Posts filed under 'MBA'
Opening day (the commissioning of Barcelona’s Airport Terminal 1)
Unbelievable we’re already here. After six years of dedicating an important part of my professional life to Barcelona’s Airport, today Terminal 1 is officially born. We’ll listen to the politicians’ speeches on how they made this possible. Maybe they did, but we worked all the way through. And this feeling, this pride, this sense of belonging will carry on with us the rest of our (professional) lives.
A huge, unique project can only be done with the commitment of a group of people. A group of people ready to withstand many pressures and surmount uncountable odds. Very diverse people, some very qualified, some able to star and shine without that qualification.
There are some pass-byers as well. The latter will be all in the official celebration today, even publicly displaying their self-attributed mothering. Isn’t it sad that people that have not appeared in the life of the project, and could have done things to support it, they come now for the medal?
We’ve learnt many things here. We’ve lived through many successes, and mistakes too. Fortunately! You can’t learn if you always do everything well. It would give you a false sense of security that would undermine your judgement.
But even if you make mistakes, you can’t learn unless you can reflect on past experiences. Unless you can evolve. That’s our duty today as nucleus of the project that has created the biggest Spanish airport terminal of all times, the biggest infrastructure that has been built in Barcelona for the last decades. We must make this exercise and learn.
Nothing of this would have been possible without the engineers. People think of architects, but they only make a small part of the project: they don’t make things work. Specially star architects that have seldom appeared during the project and have been more of a nuisance than anything. Till now this was the realm of the engineers. It was our time. Not any longer. Now it’s turn for the airlines and for the people that maintain the airport to work. It’s time for the passengers, for Catalans, to make this terminal their own. This terminal will be the first, and last, thing that visitors to Barcelona, and Catalonia, will see. It’s for all of us.
Yes, that was yesterday. And I was there. And from the experience I can tell you that I felt that my commitment for this project for so many years had been worth it. I feel as I have participated in something big, something important for my country. And this, in itself, is a reward as well for me.
2 comments 17 June, 2009
A weekend in Cologne (Köln) and some bits of European construction
I’ve been this weekend in Cologne, an amazingly thriving city on the Rhine born about 50BC as a Roman outpost. A city that grew in the industrial revolution thanks to the enterprisingness of its inhabitants that strategically used their proximity to the coal of the Ruhr region.
Catholics, in 1248 they began the construction of their cathedral. It would stop in 1560 for as long as four centuries, with a crane that would be Cologne’s symbol and witnessed lots of generations live and die. Until 1848 you could have seen something like this…
This was the tallest building of the wold as well, until the Washington Monument’s capstone was set in 1884.
Let’s make another step in time to 1945 after the second World War. Cologne was obliterated with bombings. Less than 10% of its buildings survived. One of them was the Cathedral. Although hit by several bombs, maybe miraculously, the Dom still stood in the middle of a lake of rubble.
Little remains of those years. Where Adolf Hitler rallied his troops, now there’s a lake where students gather instead to have fun and drink beer. Now Cologne is a cosmopolite city, a mix of cultures and lifestyles, somewhat disordered for a German city, but very much alive and breathing. It is the broadcast centre in Germany, the fourth biggest city and see to many international art festivals. Their inhabitants celebrate the good weather sitting in the terraces at night and have one of the largest Karnevals, or Mardi Gras, in Germany. Last Saturday’s view was quite different:
Yes, I went there to study, to prepare the forthcoming exam on Strategic Direction and Corporate Finance and Governance with my German peers on the MBA. We had a great time and also worked a lot.
Now for European construction. We saw the next election’s publicity in many streets. I saw it again in Barcelona, when I came back yesterday. I read the newspapers and saw, to my amazement, how Spanish politicians are using the European elections to talk about local issues, even to try to condone some misbehavings some of their numbers have committed.
Our politicians, and I do thing that’s an European wide issue, are inadvertently but irresponsibly turning us away from democracy with their constant cynicism, hypocrisy and abuse. And our democracies, our peace, our union and our prosperity are the most valued shared good that we have. They are the only guarantee that neither Cologne nor Barcelona’s inhabitants, both cities whose civilian population have been bombed by air, each from a different political side, as if it mattered now or then to any crying child whose life had been severed, are not going to endure that cruelty anymore.
We are the ones benefiting and inadvertently collaborating to the European Union by travelling, by getting to know each other, by learning to respect our difference, by meeting to study an MBA from a British business school in a German roaring town.
I’m going to miss Cologne… it is a city I could live in!
2 comments 25 May, 2009
I sense some hope… sorry not yet! (Pandora’s jar is still not completely open)
Lately I’ve been hearing some musings about how the economic situation is improving. Yes, optimists are always necessary, though they can also be a bit annoying sometimes.
In any case it’s good to reflect for a while on where are we now. Have the fundamentals of the current crisis changed so much that we can say things are changing? Maybe is it that people are sensing that we have already touched the floor thus the situation is about to rebound? If it is the second one, let me tell you, we spent so many years skyrocketing ceiling after ceiling, why should the bear animal spirits be less powerful than the bulls?
Crisis, at least most crisis, aren’t the results of sudden disasters or fulminant downturns. Although everyone can recall tipping points, such as certain interventions or lack thereof, they are the consequences of deeply undergoing currents, things that have been happening for a long time.
And what has been happening for a long time? Things like the excess of liquidity, thus the excess of leverage. Piles and piles of debt. Unsound financial constructs acting like dark boxes trying to hide the risk inside, just like a giant Pandora’s jar (incorrectly translated from the ancient greek as a box instead of a jar).
Ephimetheus had been warned not to accept any gifts from Zeus, and Pandora had been warned not to ever open her box. But you know mankind, the former couldn’t resist marrying her, and the latter couldn’t resist her curiosity to know what was inside the box… Otherwise mankind would have lived tranquil and blissful (for another while).
So, has this man been able to close the jar (or box) that brings all the evils to mankind? I know it’s ugly to personalise but, has quantitative easing helped? It probably has, somehow, albeit many doubt so. I think it has bought us some more time, but we still haven’t taken care of that atonement I’ve written about a few times.
Because putting still more money into the system doesn’t address the fundamental problem we are facing. It’s more like trying to remedy a symptom than a disease. It’s true the pendulum has swung to the other side, and injecting liquidity, the swing won’t be that strong anyway, but that still doesn’t solve our problem.
Yes, banks are paralised. But that’s not because they have forgotten how to be banks, but because nobody really knows how much their assets are worth now. We are permitting them to alter their book to market ratio thanks to the backing of the ultimate lenders (yes, you know who they are, those forced lenders), and they are not lending because they are holding to those promises that permits them not to face reality.
Any reconstruction must begin by assessing the losses, instead of counting on a white (forced) knight that will save them all. This thought paralyses them, makes them look to the future with unrealistic expectations.
In the meantime, the forced lenders have to back and even buy bad assets. But they can’t sell them, as they don’t know how or whether they are worth anything. Just like another Pandora’s jar that trades hands without anybody actually looking what’s inside. And it won’t be a bad thing to look inside this jar, as at least we’ll know what we are able to recover. Bad assets are bad because they are worth much less than what’s in the books, it’s time to know how much.
So what then? Is this all? Even when we reach this point we will still have to face the biggest problem: the excess of debt. Right now we are still indebting us more and more as the quantitative easing still needs to be financed, as each and every infrastructure we may be trying to build, or every single measure taken to protect the weakest.
An interesting article from the New York Times wrote last month that the debt in the hands of the consumers had begun to recede from 98% of the Gross Domestic Product to 97%. Those were the good news. The bad news were that the debt in the hands of banks had not. And, according to the article, that debt stood at $17.2 trillion, or 121 percent of the size of the GDP of the United States, compared to 6% of the GDP half a century earlier. Yes, that’s a problem.
Still two final reflection in this already too long post: if households are saving more, that will have a long lasting impact on the economy as well, an impact that will last for sure much longer that the present recession. No more exuberant lending to households.
The other reflection is like this, what if we added to the debt held by households the debt that the governments are generating? They are the forced lenders after all. And if you look at the whole picture this way, the debt is still growing and growing… and the end is still further away.
Add comment 27 April, 2009
An unexpected impact of the crisis in project management (no, they are not lazy)
As the new terminal in Barcelona’s airport nears its completion and the trials are increasingly successful, we are increasingly dwelling into the depths of this recession / depression. No manager can have the luxury of forgetting the external environment, as it always impact us somehow, somewhere.
Sometimes project managers tend to think that they are insulated from the rest of the world. They have their budget, their plan, their milestones. Of course there’s a great deal of interaction with the customer and the stakeholders, but sensing the environment isn’t usually deemed necessary.
They are wrong.
I’m not talking here of budget cuts, or milestones changing. That could happen anywhere, anytime. I’m here referring back to an old post: Soft and hard human resource management (utilitarian instrumentalism versus developmental humanism) and the concept of the psychological contract.
There are many definitions of the psychological contract. For our purposes, let’s say that the psychological contract is the assumed relationship between employer and employee that includes a lot more than what’s included in the papers: what you’ll do for me, what you expect from me, including the promises I might have made, the way you expect to be treated, and the expectations you have for the future. Those small things you’ve talked with your boss about and the trust you have in him that they’ll be taken care of. If your boss lied to you, for instance, your psychological contract would be shattered, and your attitude with your job would dramatically change… for worse.
So, what’s in it for construction workers here? They are usually contracted through companies that have a working relationship with the companies that have been awarded the construction contract. There may be two, three, even four layers of agreements between them and the project. They may even work for several contracts, always ready to switch between one form of contract or another, everything transparent and irrelevant to the direction of the project, apparently.
But, what used to be the reality for them, that they went from one thing to another always having things to do and always earning money in one form or another, no longer holds true. Their expectations have dropped and, for many, next destination is unemployment. They won’t get bulky severance pays as many other layoffs. They will be simply be no longer required and no longer invited to participate in the next move. They will be have unemployment compensations, of course, but I bet they will be lower, for many reasons, than those of other kinds of workers.
So it’s no wonder they psychological contract has been shattered as well, as they expected to be able to keep living as they had been living. Not anymore.
And when is that going to happen?
The scary thing is that this is going to happen whenever they finish their job.
So, where is the motivation to finish as soon as possible? Do you think their intentions are aligned with the timeframe of the project’s direction? Obviously they are not. If they are not paid lump sums but depending on the days spent working, which is the usual contract as the lump sums are in higher layers, they will take as much time as they can. And with that they will also shatter part of the psychological contract.
I have been observing this effect. And this feeling is dangerously infectious as workers from one contract see workers from others procrastinating as much as they can. Moreover, this has no easy solution, as the usual ways of control are not responding effectively as they were never designed to overcome this threat or to better manage people, but to apportion and divide the value of the contract between several companies.
Sometimes, when we are thinking of leading our team to peak performance, we are forgetting to look around and realise how things are changing. We can name them however we want, but we can’t forget that, layers below, there is not a collection of resources: they are people.
Add comment 9 April, 2009
Listening (a reflection induced by a beacon)
Yesterday I took a few hours away off the hectic drumming of the new terminal to concentrate on a new project that I am leading: a new control system for the runways and taxiways lighting system for Barcelona’s airport, that happens to have the biggest beacon lighting system in Spain, bigger than Madrid’s.
This project has a very important difference to many other things I’m doing. It’s not focused on the big opening day but the completion date is one year later, in 2010. That means we can focus on understanding the problem, building a team, applying a methodology, generating buy-in with the final customer, expliciting the acquired knowledge and incorporating the best practices into the organisation.
We are also going to standardise the application. Coming from a bespoke application, it won’t be easy but my intention is to be able to build an standard that the organisation will be able to use in its 40-something airports. Closed applications are a thing of the past, we all know it but, instead of paying lip-service to it, this time we’re going to do it.
But, what was important is the personal reflection that arose after our working session. Just forgetting fire fighting for a while and listening to somebody that knew a great deal about the system and discussing various proposals of what we could be doing for our initial project viability analysis.
It felt so good. Listening, learning. I’ve been getting these kind of sensations thanks to my Henley MBA, but it was great to have the same sensation coming from an engineer’s discourse. Focusing in the input instead of the output as I’ve grown accustomed to be lately.
We all need to be able to take long perspectives into a project. Be able to plan, and consider alternatives. To flex our creative muscles and deploy our energies into constructing something new, more effective, something built constructively not on the unstable foundations of pressure.
We all need to sit back an listen, as humble as the boy (or girl) we all still carry inside, and learn something from people that know more than us. Be able to capture that elusive gist that will enrich each and everyone of us. Coming humble from humus, or ground in Latin, and humilis from lowly, every manager needs to be humilis habitu humilis et actu, that means humble in dressing (or garments) and in its way of behaving to be able to trascend the manager-administrator role into leading the project’s team to success.
1 comment 12 March, 2009
Never say no to upper management (reality will do it for you anyway)
In many organisations, bad news just go one way, and that’s out the door. Managers try to keep their superiors happy, and you bet they do, just talking more about the good things than the bad things. Who can blame them for that?
Well, you should. As I like to say, reality is stubborn. As stubborn as reality can be, and that’s a lot. When you try to make your boss happy, you are making a good deed… unless there are deadlines.
How can huge companies make huge mistakes when everyone knew they were not ready? Well, the leaders didn’t. Upper management really thought they were in a sweetened version of reality. And then an airport fails to work as it should, or a supposedly great product is a flop, or a huge investment in satellites is simply converted into flying junk. Whatever.
This bears an important relationship to what John Kay, a brilliant British economist, labels as the architecture of an organisation. If we see the information as the blood that flows inside the organisation’s veins, a good architecture will ensure that it reaches wherever it needs to reach: the right information to the right people that can make the best use for it.
That won’t happen in sclerotic organisations where there is lack of clear purpose, weak leadership. stakeholder conflicts, where failure is severely punished and where hierarchy is very important. Managers won’t have holistic perspectives at all, but tunnel vision instead. They will make erratic and irrational decisions guided by personal interests, maybe defending their clans and silos. Problems will tend to be assigned to someone else, or simply dissoluted around.
And bad news won’t go upwards. Only downwards. Think of “Why should I bother telling them while it’s not my responsibility to tell? Someone will realise” or maybe “If I put the spotlight in this problem, it will be my problem. Mind into my business.”.
If you add a pinch of “That’s the way we do things around here”, the recipe is made for cooking the ultimate failure. With its executives doped with tons of saccharine, the organisation will start behaving recklessly. And down below cooperation will give way to antagonism, combined effort to abrasion and erosion. Through the confrontation, we will be collectively driving looking through the rear view mirror… or even, while figthing crises one after the other, looking at nowhere at all… it’s only a matter of time…
3 comments 10 February, 2009
Banco Santander: a rising star (but not that bright)
If you’ve been reading in the news on how Banco Santander is covering its customers over Madoff’s losses, and how it’s been cherry picking some banks in distress, as well as not using the Spanish’s government toxic assets relief measures you’ll be thinking that they are a rising star. And they are, I won’t be the one to deny that, but maybe they are not rising as much as it might look like. In any case, in comparative terms, their are enjoying a privilleged position, especially because the rest of competitors are worse off. The star ain’t that bright.
Santander, a beautiful port city in the north of Spain
Let’s focus on the bank’s last announcement where they claim to be covering their customer’s losses. Let’s go deeper into the figures for some interesting hints.
The bank is including in its 2008 books an extraordinary expense of €500 million with that purpose. Wait! Weren’t they €1,680 million?
Okay. Here’s the trick. Santander is emitting new preferential shares, creatures born half-debt half-shares. Those, in 10 years will be worth €1,680 million less any increment of the initial fund deposit and the earnings to the present date of those funds (whatever that figure might be). What is insured is the initial investment, nothing else. It will be recovered not now, but in ten years. And with no actualisation at all.
For any investor that means bearing a couple of huge opportunity costs: the one already borne and the one that lays ahead. That’s how €1,680 million transform into 500€. The preferential shares will be liquid in ten year’s time. In the meantime yielding a mere 2% per year.
So, what should an investor do? Some will think about it, if its true that, when they invested, Santander was selling these funds as their own trademark, not referring to the real custodian behind. It’s great to sell something that works well solely under your name, as long as it keeps working well! And that entails a responsibility.
But many will simply sign this rebate deal and forget about it. And with the deal the compulsory renounce of any legal claims against Santander, and the curious obligation to keep working with them for the next decade. Not too bad for many considering the alternative of entering a judicial quagmire that will carry expenses for sure as uncertain the outcome may be.
And here comes the final reflection that, from my point of view, explains many things about the Spanish banks. People in Spain, unlike in the US, take their time to assume their losses. At the moment there’s not property market in Spain as people are not selling, waiting for hint of hope to recover what they paid for it. And, as long as there are no transactions, there are no prices.
With raising unemployment covered by benefits that won’t last forever, eventually, many people will have to face reality. So will the Spanish banks. If Santander is betting that, when this moment comes, the worst will be over and the economy will be going upwards, I’m really sorry to bet in the opposite direction.
Add comment 29 January, 2009
The tipping point of the crisis (are we there yet?)
It’s easy to talk about something when it has already happened. The crisis seems so predictable now (it was predictable before as well if you browse to older posts). Now the trick is about spotting the tipping point. Have we already seen the worst or are we going into a depression this time?
If we all saw it coming, why didn’t we do anything about it? Why sometimes prospects seem so grim and then, suddenly, hope seems to be around the corner?
I’ve got a theory about the tipping point, or how we are going to turn this around. It’s related to what Keynes called the animal spirits, not those of the American natives, but of John Maynard Keynes. Those that sharpen the edges of the market, turning optimism into euphory sometimes, and dismaying in despair sometimes. They are moody and impulsive, and sometimes the distance between hope and fright is as thin as a hair for them.
But the animal spirits couldn’t do anything without bodies. Inadvertently, we lend them our bodies, energies and enthusiasm. They act through us, so we should know something about them. We should feel them about to act.
Let’s read around. Who are we blaming for the crisis? The govermnents mainly, some obscure financiers, some not so obscure cons, other countries, departing leaders, distant wars… in short, we look around and find somewhere else to look at.
But this couldn’t have happened without our acquiescence. This wouldn’t be here if we all had avoided some things that, looking backwards, feel like common sense to all of us now. We didn’t have a say, yes, but we all could have had.
And how is all this going to change? How are we going to turn it around?
I can’t answer that. I am writing about when. And the when is not here yet. Only when we look inward, think of what we should be doing to change it all, when we finish the blame game and we act on responsibility instead, only then, we will have touched the bottom.
Until then, our animal spirits will keep dragging us down…
3 comments 21 January, 2009
Are we in a liquidity trap? (am I blind or is this another black swan?)
Liquidity traps are one of those obscure concepts hidden into macroeconomics books. Obscure enough to occupy some marginal comment only and disputed enough to be denied by the Austrian School of Economics. Ludwig von Mises would label them as myths. But, as mytical as a black swans that have recenty decided to come out of their closets and start teambuilding in the Thames, are we going to face this myth soon as well?
When Sir John Hicks thought of the IS-LM model, he already thought of liquidity traps somehow, but it was the first Baron Keynes (also known as John Maynard Keynes) who shaped the concept (did Ludwig von Mises need a better reason to label them as myths?).
The idea is simple. With the IS-LM model, cutting the interest rate is the scape from any recession, as we make more money available into the system to boost growth and employment. But, does more available money always equate more growth?
There’s a obvious limit to this: interest rates cannot be negative (hmmm, let’s leave it like this for a minute…) so there’s obviously a limit to monetary policies, that is when rates reach zero. Are we there yet? Well, the following table borrowed from Bloomberg can help:
Regardless of the fact that we are getting there, what if the rate where monetary policy became ineffective was not zero but higher? That’s in fact the idea behind liquidity traps. What if the banks and the firms -in short, people- became risk averse enough that they preferred the liquidity of cash to offering it to others at low rates?
In other words, what happens if the free-risk situation is no longer perceived as risk-free? How should this extra aversion to lending be rewarded?
The conclusion from Keynes was that there would be a point where monetary policies would be ineffective and the economy would remain trapped in recession. Then only fiscal policy, that would be a lot of government spending, would do the trick. But are we psicologically prepared for this extra spending and increased budget deficit and debt? Will the debt attract enough financing? Will the solution even deepen the liquidity trap by substracting even more money from the private sector?
There’s still a way to have negative interest rates and that’s thanks to inflation. After all with inflation our money inside the sock loses value every day. And an expansive monetary policy should raise inflation. (hmmm, look at inflation dropping and that other scary, even mytical word too: deflation) Even though, with a low enough interest rate, and with the current global scare, many people may choose to still leave it there.
Yes, a liquidity trap is a rare think. It may have happened in Japan long ago, even in the US in the previous recession (Krugman would say, and Reisman deny). May we already be into one?
Add comment 9 January, 2009
Back from Switzerland (and missing it already)
Back from Switzerland and missing it already. One week of skiing and cheese eating is not enough. I’m going to miss those great valleys, the Geneva Lake, the snow: Champery, Avoriaz, Morgins, Torgon, Chatel, the people, the order, the commitment to having the roads and the trains ready regardless of the weather (in Barcelona our distant-managed-from-the-capital trains just stop when it snows too much). Yes, I’m missing Switzerland already.
To my amazement I’ve discovered I speak an peu du French. We Catalonians are born bilinguals, breathing both Catalan and Spanish since we are born, so learning a third language is not that difficult as we are already wired for it. In my case my third language is English, which I am proud to say I am able to use it effectively. But when I was a kid, and TV channels were still a scarce resource, we lived close enough to the French border to watch French TV and Jean Paul Belmondo’s great action movies. (Catalonia spans a bit further north into France, cut by nation-states seeking natural limits, cutting that only a few countries survived: Switzerland is the most prominent example).
Sorry for the mental rambling. The fact is that I could understand French very well, and even managed to communicate. At the end of the week I even dared to make my first jokes in French 
Now, I have decided to improve my French. More things to do, still the same time. Business as usual for an MBA student. 
The great view is from Torgon, in the top of the Jorette piste. If you looked backwards you could see the Mont Blanc not that far aways, if you look down you can see the Genève (or Leman) Lake. The picture was not mine as mine wasn’t that good. On the other hand we had a lot more snow.
Now, time to work again. An airport and an MBA are waiting, so is my soon-to-improve French.
4 comments 7 January, 2009
