The Tribune

By Simon Cooper

Res Socius

It’s rumoured that the first thing mankind did after they stumbled into caves was to invent wicker doors, and to apportion space for different uses. This culminated in the huge, polluting cities that threaten our sanity and health. Ironically, for many city dwellers the perfect holiday has become time spent outdoors (and, perhaps, sometimes with no clothes on).

Business is generally getting into a similar kind of mess. In fact, many working procedures I have seen lately are a patchwork of verbal band-aid. Two things happen as a result: We either end up doing things that do not make sense in hindsight, or our personnel find creative ways to get around the latest rules.

Airlines have one of the most comprehensive safety systems around, yet every time I watch a crash investigation movie, almost unimaginable things seem to happen. Take the 2009 Air France disaster, when the pilots failed to notice that their aircraft had gone into a stall despite having one of the most elaborate instrument systems available, and a chorus of alarms.

Pilot 1: “Damn it, we’re going to crash... This can’t be happening!”. Pilot 2: “But what’s happening?”

That’s as alarming as the fact that two seconds after that final cockpit voice recording, 228 people were dead.

Without going into the fundamental reasons why accidents such as Chernobyl and Three Mile Island happen, the truth is that the more bullet-proof we make our systems, the more we assume they are going to work. Neither Orville nor Wilbur Wright would have had a problem noticing their plane was going down, because things were simpler then. In fact, they didn’t have a single instrument.

When I was growing up in England, a school pal’s father ran the local grocer’s store. All he had was a cash register and a purchases/expenses/drawings book. How did he know he was making money? He just counted the number of �5 and �10 banknotes in the drawer, because he had a good feel for how many should be there. In my case, I monitor the dwell-time of every business for sale on my books.

Compare this with the cataclysmic crashes of some big corporate entities lately, and the standard executive’s assurance that: “I just didn’t know what was going on.” I’ve seen this happening in the Bahamas with businesses both large and small. And some have had the most advanced accounting systems available.

What every business really needs is a set of critical indicators that measure where they are going. Equally important, they need managers to monitor them, which is not always the case. Take BP for example. Several years before their Gulf oil spill happened, there were ample warning signs. Yet their executives were looking someplace else. Complexity has never solved a problem yet ... So shall we ‘can’ it?

NB: Simon Cooper is a founding partner of Res Socius, a firm authorised by the Bahamas Investment Authority to facilitate the sale and purchase of businesses and provide management consultancy services. Contact 376-1256 or visit www.ressocius.com.