Shameless Self-Promotion: CI and the financial crisis - Competitive Intelligence2024-03-29T15:46:17Zhttp://competitiveintelligence.ning.com/forum/topics/2036441:Topic:10884?commentId=2036441%3AComment%3A11022&feed=yes&xn_auth=noKenneth: Good business models…tag:competitiveintelligence.ning.com,2008-10-24:2036441:Comment:110222008-10-24T18:18:32.244ZEduardohttp://competitiveintelligence.ning.com/profile/Eduardo
Kenneth: Good business models, even risky ones, may (or may not) prove to be successful. One does not know at the beginning and projections should consider a couple of possible scenarios (including worst case). Should anything go wrong, one should be prepared to face "results and/or consequences". It is not as simple as overbooking a flight. The dot.coms are clear examples, since not all resulted in successful stories. Nevertheless, JB and amazon proved to be worthy of billions of dollars of…
Kenneth: Good business models, even risky ones, may (or may not) prove to be successful. One does not know at the beginning and projections should consider a couple of possible scenarios (including worst case). Should anything go wrong, one should be prepared to face "results and/or consequences". It is not as simple as overbooking a flight. The dot.coms are clear examples, since not all resulted in successful stories. Nevertheless, JB and amazon proved to be worthy of billions of dollars of trust; even against the odds. There was reasoning behind it. There were even fall back positions. In the case you address I am missing both security parachutes. Ethical practices (it is not only about regulations) "seem to be missing" (!!!). External CI could have maybe helped; who thought about it? Internal CI was probably looking another way. So, what come next; who will be the next one...? Eduardo It's a really complex issue,…tag:competitiveintelligence.ning.com,2008-10-22:2036441:Comment:108992008-10-22T17:54:58.238ZTim Powellhttp://competitiveintelligence.ning.com/profile/TimPowell
It's a really complex issue, as you say Ken, and there was lots of early warning.<br />
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Yale Economist Robert Shiller -- who coined the term "irrational exuberance -- has just just published a book, <i>The Subprime Solution</i> (Princeton). You can get a free chapter here: <a href="http://press.princeton.edu/chapters/s8714.html">http://press.princeton.edu/chapters/s8714.html</a><br />
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Among other things, he says "...the current situation is <i>really</i> an opportunity to redouble our efforts to rethink…
It's a really complex issue, as you say Ken, and there was lots of early warning.<br />
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Yale Economist Robert Shiller -- who coined the term "irrational exuberance -- has just just published a book, <i>The Subprime Solution</i> (Princeton). You can get a free chapter here: <a href="http://press.princeton.edu/chapters/s8714.html">http://press.princeton.edu/chapters/s8714.html</a><br />
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Among other things, he says "...the current situation is <i>really</i> an opportunity to redouble our efforts to rethink and improve our risk-management institutions, the framework that undergirds our increasingly sopisticated financial sector." If you see intelligence as a part of risk management, as I do, his answer would be we "should have" seen this coming -- but didn't, because people suspended due diligence, fiduciary responsibilities, and plain old common sense in the pursuit of making more money.<br />
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No earthquake happens without preceding tremors. There were plenty of early warning signals here, some of which Shiller describes. CI professionals could play a lead role in identifying the many points at which financial intelligence failed, and how it can be fixed.<br />
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The undermining of financial data calls into question much of what we all do as "CI professionals". Like most of you, I use audited financial data constantly, and (up until summer 2007) have tended to assume it is more or less correct.<br />
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For us, it's more than a financial crisis -- it's an <i>information</i> crisis. I've written my own interpretation to that effect ("Our Radar Has Failed") here: <a href="http://www.knowledgevaluechain.com">www.knowledgevaluechain.com</a>.