Posts filed under ‘Thoughts’
Recovery or rebound? (long lasting pains)
It’s always nice to hear that Japan has grown a 3.7%. It makes eye-catchy headlines. But if you go deeper you see that the figure is just the annualisation of a mere 0.9% between April and June, and that in the first quarter the slump was around 11%. What does that tell us about statistical significance? After all, interpreting the figures will always be mediated by our wishful thinking.
A quarter may take us out of a formal recession but won’t make a new trend. I am the first whose wishful thinking would like this to be over, but it doesn’t seem likely to me. Still a lot of pain to endure to reverse the trend. Many things are pending to be able to grow healthily, albeit I admit that growth doesn’t need to be healthy to be growth.
And when growth gets here again, there will be more pain to endure. Companies have made put themselves in protection mode, rightsized…sorry, I meant downsized; they may have made extraordinary things to get their products moving, to appease their customers and investors. Everything to get to the end of the tunnel. But that won’t be enough.
I hate to seem gloomy. I am not. My message here is quite simple. Even if we find the right path for recovery, we won’t be at the same place we’d left. Things will have changed. When the scared company opens its shell again, it may find itself in a very different place. Some currents will have dried out. Fortunately, and that’s where my optimism lies, new wells will start flowing, somewhere. But they won’t be at the same place we took for granted long ago.
Also we will have proven our customers there are other ways, that we can do more with less. That we can remove that slack, streamlined our operations, adjusted our overheads and given better quotes. Hopefully, they will have based their recovery on that, they won’t let us go back again to the previous business conditions. And we will have to adapt to that: more pain. The leakage of jobs will go on after the recovery is here. And no sense of urgency can last forever. Sometimes it’s easy to retrench than to transform oneself.
A silly example from my daily life. Calling from India to Spain five minutes costs 10€ with my Spanish cell. Driven by the necessity not to waste resources, the experiment is to do the same with my Indian cell: 54 rupees, which are approximately 0.85€. Do you think I’m going to use my Spanish cell here again?
Although this might seem irrelevant, it’s a sign that we customers are not that stupid after all.
Did you know that the Hilton Group is about to become extinct? Blackstone bought it for $26 billion in 2007, right now they owe $21 billion in debt. Refinancing that debt won’t cost that much right now, that’s not the problem. The problem is somewhere else: executive customers have massively forgot their loyalty to the firm seeking cheaper alternatives.
Did you know that the huge amount of money that Air India is losing just required its intervention? Probably you did. Same happens with other main Indian Airlines. The interesting part is that the low cost carriers that operate here are not losing money.
And when we are out of the crisis, if Air India and Hilton make it, surely by reducing prices and streamlining operations, the customers they will face will get accustomed to the new conditions and will keep asking more for less. After all their own streamlining depends on that. What used to be exceptional will become somehow the norm and the companies not aware of that change will suddenly open their shells in a dry desert.
New challenges (new continent, new airport, new terminal)
It’s been a while since my last post. Lots of things have changed. Suddenly I was pushed out of my comfort zone, something very healthy that we should experience once in a while and now, today, I realise this is the first day in weeks that I’m able to sit and reflect over what has been happening. And I also realise that a dose of personal development is what I currently need. You know my recurrent idea: it’s only when you reflect when you really learn!
So here I am, resting for a few days in an old strip of coast in Catalonia, a small thousand-year-old country that resists his identity to be dissolved into those huge empires of today and of the last centuries. This coast has witnessed countless invasions, and we’ve also invaded from here, made a Mediterranean empire and, as well, sent the boats that discovered America (yes, we did, although the Spanish Inquisition spent centuries to erase almost every trace of it, and to build a different story from another place that never had a good naval tradition, or good sailors, or even the willingness to discover anything).
But let’s not get into politics, and accept my apologies if I have offended anyone. After all the macro-economic data shows who works and who gets the subsidies in this unemployment prone Spain where some territories send the money for the others to keep procrastinating.
Sorry again. It seems that too much work has taken my knives out. Again, this is not about politics, it’s about entrepreneurship.
And I hate to boast, but this time I’m proud of having commissioned a terminal which with 544.000 square meters is the biggest in Europe, and, opposite to what happened in London or Madrid, it worked the first day. Yes, we did some things differently. Yes, we were also lucky. Yes, we learnt so many things in the process.
Well, the thing was that everything worked from day one. And kept working in day two, three, four and five…
On day six, I’m not sure what happened. I was on a plane. Day seven I was in India. Day eight I was starting a new project there. A local partner, new customer, new airport, new terminal, different continent, different culture, speaking in English 24/7, living in a different place.
And here I am still riding the wave. The beginning of a project is usually tough, specially when you got little time for the wheel to start spinning, specially when everything is different than what you used to have, specially when you’ve spent many years in a huge project, building a new airport from scratch, playing every role, mastering every trade.
This is what I wanted to share with you. I’ll keep blogging, this time from New Delhi, or Gurgaon. I’ll keep working, trying to have a small impact in another terminal: T3. I’ll keep learning, as I passed my MBA second year final exams, which happen to be the last ones. Now almost in my third year, I only need to finish an assignment for that.
And, in the meantime, Barcelona’s T1 keeps working 
Next post next week, back in India…
On reorganisation and micromanagement temptations in times of crises (holding the steering wheel tight)
Note to the occasional reader: I had this post saved from long ago as a draft and I decided to let it go like it is, I’m in a different mindset now… see next post which is really today’s
In times of crises, and by this I mean, for instance, when you’re in the latests stages of a project and you spend a lot of time fire-fighting (where have I seen that?), it’s more important than ever to keep in mind the structure of your organisation and use it for good.
What do I mean with that? Well, there are two well know roads that tend to be followed in this kind of situations:
- Forget about structure and just go straight-ahead-no-matter-what. We are all fighters and we can go down as much as it’s needs to be done. Many senior executives really love to envision themselves as being able to reach the ground level when necessary, even brick layering when they see fit.
- Focusing on structure: reorganising again. And with this new focus, we forget the problems at hand and we think of organisational architecture. Some senior managers love to envision themselves (again) as not rushed by circumstances but able to keep a cold mind. And with that suspending the activity of the organisation for the sake of more effectiveness and efficiency.
Neither is effective at all.
The first kind thinks that setting an example is useful, which is not exactly true. You expect a captain able to know every detail about his boat, true, but his main purpose is to steer the wheel. When the conductor of an orchestra starts playing the piano, the rest of the orchestra, mesmerised, feel as if they were directors themselves, and look at the empty place in front of them with scepticism, and the senior manager playing along in disgust. Instead of leading the way, this senior manager is seen as exercising and hipocritical and unsustainable exercise.
Please, don’t micromanage us if you still want our initiative! Otherwise brick layering will turn into brick breaking.
The second group think that it’s trading off time for effectiveness. But in fact is wasting both. Crises are not the best occasions for organisations unless you want to make a crisis-prone organisation.
To change, there has to be the will to change, which will hopefully melt the existing structure and (a small) part of the culture, and a road to follow, a new vision, a new strategy to be implemented that will derive a new structure, that will have to be built and solidified. Does anyone really think that can be done in the rush-hour? I don’t.
What we risk is increasing the chaos, destroying the slowly established learning-by-doing that make the organisations increasingly efficient, is simply a waste of time and energy.
Then, what should we be doing? Structure is still important, yet it should be interpreted flexibly. That doesn’t mean it should be forgotten. Leaders must lead more than ever, inspire more than ever and, if they want managers to be entrepreneurial and problem solvers, they need to keep away from blame orientation at all times and be the first to adopt a problem-solving mindset.
In the moments of stress and crazyness, that’s when you need leader the mosts, to guide, to nurture, to worry about people, or at least to prevent them ending up throwing bricks at each other.
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.
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!
Green shoots, maybe, but don’t expect flowers
I’m increasingly growing wary, or even tiresome, of anyone that talks about green shoots. Yes, put a lot of fertiliser over a bed of rocks and something will grow on that. Mostly weeds. After all, weeds are green, but they don’t make nice flowers.
After pouring so many fertiliser taken from the forced lenders throughout the world (yes, we and our descendants are the forced lenders, and the fertilisers are the billions of dollars irresponsibly poured everywhere) what else is there to expect than a few green shoots?
But one thing is to have green shoots, and another one is to have a sound recovery. That needs to be sustained on healthy fundamentals, which we don’t have now.
Okay, maybe we are not falling that fast… so what? Even the most bullish markets have relevant corrections, why shouldn’t the bearish? That is some hope in midst of despair, true, but the despair still has a sound reason to be.
Hiding things in the balance sheet, having assets that don’t reflect real prices, is not the way to recovery either. First we need that atonement, that reconciliation with reality, that would be a real stress test, after a previous sanity check: let’s value things for what they’re really worth.
And in the meantime the GDP of the Euro countries has contracted more than 10%. Germany is contracting more than Spain, with an unemployment growth rate 1000% bigger. We, who were the main sinners, are weathering the storm better? Something tells me that the methodology that we are using to calculate our GDP, given the fact that we have to remove seasonal effects being a touristic country, is delaying the changes to the real data. But something also tells me that the most inflexible labour markets are exhibiting those same troubles that don’t let them flexibly grow, only applied to contraction. There’s plenty for all of us.
Hmm, I’m so sorry to be negative but… let’s prepare and get ready, because those shoots are bound to whither and the worst is yet to come.
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.
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.
Moving from the tyranny of success to the crisis-stifled innovation
Yes, your company used to work so well. You were succeeding. And since you were succeeding and you were the incumbent, you needn’t innovate. Well, of course, you were better than that and you decided to innovate anyway, letting go some leash and opening some space for incremental innovation, probably parting from your customers and clustered companies suggestions, and put up some resources to think of new ways of doing the same things, or even new things. You were great.
So, let’s agree that your successful company innovated in any case, at least namely. But you were in a disadvantage with respect to new smaller entrants, that did not have a strong corporate culture to protect, and some rules to adhere to. Yes, you did have those, as that was the culture that helped you to be successful in the first place, and the first thing you’d need to do, if you were not successful, in your turnaround strategy, would be to build a new, aligned and strong culture anyway.
True divergence, the one that was contrary to everything you held dear, had to be repressed. That success was the tyrant that stifled innovation, till now.
The tyrant has died with the crisis. Now you’re no longer that successful, but prone to crisis-fighting and worried about keeping your ground. Who thinks of innovation now? Surely you know about the importance of innovation, as the innovators now, the ones that rethink the business and learn the ropes of the new rules, will be the winners of tomorrow, but, what about those innovators that bend the norms, destroy capabilities in order to build new ones, ride through the waves of creative destruction inside your company. Couldn’t they wait and not to bother too much until a better time comes? Aren’t they annoying?
Yes, they are the traitors that are breaking the ranks precisely when you needed everyone unconditionally by your side, to put up the fire.
Innovation is stifled again… different reasoning… business as usual.
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.
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