proven wrong, the Secret Barrister wrote four thousand words to the effect of “Well, who can blame me for assuming the worst about this kind of man?”  Some barrister. The media’s handling of the subject is even worse, littered with smears, falsehoods, and libelous accusations as they play their assigned role as propaganda organ for the ruling classes. Not without reason does Robinson believe the upcoming BBC Panorama programme accusing him of child abuse is a last-ditch effort by the authorities to make him impossible to support. The campaign led by BBC staff and British politicians to get him banned from social media platforms looks carefully timed to ensure he has no way of responding to these allegations.

Two things sprang to mind when listening to the podcast. The first is that not a single MP, newspaper, or public figure questioned the treatment of Tommy Robinson. Contrast this with the way Labour politicians, Guardian columnists, and other Establishment figures fall over themselves to prevent jihadists, child rapists, and knife-wielding thugs from having to face justice. Apparently Sky News can travel to Syria and give sympathetic interviews with ISIS brides aimed at swaying public opinion towards repatriating them, but are uninterested in the fact that the state conspired to throw a British man who has broken no laws into solitary confinement for two months. When we are unable to deport hooked-hand lunatics inciting terrorism in London mosques, the chattering classes stroke their chins and deliver earnest sermons on the importance of human rights. But when Tommy Robinson is chucked in jail they say nothing, except perhaps to remind us of his real name and his highly suspect mortgage fraud conviction. Who do you think this inconsistency will harm in the long run? And where are the Conservatives in all this? That’s a rhetorical question.

The second thing that sprang to mind is the ruling classes had better be sure of their position here. Things are changing fast; the government is on the verge of collapse, the streets are boiling with anger, and the status quo is looking shaky indeed. If things get really chaotic and British politics flipped on its head, there is a reasonable chance Robinson might find himself in a position of power before he hits retirement age. It might seem unlikely now, but history is littered with pariahs who were jailed by failing governments and found themselves in charge a few years later. Now I doubt Robinson is ever going to be Prime Minister, but who knows where power and influence will lie if the current system is upended by a populist revolt? If even half of what Robinson says on the podcast is true, he will be fully justified in finding those politicians, judges, policemen, prison staff, and CPS agents who were responsible for his treatment and holding them to account. What form that will take I don’t know, but I’m not sure I’d want to rely on principles of human rights to save me if I were being fixed with a blindfold. That ship sailed in May last year, and the chattering classes were fine with it.

Go and listen to the podcast, and tell me I’m wrong.

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