Tuesday, December 30, 2008

Hothousing vs.Greenhousing

“A 2009 Question - Hothousing vs.Greenhousing,
what approach will you be taking to deliver the best results ...”

Hothousing is a competitive environment where ideas compete, are rapidly evaluated and dismissed; the winning idea is then implemented.

Greenhousing is a nurturing environment where ideas are focussed and invested in; ideas are protected and given time to mature before being evaluated and taken forwards to implementation.

In Hothousing there is a very real danger that potentially successful ideas can be killed before they have had an opportunity to develop and prove their worth. There is also a risk that the rapid timescales involved in Hothousing mean that the problem is never really understood (often the problem you start working on is not necessarily the one you end up having to solve). There is also the risk that the evaluation criteria may be based more on the strong personalities of team members in the winning team than on the proposed solution. Early commitment is made to a solution and a course is set that then becomes very difficult to change if the solution starts to look a little shaky.

In Greenhousing specific ideas are focussed on and nurtured; given time to develop and protected until their true value can be assessed. This means that the assessments are based more on the merits of the solution than on the team presenting it. Also, if there are flaws in the solution their is opportunity to identify and remedy before any final decision is made. This approach can be seen as more risky because it requires investment and comitment to specific ideas that may not work out; however the approach does offer a greater degree of success and a better end solution than Hothousing. If you take a medium to long-term view then this approach does offer a greater return for the commitment.
Source: Random Thoughts

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Wednesday, September 24, 2008

Warren Buffett to inject up to $10bn into Goldman Sachs

“Start of the Super Banks ...”

Lloyd Blankfein, chief executive of Goldman Sachs, last night said he planned to raise up to $12.5 billion (£6.74 billion) of new funds by selling a stake to Warren Buffett and tapping other institutional shareholders.

The bank, which this week abandoned its investment bank status to become a traditional financial institution, is seeking to bolster its balance sheet with new cash as the US Federal Reserve, its new regulator, demands that it reduces its borrowings. Last night, Goldman Sachs said it had agreed to sell $5 billion worth of preferred shares to Berkshire Hathaway, the investment group controlled by Mr Buffett. Berkshire Hathaway has also secured an agreement to buy another $5 billion worth of stock. At the same time, Goldman said it was planning to raise $2.5 billion from other investors.

While banks such as Goldman Sachs do not need to raise the capital, it is seeking to address anxieties on Wall Street about the long-term future of financial institutions. However, Goldman is paying a hefty price for Mr Buffett’s stake, having agreed a 10 per cent coupon on the preferred stock. It is understood that Goldman can repurchase the shares from Mr Buffett at any time, but at a 10 per cent premium

In a statement, Mr Blankfein said:

“We are pleased that given our longstanding relationship, Warren Buffett, arguably the world’s most admired and successful investor, has decided to make such a significant investment in Goldman Sachs.”

This week Morgan Stanley and Goldman Sachs got approval from the US Federal Reserve to turn themselves into traditional banks, relinquishing their investment bank roles. The difference in definition has two key implications. The first is that it allows Goldman Sachs the right to access emergency funds from the Federal Reserve’s lending facility on the same terms as retail banks, and the second is that it comes under the scrutiny of America’s central bank, which demands much more benign levels of debt.

Source: Times Online

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Monday, September 22, 2008

End of the Wall Street investment bank

“Goldman Sachs and Morgan Stanley last night abandoned their status as investment banks in a move marking the end of an era on Wall Street”

The two investment houses yesterday received the regulatory approval to transform themselves into traditional bank holding companies.

While the change appears to be a technicality, it means that both banks have equal and permanent rights to access emergency funds from the US central bank, the Federal Reserve. They will also be far more tightly regulated.

After the collapse of Bear Stearns, then Wall Street's smallest investment bank, in February, the Federal Reserve extended its emergency lending facilities — called the discount window — to investment banks as well as commercial ones. Investment banks were more limited with the types of collateral they could use as backing for the Fed loans so were at a disadvantage to their commercial rivals

The conversion of both banks is a watershed moment for Wall Street, effectively marking the end of the New York investment bank.

The credit crisis, which erupted on Wall Street a year ago, has shown that the business model of the investment bank no longer works. Commercial banks are cushioned by deposits from retail customers who hold savings accounts and mortgages. However, the bulk of business conducted by an investment bank is done with other banks, and such business can be withdrawn with a phone call.

Bear Stearns and Lehman Brothers, both investment banks, have collapsed, Merrill Lynch was acquired by Bank of America last weekend, and Goldman Sachs and Morgan Stanley have changed their status.

Source: Times Online

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Barclays and Nomura to decide Lehman's fate

“At least 700 investment banking jobs at Lehman Brothers in Europe appeared to be safe as Barclays and Nomura tabled their final offers ”

At least 700 investment banking jobs at Lehman Brothers in Europe appeared to be safe last night as Barclays and Nomura tabled their final offers to buy large swaths of the collapsed American investment bank.

Hundreds more of Lehman’s back-office and support staff could also find themselves new employers within the next 24 hours as the two banks submitted formal proposals to PricewaterhouseCoopers (PwC), the administrator for the bank in Britain and continental Europe.

Lehman employs about 1,500 staff in the cash equities business and the mergers and acquisitions advisory unit. The vast majority of them are based in Canary Wharf in East London, but there are also offices across the Continent and in the Middle East.

The two banks appeared to be neck and neck in the race for Lehman assets last night.

Source: Times Online

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Sunday, September 14, 2008

Lehman set to go into insolvency

“Chapter 11 Bankruptcy looming for Lehman Brothers...”

Preparations are being made for US investment bank Lehman Brothers to file for bankruptcy protection. The firm was pushed to the brink on Sunday after UK bank Barclays pulled out of talks to buy most of Lehman. If no new financing is found before Wall Street opens on Monday, Lehman will have to seek so-called Chapter 11 bankruptcy protection. This could result in a severe shock to the global financial system, as banks unwind their complex deals with Lehman.

It could take weeks or even months to complete and put banks around the world in a state of extreme uncertainty. In the UK, accountancy firm PWC has been lined up to run the British operations of Lehman.

Potential implications
BBC business editor Robert Peston says Barclays' decision to walk away from a Lehman deal was a huge setback for the effort to rescue the fourth-largest investment bank in the United States. A source close to the talks told the BBC that Barclays was unlikely to change its mind.

Barclays terminated the negotiations because it was unable to obtain guarantees in relation to financial commitments faced by Lehman when markets open on Monday. Unless the US government does a U-turn and puts taxpayers' money into Lehman, the bank will have to file for bankruptcy protection.

Bad bank, good bank

The rescue effort for Lehman is being co-ordinated by the US Treasury and the New York Federal Reserve. In the light of the credit crunch and the parlous state of financial markets, Barclays feels it would be running a crazy risk if it took [Lehman's obligations] on without any protection right now


The US government had hoped to arrange a bailout under which other US investment banks - such as Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs - would finance a "bad bank" that would hold the most "toxic" investments of Lehman in the property and mortgage market.

The "good bank" or rest of the firm, including its investment and wealth management arms, would then be sold to another financial institution, for example Bank of America or the UK's Barclays.

Although such a deal would have cost the other investment banks millions, it might have restored confidence in the sector and avoided a sharp drop in the share price of all banks. However, it appears that this plan is falling apart.

The only thing that can prevent Lehman collapsing would be a huge injection of taxpayers' money," a banker close to the talks told the BBC, but added that US Treasury Secretary "Hank Paulson has made it clear he doesn't want to do that.

Bank of America to buy Merrill?

Our business editor adds that in the light of the credit crunch and the parlous state of financial markets, Barclays feels it would be to risky to take on Lehman's obligations without any protection.

Bank of America, meanwhile, is said to be unconvinced that buying Lehman would be in the interest of its shareholders.

Instead, according to a report in the New York Times, Bank of America is in "advanced talks" to buy investment bank Merrill Lynch for more than $38bn.

Like other US investment banks Merrill has suffered losses of tens of billions of dollars in the subprime crisis, and has seen its share price plummet during recent months.

'Too difficult to value'

"No other large firm should buy Lehman whole - its toxic real estate and securities are too difficult to value," said Peter Morici of the business school of the University of Maryland.

Only a fool would think he could fairly assess their value, unless those are assigned them a value of zero.

Lehman is up for sale after it reported a $3.9bn (£2.2bn) quarterly loss last week amid concerns over its long term financial viability.

The firm's share price has plummeted as fears over its future have mounted.

Unless a bailout deal can be arranged and another large bank steps up to buy the good bits of Lehman, the US firm will have to file for bankruptcy protection.

This would deal a severe blow to the global banking industry, which is based on the expectation that the other party will always honour its commitments.

It could take weeks or months to unwind Lehman's complex deals with and obligations to other banks, both inside and outside the US.

'Difficult decision'

Former Federal Reserve boss Alan Greenspan said the US government faces "very difficult decisions" over Lehman if it cannot secure a rescue deal that does not involve public funds.

"They [will then] have to make a very difficult decision as to whether or not they allow it to liquidate or they support it," he said.

Yet Mr Greenspan said it would be "unsustainable" for the government to bail out every US bank that got itself into difficulty. Predicting that Lehman would not be the last to require rescuing, Mr Greenspan added that this would not necessarily pose a problem. "The ordinary course of financial change has winners and losers," he said.

Source: BBC News

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Tuesday, June 10, 2008

Changing Team Behaviours and Attitudes

“ If you want to change an individual's behaviour or attitudes to a more desirable end - at any time and in any cirumstance ...”

You need to provide answers to two key motivational questions:

What's in it for me? and Why should I care?

Alexander Hiam in Motivational Management outlines 15 different motivators "incentive profile" for employees to consider:

Affiliation, Self-expression, Achievement, Security, Career growth, Excitement, Status, Purpose, Competition, Recognition, Consideration, Autonomy, Responsibility, Personal needs

Most everone wants to work in an environment where there is trust, good communications, the opportunity for contribution, emotional support, clear goals and feedback, and espirit de corps. Not to mention 'reap the fruis of our efforts'

To modify your team's Behaviour and attitudes, as well as to further motivate them to higher levels of performance, you must understand and respond to each person's needs.

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Monday, June 02, 2008

Greg Fleming cracks the whip again

“Greg Fleming is in for a busy year, the 45 year-old Merrill Lynch president and chief operating officer is breathing fire on all cylinders, addressing bank's staff at a “town hall” meetings and “circle of champions” events”

Merrill Lynch stunned the markets last October when it revealed $5 billion in writedowns from risky bets on sub-prime mortgage assets. Ballooning to $29 billion (£14.8 billion) and resulting in 4,000 job cuts

The revelation cost Mr O 'Neal, then the chief executive, his job and the bank's executives, led by Mr Fleming, were forced to go cap in hand to a collection of sovereign wealth funds to raise emergency capital.

Fleming remains in buoyant spirits. Arriving in London last month to rally the troops and get them re-focused and back on track after the extreme turbulence of the past nine months.
In his “town hall” meeting ...

I said that we have come a long way and put a lot behind us.

He emphasised on getting back to the day-to-day blocking and tackling that everybody was thinking about last June or July before it all went in a different direction.

It's important for people to know that we feel like we are in a position to be on the offensive and build the business

The 16-year Merrill Lynch veteran argues that the violent adjustment of huge writedowns, followed so quickly by intensive capital-raising, have made him confident that recovery would be quicker this time than in previous crises.

The fact that you could write that much down and put the capital back in such a short period of time leads me to be more optimistic than some about the future.

At least he can be confident of his own role. The arrival of Mr Thain raised questions about the future of all senior executives at Merrill Lynch, including Mr Fleming.

The new chief executive has brought in a number of staff from outside the company but reaffirmed Mr Fleming's status when he unveiled his new line up recently. Now, to judge by the number of references to Mr Thain, it is clear that they work together well.

On several occasions Mr Fleming ensures that he uses Mr Thain's words when answering questions on sensitive issues, such as the speculation that Merrill will need to go back to Singapore, Kuwait and South Korea's sovereign wealth funds.

Mr Fleming is in no doubt about the value of the sovereign wealth funds' intervention - the funds injected cash more quietly than could have been achieved by a mainstream institution, for a longer investment term than hedge funds and with fewer demands than private equity.

Many of them [the sovereign funds] do detailed analysis before moving, but when they are ready to go, they are ready to go in the amounts required given the scale of the problems. So they have been a significant positive, which is why I believe there has been less political noise in the US than you would have expected.

Fleming is also upbeat about a recovery in the financial markets ... with a revival in mergers and acquisitions, albeit in at least six months.

What you need is well-capitalised institutions that are able to do the deals. As we work our way through this, we will have more and more of those and then it will pick up considerably, no later than the middle of next year. Regional US banks and small financial companies will go under the hammer, and the strong euro will fuel cross-border deals ...

On the likelihood of consolidation among Wall Street's big four banks.

There's only Goldman Sachs, Morgan Stanley, Lehman Brothers and Merrill Lynch left, so it becomes a conversation about culture, fit etc.

Mr Fleming is even unruffled about the accounting rules that forced global investment banks to cut heavily the value of their credit-related securities, even if the
underlying assets were unimpaired ...

Fleming claims Merrill Lynch is well-positioned to participate in the markets' recovery ...

Bank owns 49 per cent of Blackrock, the blue-chip asset manager, and client businesses such as M&A advisory and equity underwriting are high return-on-equity operations.

The mortgage origination business is gone, but Merrill Lynch continues to offer mortgage servicing to other loan providers.

The 94-year-old American bank further increases its reliance on markets outside the United States ...

Sixty per cent of its institutional revenues now come from outside the US and that's going to be 75 per cent within the next five to seven years. Mr Fleming goes on to say. In wealth management we want to triple our revenues outside the US over the next five years.

Merrill Lynch had a reputation for cutting and burning staff more viciously than most rivals in the bad times. In the aftermath of September 11, the bank shed more than 20,000 workers, then struggled to find the manpower to capitalise on the subsequent upturn.

Mr Fleming admits ...

There is a concern in our employee base, a feeling of 'here we are again', and John Thain and I are very focused on not having that happen this time.

He figures that the worst writedowns are over and that the price of leveraged finance paper is picking up. It is not going at close to face-value prices, but he says that buyers have come out that were not there in the first quarter of this year.

Source: Times Online

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Friday, May 30, 2008

FSA New Leadership, renewed Culture

“Lord Adair Turner needs his firefighting skills”

"The Financial Services Authority is the worst financial regulator in the world." ... But it is not so bad that it can’t be made worse by Adair Turner ... growled one of the City’s leading figures following confirmation that Lord Turner would be the FSA’s new chairman.

The statement may be on the extreme wing of City opinion. But it underlines the scale of the task Lord Turner is taking on. The supervisory failures over Northern Rock have blown the FSA’s reputation out of the water and led to a crisis of confidence in the organisation.

Morale is low and the FSA is said to be finding it increasingly difficult to recruit good people.

While the FSA still has many admirers on Wall Street, London's lead over other financial centres feels like it is narrowing. The fight against financial wrongdoing – as measured by fines and scalps – seems stalled. And perhaps the biggest prize of all, getting a fairer deal for ordinary consumers, seems as elusive as ever.

FSA officials seem to spend a great deal of time studying the fine print in financial advertisements. But they missed the biggest potential disaster since the the authority’s formation – Northern Rock’s business model – which was staring them in the face.

Increasingly now, the FSA has no one to blame but itself. It already has sweeping powers and when it asks for additional weapons, it gets them, in recent months winning additional powers in banking supervision and dramatic new powers to offer witnesses immunity from prosecution. It also has plenty of resources in the form of a 2,000-strong army of well rewarded and well qualified staff. What it lacks, is a can-do culture.

This is a bureaucracy that still measures effectiveness in terms of numbers of lever-arch files filled and length of meetings attended. It is an organisation with a bottomless capacity to create consultative documents but less appetite to root out bad behaviour and punish it. Its instinctive reaction is to create more rules for everyone, including the innocent majority, rather than to go out and challenge the guilty minority. Its senior people rejoice in issuing myriad warnings and sermons, but then tend to see their work as done.

Lord Turner’s experience of business and bureaucracy make him an attractive candidate for the job. (Quite why he wants it is less clear). He has one foot in Whitehall and one in the Square Mile, but is not seen as too much of a City insider – in spite of his service over the years at Merrill Lynch, Standard Chartered and Paternoster. And as a fully paid-up member of the great and good on government working parties should help him to avoid the more obvious elephant traps of public life.

In the City he may be regarded with a little suspicion. His relations with new Labour when running the CBI in the mid 1990s were seen as a little bit too cosy at times. His pro-business credentials cannot be doubted, but some in the City see him as too cerebral and technocratic with little feel for the shopfloor of financial services.

It is providing leadership that may be Lord Turner’s biggest challenge. As part-time chairman, he cannot do much about the minutiae of the regulatory work.

But culture works down from the top. The FSA needs someone with the capacity to inspire the troops into enforcing better behaviour and preventing new disasters without piling up costs and stifling innovation. If Lord Turner can achieve that, he will earn his peerage all over again.

Source: Times 30 May 2008

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Wednesday, May 21, 2008

Power companies are ripping off consumers

“British consumers are being ripped off by a “comfortable oligopoly” of bloated electricity and gas supply companies, MPs were told yesterday”

At the opening of a parliamentary hearing into competition in the UK power market, Allan Asher, the chief executive of Energywatch, the consumer watchdog, launched a two-hour tirade against the industry’s leading players. He accused Britain’s big six energy suppliers of engaging in “tacit collusion”, said that competition in the market was a “myth” and that consumers were “getting it in the neck” from companies with no incentive to compete or innovate in order to win business.

“Sadly, we have seen the 20 suppliers of ten years ago shrink into just six,”

Mr Asher told a cross-party group of MPs on the Business and Enterprise Select Committee. “Consumers are the losers.” While he acknowledged that there was no evidence of outright price-fixing, Mr Asher claimed that the largest suppliers followed British Gas, the dominant market player with 16 million customers, in raising or lowering prices.

“In oligopoly markets, you don’t need to meet in smoke-filled rooms,” he said, citing figures showing that for dual fuel paid for by direct debit, the most popular product in the industry, the annual price difference between the six main UK energy companies - E.ON, British Gas, SSE, ScottishPower, nPower and EDF - was less than £30, or “just a few pence a week”. He said: “There is a myth that there is vigorous price competition between them.”

The warning comes amid fears that the industry will increase prices again this summer. Energy companies have blamed rising wholesale prices for a succession of rises in domestic charges this year, which have taken the average annual dual fuel bill to £1,048, up from £662 in 2005. Global oil prices reached a record of almost $130 yesterday.

Mr Asher’s comments unleashed a storm of protest from the industry. A spokesman for Centrica, the owner of British Gas, said that he was “misleading” consumers. “Despite the impact of record oil prices on the cost of gas internationally, Britain’s household gas bills remain the lowest in Western Europe, and our electricity is among the cheapest, too,” he said.

Mr Asher rejected the argument that the level of switching — five million last year — offered a guide to the level of competition in the industry. He said that 4.8 million customers, many of whom were among Britain’s poorest people, were “closed out” of the switching market because they use pre-payment meters. Customers could not switch if they had no bank account, no internet access or problems with debts.

He said that the possible sale of British Energy, the UK’s biggest electricity generator, to EDF, of France, would compound the problem of a lack of industry competition. The top six suppliers control 55 per cent of the generating market, which would rise to 75 per cent if the EDF deal proceeded.

Winter gas prices hit a record high of 89.1p per therm yesterday, and winter 2008 power prices rose to £78.85 per megawatt hour, because of rising costs for power stations

Source: Times Online - Robin Pagnamenta, Energy and Environment

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Tuesday, May 13, 2008

Treasury backs down on corporate tax

“The threat of a corporate exodus to countries with more business-friendly tax structures forces a rethink by the Government”

Several big multinational British companies had said that they were prepared to move their headquarters from the UK amid concerns that the Treasury was preparing to tax the profits they derived overseas.
A Treasury spokesman confirmed yesterday that the department had drawn up a new set of tax plans after extensive consulation with UK companies. The move will be seen as another embarrassing government climbdown.
The spokesman said that new proposals would be put out to consultation in mid-June, with a view to introducing legislative changes next year.

Continue Reading ...

Source: Times

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Monday, May 12, 2008

British Gas sues Accenture

"Accenture faces a £182 million High Court writ ...”

An IT system that was supposed to make British Gas the darling of consumers nationwide has instead become the focus of a multimillion-pound legal battle.

British Gas had hoped to consign complaints about the business to history, but in the event it was described by watchdogs as being in meltdown and thousands of its customers decided that they had suffered enough and switched to a rival.

Now the origins of the customer service problems a year ago, which caused complaints about Britain's biggest residential energy supplier to rise nearly threefold to record levels, are at the centre of a £182 million High Court writ.

Centrica, the parent company of British Gas, confirmed yesterday that it was suing Accenture, the global consultancy group, about the state-of-the-art IT system.

It claims that the “Project Jupiter” system reduced British Gas's customer billing process to such a mess that the energy supplier had to hire 2,500 extra staff and invest millions more pounds to fix the problems and make it work.

The showdown promises to last for months as each company fights to prove that it was not to blame for inaccurate bills sent to homes across the UK. Complaints to Energywatch, the watchdog, about British Gas hit a record 14,001 in March last year.

Accenture vowed yesterday to fight its corner, stating: “We are confident, based on the facts of the situation, that this claim is baseless and without merit. Centrica is only trying to shift the blame for a situation it created.” Centrica hired Accenture to provide the new billing system seven years ago.
It was to bring together the records of British Gas's 12.5million gas and electricity customers on to one platform capable of handling 250,000 meter readings and 200,000 bills a day.

The £317million fee would come from the £397million of savings that British Gas expected to obtain from the project. Centrica claims that, after a number of glitches, in March 2006 Accenture guaranteed a software upgrade that would work. Centrica argues that, instead, the system continued to struggle and generated a high level of “exceptions” - billing issues that required manual intervention.

Centrica also claims that Accenture failed to provide adequate computer hardware and did not integrate the system properly. The energy supplier formally notified Accenture that it was in breach of contract in February 2007.

A British Gas spokesman said: “An independent analysis of the billing system has concluded that Accenture was responsible for fundamental errors in the design and implementation of the system. British Gas has been left with no option but to pursue legal redress against Accenture.”

In the past year, since British Gas fixed the system itself, complaints to Energywatch about the supplier have fallen 85 per cent, the spokesman said.

Source: Times Online

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Wednesday, May 07, 2008

Convergence of Operations and Technologist

“Demand for well-qualified and business-aligned technologists remain high”

Operations and technology are intertwined, the idea behind operations is that the fewer hands that touch the process and the more automated the process is, the more cost effective it is, and the one fewer issues you have with mistakes. The CIO and the global head of operations roles is coming together.

More and more firms are moving toward the Goldman Sachs model - one trader, one technologist and one quant sitting together at each desk, instead of keeping these functions separate as they have in the past.

It is very important to communicate the value of technology to the business. If business heads do not understand a project they are more likely to cut it at a time when all firms are looking to take cost out of IT.

As banks set themselves big targets, organizations will shrink. Anybody who shows initiative to further develop their skills have a better chance of being redundancy-proof than somebody who doesn't try to evolve and become more business astute and aware.

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Did You Know ...

“News in numbers”

23% Y-o-Y fall in new job opportunities in London's financial sector

24% decline in value of the pounf against euro since the launch of the single currency in 2002

Over 100 MBOs went into receivership in 2007 in the UK, which is the biggest number for a long time, they'll be a lot more failures in 2008

By 2011 660 million is the number of virtualised PCs expected to grow worldwide from 5 million in 2007

A fully configured container will use up to 50% less electricity and needs 80% less coolo than a standard data centre

€21,037 million is the total revenue postedfor 2007 by BNP Paribas, the best performance in the firms history and an 11.6% rise on the previous year

66% of social networkers are more likely to buy a product as a result of a recommendation or word of mouth

$45.5 trillion is the current outstanding value of credit default swaps (designed to hedge against losses to banks and shareholders when companies fail to pay their debts), up from $900 billion in 2001

19 bn is what it cost the UK businesses in congestion charge

$70 million will be spent in 2008 by average top-tier investment bank on automating OTC derivatives processing according to Tabb Group, that figure is set to rise to $120 million by 2010

10% is the number of people working from home at least 1 day a week, the figure is expected to grow due to universal broadband, rising rail fares and taxes on parking spaces

3 EU member state countries (Spain, Poland, Czech Republic) will be taken to court for failing to transpose MiFID into national law

6 investment banks (Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, Deutsche Bank) started trading US Dollar interest rate swaps on TradeWeb

180 staff will be employed by Deutsche Bank in the Middle East after it annouced plans to develop a resEarch facility in Dubai International Financial Centre to support its global equities business

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Rich clients deserting wealth management businesses

“UBS cuts 5,500 jobs after £5.5bn quarterly loss”

UBS cut 5,500 jobs and sold $15 billion (£7.6 billion) worth of damaged assets yesterday, shares in Switzerland’s biggest bank fell by more than 4 per cent amid fears that restructuring would wreak further havoc

The bank added to investors’ woes by revealing that rich clients were deserting its wealth management business and business banking clients in its home market had pulled almost SwFr2 billion (£960 million) from their accounts in the first quarter

Job cuts include 2,600 staff from UBS’s investment bank, which ran up most of the group’s $37.4 billion in credit crunch writedowns. Fewer than 900 jobs are expected to be lost from the investment bank in London, where UBS employs about 9,000 people. Marcel Rohner, the chief executive indicated that the worst of the staff cull was over.

UBS said that it had agreed to sell a $15 billion book of sub-prime mortgages to BlackRock, the asset management group. The mortgages had already slumped in value from $22 billion, the bank said.

Source: Times Online

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Friday, May 02, 2008

I will Listen and Lead

“A New Way Forward”

Gordon Brown says in his assessment about the results in the Local Elections that its his job to Listen and Lead following Labour sustaining its worst losses in 40 years to the Conservatives, leaving Labour beaten to 3rd place. So what has Mr Brown being doing as a Leader that stopped him from listening and leading effectively prior to the elections?

Taking on a leadership role requires you to be
accountable in gaining the best results, set the agenda for their team to follow and take action. Effective leaders say what they mean and do what the say they can.

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Monday, April 28, 2008

Bear Stearns carved up

“Michael Spencer in talks over slice of Bear Stearns equity team

Michael Spencer, the City’s richest man, is in advanced talks to carve out the UK equities business of Bear Stearns, the stricken American investment bank according to Times. Spencer is looking to hire a team of about 25 staff from Bear, headed by Nicolo Brandolini d’Adda, the co-head of European equities
Although Bear has agreed to be bought by JPMorgan Chase, European equity sales and trading is an area in which there is a high degree of overlap between the two US banks, meaning that the new owner is expected to retain very few of Bear’s stockbrokers. UK equities are thought to account for about one third of Bear’s European stockbroking revenues.

Numis Securities, in which Mr Spencer holds an 11 per cent stake has 180 employees, said recently that it was “determined to grow the business organically in a contracyclical fashion” and would “exploit the volatility in the market to attract staff”.

Bear Stearns employs about 140 staff trading European equities in London. JPMorgan has not yet said how many of Bear’s employees it plans to keep. The acquisition will not formally complete until June 1

Source: Times 28/04

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“Michael Spencer in talks over slice of Bear Stearns equity team

Michael Spencer, the City’s richest man, is in advanced talks to carve out the UK equities business of Bear Stearns, the stricken American investment bank according to Times. Spencer is looking to hire a team of about 25 staff from Bear, headed by Nicolo Brandolini d’Adda, the co-head of European equities
Although Bear has agreed to be bought by JPMorgan Chase, European equity sales and trading is an area in which there is a high degree of overlap between the two US banks, meaning that the new owner is expected to retain very few of Bear’s stockbrokers. UK equities are thought to account for about one third of Bear’s European stockbroking revenues.

Numis Securities, in which Mr Spencer holds an 11 per cent stake has 180 employees, said recently that it was “determined to grow the business organically in a contracyclical fashion” and would “exploit the volatility in the market to attract staff”.

Bear Stearns employs about 140 staff trading European equities in London. JPMorgan has not yet said how many of Bear’s employees it plans to keep. The acquisition will not formally complete until June 1

Source: Times 28/04

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Wednesday, April 23, 2008

Credit Crunch affects DB Expenses

“Deutsche Bank Tightens Purse Strings”

Lap-dancing, Brothel visits and Adult films in hotels are off the expenses menu for the banks Top Execs, according to London Paper : Tuesday 22 April. CEO Josef Ackerman issued new directive for all staff to curb expenses on first class travel, early flight check-ins are out, (shower and shave at airport is in)

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Sunday, February 17, 2008

A Guide to Layoff Survival

“How do you survive an unexpected job cut and get back on your feet to find employment?”

FastCompany.com guide to layoff survival. From the practical to the philosophical, expert tips on how to survive the fall, and get back in the game

The Axe is Falling ... Amanda did not see it coming. Her most recent performance review was strong, plus she had a great rapport with her manager, so when the year-end layoff rumors began circulating around the office, she thought she had immunity. She should have known better. She, along with the thousands who were axed, never received an invite to the Christmas party and got the worst gift of all, a severance package.

Sadly, Amanda isn't alone. In the US as of November 2007, at least 1,408,852 people have lost their jobs due to mass layoffs, a 6% increase from 2006, according to the Department of Labour’s Bureau of Labour Statistics. And that figure only reflects those who claimed unemployment insurance from employers who cut 50 or more employees at a time.

The unemployment rate went from 4.7 to 5% in the space of a month (from November to December 2007), the largest increase since April 1995. Monster.com’s own employment index, which tracks online recruitment across career sites and job boards in real-time, also posted its first-ever decline in online job ads in November 2007.

While companies downsize for a plethora of business reasons -- to reduce redundancy after a merger or acquisition, to revamp corporate strategy, or to improve the bottom-line -- much of the current job shortage has direct links to the subprime mortgage collapse still reverberating across the country in 2008. Just a few days ago, Citigroup reported record losses ($9.83 billion in the fourth quarter) due to bad mortgage-related investments and loans and will reportedly be slashing 4,700 jobs. With housing prices nosediving and credit becoming ever more difficult to obtain, jobs in manufacturing and construction have been hardest hit, totaling 47% of mass layoffs last year. White-collar jobs are hardly any more secure. Companies that service the housing industry (insurance, mortgage, real estate brokers and banks) were quick to downsize; jobs from media and technology to the usually strong biotechnology/pharmaceuticals also followed suit as a reaction to weak performance in a slowing economy.

You may not be at risk of being laid off but there is definitely anxiety over job security in the workplace. If you follow the news at all, it certainly feels as if everyone and everywhere is downsizing. So how can you avoid being the sacrificial lamb for your company?

According to University of Colorado Denver management professor, Dr. Wayne F. Cascio’s research on the culture of downsizing ... there isn’t much individuals can do. Downsizing has simply become the de-facto quick fix to address business woes in the US, so being laid off is an unavoidable aspect of corporate life. "A young adult should expect to be laid off three to four times before he turns 50," he advises.

While there may be optimism in the job market, being laid off can wreak havoc on your psyche, which could play a bigger role in your ability to rebound than you think. No matter how you got the news -- you were denied access to your office via a deactivated security pass or gently let down by your manager -- you’ve lost your livelihood and in many cases, your sense of self. Like a relationship gone bad, losing your job can be incredibly painful and life-changing. But it doesn’t have be tragic.

Pulling Yourself Together

Allow yourself to mourn: When you lose your job due to layoffs, you’ll feel as if you’ve been dumped by your employer. You’ll feel betrayed, hurt, dejected and angry, which are common emotions associated with grief. "Mourn the loss of your job and get some emotional distance so you can regain the strength to find a better one"

Be resilient: "You’re bound to encounter rejection in your job search, so you need to be resilient," offers Dr. Andrew Shatté, co-author of The Resilience Factor. He believes you can train yourself to be mentally stronger by knowing your own thinking patterns and counteracting against your natural inclinations. You can uncover your innate resilience factor online (click on"How resilient are you?").

Talk it out: Women tend to refocus and start their job search faster than men, because they’re more comfortable talking about their needs and anxieties to family and friends, and doing so helps them move beyond the shock and anger to start thinking about 'What’s next?'" It’s not that men have nothing to say -- they just need to find the appropriate support group to open up to. When Test-Drive Your Dream Job author Kurth lost his dotcom job in 2001, he and a few other job seekers would meet every week to share job search experiences over coffee and bagels (a.k.a. "Unemployed Bagels"). He recalls how all the members in the group eventually managed to bounce back and find jobs they love.

Set a budget: You’ll need to put together a budget to reflect your newly unemployed status.

Getting Back in The Game

Set goals: Brainstorm on what to do next with your family and friends, get your ideas down on paper -- stay organized and focused. Make a list of all the things you loved, hated, and would like to change about your life and ex-job. From here, you can begin brainstorming about your short and long-term goals. What other careers have always intrigued you? Are you an entrepreneur at heart? Would switching fields require additional training? If so, where, and how much would it cost? Above all, share your plans, however preliminary, with your support group so your friends can keep you on your toes.

Network, network, network: Be upbeat and positive even if you're not feeling that great about yourself. Make a point of getting out of the house and interacting with people. The more people you meet, the better. Create your own network in addition to attending professional networking events. A good way to ensure you get out there and do meaningful work is to volunteer your time for a charitable cause, according to Challenger. You never know who you will meet and what connections they may bring.

Try to identify people whose work appeal to you in some way and make a point of meeting them. Offer to take them out to coffee or even lunch. You'd be surprised how helpful people can be.

And by all means, get up to speed with all the major social networking sites like LinkedIn, Plaxo, MySpace and Facebook. Get reacquainted with your acquaintances.

Through all your networking efforts, stay organized in order to make best use of your contacts.

Limit your computer use: You’re wasting your time if you devote all your time responding to online job ads. Spend your day meeting and interviewing with people, not in front of your computer.

Take breaks: Whether it's going out for dinner once a week (within your means, of course), going for a run every other day, or both, taking breaks from your job search is essential to your mind-body wellness, which will help you stay energetic and motivated.

There is no denying being downsized is difficult, and bouncing back, harder still. But it is not impossible. "[Being laid off] can be a tragedy or an opportunity," ... "Turn it into an opportunity of a lifetime. "

Source: Fast Company

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Saturday, February 16, 2008

Be the change you want

“Be the change you want to see in the world ...”

Mahatma Ghandi 1869-1948 Indian Philosopher,

This great quote got me thinking about the difference executives can make in their world of work:
Executives must design structures, create reporting relationships, and develop evaluation systems that make people accountable. Executives who set broad, stretching aspirations that are meaningful to their employees have a better chance of achieving the outcome they want than do executives who resort to conventional, dominant, or detailed top-down leadership.

And the Best way to promote high-performance behaviour in organizations is to emphasize openness and trust among employees.

Ten Tips to making a difference

1. All significant change throughout history has occurred as a result of the courage and commitment of individuals. Whether you do it alone, or with the help of others you're still a change maker.

2. Know that you have unique purpose and potential. It's not so much something to create as to be discovered. And it's up to you to discover it. Believe all that you can and will make a difference.

3. Recognize that everything you do, every step you take, every sentence you write, every word you speak-or DON'T speak--counts. Nothing is trivial. Everything matters.

4. To be the change you want to see, you don't have to be loud. You don't have to be eloquent. You don't have to be elected. You don't even have to be particularly smart or well educated. You do, however, have to be committed.

5. Be accountable, take personal responsibility. Never think "it's not my job". It's a cop-out to say, "What can I do, I'm only one person." You don't need everyone's cooperation or anyone's permission to make changes. "If it's to be, it's up to me."

6. Don't get caught up in the how of things. If you're clear on what you want to change and why you want to change it, the how will come. Many significant things have been left undone because someone let the problem solving interfere with the decision-making.

7. Don't wait for things to be right in order to begin. Change is messy. "Do what you can, with what you have, where you are."

8. The genesis for change is awareness. We cannot change what we don't acknowledge. Most of the time, we aren't aware of what's wrong or what's not working. We don't see what could be. By becoming more aware, we begin the process of change.

9. Take to heart these words from Albert Einstein -- arguably one of the smartest change masters who ever lived: "All meaningful and lasting change starts first in your imagination and then works its way out. Imagination is more important than knowledge."

10. In order for things to change, YOU have to change first. We can't change others; we can only change ourselves. However, when WE change, it changes everything. And in doing so, we truly can be the change we want to see.

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Monday, February 11, 2008

Global IT Spending Slowing Down

“Slowing U.S. economy will affect the rest of the world’s spending on IT products and services in 2008.”

IT might finally start feeling a sting from the slowing U.S. economy. In a new report released Feb. 11, Forrester Research found that the sluggish U.S. economy will start affecting the amount of money IT departments will be spending on products and services in the next 12 months.

While the worldwide IT market will total $1.7 trillion in 2008, Forrester found that global purchases of IT products and services will grow 6 percent during the year. Originally, Forrester predicted growth of 9 percent. Spending in the United States will hit 2.8 percent, down from the original forecast of 4.6 percent. To date, IT has not felt the crunch of a weak U.S. economy.

In 2007, Forrester found that global IT spending grew 12 percent worldwide and 6.2 percent in the U.S.

Andrew Bartels, an analyst with Forrester, said the firm revised its number after retailers, such as Wal-Mart, reported less consumer spending in the fourth quarter holiday season and after reviewing recent reports that the U.S. economy lost jobs in January. These and other factors, such as falling real estate prices and higher prices for gasoline, mean less consumer spending, which will eventually affect business spending.
"U.S. consumer spending has been slowing down and consumer spending represents about two-thirds of the U.S. economy and about one-fourth of the world's economy,"

With less consumer spending to spur the economy, along with the tightening of the credit market following the problems in the mortgage market, enterprises and smaller businesses will likely spend less on IT goods, services and consulting in the next 12 months. Bartels said most companies will cut down on big-ticket hardware spending—like PCs, servers and storage—but continue to invest in software.

Software spending is not as discretionary

"Companies do not want to cut back on spending on software for security, which they see a prudent investment. Also, software spending is seen a way to be more efficient and a way to save costs in the long run. With virtualization software, you're cutting down on the amount of servers a business needs to buy."

Overall, hardware spending will increase about 4 percent in 2008 compared to 12 percent in 2007, and software spending will hit about 8 percent compared to 11 percent last year.

Although Forrester revised its figures downward, Bartels noted that IT spending will continue to grow in 2008. However, he said that vendors could not expect the same type of profit returns they experienced in the last year. For example, Cisco Systems reported Feb. 7 that its growth for its third fiscal quarter would be 10 percent, but that was less than what Wall Street had been expecting. In the coming few weeks, Bartels said quarterly reports from Hewlett-Packard and Dell should give industry watches a better view of the economy. While HP has a large overseas business that might help its quarterly report, Dell sells most of its products in North America and its report could give a clearer indication of the strength of the U.S. economy.

Source: Forrester Research, e-Week

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Outsourcing Pendulum shift

Outsourcing can either be a way for a company to gain strategic altitude and rise to greater heights (or) unloading dollars that don't pay off ...”

Most business processes rely heavily on technology. Companies identified the capital, time and space-savings associated with reductions in staff, training, equipment and work environments as advantages of outsourcing IT. Gartner announced in 2005 that IT teams will shrink dramatically during the next five years as employers adopt competitively priced external suppliers for IT services ... And, employees lucky enough to stay in a job will find themselves dealing less with technology and assuming more of a business role by managing suppliers.Gartner's predicted IT staff numbers will fall 15 per cent by 2010 as companies realize the potential efficiencies of bringing in external suppliers. IT departments will find themselves under pressure from suppliers offering prices and levels of professionalism that are difficult to match.
"As IT skills become a more important component of business professionalism, in-house IS staff while be displaced,"

Gartner said in a statement. "Companies must start the process of evaluating their long-term options, decide whether - and how - to compete against external suppliers or re-structure to manage those suppliers" The changing nature of IT departments’ role means that by 2010 six out of 10 people affiliated with IS organizations will take-on business facing roles around information, process and relationships as they manage suppliers. Departments who do not outsource will increasingly have outsourcing forced on them, according to Gartner.

Organizations who do not adopt what Gartner calls "process-based delivery models" will see their service portfolios outsourced at a rate of 25 per cent each year.

The outlook for jobs in the European technology sector is good but the spectre of outsourcing looms ominously, according to the IT Confidence Study, conducted by Eurocom Worldwide and Simpson Financial & Technology PR (Simpson FTPR) in 2007, the report surveyed 217 senior executives across Europe about their views on the sector.

63 per cent of respondents expected the number of people working in the tech sector to increase over the next 12 months, compared to 58 per cent last year. Meanwhile, four per cent expect job losses during the year, as opposed to eight per cent last year. "The outlook for jobs is reflected in the fact that skills shortage is now listed as the biggest threat to the tech sector," commented Ronnie Simpson of Simpson FTPR.

Despite the need for more skills, Simpson warned that certain jobs in the industry are at risk of being outsourced to countries such as China or India. "The study finds that not only are traditional manufacturing jobs at risk, but increasingly service jobs are shifting to low-cost centres as well," he said.

These fears were shared by 81 per cent of the study's respondents who believe their country is losing tech manufacturing jobs to low-cost centres, with 58 per cent believing that service jobs are moving as well.

The jobs most in demand in the industry are software engineers followed by international sales, project management and local sales people. The report found that the divisions within the tech sector that are expected to see most growth over the next 12 months included IT security and customer relationship management.

As well as different types of IT outsourcing, key questions faced by IT directors when outsourcing IT services, include whether to offshore, nearshore, or onshore. Outsourcing IT does, however, present different challenges. Learning how to manage relationships with outsourcers, engaging in industrial relations disputes with outsourced workers and designing service level agreements are a few.

Significant Outsourcing activities

February 2008: Govt outsourcing IT to overcome skills shortage >>
January 2008: Shell to outsource hundreds of UK IT jobs >>
January 2008: UK firms continue to pick India for outsourcing >>
January 2008: AA brings datacentre back in-house to cut costs >>
January 2008: LogicaCMG creates new outsourcing division >>

November 2007: Deutsche Bank outsources to HCL Technologies >>
August 2007: Lloyds TSB to outsource 210 IT roles to India >>
July 2007: British American Tobacco outsources network security >>
May 2007: Tesco signs £18m IT contract extension >>
May 2007: Allianz signs outsourcing deal with Fujitsu >>
May 2007: Hewden updates network and services with renewed BT deal >>
May 2007: Dorset Council signs services deal for contact centre >>
April 2007: Vodafone consolidates to reduce spend on app development >>
April 2007: PWC reveals faults in Swansea Council's 83m outsourcing >>
April 2007: Indian outsourcers make inroads into continental firms >>
March 2007: Prudential looks to axe 600 jobs from UK in-house IT >>
February 2007: Lloyds TSB to cut 245 back-office jobs >>
February 2007: Credit Suisse considers massive switch to offshore >>
January 2007: NCR offshores ATM production >>

Source: The Register, Gartner, Simpson FTPR, Eurocom Worldwide

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Friday, February 08, 2008

Bankers Everywhere - Change On Bonuses, Or You're Out!

“It's no longer about 'you', it's now all about 'us'”

Merrill Lynch CEO John Thain is changing his firm's bonus philosophy, tying bonus payouts more closely to the performance of Merrill as a whole, rather than individual employee results. Thain's intentions are good - fostering a more consultative and cooperative culture at Merrill, hopefully avoiding a repeat of the situation last year, where 100 or so fixed income traders wreaked havoc on the firm's profits and screwed up what promised to be a very good year for the firm. But Merrill's boss might have difficulty persuading his employees (and perhaps as importantly potential new hires) that they should rely on others when it comes to their year-end bonus pay-outs.

According to Monday's "Here In The City" quick reader poll ...
Many bankers are happy to have their bonus allocated on the basis of the performance of their desk, or immediate team, the majority still expect to eat what they kill and be paid out based on their own performance. Very few bankers are content to be rewarded first on the basis of how well their firm does as a whole.

Poll results:

50.7% of respondents said that they expected to be rewarded on the basis of their own performance

48.2% said that they were happy to be rewarded on the basis of their desk, or team, performance

1.1% said that they were content to be rewarded on the basis that they get paid first on how well their firm as a whole does.

Will this information surprise, or concern, Thain? No, determined to create a cohesive team-like atmosphere at Merrill, he won't want those who put themselves first at his firm anyway. And in this approach Thain, may well be leading what could turn out to be a sea-change for the industry - it's no longer about 'you', it's now all about 'us'.

Source: Here Is The City

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Best Place To Work In London Is ...

“Nomura International came top in 2008 poll, Best Place To Work In London 2008”

Yugo Ishida, President & CEO of Nomura International, said ...

'I'm delighted the people who work at Nomura have voted it the best place to work in London. This recognises our growing success in forging links between Europe, Asia and other emerging countries, and is a tribute to the talent and commitment of our people who have enabled that success. Together we have built an innovative and client-focused business that provides an opportunity for everyone to advance as far as their strengths and skills will take them'.

Top 30:

1. Nomura International
2. Morley Fund Management
3. UBS Investment Bank
4. State Street
5. Credit Suisse
6. Rabo International
7. GAM
8. Bank of America
9. Merrill Lynch
10. Daiwa Securities SMBC Europe
11. Dresdner Kleinwort
12. Citi
13. Barclays Capital
14. Goldman Sachs
15. Man Group
16. Macquarie
17. PIMCO Europe
18. Royal Bank of Scotland
19. Jefferies & Co
20. BlackRock
21. Schroders
22. Lehman Brothers
23. Bear Stearns
24. Fortis
25. Morgan Stanley
26. Clifford Chance
27. 3i
28. Northern Trust
29. JPMorgan
30. Threadneedle Asset Management

Source: Here In The City | Survey

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Thursday, February 07, 2008

Nemorelaxer Airport Luxury

“Coming Soon To An Aiport Near You ... the latest in airport luxury”

The Nemorelaxer will be cropping up in European passenger lounges, a sound-proofed pod recliner chair, sound-isolating materials and a cocoon for privacy. The Nemorelaxer also has a touchscreen monitor for watching movies and a fold-away worktable with internet connection. The idea is from a new company 'Nemorerelax' is designed to create an ‘oasis of calm’ in busy airport surroundings and the pods will be arranged in groups in a special area, fronted by a reception desk and helpful staff. They’ll loan you a notebook if you don’t have one and even look after your luggage while you snooze, slave or surf the Net. Time slots will be sold by the half hour and the fact that they haven’t told us what it will cost gives you some indication of the type of customer they are targeting

Source: Gizmondo, Luxist

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Tuesday, February 05, 2008

High Oil prices is a tax on consumers

“Oil is trading at $100 per barrel, forecasted to hit $150”

Back in 1992 when I worked in the oil industry $25 per barrel was high, some 15 years later and a barrel is trading at $100. As Oil prices continue to set new records and generate windfall revenues for oil-exporting nations. What are the affect that are causing the world to guzzle more oil than it can find!. Sean Brodrick on The Market Oracle reveals some interesting reasons why:

* America is the world's largest consumer of oil, guzzling more than 7.5 billion barrels per year. We import more than half the oil we use, and that amount is rising.

* More than 81% of the world's discovered and useable oil reserves come from just 10 countries. And 30% of the world's oil is in three of those countries — Iraq, Kuwait and Saudi Arabia.

* The world consumes an astonishing 173 billion barrels of oil every 2.4 years. At the same time, we find enough new oil to supply just 3% of that.

So, just to keep prices stable over the next decade, we're going to have to find a couple more fields the size of Ghawar — the biggest oil field in Saudi Arabia ... and the world

According to the International Energy Agency, global oil demand will average 87.8 million barrels per day (bpd) in 2008, up from 85.7 million bpd in 2007. At 87.8 million bpd, we'll use 1,016 barrels per second — a sonic boom of energy use.

Three Forces That Will Squeeze Oil Prices Even Higher

Terrorist attack, a war in the Persian Gulf, or a natural disaster would cause oil prices to rise.

But there are other fundamental forces that will drive the price of oil higher relentlessly, even without a headline-grabbing catastrophe. Let's look at three of them ...

Force #1: A Thirsty World. Despite economic storm clouds on the horizon in the U.S., the global economy is growing at about 4.5% per year. From Brazil to Singapore, business is booming and incomes are rising.

The world's population is trading bicycles for cars, and global oil demand can't keep up. With 14,000 more cars on the road each day, China's oil demand alone is expected to rise at least 5% this year, according to the IEA.

As a result, the International Energy Agency (IEA) projects in its Medium Term Oil Market Report that global oil demand will grow 2.2% a year, on average. By 2012, demand should reach 95.8 million barrels per day (bpd) vs. 85.7 million bpd this year.

At the same time, spare capacity — almost all of which is in Saudi Arabia — is going to vanish like a mirage in the desert.

Even worse, the IEA expects supply increases from non-OPEC oil producers and biofuel producers to start dwindling around 2009.

All that boils down to an ugly picture from the IEA: The world's oil demand growth is going to start outpacing supply growth by 2010!

Force #2: Slipping on the Oil Field Treadmill. The IEA has more gloomy news for us: We're getting between 3% and 4% LESS out of existing oilfields every year. Mature producing areas and many recent deepwater projects are declining at even sharper rates — 15% to 20% annually!

All told, the oil industry needs to add three million bpd of new supply each year just to offset declines in existing fields.

But the oil majors are having trouble finding oil. For example, last year was the first time — EVER — that Exxon didn't replace its reserves through its own drilling, according to Oppenheimer research.

Force #3: Oil Exporting Nations Need More of Their Own Product. The economies of many big oil-exporting countries are growing so fast that their domestic need for energy is sucking up their exports. Experts say the sharp growth, if it continues, means several of the world's most important suppliers may need to start importing oil within a decade.

OPEC member Indonesia has already started importing more oil than it exports ...

Mexico could be doing the same within five years ...

And domestic consumption in Kuwait, Saudi Arabia and Iran is soaring!

According to a report from CIBC World Markets, Russia, Mexico, and OPEC members will cut crude exports by as much as 2.5 million barrels a day by the end of the decade. That is MORE than the current spare capacity in the oil markets.

When OPEC recently opted to freeze output levels it argued that the global market for crude oil was "well-supplied."

But maybe the real reason was that OPEC just didn't have much more to sell.

My Forecast: We Could See Oil Hit $150 a Barrel in 2008

The Energy Information Administration recently told the U.S. Senate that crude should average $85 per barrel in 2008 as fundamentals tighten ...

Goldman Sachs said it could hit $105 ...

But I'm setting my sights a little higher: I think we could see prices spike to $150 a barrel next year!

That kind of a jump might not stick around very long. But as I just showed you, all the fundamentals are in place for oil to hit — and maintain — triple-digit prices next year.

In fact, I believe the only thing that could derail higher prices is a stiff recession in the U.S. And central banks around the world are working hard to prevent that. Our own Federal Reserve is throwing everything but the kitchen sink at the markets, and the Bank of England and European Central Banks are doing the same.

Source: The Market Oracle

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Change Curve

“Change Curve is a concept often misunderstood and mis-applied frequently, even by major players in change arena.”

The Change Curve is an adaptation of Elisabeth Kübler-Ross’s - five-stage theory that seeks to explain how people deal with catastrophic personal loss (e.g. loss of a job, freedom, finances, status, identity) or grief (loss of a loved one). The stages are denial, anger, bargaining, depression and acceptance.

It has also been observed that personal change can be somewhat like personal loss and, therefore, the model has been applied to change. Indeed, I have seen it stated, more or less as fact, that when people change they need to be helped along this curve. I’ve also seen it reduced to four (that way it fits nicely in a matrix) and three stages. But wait a minute. Let’s not let the facts get in the way of a nice model that has had little empirical testing in its own right, and particularly in relation to organizational change.

1. Kübler-Ross "stated that people do not necessarily go through all of the stages, and if they do, it can be in any order". Indeed, people can experience a whole range of emotions at different times during grief.

2. Change is not always experienced as loss. It’s exciting. It’s new. It’s a break with the old way of doing things.
It’s liberating. Some people love it, and some just want it to stay far far away, over there and affect somewhere else. Hence the reason why change is considered synonymous with grief?

The five-stage model is useful, but it is not the be and end all. Truth be told, you still need to truly understand how people really experience change.

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Monday, February 04, 2008

mydeco counter-cyclical start-up

“It's time to wipe your feet and come on in ... mydeco the place that makes it easier and much more fun to make your home more you.”

mydeco brings together the widest possible range of products from high street stores to niche retailers, thousands of inspiring looks to fit your budget, expert designers on hand for advice, and simple 3D tools to help you plan your room before you even open a tin of paint.

{it's leaping, vaulting, nothing's impossible ambition}
{it's exceptional, professional and passionately progressive}
{it's collaborative, responsive and totally committed}

Thinking behind the idea ...

Counter-cyclical start-up theory:
“When the big players retrench, the opportunities to innovate increase. Going against the grain is where entrepreneurs win.”

mydeco founder Brent Hoberman (of Lastminute.com) is Executive Chairman of mydeco, non-executive Chairman of WAYN (a travel and leisure social network with over 9 million members), a non-executive board director of Guardian Media Group and also acts as Governor of University of the Arts College, London. mydeco employs 35 people based in Victoria, London.

"We’ve got a passionate and talented founding team on board, with experience ranging from Community-building and 3D Design to Interior Designers and Architects."

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Us-and-them Syndrome

“Us-and-them syndrome eats away at al-Jazeera English”

Al-Jazeera English was launched in a blaze of publicity a little over a year ago, but what has happened to the dream of creating a multinational broadcaster since is dispiriting. The collapse in morale among employees, whether caused by financial constraints, a clash of cultures or political pressures, is a pity, because competition for Anglo-American news media is a healthy thing.

Discord was sowed from inception. The English channel operated at arm's length from the Arabic channel, offering better terms and conditions than those offered to staff at its headquarters and employees elsewhere - after all, Sir David Frost was on the payroll.

The repeated emphasis that the international channel would be independent from external influence also created ructions, because it implied that the original Arabic news channel was somehow not. Pointedly, its name was changed from al-Jazeera International to al-Jazeera English just prior to its launch.

Nigel Parsons, the English channel's managing director, started well, building a channel not wildly different from the BBC - a bit bland but certainly careful to report in a balanced way.

Yet it was never clear who the viewer was: outside Africa and Asia, resources were stretched. The mix of news could only have pleased diehard internationalists; most people also want a good dollop of news from home, but there was little from the US or Britain, where many English-speaking viewers are likely to be. There was also precious little marketing or viewing data.

Then, al-Jazeera English began to be reined in. From the summer, management clamped down on overheads and benefits, querying whether expatriate journalists needed to be paid so much. Parsons was excluded from board meetings, to the point where he reportedly had to glean information from a secretary.

Now, the climate of suspicion is such that some believe that political pressure will be exerted on their journalism, although accounts as to whether this is happening vary.

Al-Jazeera in Arabic, of course, made its reputation by being in tune with the views on the Arab street, but today's talk is of a softer line on the Saudi regime.

Two Arabic journalists recently published interviews with militants on their personal websites because they could not get them aired. One was with Baitullah Mehsud, the leader of al-Qaeda in Pakistan, who is suspected of involvement in the killing of Benazir Bhutto. The Mehsud interview, done in December before the assassination, did not appear, but a second interview conducted with Mehsud in January did air in the past week. It is easy to stir strong feelings here, and the reality of how news organisations work is always more complex than outsiders think. But trust is breaking down. In December, an emotional staff meeting heard an avalanche of grievances. At least one industrial tribunal hearing is in the offing, and the situation is summed up in the words of an employee internet posting:
“You don't need us Westerners any more do you?”

Al-Jazeera English was meant to help extinguish such them-and-us sentiments; that they are emerging shows how bad morale is. The emotion behind the scenes is beginning to surface publicly, and once credibility drains away outside, it is very, very hard to win it back.

Source: Times Online

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Sunday, February 03, 2008

Success of Listening

“Listening may or may not be an act of love or way to tap into people’s dreams"

Listening may or may not be an “act of love” or way to “tap into people’s dreams,” but it sure as hell is (1) an uncommon act of courtesy and recognition of worth from which (2) you will invariably learn amazing stuff if you can just keep your damn mouth shut and ears open with an expression of interest on your face and (3) it will build-maintain relationships beyond your wildest dreams. The surprisingly uncommon act of listening is the most foolproof seduction “tool”-“method” ever invented because no one, M or F, is ever able to resist the overwhelming attraction that comes from being listened to and taken seriously ...

Source: Tom Peters - Success of Listening Intently

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Friday, February 01, 2008

Organizational Challenges

“McKinsey Global Survey: Organizational challenges of global trends”

  • Executives are grappling with a wide range of organizational challenges created by new economic and social patterns.

  • The respondents say that intensifying competition for talent, shifting centers of economic activity, and increased technological connectivity are the most important trends for their companies. Moving quickly and dealing with regional diversity are two of the most common concerns.

  • Two-thirds of the executives say that their companies aren’t sure of the right organizational response to emerging global trends — but the vast majority believe that responding effectively is critical for competitive advantage.

View: McKinsey Quarterly: Global Trends Survey

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Thursday, January 31, 2008

Seesmic next Big Thing

“The future of online video is not YouTube or even live video, its video conversations ...”

Seesmic-ers around the world are tuning into the daily video that unfolds and follows the Seemic journey. Loïc Le Meur a Serial Entrepreneur & blogger is the brain behind this innovating business tool that is emerging as the next big thing that about to take video to the next level.
Anything that connects me safely with the rest of the world, and doesn't require me to reconfigure setting here and there and do any of the fiddly stuff gets a thumbs up on my list of great ideas. 'YouTube is about the videos, Seesmic is about the people in the videos'. Users can record videos via webcams and upload directly to Seesmic, or record using YouTube and post from that site. The company is also working on a mobile phone version of Seesmic. Is it all its cracked up to be! yes it is, this is the much long awaited platform for "video conversations"

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Tuesday, January 29, 2008

How do the best organizations actually change?

“John P. Kotter, on change processes and the key challenges in order to create an ongoing successful change culture.”

Which are skills and talents used by an effective Change-Leader?
The one thing that we need to understand the best, is the fundamental process by which significant change can happen effectively with a minimum of pain and expense. In the process there are all kind of different types of skills that people can, at one point or another, usefully apply, and what you find increasingly, is the significant number of people that get involved in this efforts. Very often it works because they know the roadmap.

One person helps because he is particularly good at one thing, at one particular part of the process, another person helps most because he is particularly good at another thing, at another part of the process. So it is not one person with one sort of skills that makes it happen. It’s more that sufficient people, who understand how this can work, who all contribute various skills, are set at the right time, in the right way, to make the change happen effectively.

That means the change leader is in a role of a conductor?

In a lot of cases, it increasingly is. Additionally, as the world moves faster and faster, the size of the orchestra, that he or she is dealing with, is growing: When we were at a string quartet 15 or 20 years ago - we are now up to a full orchestra, which means, that the complexity is growing.

Where do you see the differences between a Manager and a Leader – and is there a chance for a manager to become a great Leader?

What good managers do, is that they take something that exists and make it work well. They do it through the kind of processes that are taught in MBA programs: budgeting, structuring activities, people staffing, control systems, etc. All of that done well, can take even very large organisations and help all the activities happen in a way that it produces the outcome that was desired. So that the products come out of the factory on time and on budget. The thing works.

What leaders tend to do is, they either create the organisation of those systems that managers manage or they take them and help change them in a significant way, to take advantage of new opportunities or to avoid induct new hesits that are coming from the outside. They do it in totally different sorts of processes: the first of that is working with people in order to create this new vision of ‘where we want to go’ and ‘how to get from here to there’. The second important point is about communicating the information to as many relevant people as possible, in a way that they get them not only to understand, but to become convinced, that it is the right way to change into the direction toward that vision. The third is to create conditions that really motivate people, inspire people to want to put in the action that will make implement the strategy and make the vision reality, even when they run into obstacles.Those things: the vision, the strategy, the communication, the inspiration and the motivation is the leadership side of the change. While the Manager is in a more hierarchical structure and looks that the things are done in the right way, the Leader is less hierarchy based but more vision focused.

Why do firms/companies often fail in change-processes?

The first and main reason is, that it is difficult! The second reason is, that companies don’t understand the dynamics of a significant change. They don’t know the secrets of dealing with difficulties and actually making things happen without provoking a lot of frustration and pain. The reason they don’t know this is, because they didn’t grow up in an increasingly fast moving world. They saw lots of examples from companies getting hit with new technologies, companies getting hit with new competitors because of globalisation, that needed to make significant changes, and did it well. So it is not in their experience that it is so difficult. When you put it all together, it is not surprising that most of the times they don’t do a great job with a perspective significant change.

If a change process is fundamental, e.g. by a new vision or a new positioning, but not realised in the organisation as urgent, how can a Leader create an urgency for change in his organisation?

What we found is a kind of formula that get used by firms that are most successful. It all starts with step one, which is creating some sense of urgency: killing off the complacency that so easily grows in bureaucracies and also getting pass other things like fear or anger that people want to hide. Urgency is the state where I feel that ‘I’ve got to do something’ but ‘can’t do it on my own’. We’ve got to figure out new and better ways to grab up opportunities and avoid hesits. If you look how people create their urgency, and when you look at enough companies, it’s almost an endless list of creative things that people come up with, they all tend to be attention grabbing. The leaders tend to be not just to work on the rational side but also the emotional side of the brain. They grab people not only in the logic but in the stomach. No matter the form, it is all the same logic: it’s trying to take a complacent group and get them to suddenly sit up and say: maybe we need to do something! Once they get the concept, the place to start on all of this has to be, to get some minor, minimum amount of urgency going. People can be very creative at looking at their specific situation, at specific details on what is going on in a company like that, and come up with very creative ways to start making things happen.

In a change-process, how do you deal successfully with the matter of resistance and fear?

The answer to that is, the more the process is done well, the more fear goes down and resistance goes down. When people feel a sense of urgency they resist less. If they feel that the people who are pushing the most are credible, seem like a logical group to help out, seem to have skills, then, fear and resistance go down. So it does, if the vision makes sense to them, if they can understand it. But if they are trying to do something but find that they are bumping into roadblocks and barriers all the time, frustration grows and at a certain point, even if you understand ‘we got to move over there’ they get frustrated, they stop and become part of the resistance. Only if people see someone move into the right direction, they calm down, they resist less. So trust, credibility and transparence are important parts of the process.

Which key-points are important by putting together an effective change-team?

Two things:

1. The people on it has to feel some sense of urgency themselves. If they don’t, they don’t put in enough time and energy.

2. Companies have to bring together a set of complementary skills that you must obtain in order to drive a change: somebody that knows the territory, someone specialized in technology, somebody that is good at leadership, etc. At least you need to have some people who are highly trusted in the organization and have a great reputation. Some which are a little more analytical, some that are little more emotional and then, the critical thing is to get them all together to work as a team.

What are the most challenging points in order to creating an ongoing change-culture?

The most important thing by far is, that the organization achieves multiple changes successfully. When that happens the actions and attitudes that help facilitate an ongoing change-culture, will start to be part of the culture. So culture is something, that is less a cost than an effect. You can’t go at it directly: holding a meeting and explaining, what the culture has got to be, doesn’t work. The aim is to get a culture that facilitates change and not saying we need to have one. Changing will simply be successful when the experience shows that it works. Then attitude and behavior will just automatically be adopted and will create that culture, the right norms and the right values associated with it.

Regarding the structures of a winning organisation in the 21th century, what are the key-challenges for the leaders?

The challenge is to give more and more help for more and more people. In the former industrial model, a very limited number of smart people at the top of a hierarchy, were developing the strategy, and then there was a bunch of people with implements below them. If you look at some of the most successful companies on earth, which have been able to sustain their success over more than only 3 to 5 years, people are really into the game and are not just doing some limited job for contributing more understanding. In great organisations you can go five levels down the hierarchy and find people to have an intelligent discussion about corporate strategy, while in the old model, you’d have trouble going down one level. I think the challenge of making that happen, of going from a more limited, exclusive, to a more inclusive group of people, who do understand things and who contribute brains, is a tough transition from an industrial model. The people are the brain of the company not only 5 or 6 people at the top. A company in the 21th century is increasingly a knowledge driven organisation and not a machine. So it’s a big challenge, but it’s increasingly critical to making companies succeed in a rapidly changing world.

Source: Our Iceberg Is Melting: "Changing and Succeeding Under Any Conditions" John P. Kotter

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French bank 'had trader warning'

News ...

“French stock market officials warned Societe Generale about alleged rogue trader Jerome Kerviel late last year ...”

"There is a whirlwind of negative rumours and speculation, the worry for the financial markets now is what else is out there, which firms also have problems and when will it all come to light?

By any measure the world's leading financial firms are enormous organisations. Ahead must lie much more slimming ... organic growth have given way to large scale acquisitions fuelled by the booming global economy.

As in all industries scale confers a number of advantages particularly when aligned with profitable growth. But the pursuit of growth also has a downside, in some cases - that little red light that keeps flashing and suddenly falls off the radar - we must ask yourselves how do we manage organisations that become too big to be easily managed!

With Mr Kerviel now released on bail, the prosecutor's comments increase the pressure on the bank to explain why his trades were not discovered earlier. Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security. Societe Generale says his actions cost it 4.9bn euros ($7bn; £3.7bn).

'Thrown to the dogs'

The bank, which says it only discovered Mr Kerviel's unauthorised trades 10 days ago, had been pressing for Mr Kerviel to face the more serious charge of fraud.

When there is an event of this nature, it cannot remain without consequences as far as responsibilities [of senior managers] are concerned
French President Nicolas Sarkozy

His lawyer, Elisabeth Meyer, on Monday called the judges' decision not to press for fraud charges a "great victory".

Mr Kerviel's other lawyer, Christian Charriere-Bournazel, said his client had committed no fraud, adding that Societe General's chief executive Daniel Bouton had no evidence to back up his allegations.

"The word fraud was used by Mr Bouton numerous times," he said.

"Mr Bouton held this unfortunate man up for public vilification, threw him to the dogs... and there was no substance to it."

'Invented deals'

Societe Generale says Mr Kerviel had a position, or a bet, worth about 50bn euros on the future direction of European shares. That was more than the bank's value - about 35bn euros - and about the size of France's entire annual budget deficit.

To avoid that potentially catastrophic loss the bank had to unwind Mr Kerviel's trades, but that still cost it 4.9bn euros. Societe Generale said Mr Kerviel's background in handling the administration of trades enabled him to fool those monitoring traders' activities.

It says Mr Kerviel invented deals that, on paper, balanced out his bets. Under French law breach of trust carries a maximum sentence of three years in prison and a fine of 370,000 euros ($546,637; £186,562).While a formal investigation has started into Mr Kerviel's actions, this does not automatically guarantee that a trial will follow.
- Founded in 1864
- 467bn euros in AUM (as of June 2007)
- 22.5 million customers worldwide
- 120,000 employees in 77 countries

French President Nicolas Sarkozy has said that Societe Generale's senior managers would have to accept their share of responsibility for the scandal.

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Managing change the US way

News ...

“A new way to motivate your CEO: tell the world you've been actively trying to hire his replacement.”

That seems to be the strategy of Tom Hicks, the American businessman who bought Premiership football club Liverpool last year alongside George Gillett. He admitted to the local paper this week that the pair spoke to Jurgen Klinsmann, the former Germany boss, about taking over as Liverpool manager. When it was pointed out to the ever-astute Texan that Liverpool already had a manager – Rafael Benitez, the man who’s guided the club to two Champions League finals in his first three years on the job – Hicks suggested Klinsmann was as an ‘insurance policy’ in case Benitez took another job, or if communication between manager and chairmen failed to improve.
Apparently Hicks’ idea was to draw a line under the speculation by speaking out in support of his manager. But we’re not sure how you dampen speculation about your manager’s position by admitting to talks with another manager. Equally, we doubt that talking publicly about a communication breakdown is likely to resolve a communication breakdown. Either way, Liverpool’s top brass – including co-owner Gillet – are apparently spitting feathers over his latest indiscretion.

When Hicks (and Gillett) took over last year, most Liverpool fans were delighted. The man who had built a major US private equity firm (Hicks Muse Tate & Furst) would surely bring some proper US-style management discipline to a club that seemed to have missed the commercial boat. Despite its huge worldwide support, stemming from its European success in the 1970s and 1980s, Liverpool had been left in the shadow of local rival Manchester United – on and off the field. The new US owners would surely smarten up the club’s act.

Instead, they’ve done exactly the opposite. Hicks and Gillet have spent more time in the sports pages than the team – if they’re not fighting amongst themselves, or failing to refinance the loan they used to buy the club, or trying to flog a stake to Dubai, they’ve been falling out very publicly with their manager (who hasn’t done himself any favours by whinging to the papers about his lack of transfer funds). And this at a club that has never washed its dirty linen in public.

If this was a standard company, Benitez would be out on his ear already (and probably suing for constructive dismissal, on the basis of that interview). But he has one big advantage that your average CEO doesn’t have – the presence of 50,000 fanatical supporters chanting his name every fortnight. Hicks will be a brave man to take on the fans, and if he does it’s unlikely to do a great deal for Anglo-US relations in the North West. A banner at the last FA Cup game summed it up nicely: ‘Thanks Yanks – More Friendly Fire’...

Source: Management Today

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