Posts Tagged ‘Exploiting Change’

By Richard Martin

We need to talk about the economic impacts of the Ukrainian invasion on Russia and, by extension, China. Key strategic takeaways:

1) Russia is heading toward an autarkic situation, with trade limited to China and other countries in the Axis of Lies. In essence, it is in the process of becoming a huge North Korea.

2) Russia needs Ukraine for its resources and productive capacity (Lebensraum).

3) China is crucial to Russia to provide markets, access to capital, and a conduit for advanced technology and outside innovation.

4) The United States must lead the West in cleaving China and Russia apart and play them off against each other, as was achieved with the Opening to China strategy of the 1970s.

5) The United States and Canada should stop tilting at windmills – literally and figuratively – and ramp up production and export of hydrocarbons, especially gas, to supply Europe, Japan, and other friendly and like-minded nations.

Most Western countries have imposed a raft of economic and financial sanctions on Russia since the invasion began on 24 February 2022. These are in addition to the sanctions that had been imposed since the annexation of Crimea in 2014.

Depending on the country, measures run the gamut from cutting Russia off from the Swift payment network, seizures of financial and real assets of regime members and oligarchs, embargoes on oil, gas, and petroleum products, trade interdicts, massive tariff increases, banning of Russian civil aviation, and other less prominent sanctions too numerous to mention.

So much for state-level sanctions. Transnational companies have also announced they are pulling out of Russia or will do so imminently. Many of these have decided to liquidate their investments in Russia, or simply abandon them and take massive write-downs on their assets. The most prominent of the latter are some of the biggest oil and gas companies in the world, such as Shell, BP, and Exxon.

On the other side of the equation, the Russian government has been banning foreign media outlets while threatening draconian prison sentences on anyone contesting the official Kremlin line on the invasion. This includes foreigners, and some of the most credible and courageous news organizations are being forced out or cowed into more insipid coverage.

To add to the informational chaos, Netflix, Facebook, TikTok, and other social media platforms have either ceased operating in Russia or have been banned. Putin and the Kremlin has threatened to completely cut off the country from the Internet. This will give the Kremlin full rein to poison the minds of Russians and indoctrinate younger generations even more than is already the case. Russia has adopted a strategy of information chaos with the goal of generating cynicism and nihilism internationally and complete obedience internally. When combined with autarky and complete top-down control of the economy and country, Russia is well on its way to realizing its brand of fascist nightmare.

While all this is happening, China, Russia’s non ally “strategic partner,” has continued to supply resources and maintained trade with Russia. In my estimation, this relationship will only get closer. I assess that Russia is headed for autarky, with China constituting Russia’s principal market for raw materials while providing access to technology, high tech manufacturing, and investment capital. Chinese companies have already started circling abandoned or divested Western enterprises like vultures. The pickings should be reasonably good for China.

This puts the invasion of Ukraine in a different light. In effect, Russia needs Ukraine as Lebensraum (living space). Yes, I use that term in the very specific sense of Nazi Germany. As many commentators have pointed out, Ukraine has tremendous resources, including agricultural, industrial, and other economic capacity, actual and potential. Whether Russia can fully exploit that potential will depend on the technical, financial, and industrial support the country receives from China in addition to what it can muster internally.

This assessment suggests a few inferences. First, to be successful, Russia’s invasion of Ukraine must end in its conquest and incorporation into the Russian economy and sphere of influence. I believe that is the ultimate war aim of Putin and the Kremlin and will lead to the near complete reconstitution of the Russian/Soviet Empire. This would explain Putin’s willingness to sacrifice so much military combat power and his readiness to destroy civil infrastructure and housing. We should be on the lookout for deliberate preservation of industrial and other productive assets by Russian forces with a view to restarting production as quickly as possible post-occupation or conquest.

Second, China has a crucial role to play in assisting Russia in its ultimate intent of reconstituting its territorial empire and in sustaining Russian autarky. China can give Russia access to markets and innovation. There is also considerable opportunity for China to act as an indirect channel for technology and sales of commodities and raw resources. Western powers, starting with the United States, should find a way to cultivate improved relations with China, like what was achieved in the 1970s with Nixon-Kissinger opening to China. As unpleasant as that may seem, the West has no choice but to cleave China from Russia to relieve the pressure on Eastern Europe and give some chance of success to Ukraine’s resistance.

Third, Western nations with significant hydrocarbon resources (i.e., oil and gas), must replace Russian supplies as quickly as possible. There are two aspects to this approach: A) The need to ramp up production in the US and Canada, especially of gas, and develop the supply chain to get the gas from the ground to LNG terminals quickly and effectively; and B) The imperative to develop alternate sources of oil and gas for the free world, such as the Iran, Venezuela, and other locations, as repugnant as that may be. During the Cold War, Persian Gulf oil was essential for the prosperity and security of Europe and the Far East. Now is no different.

© Richard Martin

Richard Martin was an infantry officer for over 20 years in the Canadian Army. He is currently an entrepreneur, strategic advisor, and information warrior focusing on extracting valuable information and signals from chaos and noise.

Copyright: Borislav Marinic | 123RF Stock Photo

By Richard Martin

The ongoing saga in Catalonia is an excellent illustration of how crucial it is to consider a range of scenarios before implementing a decision that could be heavy with consequences. And the scenarios shouldn’t all be rosy and positive for us. Consideration must be given to the worst-case possibility as well, so we know what we may be up against before acting. This entails a detailed consideration of competiting and opposing positions, as well as those of other stakeholders and bystanders. It also means preparing contingency plans for the most probable and dangerous possibilities so we aren’t caught flatfooted if they come to fruition.

A well-known radio commentator (and former politician) here in Montreal said this week that he had the impression that the Catalonian prime minister and regional authorities hadn’t really thought through the potential consequences of the independance referendum held a few weeks ago. I agree with him; both sides appear guilty of amateurish improvisation. It seems as though both the instigators of Catalonian independance and their opponents inside and outside Catalonia have given little or no thought to the inherent risks in their decisions and actions, as well as the range of possible responses of the Spanish government, population, businesses, and other countries. I also little or no evidence of forethought in securing international recognition for the referendum and subsequent moves. It’s as if it was all being driven by pure emotion, with not a lot of rational consideration of options.

Such conflicts usually build and fester over time until they reach a feverous level. And it takes two to tango. Threat generates counterthreat; action entails counteraction. Not all outcomes can be foreseen ahead of time, but a great many can be characterized to some extent and compared to see which are most probable and consequential. This is the essence of risk management.

Whether we’re talking about a political entity, a business, a non-profit organization or an individual person, prudent forethought should be given to the range of scenarios and options available or possible before deciding and acting. No forecasting or planning process is perfect, but the benefits of a disciplined and rigorous assessment of the situation and its various branches and outcomes will always pay dividends in better decision-making, management, and leadership. And this includes looking at the situation from your opponent’s or competitor’s standpoint. If I were to take this action, what would my opponent do?

It’s how we try to play sports and games, and it’s the essence of strategy, military, diplomatic, political, and commercial.

Copyright 2017 Alcera Consulting Inc.

By Richard Martin

There has been a lot of chest thumping and ink spilled in recent days about the announcement that Airbus and Bombardier Aerospace have agreed to transfer control of the new C Series airliner business from the latter to the former.

There are important implications from this transaction in terms of politics and economic policy. My goal here, however, is to focus on the readiness and strategic implications for the two companies involved. In a nutshell, both Bombardier and Airbus saw a window of opportunity open and jumped through it at the right time.

© Sergey Ilin|123RF Stock Photo

For Bombardier, Airbus brings financial, commercial, and industrial know how and credibility. If you want to be a global player in the market for commercial airliners, then you have to have a global network with a strong backbone, including the robustness and resilience to batten down the hatches during storms, absorb shocks, and bounce back when the weather turns. Bombardier, while technically able in terms of innovation and development, didn’t have the wherewithal to compete against the big boys: Airbus and Boeing. As a business decision, this opportunity makes eminent sense and I’m sure will be a long-term success.

For Airbus, the opportunity was just too good to pass up. Airbus acquires a brand-new design with huge commercial potential, especially in Asia and the Far East. Talks between Airbus and Bombardier had apparently been ongoing for two years or so, but had broken down more than once for undisclosed reasons. The biggest advantage for Airbus, though, is that the tie-up with Bombardier’s C-Series deals a blow to Boeing. Airbus no longer has to continue developing an aircraft in the same size-class as the C-Series, while acquiring new capabilities and geographical reach.

The big loser in this manoeuvre is, however, Boeing. The latter was evidently trying to destroy the C-Series by lobbying for punitive tariffs on the planes if sold in the US. However, Airbus already has facilities in the US to assemble the aircraft. Delta Airlines, Bombardier’s lead customer for the C-Series in the US, has already declared that they will wait for the planes that are assembled in Airbus’s Alabama factory.

The biggest difference between Boeing and Airbus when faced with Bombardier’s competition is the fact that Boeing chose to view the C-Series antagonistically, as a threat, whereas Airbus viewed it positively, as an opportunity. The same goes for Bombardier. Claims and counter-claims of “illegal” government support are overblown. No one is blameless in that regard, and Boeing is probably the most hypocritical of all.

Regardless, from the standpoint of business strategy and business readiness, Airbus and Bombardier have shown that exploiting opportunities are just as important, if not more so, than trying to prevent or mitigate threats, as important as these may be.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

Strategic Readiness Bulletin Number 3 – 16 October 2017

Are We Entering a Post-NAFTA World? (Download as PDF)

By Richard Martin, founder and president, Alcera Consulting Inc.

Richard Martin issues Strategic Readiness Bulletins on an as needed basis to clients, key decision-makers, and other influencers, to highlight recent or evolving risks, threats, and opportunities for companies and organizations resulting from chaotic change as well as international and national situations of a political, economic, technological, or social nature.

The Strategic Readiness Issue

© Michał Barański | 123RF Stock Photo

With the current NAFTA negotiations underway it’s hard to tell yet whether they will be a net positive or a net negative for companies doing business across the Canada-US and Mexico-US borders.

My aim isn’t to assess the probabilities either way at this stage, but rather to highlight the need for prudent risk management and contingency planning to address various post-NAFTA—or “new” NAFTA—trade arrangements between Canada and its most important trading partner, specifically the US.

The diagram on the right below summarizes the strategies for risk and threat management. When we work to lower or eliminate the probability of occurrence of a risk/threat, then we’re in the realm of PREVENTION. However, if prevention fails, we still must have measures and plans in place to contain its most damaging consequences. This is where MITIGATION comes into play.

© Alcera Consulting Inc.

Businesses with NAFTA exposure must be aware of the risks and threats arising from potential changes to the trade agreement. This is prudent and may even lead to the identification of unique opportunities whether Canada-US trade relations continue much as before or change in a significant way.

Who Can Be Affected?

  • Manufacturers and other businesses that depend on imports and exports
  • Transportation and logistics companies with cross-border operations
  • Federal, provincial, and local government agencies and departments
  • Ports and border-crossing facilities
  • Tourist and travel related businesses
  • Sectors that are highly sensitive to changes in tariffs or trade restrictions

Assessing Your Situation

If you haven’t already done so, it’s time to consider the probabilities and potential impacts of the risks and threats your company faces if there is a change in the trading regime under NAFTA, or even just between Canada and US. This isn’t alarmist, it’s common sense and prudent leadership.

I can help you, but you can get a head start by considering the following questions.

  • What is your current dependence on imports and/or exports to the US (in terms of total revenue, volume, profits)?
  • What business lines or activities are in areas of HIGH POLITICAL SENSITIVITY (soft wood lumber, auto manufacturing, aerospace, etc.)?
  • Can you “immunize” to a certain extent against disruptive changes by diversifying your clientele or supplier relationships?
  • How sensitive are your prices and costs to small changes in trade restrictions and decisions?
  • Have you developed contingency plans for supply, transport, or logistics?

About Richard Martin

Feel free to contact me to discuss this and related strategic issues.

Richard Martin is an expert in identifying, assessing, and preparing for strategic risks, threats, … AND opportunities, so companies and organizations can exploit change, instead of passively reacting or succumbing to it.

Richard.Martin@alcera.ca

www.alcera.ca

www.exploitingchange.com

http://www.facebook.com/exploitingchange

(514) 453-3993

Previous Strategic Readiness Bulletins

The North Korean Nuclear Threat

Is Canada Facing an Incipient Refugee Crisis?

 

by Richard Martin

Copyright: faithie | 123RF Stock Photo

There are an infinite number of ways to be wrong, but only one way to be right. Trial and error is the process of evolution, science, business and innovation. We produce many more “errors” than “successes,” so we must continually experiment with new ways of doing things.

Readiness is the product of this trial and error process. If we continually are working to improve our understanding of our surroundings and what will work to get us to our goals, then we can’t help but adapt to the constantly changing conditions by mitigating threats, and exploiting gaps and opportunities.

I like to think I’m in illustrious company, as shown by this sampling of aphorisms and quotes. I’m particularly fond of the approach of the great philosopher Karl Popper.

“Experience is the name everyone gives to their mistakes.” Oscar Wilde

“What is today called ‘negative feed back’ is only an application of the general method of learning from our mistakes-the method of trial and error.” Karl Popper

“The first principle is that you must not fool yourself-and you are the easiest person to fool.” Richard Feynman

“Reality is that which, when you stop believing in it, doesn’t go away.” Philip K. Dick

“Our whole problem is to make the mistakes as fast as possible…” John A. Wheeler

“Criticism of our conjectures is of decisive importance: by bringing out our mistakes it makes us understand the difficulties of the problem which we are trying to solve.” Karl Popper

“All our knowledge grows only through the correcting of our mistakes.” Karl Popper

“The more we learn about the world, and the deeper our learning, the more conscious, specific, and articulate will be our knowledge of what we do not know, our knowledge of our ignorance. For this, indeed, is the main source of our ignorance – the fact that our knowledge can be only finite, while our ignorance must necessarily be infinite.” Karl Popper

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

By Richard Martin

© Alexskopje | 123RF Stock Photo

The recent spate of natural disasters (hurricanes, earthquakes) have shown once again the need for readiness and resiliency for operational and business continuity. I’ve also been working with a client organization to review and upgrade its continuity programme. Here are some basic principles to keep in mind.

  • Readiness for business continuity is a leadership responsibility. It is a strategic concern and must be led by senior leadership and executed by the entire organization and its “chain of command.”
  • Business continuity is part of contingency planning and preparedness to respond and recover after prevention has failed. In other words, it’s part of your risk/threat mitigation strategy.
  • Insurance is needed to help recover and rebuild after a disaster or a crisis, but it can neither prevent nor mitigate the impacts as they unfold. That is where the entire preparedness and readiness programme come into play.
  • There are three phases to business continuity planning and management: preparation, response, and recovery. The preparation phase should always be in effect, and not just an afterthought.
  • Business continuity planning (BCP) must be conducted on a cyclical basis, for instance every year. It must be aligned with other normal management processes such as annual budgeting and capital planning so any required investments can be identified and adequately resourced.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

by Richard Martin

Back in March I put out a Strategic Readiness Bulletin titled “Is Canada Facing an Incipient Refugee Crisis?

The situation has evolved to the point where the Canadian Forces have been tasked to set up a temporary reception centre near the Quebec-US border. Asylum-seekers are being temporarily lodged in Olympic Stadium and the old Royal Victoria Hospital in Montreal. The Canadian Border Services Agency (CBSA) and RCMP have sent reinforcements south of Montreal to help with the overflow of migrants arriving on foot at the border. Most are of Haitian origin, but it seems that other nationalities may also be arriving and that the mix could very well change quickly.

You can surmise from reading my bulletin, referenced above, that this situation was entirely predictable, if not in its specifics, then at least in outline. I don’t think we’re at a crisis point yet, but that could develop rapidly, as we saw when the same thing happened in Europe two summers ago.

A crisis occurs when you lose control of a situation, and you are constantly reacting to conditions rather than shaping them. If at any point border crossings or reception and housing facilities are overwhelmed, then it will be a crisis.

The question at this point is whether plans and actions can be undertaken now to prevent and/or mitigate these possibilities. Organisations must stay ahead of events by envisaging various scenarios and possibilities and implementing plans and measures to cater to them, before they occur.

And this isn’t just a federal or provincial government responsibility. Municipalities, private businesses and non-profits can be affected. Some small municipalities are already being stretched by the demands of reacting to the situation.

If you are running a business, can this affect you? What if you are near a border area, or have clients in the US, or depend on shipments to and from the US? Could you be affected. I talk more about this in the bulletin, so you should definitely check it out.

Also, here are some other articles I’ve written over the years that you may find of interest, especially for interagency cooperation and planning.

Five Myths About Crises: Why we’re surprised by unsurprising things.

Crisis? What Crisis?: The type of crisis we’re facing, and how it is likely to unfold.

Mobilizing for Readiness: What you need to do to mobilize your team or organization.

Proven Techniques for Crisis Leadership: Leading effectively before, during, and after a crisis.

Battle-Proven Principles for Disaster Leadership: The focus of this article was disaster management, but there is a lot of good information, especially for public agencies.

© 2017 Alcera Consulting Inc. Reproduction and sharing permitted for non-commercial reasons.

by Richard Martin

  1. Velocity: Action is a vector. You can get to your objectives earlier by combining the right direction of movement with fast speed of execution.
  2. Decisiveness: Don’t wait for perfection; move when you can act and generate results that contribute to your aim.
  3. Opportunism: Accelerate execution and results by exploiting favourable events and conditions.
  4. Momentum: Consider changes carefully, as it takes time and energy to change direction and speed.
  5. Preparation, planning, and logistics: Use time judiciously (or make it) to prepare for action; consider all relevant factors, conditions, scenarios, and risks; develop courses of action to achieve your aim and select the optimal one for detailed planning; balance resources and priorities accordingly.
  6. Initiative and creativity: Tell your people what outcomes they are responsible for, and let them find the optimal ways to achieve them; give them the requisite authority and resources in line with their needs and overall priorities; make them accountable for their actions and results.
  7. Security: Protect your flanks and lines of communication through 360-degree situational awareness; validate your assumptions.
  8. Surprise: Don’t advertise your intentions, unless you can be almost certain of the results beforehand.
  9. Depth: Act in waves and phases; don’t put all your eggs into one basket; reinforce success and stop doing what isn’t working; don’t expect success on the first try, but be ready for it nonetheless.
  10. Reserves: Always keep forces and resources in reserve, because you can never foresee everything beforehand.

© 2017 Alcera Consulting Inc. Reproduction and forwarding for non-commercial use are permitted.

By Richard Martin

Business leaders must constantly decide on how much time to devote to future planning versus present action. The needs of day-to-day management and decision-making tend to swamp us as leaders and managers. We get caught up in immediate, tactical issues, and lose sight of the bigger picture, where we are ultimately headed, and what we will do once they we there.

Should we focus on immediate goals and problems, or should we live more in the future, even to the point of only considering our long-term vision and development of our organizations? At extremes, we could devote all our time and resources to the present or, conversely, we could be pure “visionaries.” In fact, wisdom lies somewhere in between, neither being purely myopic nor purely far-sighted. But how should we make this decision, and how do we determine when and how much they need to shift our attention from the near to the medium to the long term?

The key lies in what I call the “future paradox.” Some decisions and actions will have immediate or short-term results. Others will take longer to come to fruition, even to the extent of taking years before they are fully actualized and the results are in. This can generate a significant lag between decision, action, and results, between cause and effect. The problem comes from this lag.

We can’t afford to be stuck in the present, but the further out we look, the less the definition and clarity, the greater the uncertainty. Present commitments and decisions are essential to build future readiness and achieving distant objectives, but these may severely constrain our future freedom of action.

 

This is the future paradox: We must decide and act now to generate short-, medium-, and long-term effects, but we can only do this with increasingly fuzzy knowledge and information. In other words, change takes time, but conditions can and do change between our decision point and the time that our actions start taking effect.

We have a current reality and we articulate a vision of where we want to be in the future. This vision is nothing but the overarching objective of our undertaking. To speak in military terms, it can be to win a war or achieve an peaceful outcome in our nation’s interests. But it can also be to capture a road crossing and then be ready to face a counter-attack. In business, it can be a strategic goal, for instance to launch a major international expansion, or it can be much more mundane and tactical, for instance to win a contract with a new client. It is the future vision that drives most of our decisions. The gap between the objective and the current reality is the fuel for planning and decision-making. It frames our actions in the short, medium, and long terms. Over time, we should approach—and eventually arrive—at our ultimate destination, our vision, or overarching objective.

Some things we can do relatively easily and quickly. These decisions lead to short-term plans and actions. Others take more preparation and lead time. These are our medium-term plans and actions. Finally, some things we must start right away, with a view to gaining results only in the longer-term future. For instance, we can be facing a decision on whether to invest in a new factory. We must secure the capital and start the building or acquisition process now, but it can take months or years before the new facility comes on line. This requires a long-term plan and actions.

To make matters even more complex, though, the definition of short, medium, and long terms depends on the scope of responsibilities and roles. For a large company, the long-term can be, in some cases, decades. For a sales person or a production team, it can be tomorrow or next week. It is the scope of activities and effects that determines the extent of the time horizons under consideration.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.

by Richard Martin

People brag these days about being so busy that they can’t answer all their emails, or even all their phone messages. Busyness and hurriedness are praised as if they were virtues. Notice I didn’t say efficiency or effectiveness. We confuse being constantly occupied and on the run with performing at a high level and being effective.

If you can’t take time to look to the future, or to assess where you’ve been, where you are, and where you’re headed, then it’s time to slow down. Slowing down to go faster and to be more effective and efficient only seems paradoxical. But if you never take time to think, or even to just let your mind wander, how can you come up with innovative ideas, creative approaches, and unusual perspectives? As the old saying goes, haste leads to waste. But it also leads to habits and well-worn paths. As I learned in the army, it’s on the usual path that ambushes occur. If you want to seize and maintain the initiative, you must do something unusual. And if you’re too busy to plan, you’ll always be in reaction mode and will cede the advantage to others.

What can you do if you’re harried and “too busy to plan”?

  • Set aside regular down time to rest and recover.
  • Do an after-action review after each major undertaking to generate lessons learned and incorporate them into your processes and thinking.
  • Use your best time for the most impactful thinking, forecasting, and planning. In other words, don’t try to do your most important work when you’re tired, worn out, and in a rush to get home or get on the next flight.
  • Don’t do busy work when you travel. Use that time to read, think, let your mind wander.
  • Read a lot in a lot of different areas, including fiction, history, philosophy, and science.
  • Exercise and do recreational activities regularly.
  • Play games and listen to music.

Think I’m being frivolous? Well, research shows that top performers in all fields undertake deliberate practice, which is difficult and draining, and then rest regularly. How can you come up with your best ideas and think things through when you’re constantly running from one thing to another?

Not only is it undignified, but it undermines your performance.

Richard Martin’s Business Readiness Process:

  1. Ensure vigilance through situational awareness.
  2. Do preliminary assessment of tasks and time.
  3. Activate organization or team.
  4. Conduct reconnaissance.
  5. Do detailed situational estimate.
  6. Conduct wargame and decide on optimal course(s) of action.
  7. Perform risk management and contingency planning.
  8. Communicate plan and issue direction.
  9. Build organizational robustness.
  10. Ensure operational continuity.
  11. Lead and control execution.
  12. Assess performance.

Contact me to apply the whole thing–or just a piece, as needed–to improve your strategy, your readiness… and your results!

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?

Why Sunday and What Does “Stand To” Mean?

Sunday? I want you to get my insights and advice first and fast, so you can prepare and up your readiness and results before others even know what’s happening!

And Stand To? It’s the order used in the military to get forces to man the parapets and be in a heightened state of situational awareness and, yes, readiness, so they can face any threat or undertake any mission.

My name is Richard Martin and I’m an expert on applying readiness principles to position companies and leaders to grow and thrive by shaping and exploiting change and opportunity, instead of just passively succumbing to uncertainty and risk.

© 2017 Alcera Consulting Inc. This article may be used for non-commercial use with proper attribution.