@T: ALWAYS THE TWAIN

Today is my birthday and instead of writing about how glamorous I’m going to look for my birthday, I want to focus on a serious topic.

In the past fortnight a number of articles have sparked some attention:

I am also mindful of the excellent BBC documentary series ‘The Love of Money’:

SHOULD BANKERS RECEIVE BIG BONUSES?

Yes, SOME of them should. There are bankers who are a total waste of space; they do little of the work, are “me-me-and-moreme” and get excessive credit. However, there are also bankers who work incredibly hard, apply their smarts (and expensive MBA educations) appropriately and are the difference between companies (and entire countries) increasing in value, output and ultimately corporation tax towards government treasure chests for the building of schools, hospitals and other social infrastructure.

Still, legislation should be introduced so that there are no wholesale bonuses across-the-board — even for those who may have contributed to the global financial crisis in the first place.

The City and Wall Street are supposed to be MERITOCRATIC places so rewards (if any) should be based on the banker actually achieving objectives of merit on behalf of their clients, wider society and positive wealth creation rather than wealth decimation.

MY EXPERIENCE OF BANKING

My path into investment banking was unusual. Unlike most graduates I wasn’t part of the graduate trainee program and I also didn’t progress because of nepotism, old boys’ networks or because I was in a personal relationship with someone in a position of power. Nonetheless, within the space of two years I went from being a data input temp in a back office function to this in my mid-20s:

* CEO-Chairman’s Office, specializing in strategic investments and corporate strategy;

* a designated “revenue generator” (about 90% of employees are designated “support” and less than 10% are “contract”). Big-time revenue generators are known as “rainmakers”; they’re the ones who make those US$billion deals happen and, yes, they’re the ones who get the eye-watering US$ millions bonuses the media love to write about.

* creating and running e-Intelligence;

* being co-responsible for the Strategic Investments portfolio of 50+ constituents which included the likes of Perot Systems and all the major trading platforms in the world;

* being board observer on 20+ technology investments globally;

* having input on what was invested in, written down and exited (I wrote the Strategic Investments policy as well as co-authored the termsheets for Private Equity third party agreements);

* one of only 30 employees world-wide to be taught Corporate Finance by the Dean of INSEAD before he stopped his classes due to other commitments.

It should be noted that long before the bank I was known in my own right in other positions of leadership like: managing 15 country coverage in a dotcom, responsible for the ‘Risk Banking Survey’ of 3000 banks globally aged all of 22, Academic Board and Student Council member at university, responsible for European drinks projects at the second largest aromachemicals company in the world when I was 19, model student at high school (English and Chinese, plus Royal Institution maths master classes for gifted children), school monitor in junior school from 8-11.

Others have commented previously about my prodigiousness. The truth is that a person can only be as good as the people who are their role models and mentors and I’m blessed to benefit from being taught, trained and nurtured by some of the most phenomenal, wise and generous people in the world.

SEXISM + PROMOTION IN THE CITY

Luckily for me, my direct manager was and continues to be a BRILLIANT leader. He’s married to an incredibly smart and talented MBA (who was previously a top-flight management consultant), so he appreciated and understood how to develop my intelligence, knowhow and drive to collaborate successfully, and he did everything he could to be an OUTSTANDING ROLE MODEL — both in terms of delegating and entrusting me with responsibilities as well as simply being a supportive, meritocratic and decent human being.

From all the positive feedback that the Global Heads of business and senior MDs provided about me, my line manager went to a Special Committee to present the rational case for why I should be promoted as an “exceptional case” to bank policy.

HR informed us that I was the first and only person in the bank’s history this happened to.

Years after we no longer work together we stay in touch and meet up if we’re in the same city. His proven leadership skills is why his team is ranked #1 in their specialism; if you are lucky enough to work with an outstanding manager you’re inspired to work 8000% harder, simply feel motivated to go those extra miles and want to aim even higher to achieve team success. It’s that simple.

It is not at all the case that the City and Wall Street are populated by egotistical Neanderthals. There are good men and women there who are super-smart, work exceptional hours and who also care about their teams and others. However, it would be denial to say that discrimination and inappropriate behaviors don’t exist in high finance.

THE GLOBAL FINANCIAL CRISIS

It would also be denial to say that the system(s) should stay the same and it’s “business as usual” after the recent global financial crisis. Very senior people I’ve spoken with in the last year are absolutely appalled at the outright incompetence, excessive risks and lack of information/communication between and within business units. The corporate financiers, commodities traders and oil analysts are keen to distance themselves from the guys who structured those toxic mortgage CDO assets.

The Private Equity sector is particularly annoyed because the effects of that near-collapse of liquidity now mean that there is hardly any capital around, so they’re finding it tough to raise funds. That doesn’t augur well for companies seeking investment in 2009 and 2010 because it means the funds are at depleted levels. Any funds which are available are being ploughed into existing portfolio companies and, if start-ups are lucky enough to attract investment, the terms are a lot tougher than during times when the financial system was awash with cash and liquidity. For example, start-ups are now having to give away more equity in their company for less investment than during boom times.

TALKING HEADS & WALK THE TALKERS

What has been noticeable during recent outpourings of commentary about the global financial crisis is that about 99% of commentators have no or little direct experience of corporate strategy and implementation at the highest levels of banking. Yes, Nouriel Roubini, Paul Krugman and Alan Greenspan as well as entire rafters of financial journalists and politicians would be included in this. Their perspectives are intellectual abstractions or politicking rather than pragmatic first-hand experience.

The question has been asked by lots of people, “Why did no one see this coming? Why couldn’t the economists predict this bust? Where were the risk managers?” Apparently, some leading economists including those at the Bank of England replied to the Queen’s question of the same with this:

“In summary, your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole,”

* http://blogs.ft.com/arena/2009/07/28/economists-what-is-the-point/

This made me LOL.

The answer is simple: they have NEVER seen the blueprints and balance sheet strategies of any of the investment banks. They have also never been charged with the responsibility of implementation — and we all know that ideas and theories are one thing but SMART EXECUTION IS WHAT’s VALUABLE. Besides which, those commentators have no access to the systems and blueprints that govern how banks operate. Not even the bank’s own economists and Heads of Risk Management do. The management consultants who come in to help shape a little bit of the strategy are also not getting the 360-2020 insights.

The blueprints are what give any bank their competitive advantage over their peers and are so confidential that no more than a dozen people are privy to and have clearance to them. 99% of people don’t even know they exist.

I do because I worked directly on them, and they are………….COMPLEX.

The most obvious Achilles of banks is that, despite very sophisticated technology, a lot of information remains silo and business heads do not share sufficiently or effectively to enable everyone to risk manage appropriately. There is a culture of “knowledge is power” and some business heads hold that information so closely it makes it impossible for people trying to design appropriate corporate strategies to be able to do so.

In spite of any personal charm and reason I may have, there were times when Fixed Income business managers absolutely refused to cooperate in information exchanges. This proved to be their own (and the bank’s) downfall because we all know now that the more Fixed Income refused to disclose information about the real state of the mortgage CDO portfolio, the longer the toxicity was allowed to stay on the balance sheets and internal books, and pollute the other performing assets.

So whilst my e-Intelligence creation spread and sling-shotted knowhow across the silo businesses (so that more people would be on the same page and playing field), some business managers engaged in information hoarding which resulted in no one being aware of the risks on their books until it was far too late and the bank ended up writing down US$ BILLIONS and being bailed out by the government. Moreover, a lot of people lost their employment unnecessarily.

The value, capital and employment decimation is affecting everyone. That’s why there is such brouhaha over the bonuses issue from the Obama administration as well as the Mayor of London, who was previously the sole principal political defender of the City.

STEPS FORWARD FOR THE FUTURE

Personally, I’d like to see technologists become a lot more involved from the outset in the entire process of restructuring the global financial system (and it sorely needs this to prevent recurrences of the last 24 months), so that it not simply the theoretical or political points-scoring framework of some politicians and commentators, but based on PRAGMATIC IMPLEMENTATION.

It beggars belief that the 2009 World Economic Forum and the various G20 summits had hardly any senior technologists discussing how technology can be deployed to tackle those silo information issues — whilst still preserving security and competitive advantages — and creating early risk warning systems, across a whole range of financial products and interconnecting them, that can be universally accessed by the banks for a fee.

My experience has been with consortia trading platforms; that’s how I know something tangible can be created and I even know how the terms of agreement and service level agreements would work and be written.

Equally importantly, we need our smartest economists and corporate strategists to collaborate and construct new economic models wherein:

(1.) VALUE explores quality factors and not pure quantity dimensions of GDP, trade deficits and ISLMs (investment savings, liquidity of money).

(2.) comparability is on a more like-for-like basis;

(3.) consequentiality of consumption can be charted and is transparent;

(4.) philanthropic allocation as a compulsory and not simply voluntary facet of business models that is distinct from corporation tax; and

(5.) contextualized connections between information that seems silo but is actually critical in sense-making.

360-2020

There are all sorts of reasons I’m developing this system. What has been obvious is that we need the ability to discern, categorize, tag and synch data objects, situations, relationships and more in a way which is pragmatic, anticipatory, contextualizing, consequential and smarter than what has been available before.

It is not simply a matter of having real-time updates provided by the likes of Twitter nor is it about the categorization afforded by the Semantic Web Stack and RDF nor is it about semantic social networks.

The facts are e-Intelligence had a real-time IM channel and that IM had been created back in 1999. Separately, the M+A dotcom had an ontology authoring tool which enabled text to be classified as people, places, organization, date, etc. and that had been created back in 1998. The social networks of today are not that different from the virtual communities of the 1980s like the WELL (Whole Earth ‘Lectronic Link), just as Larry Brilliant has commented on:

This is why when I observe that Web technology has not made that much progress (and certainly not the type of leap I personally would like to happen) I’m basing that observation on historical, practical and personal experience.

Is there anything like what I am trying to do with 360-2020 already out there or even in idea generation? No, it’s not. I’ve even examined various sentiment analysis methodologies along with what’s happening in semantic scraping and I have a 99% confidence that it is on no one else’s horizons except mine.

That’s good.

The Chief of Staff of the big bank once observed I was “left of field” and they needed to get me thinking more along the same lines as everyone else, doing what others were. This was after I presented a strategy paper that offered alternative strategies to the US mortgages market and which presented competitive matrices and growth curves that were different from then accepted convention. I used elliptic shapes instead of nice round circles to represent competitive potentials, and my growth graphs didn’t show straight-line trajectories but rather curved humps which plateaued before a new injection of strategy created new curved humps.

Five years later, I read in some management consultancy reports that elliptic shapes had become industry standard and saw some corporate finance reports which showed those curved hump growth curves.

LOOOOOOOOL.

So……….on my birthday, I can say this happily: “I’m glad I think the way I do, can do what I can and am who I am because I was spot-on about the Asian collapse back in 1997, spot-on about the investments I was involved with, spot-on about the risks of overloading into the US mortgage CDO even way back in 2003, spot-on about the need to evolve some of those accepted management consultancy frameworks  and spot-on about various Semantic Web plays and their limitations.”

In a few years time, I’m probably going to prove spot-on about the creation of a Conscious Web and those new economic models too.

Meanwhile, I need to go and find shoes and make-up to match my party dress………….LOL.

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360-2020: MY SYSTEM, MY VALUES

GC asked what would happen if Google came along tomorrow and offered US$10 million for 360-2020. Could I imagine what else I could do with that US$10 million? What other ventures?

I said that if Google wanted to become a STRATEGIC INVESTOR with a sub-3% equity stake at US$10 million, I might consider that. To sell out 100% to Google at US$10 million is not a value proposition because I’ve observed at close quarters quite a few of Google’s flagship products. As with anything, some work better than others. Overall, of the big techco’s, Google has a lot to merit it.

My considerations would involve my confidence about Google’s commitment to realizing a Conscious Web — one in which tools are available to help us understand the context and consequences of our choices and actions across a range of major issues: consumption, climate change, education, global economies, etc.

The ultimate strategy of 360-2020 is towards the realization of a Conscious Web.

That’s why I’m allocating my brainpower, knowhow and energies to it.