“Isn’t there something you can do to order us not to take all these risks?”(Charles Prince, Citibank CEO to Henry “Hank” Paulson, then US Secretary of the Treasury, 2007)
I like simple process; by extension, I like simple regulation, which may seem odd that my initial training and experience was as a taxation law and compliance consultant.
Yesterday saw the publication of the final report of the Parliamentary Commission on Banking Standards. In summary, the key points are:
- Given the misalignment of incentives in banking, deep lapses in standards have been commonplace. .
- The recommendations include:
- making senior bankers personally responsible,
- reforming bank governance,
- creating better functioning and more diverse markets,
- reinforcing the powers of regulators and making sure they do their job.
On hearing the coverage, I was reminded of the opening quote to this post. I know hindsight is easy, but looking back on that time, the regulators were running to catch up with where the banks were much longer before. The quote is telling, as it is absolutely clear that large institutions would not self-regulate when it really mattered. Regulation on risk and capital wasn’t effective, nor was it enforceable.
So now we have this report. I wonder how regulation will strengthen going forward – process and control works best when there is accountability, so I like the thoughts of making people personally responsible, with potential prison terms and fines. It happens in the health and safety arena, but finance has been treated conspicuously lightly.
With great risk should come great accountability.
Some people are scared when they’re forming or running new teams. They don’t need to be.
A former colleague of mine had been in military intelligence before joining and rising rapidly in the business world. His key to building good teams:
“I always aim to hire people better than me”.
I’ve seen similar messages in various publications, and thought of them as patronising or as cliches, but we discussed it further. His point was that he needs people on his teams who are excellent at what they do, who were reliable, and with whom he could work well. Many, perhaps most of them, would have skills or other attributes that he didn’t have, which is fine; that’s why we have teams, so the team can have all of the strengths needed.
If you’ve got too many strengths, what’s the problem? If the people can work well together, they’ll get the best out of themselves and you.
My second business book is currently in draft. On teams, I use the phrase
“A”s hire “A”s; “B”s hire “C”s.
What I mean by this is “if you’re good, be confident, and fill your team with good people”. This is especially important when managing change – the project may be short, so you need quality and effectiveness quickly. If you feel threatened by someone’s experience, think again. Be brave.
Last year, I published a Kindle book on project and risk management, operations and communications. It’s called “Titanic: Enterprise and Risk”, and tells the story of Titanic from a business perspective, identifying what influenced key decisions, and led to the loss of so many lives. It was well reviewed, and had plenty of downloads, so it’s now available in paperback, here.
I’ve used my research for this book as the basis for live training and lectures, so let me know if you’re interested in this for your organisation. The Titanic story works well as a lesson for modern businesses who want to encourage their people to think more about risk, and communicate consistently and better. There are also lessons to be learned about dealing with different or difficult stakeholders – internal e.g. senior executives, and external e.g. regulators.
The book is also available on Amazon, but orders are fulfilled more quickly here.
So here it is – the paperback version of my book on project and risk management.
Risk is an important part of any enterprise, but do those leading their businesses consider the possibility of the worst happening, and plan to avoid it? Do we place too much trust in those at the helm, and those who regulate or govern them?
I use Titanic, White Star Line, and Harland & Wolff to illustrate factors that affect any business operation – project management, risk, communications, regulation and people. I think it makes a good read, thought provoking, and a different angle on a familiar story.
I’m a hypnotist. It’s a hobby which grew out of my years in sport as a competitor, coach and instructor. It inluences some of my training methods, and it’s helpful with my communications, especially in new assignments. I don’t carry a pocket watch, nor do I sport a creepy goatee.
So why do I mention this? I was approached a while back by a successful businessman (big alpha type) who wanted me to hypnotise his staff to do more cold-calling to generate new business. Few people like cold calling, and his team preferred doing the core work. This is understandable, but a source of frustration to my contact. He genuinely wanted to see if I would “hypnotise them to do what they’re told”!
I said no, not least because they’d resent it. However, I gave him some practical advice:
- Write down what they’re to do – number of calls, times during which they make them, etc, and make it part of their role description.
- Agree it with them.
- If they do it, great.
- If they don’t, bring in the HR manager.
He needed a clear process, understood by those applying it. That’s all.
The Harvard Business Review blog recently published this post “Change Management Needs to Change”. It provides a neat overview of what is needed to deliver change well and consistently. Here’s my summary:
- Have a common framework – language, approach, and simple checklists – that everyone uses consistently
- Integrate plans for change into overall project / programme plans.
- Hold people to account for effective change management.
There’s only so much a blog post will cover, but I would add these points:
- It is crucial to involve those affected throughout; after all, people support what they help to create.
- Get your communications right. What is communicated, how, and when, may vary, but if you fail to communicate well, all your other good work is undermined.
Too many of those in leadership positions expect a “JFDI” approach to everything new, but that’s not change management, it’s just insistence. Delivering change needs flexibility, but it still needs people to get the approach right. This means someone has to identify the right approach for their organisation, and embed it.
On the 101st anniversary of the Titanic disaster, here’s an extract from my book “Titanic: Enterprise and Risk”
“RMS Titanic was designed to be the grandest, most luxurious, vessel in the world. Safety might be considered to be a by-product of such standards, but this proved not to be a safe assumption. Claims were allegedly made that the ship was “unsinkable”. This was perpetuated by the media following the disaster, as it had an ironic appeal. Subsequently, it was established that it was never advertised as unsinkable, although those with a stake in the vessel had done little to dispel any growing myth of unsinkability.
In 1906, Captain Smith said of the Adriatic:
“I cannot imagine any condition which would cause a ship to founder. I cannot conceive of any vital disaster happening to this vessel. Modern shipbuilding has gone beyond that.”
If that was his belief of a much smaller ship, and of modern ships in general, he is unlikely to have changed his mind as commander of the Olympic or Titanic.
As reports were coming in on 15 April, Philip AS Franklin, a vice president of White Star Line, said:
“We place absolute confidence in Titanic. We believe that the boat is unsinkable.”
Even without such statements, the ship looked unsinkable; people wanted it to be unsinkable. How could something so big, so grand, so modern be at all vulnerable? According to Walter Lord, in his book ‘The Night Lives On’:
“The owners were lulled into complacency. This was because the ship looked safe. Her huge bulk, her tiers of decks rising one atop the other, her 29 boilers, her luxurious fittings – all seemed to spell “permanence.” The appearance of safety was mistaken for safety itself.”
Here is an extract from the second edition of my book ‘Titanic: Enterprise and Risk‘ *, due out in paperback later this month. On the 101st anniversary of the disaster, this piece should provoke some thought about operational risk. It starts with reference to the British Wreck Commissioner’s enquiry.
“This extract gives further insight into what messages might reach a ship’s commander:
You said: “On Sunday, 14th April, reports were received by wireless from a number of steamships of having passed ice and bergs in positions varying from 49.9 W., to 50.20 W., on the outward Southern track”?
Was that right?
– They were not sent to me officially. The operator gets those, and he transmits those to the different ships as they are passing along. I get just a list. They were not official; they were simply sent by the different steamers as we passed to the operator, and he makes out a list of them and sends them to me. They are not signed at all by the Captains of the other ships; they were not official.
They were messages received from other ships to him to transmit?
– To transmit to me. He would send to me. They were from the operators, but they were not sent to me specially, except this “Athinai” – that was. That was an official message signed by the Commander.
The Marconi room was very busy with commercial radio traffic. Jack Phillips reacted tersely to one of Californian’s ice warnings, with this infamous message:
“Shut up. Shut up. You’re jamming my signal. I am busy. I am working Cape Race”
The following table lists five of the ice warnings received in the Marconi room:
Caronia (MSF) – Eastbound. The message was delivered to the bridge, and posted for officers.
‘Captain, Titanic – West-bound steamers report bergs, growlers and field ice in 42° N, from 49° to 51° W, April 12th. Compliments, Barr’
Baltic (MBC) – Eastbound. Message delivered to Captain Smith while he was with Bruce Ismay. Ismay took the piece of paper, and later showed it to several passengers. Captain Smith later asked for its return, and it was posted in the chart room.
‘Captain Smith, Titanic. Have had moderate variable winds and clear fine weather since leaving. Greek steamer Athenia reports passing icebergs and large quantities of field ice today in latitude 41° 51’ N, longitude 49° 52’ W.
Wish you and Titanic all success. Commander.’
Amerika (DDR) – Private message to the US Hydrographic Office in Washington DC, overheard by Titanic’s radio operators. It was not delivered to the bridge.
‘Amerika passed two large icebergs in 41° 27’ N, 50° 8’ W on April 14.’
Californian (MWL) – Message to the Antillian (MJL), overheard by Titanic’s radio operators. Message was delivered by Bride to the bridge, while Captain Smith was dining.
‘To Captain, Antillian: Six-thirty pm, apparent ship’s time; latitude 42° 3’ N, longitude 49° 9’ W. Three large bergs 5 miles to the southward of us. Regards, Lord.’
Mesaba (MMU) – This message never reached the bridge. Harold Bride was sleeping, and Jack Phillips was busy on the key sending and receiving commercial traffic.
‘From Mesaba to Titanic . In latitude 42° N to 41° 25’, longitude 49° W to longitude 50° 30’ W, saw much heavy pack ice and great number large icebergs, also field ice, weather good, clear.’
In his book “Titanic and Other Ships”, Second Officer Lightoller highlights the non-receipt of the Mesaba message as the key failure:
“when standing with others on the upturned boat, Phillips explained when I said that I did not recollect any Mesaba report: “I just put the message under a paper weight at my elbow, just until I squared up what I was doing before sending it to the Bridge.” That delay proved fatal and was the main contributory cause to the loss of that magnificent ship and hundreds of lives. Had I as Officer of the Watch, or the Captain, become aware of the peril lying so close ahead and not instantly slowed down or stopped, we should have been guilty of culpable and criminal negligence.”
During the inquiry, it emerged that the Californian’s radio officer listened as the Titanic talked to Cape Race up to a few minutes before the time of the accident, then he turned in for the night. The message from Phillips was less than helpful, given Titanic’s later predicament, but Phillips and Bride were working diligently, performing their roles as expected. Those messages addressed to the Captain reached him; others were held by the radio operators. In accordance with practice at the time, there was nothing unusual about this.”
The warnings were there. The communications structure was there. What was missing?
* The link above is to the Kindle (first edition)
Here it is. I must admit this made me laugh aloud when I saw it on BBC.
I wonder how long it will be before someone does a “Goldseeker” version, referencing the court case last week, where Lord Sugar successfully defended a claim for constructive dismissal, made by previous contest winner, Stella English.
In this report, he said she had picked the wrong fight, describing her as a “chancer” and “money-grabber”. I suspect he was annoyed. Maybe he’s right, but, given the nature of the competition and its competitors, he probably shouldn’t be surprised.
As with managing change, the principles can be straightforward; you’ve got to get the people element right.