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Growth: an international misuse of statistics?

Who says international growth statistics are misleading?

I have written about the risks of growth and about the misuse of statistics. For more on the misuse of statistics, go to https://www.amazon.com/How-Avoid-Being-Misled-Statistics/dp/1499190484

However, I have not written about the misuse of growth-statistics, which David Pilling writes about in his book, The Growth Delusion. The author quotes former President of France, Nicolas Sarkozy, that we are ‘mismeasuring our lives’.

How do people measure growth?

Gross Domestic Product (GDP) is the main index used. Everyone wants to see this number increase. We use it to compare ourselves with other countries, and with ourselves in previous years. What is it? It is the total value of goods and services produced in a country in a year, excluding investment income from abroad.

Why do GDP statistics not give a true picture of growth?

The powers that be have chosen a single measure. This gives the impression of simplicity and appears to make comparisons easy. The trouble is that life is not so simple.  GDP will not reveal regional variations, or even the experiences of different groups of people in the same town. There is plenty of evidence that regional and other differences in income have been widening in the UK for some time. Different people’s real incomes are moving in opposite directions, because their prosperity depends on where they live and what industry they are in.

You can read about other criticisms of the way people use GDP in The Growth Delusion.

Do misleading growth statistics create a risk?

David Pilling and Nicolas Sarkozy have recognised a risk, which is that people will think they are being deliberately misled. They will hear how well our economy is performing,when the evidence of their own eyes contradicts that assertion. This could add to the distrust in experts of all kinds, which would be very bad for democracy. I do not want to take that risk.

Let’s find better ways of measuring prosperity.

 

 

Risk Predictions 2018 – do others agree with me?

It is not too late to look at predictions for the new year.

I have written about my predictions for the risks to watch for in the coming year. These included the cyber risk, Brexit, the supply chain and climate change. Many others have offered their views. I am pleased that I am not unique in my opinions and I was particularly interested in an article in Time magazine on 15 January by Ian Bremmer. He gives a longer list than mine. Have I missed something?

What’s in the Time list of predictions?

I will not reproduce the article here, but I list the main points.

  1. China’s rising power
  2. World/regional conflicts escalating
  3. The tech cold war
  4. Mexico’s forthcoming election
  5. US – Iran relations
  6. Public loss of confidence in major institutions
  7. Protectionism
  8. Brexit and the Conservative Party
  9. Nationalism in South Asia
  10. Instability in many parts of Africa

I do not disagree with Ian Bremer very much on his assessments.

I don’t remember where Donald Trump fitted into any of the risks listed, but I’m sure he’ll play a part in influencing them.

Why are Time’s predictions different from mine?

The Time article looks at global risks, whilst I tried to concentrate on ones you and I need to be most aware of. I did not mention risks which we cannot control or do much to mitigate but I advise you to think what you can do to prepare for the risks that are most relevant to your business. Some things, regrettably, we have to leave up to the Government!

For the full article and more, go to www.time.com

Who does President Macron think he is – and are you like Jupiter?

Firstly, President Macron is not Scottish

Those who thought his name was MacRon were wrong.

The Scottish Saltire: not the flag for Emmanuel Macron
The Scottish Saltire: not the flag for Emmanuel Macron

And, by the way, former president Obama is not of Irish descent. Not O’Bama. He had enough trouble proving he’s an American, although he is possibly the first US president not to claim Irish ancestry.

What’s Jupiter got do do with M Macron?

In an interview with Andrew Marr, the French president said people had likened him to Jupiter, and he apparently accepted the comparison as reasonable. Not everyone in Britain is familiar with Jupiter. Many people know it is the name of a planet, but not everyone knows that, like many planets, it was named after a Roman god.

Does M Macron think he’s God?

No! I think that is the point. Jupiter was the chief of the gods, but his powers were limited. Not only did he have trouble keeping the other gods in order, but also, like all the gods, he had only limited power over humans. He was very different from an omnipotent creator, such as the deity of Christians, Jews and Moslems. (Let’s not argue right now as to whether those are all the same.)

What’s M Macron’s identity got to do with you and me?

I think the president was saying that he could lead but not dictate. He does NOT think he is God Almighty, just ‘first among equals’. Do you try to manage or dictate? We all need to have realistic ideas about who we are and what we can do. Is it time to review your management style?

What does the Carillion crisis tell us about Risk Management?

I did not mention Carillion in post about New Year Risks

I did not foresee the Carillion crisis in particular, but I did mention the supply chain risk. How right I was.  We are all increasingly dependent on each other as the economy becomes more interconnected, which leads to one of my concerns about Brexit.

Dice. Is that how you manage your business? Was it how Carillion was managed?
Dice. Is that how you manage your business? Was it how Carillion was managed?
Was the Carillion crisis unforeseeable?

If you think this is all about hindsight, you are wrong. I now know that it was foreseen by many commentators, although I wasn’t one. Of course, I’m not in the government, but they were warned and should have taken steps to mitigate the risk, and perhaps some of those affected could have done more to protect themselves, as the banks have, I believe.

Did you know that the French pronounce the name of this company like “Carry-on”? What can I say?

Whether you have dealings with Carillion or not, learn from this
  • Check not only your suppliers, but their suppliers, and ask yourself how safe they are.
  • Try to avoid becoming too dependent on any one supplier.
  • Look at your clients and don’t become too dependent on any one of those.
Does this advice apply when you are dealing with a company as big as Carillion?

Of course, I recognise that my advice above may be unrealistic in some circumstances, but you always need a Plan B that does not depend on your biggest supplier or client, as far as possible.

I also know that many people thought Carry-on was too big to fail, because the government wouldn’t let it. Time will tell, but I remember Lehman Brothers.

Is the Carillion crisis an opportunity for some?

Remember that the other side of risk is opportunity. If you are a competitor of this company for any of the services they provide, perhaps you will get an opportunity to tender, or re-tender, for one of their contracts. It’s an ill wind that blows no man any good. Are you ready?

Stacks of money. Could you benefit from the Carillion crisis?
Stacks of money. Could you benefit from the Carillion crisis?

 

The Risks of Consulting – remember the Referendum!

What consulting risks do I mean?

I am not thinking of the risks involved in consulting for a living, like me. That could be a series, but not now. I am looking at the risks of holding a consultation, either withing your business or externally.

Do I not now recommend consulting?

I have written about the Four C’s of management, and Consult is one. It is definitely a Good Thing, but like anything else, it has risks, and they need managing. The Referendum on the EU was a classic example of how not to do it. See my other blogs on that subject.

The First Risk of Consulting: confusing questions

Remember “Brexit Means Brexit” and weep! Nobody knew then or now what Brexit means. What was it people wanted to gain or to lose?

  • Immigration?
  • Benefit tourism?
  • Foreign students?
  • Regulation?
  • Agricultural subsidies?
  • Our contribution to the EU budget?
  • Access to other markets, such as China, the USA or Japan?

Always word the question, or better a series of questions, so that you will know what the answer means.

The Second Risk of Consulting: failure to manage expectations
  • Some people thought leaving the EU would happen as soon as the votes were counted.
  • Others thought all foreigners would be sent back.
  • There were even some who thought we would have an extra 350 million a week for the NHS!

This has led to discontent. Do be clear as to the likely process and timescale for implementing the results of your consultation.

The Third Risk of Consulting: Polarisation

Many people now treat the 48% who voted Remain, plus all the non-voters, as anti-democratic if they raise any criticisms of the process or express any views as to the way forward.  The Brexiters claim to represent The People. Could your consulting lead to a feeling of anger among the “losers” and/or arrogance among the “winners”?

How to reduce the polarising effect of consulting

I did not specifically cover consulting in my book How to Avoid Being Misled by Statistics, but you might find it helpful when interpreting the results of your next consultation exercise.

The front cover of 'How to Avoid Being Misled by Statistics' which could help you with your consulting.
The front cover of ‘How to Avoid Being Misled by Statistics’ which could help you with your consulting.

On most issues, a simple “yes/no” answer is not much use: there will be a spectrum of opinions, like this.

  1. It’s an overdue improvement
  2. I quite like the idea but I’ve got reservations
  3. Don’t know/don’t mind
  4. I don’t like it, but might give it a try
  5. Over my dead body

You will often find the proportions in each category evenly spread or forming a gaussian bell-shaped curve. Getting 51% to say “Yes” doesn’t man you’re home and dry. How committed to the idea are that 51%? They aren’t all going to be in category (1). What can you do to get the ones in category (2) on board?

And what about the other 49%? How many are going to be won over, how many will put up with it but winge a lot, and how many are going to resign, take their business elsewhere, take legal action, demand a public inquiry, start a protest movement or join a terrorist organisation? Obviously, it will depend on the seriousness of the issue, but you get the point? How many employees, clients, suppliers or volunteers can you afford to lose?

You need to think how to manage the minority so as to win them over if they are in categories (3) and (4). Can you amend the plan to take into account their concerns?

The Final Risk of Consulting: complacency.

You probably know that the majority are not always right, but it is tempting to think that, if you’ve done a  “successful” consulting exercise, you have all you need to enable you to go ahead with your project.

Wrong! The majority could be wrong. You still need to do enough research beforehand and also to monitor for signs it’s not working. And have a plan B. It’s a good job we’re not talking about Brexit, isn’t it?

 

 

 

2018 – Happy New Year: Ready for New Risks?

What New Risks are there?

Most risks are the same as in the old year and previous ones, of course, but the level of some is new.

Three dice - is this how you will manage your new risks?
Three dice – is this how you will manage your new risks?
Is anything really new?

One fairly new risk is Fake News, which has probably always been around but has become more of a phenomenon in 2016 than ever. I agree with David Cameron and Barak Obama that this is very dangerous, as some people don’t know who they should trust, whilst others are apt to believe lies put out on social media, especially if they listen only to people they think they’re going to agree with. If people believe either anything or nothing, will they believe your messages? I’m talking about:

  • sales
  • offers
  • guarantees
  • your businesses community involvement
  • replies to complaints or allegations

This means that we need to manage the reputational risk more cleverly than ever.

Want to talk to me about any of the above? Send me an e-mail or use the contact form on the website. Or even phone me 01925 445215.

Whatever you choose to do, I wish you a

HAPPY NEW YEAR

John

New Year Non-fiction Book Offer

Why a New Year Offer?

I have made a Christmas offer of my detective novel, Accounting for Murder, Double Entry, for FREE on Kindle for the five days ending today, 22nd December 2017. It has been so successful that I wanted to offer some of my other books, the non-fiction ones, free for limited periods in the coming year. If you have not taken advantage of it, you can still buy the book, follow this link to Kindle’s website.

Back and front covers of Accounting for Murder
Back and front covers of Accounting for Murder
What’s on offer in the New Year?

I am offering a free Kindle version of How to Avoid Being Misled by Statistics for the five days from the 15th to the 19th January 2018 but if you can’t wait, you can always buy it! Follow the link. It has had only one short review. A favourable one. The more I hear about Brexit, the more important I think it is to know how to interpret statistics sensibly.

The cover of How to Avoid Being Misled by Statistics
The cover of How to Avoid Being Misled by Statistics.
What will I offer after that?

I hope to make How to Cope with the Church available free around Easter and Be Victorious! in November, just before Armistice Day. I don’t know about Load the Dice, as I am writing another book on Risk Management and this might not be a good time to promote it.

I’ll post the details on this blog and on Twitter nearer the time. Keep reading. Of course, you can buy them anytime. Follow the links.

I wish you a Happy New Year and enjoyable reading. 

 

 

The fifth phase of the creative process: elaboration

Why is elaboration a phase in the creative process?

Elaboration is listed fifth in the seven steps of the creative process that I have written about. It comes after you have done your preparation, allowed time for incubation,  had some inspiration and carried out your evaluation. It is unwise to rush into one phase before you have completed (well nearly) the ones that need to precede it.

What is elaboration?

Elaboration is the working out of the details of your project. This is where the perspiration occurs. It is not to be confused with implementation. This phase should take place before you go live. You have still time to change things or even abandon the project. With a book, it is writing the first draft. Not going to a publisher, not even self-publishing. There’s work to be done after this is finished. You do not go into elaboration while sitting in the garden or walking in the countryside. You need to be in the office, putting it all on paper. Probably discussing it with the people who will have to carry it out.

A man studying a computer screen with a magnifying glass: working out the details of his project?
A man studying a computer screen with a magnifying glass: working out the details of his project?
What not to do during elaboration: Risk Management!

At this stage, try not to do too much Risk Management. (Did I really write that?) You can pour cold water on your ideas before you’ve had time to work them out fully. You can overthink or overanalyse everything. Once you’ve got something fairly well thought out, you should ask what are the risks and how can they be managed. Remember that risks need to be evaluated in relation to the potential costs and benefits of the project. That will enable you to see whether the cost of possible control measures is likely to be justified.

For more on managing risks, read my book Load the Dice.

Three dice: risks need managing!
Three dice: risks need managing!

The fourth phase of the creative process: evaluation

What is evaluation?

Evaluation is the fourth of the seven steps of the creative process in business which I have written about. This is the process of deciding whether to commit your time and money to a particular project. Not every idea is worth following up. You have to select or at least prioritise.

A man with a question mark. Wondering how to conduct evaluation?
A man with a question mark. Wondering how to conduct evaluation?
Why is evaluation the third phase?

Until you have done your research, you don’t know enough to make any meaningful evaluation. You also need to have had at least one lightbulb moment so you know what you were planning on doing with all the information you have gathered. And that doesn”t usually come until after you have allowed the ideas time to incubate. You don’t want to leave evaluation much later or you will be in danger of doing too much abortive work.

How should evaluation be conducted?

You need to decide what are the criteria you are going to use. What is important to you? Think of positive and negative factors.  Cost? Availability of resources, including expertise? Lead time? Ultimate benefit? Dealing with an immediate issue? Nonfinancial benefits? Risks?

Three dice. Not the way to manage risks.
Three dice. Not the way to manage risks.

I suggest you list all the criteria you think are important and give each a weighting. Then give each project under consideration a score against each factor, multiply (a x b) and rank by score.

How many projects should you have in your evaluation?

This is a subjective decision. However, if you are doing only one, you can get very frustrated when you hit a brick wall, such as ‘writer’s block’ if the project is a book. I switch to another project and come back to the first one. You also don’t want to come to a halt once the first project is finished. You want to be able to get on with the second one, but not from scratch. I always have several on the go.

Can you have too many projects in your evaluation?

You can spread yourself too thin. You can be doing everything at once and never complete anything. I have heard that some very successful businessmen work on five projects, with another twenty or so in reserve. This means each project is at a different phase most of the time, so if you are fed up with, say, research, you can go to a project that is in a different phase. That keeps you fresh.

Remember, if you need help with evaluation, have a chat. I may be able to help you. 

The second phase of the creative process: incubation

Why do ideas need incubation?

Incubation is the time when the mind works behind the scenes. A lot of your best work is actually done when you are not consciously doing it! Ideas seem to sort themselves out. Perspective develops. You can suddenly see why something was a bad idea, or a good one, and you spot the gaps that need filling.

A man with a question mark, needing to give his ideas time for incubation.
A man with a question mark, needing to give his ideas time for incubation.
Why is incubation the second phase in the process?

Until you have done your preparation, as explained previously, you won’t have anything to incubate. It needs to continue until you’ve had at least some inspiration. But inspiration based on the sound basis of knowledge gained in preparation and allowed time for ideas to incubate. The other phases will work much better if you’ve let the first ones take place in the right order.

How can you forget about your project to allow incubation?

I know it is difficult but it is best to leave the project alone and work on another for a while. I’ve always got several books in my head and at least some partly on paper, so I can switch easily. It helps. Don’t try to force it. This may take only a day or two or it may take weeks. It depends on your makeup and on the problem or project in question. Anyway, it will be worth taking the time the process needs if you are to find a creative solution.