ClickUp is ClickDown

So this is what it feels like without an MBA schedule. December is like thick oxygen in a rarefied January to November.

I feel carefree and in tune with my body. My tell-tale signs of stress have been dissipating.

My mind now is absorbed in arcane and frivolous gymnastics. It has been freed from the rigours of Socratic learning and a load akin to Atlas – the Titan carrying Earth on his shoulders.

My thoughts are engaged with visiting the Neighbourhood Goods Market in Braamfontein, when I am going for a mountain bike ride on the spruit and where to buy tasty mutton for Christmas lunch

I feel rather like ClickUp, which is not up, but down. We are now on ClickDown time. Do not click on ClickUp it is down. Yes, that is exactly how I feel.

See you when ClickUp is up.

See you at GIBS – later.

My non-digital (or analogue) exam assistants

No matter how many 4 hour exams I write I still can’t believe how quickly time rushes by and how completely wasted I am afterwards.

Our Saturday morning was greeted not by a blackbird, but rather by a 30 page case study for our Managing for Results[1] exam.

As my inner reading assistant whizzed through the text and tables, my visual assistant was making mental cross references with frameworks and mental maps.

My most reliable assistant – the horn-rimmed spectacled librarian – went to work looking for the references I had stored in my dusty chambers, or commonly referred to as my grey matter.

Thankfully all my assistants were in attendance and delivered on their job descriptions. There was a clamour as they all fought for my attention, but I managed to stay calm and threaded a semblance of meaning using my rather slow and irascible writing assistant – my right hand.

Corporate Finance on Sunday was an entirely different matter. You can’t find a good assistant nowadays – especially on a Sunday.

The librarian was on a tea break for most of the morning.

The reading assistant – from the feedback I was receiving from Mr Synapse was that he was recovering from “a large night out” – was how he put it.

A mathematical assistant, although summoned, failed to pitch.

And my writing assistant – well this was the worst part – decided to go on a wild-cat strike.

As soon as GIBS allows the iPhone 4S into exams with its digital assistant SIRI[2], I am going to fire all my analogous assistants.

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[1] Managing for results is a cryptic reference to the supply and demand value chain.

[2] SIRI is IRIS backwards

Splodges of wonga

There are currently no claimants in the MBA class at GIBS for 2011 / 2012 for the grandiose titles of “Master of the Universe” or “gnome of Zurich”. But under the expert tuition of Andrew Abdo we are becoming informed and empowered into the world of high finance and how to manage splodges of wonga.
The Corporate Finance course is the last instalment in the trilogy of Financial Accounting and Management Accounting. Numbers are crucial to management success. Numbers are crucial to personal wealth success – ignore them at your peril.

Whereas Financial Accounting focuses on the Book Value of a company, Corporate Finance looks at the Market Value of companies. When a company confronts growth it needs capitals to fuel its assets. This can be done with the following parameters: equity, debt or selling assets. The million dollar question (and sometimes much more than that) is: which mix is the cheapest to attain, while keeping an optimal capital structure?

This part requires circumspect analysis normally reserved for expensive consultants like McKinsey or Investment bankers.  The tools to unlock a company value lie in its future cash flows (FCF) and its cost of capital (WACC). But first the capital asset pricing model (CAPM) must be determined.   Earnings per share (EPS) is also a useful comparison indicator of the current and future earnings of the company.

Now onto the lenders of spondulix – to figure out the bond value, using the face value and coupon rate we need to get the IRR of the future cash flows. The same approach is applied to a simply structured loan or a more complex structured finance offering with a senior and mezzanine facility.

Okay, so now we have got the cost of capital if shares are sold (equity) in the company and we can compare it to the cost of capital to acquire debt. Choices, choices.

The last step is to now get a weighting of equity and debt at the ratio of capital structure needed, or imposed by the market.

In our other course “Managing for results” Dr Helena Barnard took us through the value of the demand and supply value chain. The Nollywood case, about the Nigerian film industry, highlighted how a keystone like Iroko is attempting to become the de facto aggregator and provider of content through YouTube. Another fascinating case was on the product offering by Danone called Danimal to the bottom of the pyramid in South Africa.

It was a tough, learning filled four days on the GIB MBA. I am punch drunk from all the knowledge acquired, and power drunk from all the opportunities these learning’s provide.

Theory of Constraints and the Easter Bunny

After reading “The Goal” by Eli Goldratt I was immediately struck by how meaningful the approach to a steel factory was to solving problems in financial services. To an outsider – someone who hasn’t read the book – a fictitious steel plant and retail banking are poles apart. But lifting up the hood and peering logically at the problem I have experienced that processes all have a constraint, or a weakest link.

http://www.goldratt.com/

http://www.goldratt.co.za
The idea is to focus on the constraint and make it more effective. This can be done by a knee-jerk reaction like hiring an additional resource, or buying a new piece of equipment. A clever way, or a way of not incurring any costs, is to reintroduce an old piece of equipment into the process to relieve the constraint, or at least increase the throughput at the constraint. Another way to improve the constraint is to place quality control before the constraint thereby only allowing good applications, or acceptable widgets to enter the bottleneck. Outsourcing is another great way to relieve a constraint.

The numero uno fact to remember is that the throughput is determined by the constraint. If 10 widgets can go through the constraint, and the next process can handle 30 widgets, the capacity to produce the additional 20 items is lost.

Another eye opener is that a busy factory is not necessarily profitable.  All the resources that are working on work in progress should only be working at the drum beat of the constraint; otherwise they are overproducing stock that will sit idle in the warehouse.  

Dr Pieter Pretorius, a Goldratt disciple, took us through all the assumptions business people make and how we are hoodwinking ourselves by eliminating profitable products because of a fictitious “cost per unit” calculation. He likens “cost per unit” to the Easter Bunny. He says the bunny can be drawn, and can be talked about, but that doesn’t make it real.

This picture is of my syndicate Blue 7 playing a game similar to one written about in the book ”The Goal” for our group assignment.

Over the last week we also delved into the Labour Law Amendments that have been recently repealed by Nedlac. Professor Albert Wöcke, an old trade unionist, gave us a guided tour through this territory.  Dr Mark Bussin, from 21st Century Pay Solutions, came to give us a talk about remuneration for Executives. We learned how the short term and long term incentives are more telling than the base salary structure, and also how state owned enterprise executives are paid on a scale based on assets (under management).

My brain is almost full so I have started to weed out unnecessary clutter. The clutter consists of previous assumptions and bad information.  I am topping up at GIBS with renewed paradigms and Gestalt flips.

See you at GIBS.

 

Exam marks tizz

There are many things about human behaviour that are very peculiar. Here are two examples of some mind-screws; one for sportspeople and the other for MBA students.

When you are told that the distance for a particular cycle race is 100 km a cyclist will expend all of her energy until the finish line with nothing more to give. Strangely enough, if the cyclist was told the race distance is 120 km then a psychological recalibration occurs and a physical effort will be realised where on the mountain-top finish the cyclist will be exhausted, with nothing more to give. Nothing has changed other than an official saying the race is shorter or longer.

In other words, we set ourselves a goal (or have a goal set) and then we go until we reach the goal. If the goalpost – or finish line – is moved we then get ourselves into a psychological tizz – we are mind-screwed.

The MBA example is this: We are told that the exam marks for Prof John Ford's Management Accounting and Dr Peter Tobin's Information Knowledge Management will be available after 4pm on Thursday (The normal waiting period for module results is 7 weeks).  Being human beings we lock in on the 16:00:00 PM (UTC +2:00) [Pretoria, Harare] time.

At exactly 16:00:01 PM (UTC +2:00) [Pretoria, Harare] we log on and can’t find the marks. We do this again at 16:01:41 PM (UTC +2:00) [Pretoria, Harare] and still no marks.

Sure enough the marks appear on my nth logon attempt at 16:09:56 PM (UTC +2:00) [Pretoria, Harare].

As a human being and MBA student I should avoid the exam mark tizz and just logon to ClickUp in the evening with a mug of Horlicks sometime after the 8 o’ clock news. But, no I have been mind-screwed and I will log on at exactly 16:00:01 PM (UTC +2:00) [Pretoria, Harare] – I’m only human after all.

See you at GIBS

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Leadership Metamorphosis

This Saturday the GIBS MBA Blue group 2011/2012 class spent the day with Professor Dave Beaty. http://www.2btassociates.com/pdfdocs/Resume_dtb.pdf

His wisdom and knowledge comes from working in a wide range of different posts including the Pentagon and as a professional golf mind guru. He applied his magic on our class. His wand touched our careers as we unlocked our “Career Anchors”. http://www.careeranchorsonline.com/SCA/startPage.do

He deftly manoeuvred the entire class into understanding the importance of co-operation through his Big Foot/Little Foot game.

We learned about a career mishap that befell on the protagonist George, in our first cartoon case study. The parable revealed layers of learning that had everyone in the class promising to make BIG mental notes not to fall into his “Peter principle” syndrome. It cost him his job. Another insight from the case was “where was management?” while George slid into a management billabong.

This is what separates the GIBS MBA from the other MBA’s in South Africa. We are not stuck in silos; we are being elevated to a strategic advantage point high above the day-to-day management idiosyncrasies and ruts. We are undergoing a leadership metamorphosis.

 See you at GIBS.

http://www.gibs.co.za/

www.twitter.com/Etsebeth

http://www.linkedin.com/pub/eug%C3%A9ne-etsebeth/27/688/603

3 Day Champions

The first three day session for Module 3 is behind us. What a world of difference good lecturers make. Andrew Abdo takes the angst out of financial accounting and Adrian Saville is eloquently guiding us though the vagaries of macroeconomics.

With another 4 day session coming up we can expect to become even more immersed in these subjects.

Our accounting preparation included a 10 hour computer based learning assignment from Harvard.  If only accounting had been this well explained in first year varsity. Andrew Abdo then used his experience as an MBA alumnus and training expert to use simple graphical methods of relaying complex concepts.

In our macroeconomics sessions we have been covering case studies from a smörgåsbord of countries including the Nordic countries, the Dominican Republic, Vietnam and Botswana. We are being introduced to the complexities of competitiveness in a country.  How does economic growth affect inflation? Will productivity or technological advances reduce unemployment? Will reducing the M3 money supply reduce interest rates? How are exchange rates influenced by the balance of payments?

There are more questions than answers at this stage, but they are keeping me up at night. Within the next two weeks I will have a framework in which to navigate these waters.  These two subjects are incredibly important in the search of financial enlightenment. Without this enlightenment you may well be a victim of recessions rather than a shrewd champion.

See you at GIBS