Risk & Commodities

About technology, business & management issues..

  During the last decade the commodities markets have experienced sharp fluctuations particularly strong price rise in oil prices, grains and some precious metals. This has led to farmers, industry, mining and petroleum related industries to suffer from year to year uncertainty.

The reasons are many: from long and protracted drought in the prairies of Russia and China, as the depletion of oil reserves in the Gulf of Mexico to the announcement by the U.S. government to support ethanol production based on corn.  So, how to establish mechanisms for producers, intermediaries and distributors to ensure a profit margin and create a foundation to grow their business?

Aristotle  mentioned  Thales of Milete as the inventor of the concept of futures contract by menas of an olive harvest in ancient Greece. Thales was  such an accurate predictor of how the conditions of the olive harvest would be months before it and this allowed him to establish price contracts with producers which in turn guaranteed in advance the price of it, avoiding both the vagaries of the market wreck at harvest.

But these financial vehicles not seem to have done to implement in many industries whether unions or organizations associated regulators have decided not to implement or have not been able to craft the right model for it.

There is a whole opportunity for the development of financial engineering vehicles to establish conditions for protection against the risk of volatility commodity prices.

The question remains whether there will be no other interests,  which are clearly  blocking the establishment of such vehicles.

www.clarensyst.com.mx

The eternal micro manager.

About technology, business & management issues..

   It was over a restructuring process within the company in which  I had collaborated for eight years when I realized it.  Senior Management had hired a consultant who worked out a pretty decent proposal and rationale for the size of the company at that time. "We are building the foundations of the enterprise for the next 20 years," said one of the managing partners.

The idea seemed perfect: professionalising the business, find performance metrics of the contributors to avoid subjectivity and to define roles and processes within the company. Create a structure in order to create a career path within the company itself (¿naive?).

But the owners could not get rid of the micro manager buried deep inside of them. That little devil in all of us that constantly tells you that you do not  need to delegate anything to your subordinates (nobody can do  it better than you !) that you need to check them out all the information generated or passing through them (why trust them?) and that planning meetings are merely a constant exercise of accountability that only strained relations between owners and delegates.

How to avoid the cancer that exists in virtually all businesses in the world? I think it is impossible to eradicate it: every business owner feels like he is the next incarnation of Steve Jobs so their bad manners and contempt and capricious treatment are fully justified.

Perhaps an effective tactic, as mentioned by the founders of 37 signals in his book REWORK,  is to avoid the maximum weekly meetings. As Jason Fried mentioned it, they have no particular target, people do not come prepared, are ambiguous in their objectives and always, always a fool wants to get the attention in the meeting and he thinks he has to share his wisdom with all.

www.clarensyst.com.mx

Agile business.

About technology, business & management issues..

It's been 11 years since Martin Fowler and 17 other programmers released a manifesto called Agile Software Development. The manifesto,  a highly praised ideological tool for people in the field of technology was a simple document which sets out some principles of a methodology to develop software more quickly and objectively.

Since that time the term and concepts have been applied to various aspects of enterprise development, particularly in start ups. Arguably, the lean start-up is a unique version adapted from the principles of ASD but with their particular characteristics.

The ASD emphasizes software development and the creation of a methodology that contrasts with the waterfall model which implies the full development stage of software before its testing phase has started.

If we make the extrapolation of these concepts to the idea of starting a business or a personal project, this is a valuable tool since it allows the flexibility to make changes to the business model necessary to ground the idea in a practical and concise way, without dogmas of faith or prejudices who die hard.

Figures determine the premises, but once put them on paper, developing and implementing action processes should be a dynamic exercise and constantly changing to adjust as needed. This would be like a properly calibrated weighing scale industry or  a simple called action to just tune into your  favorite radio station.

Test, tweak, edit and start over. It should not be so complicated.


www.clarensyst.com.mx

The business model: theory and reality.

About technology, business & management issues..

About ten years ago arguing with a former employer, a group of young people in their twenties ,who were part of the management team that run the projects where the company was involve, were not really keen on his claim. Those meetings stressed out the fact that the business model of general corporate and the one of  individual projects must be realistic and that these changes should be communicated to those affected. - "The projects are just perfectly in theory, in real life the dynamic is different, "- he said frequently.

The memory came to mind after talking to several people who are frequently faced with the grim reality of the business or a single investment project that has not been undertaken as they had planned in their minds. The reality was very different from the theory.

The reasons are many and countless: the entry of an unexpected competitor (in business with few barriers to entry), lack of funding (no more personal & family savings), volatility in prices (for projects that invest in commodities ) excess in sales and marketing  budget(if  you want to get into horizontal markets) and to the impossibility of finding a profitable business model in the short and medium term (tech-related companies).

The funny thing is that people get scared as if this were not the common denominator of any venture that has been started, as if fate had taken a fancy to make them fail.
The reality is that when this happens the easiest thing to do is understand the dynamics of business and make the proper adjustments to pull it off. This is especially important in technology companies that handle many dogmas as excess investment (usually raised capital) or reaching profitability in the long term.

Many of the lean startup philosophy applies in these situations. Applying common sense, if decisions are quick and assertive, if you remove the dogmas of the mind then you can adjust on the run the business model and surprisingly fix what was supposed to be broken.

www.clarensyst.com.mx

every.cloud

About technology, business & management issues..

It's funny how ideas arise in the minds of people. While spending hours in front of my computer in a room of 5 x 5 meters in a cold room of a university town in Wales ideas seemed to come from nowhere. Maybe it was the cold wind from the North Sea, perhaps it was loneliness that allowed the ideas flowing.

How to harness the trend of "cloud computing" in the context of SMEs in a developing economy like Mexico? How to make it accessible, easy to use and that met the Mexican reality? Under these assumptions the idea of ​​every.cloud was born.

The idea was to create a platform where SMEs could create their own collaborative ecosystem. The goal was for companies to use the Internet to communicate, generate information, reports, data exchange, creating value in the sales process. How to create something simple and useful, without pretensions or ambitions beyond delivering excellent customer service ?

Many questions and no answers at all. What target market? How to communicate the idea? What is the real possibility of adoption by SMEs? Does the service must be paid or a free one?

    After months of thinking about it, chewing it,  rejecting it, adjusting it, discussing  it and finally achieve it in a couple of real products that originated every.cloud as a web platform.

Coming soon it  will be available through the web and then we can verify that it complies fully with the purpose for which it was created: to provide a web tool to micro, small and medium enterprises in Mexico.

Businesses & social networks. Overrated?

About technology, business & management issues..

      Earlier this week I was checking the contents in several journals on politics, business, marketing and technology. Not surprisingly I found the common factor in virtually all of them: the use of social networks and support in political campaigns, social partnerships between businesses and individuals and as a means of online advertising for small businesses.

A couple of days later I read the article about a company in northern Mexico created by young entrepreneurs. The company has created a platform which offers various products (from a social network which enhances relationships between transport´s suppliers to car wash dealers). The products and their quality varied greatly: some looked like pretty good ideas and some just had no reason to be or didn`t appear to satisfy any demand for any particular market.

The funny thing is the advertising they set out: in all of them it created a social network among its users and, depending on the case, with third parties. After thinking a bit I asked myself: what is the added value or competitive advantage for using or subscribing to an online service that allows me to make contact only with suppliers of steel products for car-manufacturing industry and not to join any other group specialized within a social network like facebook, linkedin and Google +?

My logical answer was: nothing at all. Perhaps at that time was that I thought that many services that offer mere social networks are overrated. The social network offering should be integrated with another value within the same platform they offer. This integration can be a management inventory web tool, a database based on human resources, a forum for buyers and sellers of commodities or whatnot. Any other tool that will help the company improve its status quo as the social network will hardly alone do it.

No doubt if the creators of these services do not understand that social networking is more a means than an end in itself then the products will be doomed to failure.

No need to reinvent the wheel. Connecting people with similar tastes, interests and relationships is already happening. The services are being offered by the big players. If you do not add something else to the social network then there is no tangible value that any client may perceive as valuable and necessary for their business.

www.clarensyst.com.mx

Microcredit & connectivity

About technology, business & management issues..

      It was in the early 70's when Muhammad Yunus started the project of granting small loans to lower-class in impoverished Bangladesh. This exercise regimen introduced in late 70' & early 80's consolidated Grameen Bank in Bangladesh. Thereafter and in many developing economies Grameed Bank has given billions of dollars in microcredit.

 The objective of the Grameen Bank is lending to people who do not have assets that serve as collateral or have previous credit history. Obviously these people do not have stable jobs.
Microcredit does not establish formal contracts so that only the borrower is expected to honor his word to restore his credit and interest which, in comparison with commercial banks, are insignificant.

One could argue whether microcredit is a panacea or not  to all  problems of the disadvantaged economies or if the credit actually encourages the creation of more SMEs and generating jobs. Certainly it is an instrument that helps a lot but that alone will not solve all the problems in poor countries.

Recently Yunus has emphasized, together with other experts in the field, the need for affordable sources of credit for people and with favorable conditions for subsequent payment. Just spoke about the need for emerging countries to ensure coverage of Internet and mobile telephony.
It is easy to understand that a facilitator in the creation and maintenance in SMEs is communications. The clearest example is not far from Bangladesh:  in India there are over 900 million mobile phone users and just over 100 million Internet users. This has caused the average growth of the domestic economy of India in the last 15 years to be greater than 5%.

It is strange to see how some analysts decry the fact of cheap credit and access to telecommunications as a growth factor and job-generation in a developing economy.

No doubt the fact that there is a capitalism with a social objective which cannot harm the economic interests previously established and whether it offers a window of opportunity to many people trying to improve its economic environment.

www.clarensyst.com.mx