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Sunday, July 8, 2012

Employment has been decoupled from Growth

In his insightful book The New Barbarian Manifesto, first published in 2000, at page 63, Ian Angell wrote;

“When will politicians and their lackeys ever learn that technology is the problem not the solution? Today, productivity is delivered by technology needing only a few machine minders. National economies are no longer able to grow themselves out of unemployment. Growth has been decoupled from employment; it is created from the talent of a few knowledge workers, not from the labour of low-grade service and production workers. Neither does it come from arbitrary education programmes, nor from throwing capital investment at it. Growth is delivered by entrepreneurs, but only if they are given incentives, and otherwise left alone to get on with business.”

The current rate of growth of the global population is about 1% per annum, at which rate population would double in 70 years to 14 billion. Seventy years seems a long way away but realise that many planners are predicting that the population will level off at around 9 billion by 2050.

In fact at 1% per annum growth rate a population total of 8 billion will be breached by the end of 2025, less than thirteen years away. That is based on simple mathematics, one per cent compound annual growth from 2012.  Hence in just over 13 years the population will increase by over 14%; more troubling, at one per cent per annum the global population will grow past the 9 billion mark in 2036 i.e. 14 years prior to 2050.

This indicates that forecasters are asking us to believe that population growth will approach zero per cent per annum between now and 2050.

In reality it is completely naïve to expect that the present growth rate will be held at 1% per annum, let alone that it may fall below that figure.

It is already apparent that every developed nation is exhibiting concern about its declining population and many are introducing measures designed to encourage their citizens to have more children.

The burning question has to be – not how we will feed all the people, not where they will be accommodated – it is what will all the people do to occupy themselves? I have no doubt that we will be able to solve the food, accommodation and other challenges, but I am unsure about the latter challenge.

Put simply, how will the mass of people be gainfully employed?

The follow on question is surely; how should education and training change in order to equip the mass of the population to make a contribution to society through gainful and purposeful employment in future?

I sincerely hope someone has some ideas as to the answers to these questions, if not the answers.

Some of the thoughts expressed by Seth Godin in his book Linchpin: Are you Indispensable? How to Drive your Career and Create a Remarkable Future may prove helpful.

If you have some ideas please comment on this blog or send your comments direct to the editor.


Sunday, June 3, 2012

The Bank Payment Obligation (BPO) is Worth Serious Consideration

The BPO promises to replace Open Account and simple Standby Letters of Credit (under UCP 600 or ISP98) payment terms, for domestic and international trade transactions relatively soon.

Unfortunately the BPO will not supplant Documentary Letters of Credit or Standby Letters of Credit that require presentation of complex or detailed documents in order to prove that the correct goods were in fact dispatched as contracted, as a pre-condition of payment. In other words the BPO process will not provide a mechanism to protect the buyer in the way that a Documentary LC will do, when the buyer does not know or trust the supplier.

The Bank Payment Obligation (BPO) is an irrevocable undertaking given by one bank to another bank that payment will be made on a specified date after a successful electronic matching of data according to an industry-wide set of rules.

The ‘rules’ referred to are in the process of being drafted jointly by the ICC - International Chamber of Commerce ( and SWIFT – the Society for Worldwide Interbank Financial Telecommunication (; these rules will be referred to as the ICC Uniform Rules for BPO (URBPO) and should be published during the first quarter (Q1) of 2013.

In a recent article titled ‘Standard Chartered Pioneers the First End-To-End Automated Bank Payment Obligation Transaction’ David Vermylen, Global Credit Manager BP Chemicals Ltd was quoted as saying: “The BPO programme offers us a number of efficiency benefits through reduced document handling and lower confirming costs, and by conducting business with less paper compared to traditional Letters of Credit.” Mr Vermylen is also a member of the European Advisory Council of FCIB Europe, the European arm of the Finance Credit and International Business Association (


BarrettWells subsequently asked Mr Vermylen; ‘How is the Buyer protected against the risk that the goods invoiced are not in fact in transit or do not meet the specifications stipulated in the Purchase Order? To which he replied;

‘Less than under an LC as a bank is not vetting the actual shipment documents. Then again if the seller wants to defraud the buyer, the bank would not necessarily catch the crime. There is indeed less protection against unintentional mistakes. (Also no protection against supply of the wrong goods, quality or volume/mass/number deficiencies, or out-right fraud. Editor) The SWIFT team therefore advises (and is very honest about this) that the product (BPO) is first and foremost suitable for well established relationships where there is a lot of trust between buyer and seller…’

Either by using the SWIFT TSU (Trade Services Utility) link for delivery of SWIFT messages received by a bank straight into a company’s accounting and banking systems or a bank’s proprietary bank-to-client trade system, companies will be able to capture a number of benefits from the BPO system; for example:

1. Improved cash flow management based on certainty as to when invoice payments will be credited.

2. Reduced document handling – whether paper of electronic – since purchase orders and invoices are keyed into the system and communicated automatically; via one or two banks in nanoseconds. The SWIFT system is exceptionally secure and reliable, and covers more than 10,000 financial institutions and corporations in 210 countries

3. Reduced information discrepancies and/or reduced time involved in identifying and correcting mismatched data. The BPO system automatically matches buyer and seller data against the Purchase Order and provides various reports

4. Better payment protection (for the seller) compared to a Standby Letter of Credit; with reduced costs and handling required on both sides of a transaction

5. Access to financing options is improved for both buyer and seller

It is not clear whether the joint ICC-SWIFT URBPO drafting committee will tackle the question of buyer protection in order to re-shape the BPO as a fully-fledged replacement for all types of Letters of Credit. However one could conceive of such an objective perhaps being achieved by introducing the option for the seller’s bank - upon viewing the shipping documents and inspection certificates - to enter certain required data (such as the Bill of Lading date) into the system to be matched against the Purchase Order, in order to trigger payment to the seller.

This ICC flow chart illustrates the process.


Sunday, April 22, 2012

The Art of Predicting Failure – Guidance from a successful Corporate ‘Doctor’

Tom FitzGerald (CEO of FitzGerald Associates) makes an excellent point in his blog viz:

‘Each company has a Trajectory that is independent of the economy. As it points - up or down - so goes the company. It shows how a company will react to threat. Or mobilize to create its future. It is not measured by the financials; those are history. (It is measured) by the causes, (the) Drivers of performance. These predict (the future) at the (same) moment (as) they are creating the future. They can be identified - easily. They can be measured - simply. They can be changed - readily. As they change, they change the future.’

FitzGerald’s excellent consulting work partly based on a London School of Economics (LSE) and McKinsey & Co research paper has proved the following predictors, if not corrected in good time, will certainly cause corporate failure. FitzGerald has identified over a hundred what he calls ‘Blockers’ that if left unchecked will cause a business to stumble into decline; four examples are:

• Distrust / Fear
• Complacency
• Need For Consensus
• Tolerance of Incompetence

When the rot is identified using simple tools that Fitzgerald has developed, it can be stopped and reversed by fixing certain ‘Critical Functions’ utilising certain ‘Generators’. Examples are listed here:

• Performance Management
• Talent Management
• Lean Operations / Cost Containment
• Profitable Growth Orientation
• Customer Orientation
• Innovation / Creativity

• Corporate Decisiveness
• Acknowledgement of Work
• Accountability
• Corporate Assertiveness / Energy
• Commitment of Management
• Openness of Management
• Adaptability
• Effectiveness
• Cooperation

It is easy to accept that when several of the ‘Critical Functions’ listed are not well managed within a business, that business is already on the slippery slope to ruin, even though its financial results may not reflect the fact. FitzGerald’s point is that when the financial results do eventually evidence that a company is in decline, a turnaround is much more difficult to effect and failure is much more likely.

The answer for FitzGerald is for corporate leaders to identify the problems even before Key Performance Indictors (KPIs) show weaknesses, and long before the financials are impaired, and to take necessary action to effect a course correction.

Credit Executives on the other hand could seek out the signs of danger in counterparty customers as a means to predict failure early enough to avoid being embroiled in a bankruptcy.

The message then for Credit Executives is, beware of businesses exhibiting the following, for example:


• Making poor quality decisions, the inability to table problems and resolve them, the inability to take decisive action and, worst case, the need for consensus.

Failure to Acknowledge Work

• Workers not discussing ‘the work’ with Supervisors. Supervisors not talking about ‘the work’ with Managers, except when a mishap occurs.


• Managers not holding their peers accountable for doing what they said they would do.

The cause and effect of failure can be illustrated as follows:

Distrust is evident (a Blocker) that leads to…
Reduced Decisiveness (a Generator) and so to…
Poor performance Management (a Critical Function) that finally begins to generate….
Loss of Quality (a KPI) and too late the result shows in the Financial Reports as…
Reduced Profit

In summary, to quote Tom FitzGerald:

‘Drivers of Performance in any organisation are the Organisational and Human Factors that Underlie, Drive and Impel Performance’

This is food for thought indeed...


Monday, March 26, 2012

Global Credit eBook in Mandarin Chinese

T3P LIMITED is pleased to announce that an eBook version of the Chinese (Mandarin – simplified characters) language version of Global Credit Management - an Executive Summary is now available to purchase through

The eBook format is a .pdf Adobe Acrobat document of about 4.15mb and the price is £5.18.

The eBook can be downloaded immediately after payment.

Thursday, March 22, 2012

Reinventing the Technology of Human Accomplishment

- How to win in a World of Relentless Change – Gary Hamel

Please log onto and view Gary Hamel’s most excellent video presentation titled:

Reinventing the Technology of Human Accomplishment

If you then want to know more buy the book – What Matters Now – you will not be disappointed by its contents….

Some random quotes that I ‘clipped’ by way of example are:

"….across the world, frontline employees feel marginalised by managers who see them as semi-programmable robots."

"….intrinsic motivation – the drive (to) do something because it is interesting, challenging, and absorbing – is essential for high levels of creativity."

"The old world (management) processes (are) focused on running the business. We (need) new processes that (are) focused on changing the business."

"In a turbulent world, prediction is difficult and long-range planning is of limited value. Management processes that seek to surface the one best strategy through top-down, analytical methods must give way to models based on biological principals of variety (generate lots of options), selection (use low-cost experiments to rapidly test critical assumptions), and retention (double down on the ideas that are gaining the most traction in the marketplace)."

At least enjoy the video it is only 16 minutes 43 seconds in length