BOW WAVE 142

Sans Souci Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2002 WavyLine.com	Issue No 142 12 Aug 02
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Quarterpoints
3. High Tide
4. Maritime News from the Baltics
5. Savi Technology
6. And Finally...

1. Welcome

New Readers this week include:

Alex Gibson of brokers Newman Martin and Buchan
John Gibbons of Specialist Crane Services

This Issue finds your editor sans souci on the Isle of Wight, sometimes known as England's Garden Isle. Although it is a dampish summer, it is nice to be away for a few weeks' holiday.

It is always good to use the time to learn something new.

http://pobox.upenn.edu/~thompson/whistle.html

Enjoy.

2. Quarterpoints: Business vs Organisation

Your editor's column in Lloyd's List on Tuesday last was a meditation on what goes wrong when firms take their eyes off the ball of business......

The days I often find myself pondering how powerful was the sense of euphoria of the recent past and how real is the morning-after feeling in many walks of commercial life. This follows upon what the investment people call the de-rating of values, the collapse of the internet bubble and the peculiar spectacle you can see quite often these days of financial organisations reporting investment losses year upon year.

Throughout the years it is possible to say that the world of marine insurance suffered as much as anyone else from the tendency identified by Stan Davis, author of Lessons from the Future, that senior managers would too often confuse their organization with their business. Organizations are defined by hierarchies, reporting relationships, departments, and budgets. Businesses are defined by competition, supply chains, channels, and customers. Organizations look in. Businesses look out.

You do not have to search for long to find some very good examples of this distinction. Look at the transformed expectations of the consultancy industry which once provided so many satisfactory livings to the big accountancy firms. Only last week PwC went to IBM for the price of $3.5bn for the operation, a handsome fee sure enough which will gain Big Blue around 30,000 staff and approximately $4.9bn in revenues this year. But one only need recall that two short years ago, Hewlet Packard made a bid for it , which was reported to have foundered on the issue of price as PwC was said to be looking for $18bn. It is impossible to say that the run of bad news which has emerged from the firm of Anderson is merely a matter of bad luck.

The firm which brought itself down on its performance auditing Enron, Worldcom, Qwest and Global Crossing was also during the course of the 1990s fighting an internal war over the future roles of the accountancy firm and the consulting wing called Anderson Consulting (now called Accenture). The partners wanted $14 billion for a divorce. It is, suggests Thomas Stewart --the writer of the Barely Managing column in the webzine Business 2.0--ample evidence of how badly Anderson higher management neglected its business in favour of organisation.

But I would emphasise a further element to this story. This is the peculiar euphoria of the 1990s which gripped many organisations which might have shown higher powers of resistance to call of money and to the dread of missing out. The insurance world, and perhaps especially the marine insurance world went through a long strength-sapping soft market from the mid 1990s to September 11th 2001. As the last decade closed there was an enormous crescendo of merger and acquisition activity.Hundreds of insurance operations with long histories in the market were acquired or folded in with other operations. This was a logical reaction to the many changes going on in the market, especially the tendency of marine and transport companies to consolidate into large companies with capital holdings far greater than those of specialist insurance organisations. But the role that fear and greed played during this period was markedly different according to how well focused the managers concerned were upon their business. Some organisations sold out, others engaged in ruinous internal conflict, some sailed on into prosperity.

As they now line up to explain why they have hit the buffers, why the reserves have fallen over a cliff, is a good time to ask how they lived during the euphoric years, how they weathered the turbulence, stuck to the ordinary disciplines, values and loyalties of successful business. Given the overall difficulty of beating the commercial trend of the insurance cycle, it is still easy to spot the organisation which bought too heavily into the internet promise, or was a house divided against itself in a time of danger, or which simply neglected its core business for other more compelling organisational politics.

The morning after effect in insurance is noticeable. The desire to buy up insurance companies, brokers, mutuals or other specialists is much diminished as are the prices paid. There is barely a premium payable for the net asset value of insurers. Not much payable at all for good will. And yet the need for great skill in underwriting, flair with technology, and bringing out the best in people engaged in marine insurance is probably as intense as it has ever been.

It is a people business. So watch how they live, how they treat each other and their customers. Is there open, two way honest communication up and down the ranks, or is there something well short of the ideal littered with fall guys, time servers, cynics and economists-with-the-truth?

It is not only in the numbers where the results of organisation can be seen.

3. High Tide: Chances in Chaos

This is the fourth post by Ian Priban of the British Innovation Group-Europe

High Tide: Chances in Chaos

A small group of individuals readily finds it can orientate and share reference points in uncertainty. Large groups take time to establish common ground. However, the relationships between individuals, enterprises, communities, institutions and states that we have been relying upon to face the future have become very tenuous. Yet there are things that the individual can do.

The time for greatest change in nature is at the equinox. It is the optimal time for the cross-fertilisation of threshold activities. The Earlybird All-The-Way-Agenda is a strategy which benefits from focusing on the High Tide on 23 September 2002. It is the event expected to start simultaneous, coherent change for a better future.

Bigger pictures of the cause and effect chains in evolution show both constructive and reactionary forces. They illustrate why failing businesses will be replaced by breakthrough innovations. A hallmark of objectivity is a statistical synthesis from quantum thinking without this, operations drift into chaos. Goliaths fighting battles of the last war are clouded in rumor and turbulence, ending in chaos. The David’s move in Earlybird flocks to the highground of new productivity game.
Breakthrough innovations can be established concurrently. Market-led engineered strategies can harness science and technology in a quarter of the time. Automation of these operations is need driven, rooted in a vision of the future and access is direct. The ATWA objectivity challenges the competition.

Where business, pensions, policing and justice, or public education, health and transport are failing, discontent and turbulence are the obvious signs. Operating beyond their design capacity, they can fail. Failing systems can cascade ending in chaos and catastrophe. Effects are unmistakable with zero likelihood of any order coming from them. The solutions usually put forward are piece meal, not innovative nor do they inspire action.

Rethinking what a top-down strategy should be, is an intellectually and morally wiser approach. Mutual trust between constructive individuals grows. New shoots develop, readily extending towards each other, forming synergy networks with this pattern recurring again and again. It inspires trust spreading like spores in the wind. Health and wealth have a common root revealing quantum capitalism to be healthy. Neo-classical capitalism, the other side of the coin, is loosing legitimacy.

The Change of State is a threshold phenomenon which when a critical mass is exceeded, triggers new growth. We showed this in "Self-renewal". The equity value of many big companies has fallen to half. Usually 80 % of profit is from 20% of the enterprises, the 80/20 rule. Future pensions demand innovations today. Where can you see innovation? Can you access it? Does it effect the 80/20 rule?

Better relationship can be established via small world networks on the Internet and web. Legitimate shortcuts do maximise market forces creatively. By aiming through chaos the failing, old value system is sidestepped. "Game Change" will show how.

Become an Earlybird guest. Begin the future on

http://www.bige-intelligence.com

4. Maritime News from the Baltics

We recently heard of this on-line publication which is produced in Lithuania and which makes a good job of explaining the maritime scene in those parts.

http://www.jura.lt/index_eng.htm

5. Savi Technology

Your editor had lunch recently with Mark McGlade, Europa MD of Savi Technology together with Chris Gatty. Readers may know that Savi is part of the Smart and Secure Tradelanes initiative. It takes the benefit of its history as the provider of logistics software systems to the American Department of Defence for the best part of two decades. Of course most military cargoes travelling by sea pass through civilian ports and the Security System software currently being installed in the ports of Hong and Singapore, with Seattle and Tacoma to follow soon will no doubt use established principles of tracking.

It is during times like these that we are reminded of the strong military origins of the word logistics...

See the Savi website at:

http://www.savi.com

6. And Finally...

Danny Cornelissen is a Dutchman who works in the port of Rotterdam and takes photographs of what he sees. You have to navigate around to appreciate all the things he has lodged on his site. See his Photos and Facts page. Remarkable in its way.

http://members.ams.chello.nl/dcornelissen/Danny2.htm

BOW WAVE is published each week to around 7300 Readers in the transport,insurance,shipping and finance industries.

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