How managers make good decisions...

What is termed a “good” decision?

Some of these elements go into a good decision:

Make sure you’re solving the right problem in the first place. It is important we understand the problem and not make any premature assumption. Jumping into conclusion will lead to failure in making what is right or wrong. Be clear about what you are looking at. For example, are you trying to maximize profit margin or just trying to stay alive and minimize loss? Gathering the right information, including information about uncertainty, which is essential if you want to choose the best option.  Reasoning out the right choice and includes what you know and what you don’t.  A commitment to make it happen, since a decision is no stronger than its weakest link.

Where do leaders fall down when making decisions?

They fall down on all these elements. In some organizations, managers don’t get the information they need to make a decision, so they end up having to make decisions based on experience and intuition or wrong feedback from subordinates. Sometimes distorted information were passed on to the management level thus leading to wrong decision made.

Does personality type determine decision making?

Yes, people become aware of their natural biases and habits, it becomes easier to avoid them. People may tend to procrastinate or focus on the big picture and the creative part. Your habits will get you in trouble if you don’t watch out and most people drag a problem into their comfort zone instead of solving it.

How do you evaluate the success of your framework?

Here’s how we figure out if it made a difference: We take a decision and try to document what people would have done otherwise, which is called the momentum strategy. Then we compare the best choice they make with us to the momentum strategy they would have used. We can now say pretty clearly that our approach avoids lots of downside errors. It avoids value destruction and creates a lot of value. Most people leave a lot of value on the table when they make intuitive decisions.

Managers basically make these types of decisions:

Strategic decisions- Managers have weeks or months to make these decisions, which have life-shaping effects on a organizational or management level. Strategic decisions are very important, involve significant uncertainty and complexity, and are hard to think through. Such decisions are costly and it may require various levels of brainstorming before the final "say" is made.

Typical decisions- These decisions often come from team meetings that last a few hours. They can have a big impact, but they are frequently tactical in nature and arrived at through a collaborative process. Usually these are made day-to-day so that the project or work process are not held up by delay in decision making.

In-the-moment decisions- For decisions made on the fly, managers use a different part of the brain that emphasizes rapid pattern recognition. Beginning with limited or incomplete information, they habitually look for similarities to experiences they’ve had in the past.

Facing Risk of Cyber War !

New technologies have revolutionised warfare, sometimes abruptly, sometimes only gradually: think of the gunpowder, aircraft, radar and nuclear fission and some have been working alongside computer information technology. The internet have transformed economies and given Western armies great advantages, such as the ability to send remotely piloted aircraft across the world to gather intelligence and attack targets within accuracy of a few meters range after travelled few thousand kilometers. However the spread of digital technology comes at a cost and it exposes armies and societies to “digital- 010010110” attack.

The threat is complex and potentially very dangerous and modern societies are ever more reliant on computer systems linked to the internet, giving enemies more avenues of attack. If power stations, refineries, banks and air-traffic-control systems were brought down, people would lose their lives. Yet there are few, if any, rules in cyberspace of the kind that govern behaviour, even warfare, in other domains. As with nuclear- and conventional-arms control, big countries should start talking about how to reduce the threat from cyberwar, the aim being to restrict attacks before it is too late.

Cyberspace has become one of the domains of warfare, after land, sea, air and space. Imagine the failure of the systems that keep the modern world turning and as computer networks collapse, factories and chemical plants explode, satellites spin out of control and the financial and power grids all come to a halt. That seems most threatening to all, yet most agree that infiltrating networks is pretty easy for those who have the will, means and the time to spare. Experts know this because they are such enthusiastic hackers themselves. Spies frequently break into computer systems to steal information by the warehouse load, whether it is from Google or defence contractors. The cyber-attacks on Estonia in 2007 and on Georgia in 2008 (the latter strangely happened to coincide with the advance of Russian troops across the Caucasus) are widely assumed to have been directed by the Kremlin, but they could be traced only to Russian cyber-criminals. Many of the computers used in the attack belonged to innocent Americans whose PCs had been hijacked. Companies suspect China of organising mini-raids to ransack Western know-how: but it could just have easily been Western criminals, computer-hackers showing off or disillusioned former employees. One reason why Western governments have until recently been reticent about cyber-espionage is surely because they are dab hands at it, too.

As with nuclear bombs, the existence of cyber-weapons does not in itself mean they are about to be used. Moreover, an attacker cannot be sure what effect an assault will have on another country, making their deployment highly risky. That is a drawback for sophisticated military machines, but not necessarily for terrorists or the armies of rogue states. And it leaves the dangers of online crime and espionage.

All this makes for dangerous instability. Cyber-weapons are being developed secretly, without discussion of how and when they might be used. Nobody knows their true power, so countries must prepare for the worst. Anonymity adds to the risk that mistakes, misattribution and miscalculation will lead to military escalation—with conventional weapons or cyberarms. The speed with which electronic attacks could be launched gives little time for cool-headed reflection and favours early, even pre-emptive, attack. Even as computerised weapons systems and wired infantry have blown away some of the fog of war from the battlefield, they have covered cyberspace in a thick, menacing blanket of uncertainty.

One response to this growing threat has been military. Iran claims to have the world’s second-largest cyber-army. Russia, Israel and North Korea boast efforts of their own. America has set up its new Cyber Command both to defend its networks and devise attacks on its enemies. NATO is debating the extent to which it should count cyberwar as a form of “armed attack” that would oblige its members to come to the aid of an ally.

But the world needs cyberarms-control as well as cyber- deterrence. America has until recently resisted weapons treaties for cyberspace for fear that they could lead to rigid global regulation of the internet, undermining the dominance of American internet companies, stifling innovation and restricting the openness that underpins the net. Perhaps America also fears that its own cyberwar effort has the most to lose if its well-regarded cyberspies and cyber-warriors are reined in.

Such thinking at last shows signs of changing, and a good thing too. America, as the country most reliant on computers, is probably most vulnerable to cyber-attack. Its conventional military power means that foes will look for asymmetric lines of attack. And the wholesale loss of secrets through espionage risks eroding its economic and military lead.
Maybe the economic crisis and oil spill saga are the least to worry for now, let's start looking at our IT infrastructure, our network lines, our fast speed cable, etc.........  and who knows, the North and South Koreans may not be looking at "solid" weapons launching but "soft-launch" attack through the cyberspace.

Recently early July2010, DBS Bank's computer system broke down with a technology glitch and has disrupted business and raised some customers' hackles.  But it is a timely reminder that systems can - and do - go down and such incidence could be linked to "cyber attack" or either techno fault and till the investigation result is out, it is either a good guess.

A quick scan of news headlines reveals the downside of the technological workhorses that businesses, governments and the general public have become so dependent on. 'Asia stock plunge raises alarm on trading'; 'Nikkei slump caused by bank system fault'; 'Computer glitch slows air travel'; 'FAA computer glitch delays flights across region'; 'Million users hit by Yahoo/Google/Baidu shutdown'; and on and on.

Computer failure has caused city-wide power outages, aborted rocket launches, forced large-scale vehicle recalls, and triggered airplane and train malfunctions and crashes. Seen in that context, the loss of access to bank ATMs and online banking facilities might not seem as critical.  What if all these are triggered by someone out there who has hacked into the system vault and managed to carry out an attack on the software system ?

And what if, despite all reasonable effort, a system glitch occurs? The principle remains the same: a contract has been broken, trust has been breached, and immediate steps should be taken to redeem the contract and restore that trust. Restoring the system in the shortest possible time is an essential first step; but equally important is keeping the customer in the know - not in the dark - right from the beginning. An immediate announcement that the system is down, accompanied by an apology - it's not so difficult, really.

And going forward, the post-mortem, the search for the reasons for the breakdown, should be transparent. What were the exact factors that caused the crash? What could the organisation, and the technology provider, have done better? The customer deserves to know. Of course, prevention is better than cure. So, hopefully, the recent bank system breakdown will provide fresh impetus to other organisations to review their own networks and processes. Not just dollars would be saved - possibly lives too if the extent of hacking into the vault is tantamount beyond ones imagination.

More Safety in future Rig design and operation? More cost ?

The aftermath of the Deep Horizon rig explosion in the Gulf of Mexico has left a lot of lesson to be learnt for those in the offshore industry as well as those classification socities reviewing and approving the design and construction of rigs in various region in the world. For the majority of those who are non-offshore industry people, an oil well gushing uncontrollably into the sea for over two months seems bewildering and there still is no sign that BP, having mobilised many rigs and support vessels, is able to plug the powerful gush and luckily the recent Tropical Storm Alex veered away from the Gulf of Mexico oil spill Saturday but experts warned that strong waves and winds could still upset efforts to halt the environmental disaster.

For Americans, the accident has been catastrophic and costly, and for the offshore oil industry, the reputation has taken a severe hit. US President Barack Obama and his administration are also feeling a political backlash. The widespread pollution as a result of the gushing oil is wreaking havoc on the ecosystems of the Gulf and the livelihoods of affected Americans. Entire industries across the Gulf coast, from fishing to tourism, have been devastated. This makes the issue a political hot potato on top of everything else.

The political and regulatory fallout from this disaster will be analysed and discussed for many years, as happened following the Exxon Valdez oil spill some 20 years ago. New regulations to govern the industry are already in the works, and hopefully the commissions of inquiry and Congressional hearings will produce conclusions that will be helpful and instructive for the industry. But the question remains: how is it that the world's most powerful nation - with the most sophisticated scientific and technological resources at its command - looks so helpless in the face of an oil leak? It must be asked: is leaving the job of plugging the leak to just one company a satisfactory approach? It's high time the Obama administration considered the possibility that this is something BP cannot solve on its own. There is also the danger that as the bills mount, and its run of unsuccessful attempts continue, BP may just give up the ghost.

The option of pooling global resources and tapping the collective expertise of the entire oil industry should be seriously examined.

Meanwhile, for us in Singapore, the Deep Horizon rig disaster contains a cautionary lesson. We must remember that Singapore is not just an international maritime hub, but also the world's biggest oil rig builder. Keppel Offshore & Marine and SembCorp Marine together account for around two-thirds of the rigs built in the world currently. Our port and waterways are among the busiest in the world with most of the oil tanker fleet plying this route. Woe be the day when a manufacturing fault of a Singapore-made rig becomes the cause of a disaster elsewhere. Or when a major accident of a similar nature occurs close to our own shores as seen recently, the spill occurred when the Malaysian-registered tanker MT Bunga Kelana 3 collided with the St. Vincent's and The Grenadines-registered bulk carrier MV Waily in May2010 at the Singapore Strait about 13km to the southeast of the city-state's east coast.

Such minor spill have already created much inconvenience to shore lovers, sea-going businesses,etc.

The oil industry will continue to boom for several years yet. But as the Deep Horizon disaster has made clear, it is an industry exposed to unpredictable and enormous risks. The need for safety first cannot be overemphasised. And if that calls for tighter regulation here as well, so be it and we as rig builders in Keppel O&M will have to take a further step to look at our rig designs and what kind of possible prevention or pre-empt to the future possibility of repeat incident and upholding and sustaining the reputation of "world class" rig builder in the offshore business sector.


Mid July 2010, BP has halted the Gulf of Mexico oil leak for the first time after struggling to cap the well for three months, raising hopes yesterday that the worst oil disaster in United States history may finally be ending.


In London, BP shares were up after the latest development in a disaster that has cost the company US$3.5 billion (S$4.8 billion). Compensation for damage caused by the oil spill could reach 10 times that amount.

Mr Obama, who has encouraged, cajoled and outright ordered BP to stop the leak, welcomed the news as 'a positive sign' but reminded everyone that 'we're still in the testing phase'.

BP is hoping to choke off the oil flow from the well, estimated at between 35,000 and 60,000 barrels a day. But doing so from the top could force oil out in new leaks if the wellbore has been damaged.
During the tests, engineers will take multiple readings from the 9m capping stack placed on top of the wellhead on Monday to monitor the pressure inside. High pressure readings would allow the three valves to remain shut and the well would effectively be sealed, but low readings could mean there is a hole or holes somewhere else in the casing of the well where oil is escaping. After 48 hours, the engineers will open up the system again and begin capturing the oil through two surface vessels to allow a new seismic survey to be done, said the official in charge of the US response, Coast Guard Admiral Thad Allen.

A final solution is not expected before the middle of next month, when crews will complete the first of two relief wells, allowing the oil reservoir to be permanently plugged in a 'kill' operation.

The disaster began on April 20 when the BP-leased Deepwater Horizon oil rig exploded 80km off the coast of Louisiana, killing 11 workers. Two days later, the still-blazing rig sank to the bottom of the Gulf.


Oilwell Plugged

Reforming business schools a must ?

World’s leading business schools are changing their course syllabus and re-making their business school image ensuring they catch up with time and the reputation upheld with high rating. This year Harvard Business School (HBS) announced the appointment of a new dean, Nitin Nohria, a first-class choice. The Kellogg School at Northwestern University has also recently selected a new head, and the Judge School at the University of Cambridge, the Ross School at the University of Michigan and the Booth School at the University of Chicago are all in the process of doing the same. Our local uni business faculties (NUS,NTU,SMU) are also trying to boost up it's image and maintaining the international standard every year and they too have excel in the top lists of preferred MBA courses in many of surveys done.

Elite business schools are plagued by self-doubt and the financial crisis has dealt them a double blow. It has damaged their pristine images, because so many financial analyse and bankers are MBAs. It has also dented their market: Wall Street laid off 240,000 people in the 18 months from the middle of 2007.

The business-school boom depended largely on the idea that MBAs were entry tickets to the world’s two most lucrative professions: investment banking and consultancy. These trades not only consumed more than half the graduates of the leading schools. They also underwrote the schools’ finances: students were willing to pay US$100,000 in fees and living expenses (and forgo even more in income) because they were all but guaranteed jobs in these high-paying industries.

Criticism of MBAs extends beyond consultancies and banks. People in many industries worry that business-school professors are more concerned with pure theory than with practical management (promotion is usually earned by publishing articles in academic journals rather than by teaching, advising businesses or gaining managerial experience). The professors themselves complain that their students are spending ever more time looking for jobs and ever less time studying. These problems are already taking their toll on the two-year courses that once constituted the ideal of business education. Students are gravitating to one-year MBAs, which are offered by 70% of European business schools, and more specialised courses. Lower-ranked business schools are already finding it harder to fill their places. The elite worry that the trend will eventually catch up with them too.

Yet business schools have an important asset: they are remarkably flexible compared with the rest of academia. Even before the financial crisis they had begun to implement far-reaching changes. Both Stanford Business School and the Yale School of Management have changed their curricula radically in the past few years. Business schools are also moving to globalisation. INSEAD led the pack by opening a second campus in Singapore: all its students have a chance to study in Asia as well as Europe. Almost everybody has leapt on the bandwagon. Of course business schools must not lose sight of their primary function. We must remain faithful to academic rigour and excellent teaching. Yet at the same time we have to regain the entrepreneurial fervour of the past; the world expects more than good functional graduates. Recent times have underlined the need for managers capable of taking a fresh look at opportunities unafraid to forge new alliances and practices outside of the norm. Schools have also struggled to make their courses less theoretical. Yale has replaced conventional subject-based courses (marketing and so forth) with “integrated” courses based on “constituencies” (such as investors, customers and employees). The University of Michigan’s Ross Business School gives students a chance to work with, say, hospitals in India and energy companies in Mozambique. Most schools are trying to employ more people with practical experience.

The new generation of deans will undoubtedly preside over dramatic changes. We must play the role of an entrepreneur in its purest meaning. It is no longer enough that we concentrate on functional training. We must constantly scan for projects to which we can add value. Once found, we must take a more developmental, consulting role, helping the project’s different stakeholders—companies, public bodies, research centres and universities—to create and manage the organisation.

Is the "Rising Yuan" going to help?

FROM a global perspective, the world has every right to expect large surplus savers, such as China, to reduce outsize current account surpluses. At the same time, the world community needs to be fair in putting equal pressure on large deficit savers, such as the United States, to address its saving problem.

Is it wrong to insist that China’s global rebalancing imperatives be addressed by a realignment in a bi-lateral exchange rate with the dollar. What matters most insofar as global imbalances are concerned is China’s broad multilateral exchange rate. China can hardly be accused of manipulation vis-a-vis the rest of the world. In real terms, the trade-weighted renminbi is up 7.5% over the past six months and fully 20% over the past five years. These is good reason to believe that a pro-consumption structural policy agenda, is likely to be a central feature of the upcoming 12th Five-Year Plan, could achieve far greater traction in promoting a timely and effective rebalancing. There is good reason for China to view a tight RMB/dollar relationship as an important anchor for an embryonic financial system. Washington’s China complaint seems especially off base when it comes to the renminbi. Yes, the United States has a large bilateral trade deficit with China. But it turns out that America ran trade deficits with over 90 countries in 2008-09. Given the unprecedented shortfall of US saving—a net national saving rate of -2.5% of national income in 2009—the US must import surplus saving from abroad in order to grow and run massive current account and multilateral trade deficits in order to attract the foreign capital.

Without a fix to America’s saving problem—highly unlikely in an era of trillion dollar federal budget deficits—forcing the Chinese to appreciate the RMB versus the dollar, or imposing trade sanctions on them if they don’t, is like rearranging the deck chairs on the Titanic. It would shift the Chinese piece of the US trade deficit to someone else—most likely to a higher cost producer.

IT ALL sounds so simple. Let the renminbi appreciate and the world's economic problems will be solved. Yet, when you think about it, this is a distinctly implausible claim. The idea that an adjustment in one relative price in the entire global economy will rid the world of imbalances and lead to a new economic nirvana doesn't really make sense.

There are doubts to these and they need to relook at some of the pending events :

The Japanese yen has risen dramatically over the last forty years—from JPY380 against the dollar at the beginning of the 1970s to around JPY90 more recently. Despite this momentous rise, Japan's current account surplus has steadily gotten bigger as a share of its GDP. When the Japanese tried to do in the late-1980s exactly what is now being asked of China—shift away from export-led to domestic demand-led growth—it all ended in tears.

The Japan's experience shows, countries run current account surpluses for structural reasons that may have nothing to do with the value of the nominal exchange rate. Inadequate social security provision and a poorly-developed consumer credit system undoubtedly play a big role in boosting savings relative to consumption in china's situation. China uses a currency target partly because of a lack of credible alternatives. No one has any idea of what is really going on with Chinese money supply while an inflation targeting regime is highly problematic for any country with low per capita incomes, where the typical consumer basket is heavily weighted towards food and energy, the prices of which are highly volatile from year to year.

Discussion of the nominal exchange rate ignores the obvious point that it's the real exchange rate that ultimately matters. Let's face the fact, China was cut off from the rest of the world for over 500 years. Now that it's opening up, it can flood the world with workers who are prepared to accept wages a tiny fraction of those being paid in the West. Western workers have enjoyed a "monopoly" on access to global capital for most of the 20th Century, rewarding themselves with wages well above the market-clearing price. Nominal exchange rate adjustment won't prevent Chinese workers from undercutting their Western equivalents.

Admittedly, the terms of trade will likely move in China's favour whether or not there is nominal exchange rate adjustment. But the way that's playing out at the moment is through some hefty wage increases in China accompanied by deflationary pressures in the West. Whether through nominal or real exchange rate appreciation, however, this simply means that China's buying power over the world's scarce resources will slowly improve and, by implication, the West's will diminish, most obviously through rising commodity prices in dollar or euro terms. A rising Chinese real exchange rate will lead to a redistribution of income from commodity-consuming to commodity-producing nations.