New Kinds of Volatility

1VOLATILITY & UNCERTAINTY are very serious threats to Executive Credibility.

Stock price and return volatility very important; but I want to focus your attention on  Volatility Risk in other areas such as product demand volality, geo political turmoil, currency fluxuation, consumer trust & preference turbulence, work force demographic & loyalty, culture, competition, and operating effciency issues.

These kind of Volatility subvert your key planning assumptions—and they magnify the cost of mistakes—even if you have the perfect financial strategy and a great underlying business.

These areas of volality relate to what I call Vital Asset Vitality which represents as much as 40% of your overall productivity and capability to mitigate risk, avoid risk and gain leverage to overcome risk factors and win unfair advantage.  This is what Warren Buffet might colloquially refers to as the “Mote”.

If you are a Director or CEO responsible for both operating performance and financial performace—My GOALS is to focus and give counsel you on a new perspective in regards to these OTHER kinds of Volatility that will help you better balance your risk management to help the business.

is And let us focus on Warren Buffett for a second… he is essentially a capital investor and I would say more cljust shy of being an investment banker per se; he an owner and capital allocator… not an operator—and as such sees volatility as a friend.”In fact a true investor welcomes volatility” says he.

WarrenB on volatility

Many CEOs have been selected and goomed to be died in this same wool because of the enormous derivative value runs up and PE ratios achieved through asset highgrading and speculation over the last couple of decades.

years. groomed or For him volatility is an opportunity as he says here

A weakness in Corporate Volatility Management today comes from a love and over-confidence in  Static Efficiency which has at its core a set of presumptions which cause traditonally most near iods  dynamic efficiency EFFICIENCY  understandable—but in these times of greater volatility it gives a false sense of security because it presumes a linearity that is no longer a valid assumption tends to hide the volatility of changing circumstances that we know are there fueling potential risk—which most teams don’t know how to segment, measure & quantify dynamically – so they don’t.

Static Efficiency Kills

2Volatility magnifies the cost of mistakes—and mistakes drive huge vulnerability into our 5 Yr strategy decisons & plans.

The issue is that the market is experiencing New Kinds of Volatility making performance management more sensitive to ‘marginal’ effects in your unique enterprise-economy even if long term demand & growth look great. And like

Volatility Management is raising hell with Board Members and CEOs due to HISTORIC circumstance & long term conditioning of
The Gibraltar Effect—leaving ALL traditionally managed companies vulnerable.

Under-Utilized Assets

3VITAL Good Will Assets are being under utilized all over the show—putting large tranches of real value at RISK because the GibraltarEFFECT has left management hanging on to traditional accounting and taxation driven perspectives.

It’s an endemic strategic problem— yet there are many low hanging solutions which evade even the most savvy traditional industry organization.

NEW Perspective on Assets is Needed… Here is Why

The REAL Economy has undergone a 75 year long ASSET-REVOLUTION leaving under-defined “Good Will” counting for 20-70% of the MARKET CAP VALUE in the S&P 500 and it is same for EVERY other enterprise that is more than 15 years old.

This simply means—REAL VALUE exists in the form of new classes of “Vital” Assets that traditional accounting is only now beginning to tackle through thge IFRS mandates.  These so called “intangibles” need something new in method and measurement to manage and maintain their value more quantitatively—or there is RISK.