Problem Solving in a Complex World

There is a great propensity for us to seek simple solutions to complex problems and to offer them up with a degree of certitude that hints of infallibility. Thus if we decrease carbon dioxide emissions we will mitigate the effects of climate change. If unemployment goes up criminal activity will increase and if we expand property ownership we will create a more responsible citizenry. Faced with the rising price of oil and the concomitant increased cost of electricity we need to invest in alternative energy.

Climate change is far from being understood, recent statistics do not support the mantra of the linkage of rising unemployment to rising crime; rapidly expanding property ownership has been a major factor in the global financial crisis; and no one can explain to me why it makes sense to invest in a more expensive, unreliable energy source to replace that one that I now have.

Each problem that we face is so complex with so many facets and variables, that it is difficult if not impossible to fully understand them. Consequently the very best we can do is to approach problem solving with a degree of humility that accepts a modicum of failure as a given, in the process of trial and error while recognizing the difficulty in solving complex issues with single solutions.

Unfortunately, many business and political leaders see this as a sign of weakness instead of a capacity for resilience and survivability. Similarly our culture is one that is most unforgiving of error or failure. The reality is that a successful business, be it a small shop or multinational enterprise, is in a constant state of evolution and change. Experimenting with new ideas, technologies and processes; keeping those that work and discarding the lead balloons. The secret to success is to facilitate a culture that allows for someone to try and fly those lead balloons in the first place.

The same is true of a country or region as we try to improve the quality and transparency of governance while enhancing the widest possible public participation. As we seek to grow our economy and enhance the quality of life for all, we must develop policies that allow, and indeed encourage, entrepreneurial experimentation. Legislation and regulations should be constantly under review with a view to adjusting to the rapidly changing real world environment and to correct the ill effects of unintended consequences.

All too often we come across Dickensian rules that are quaint in their absurdity, such as the stamp tax that requires a postage stamp to be affixed to receipts. Enacted in a day when all receipts were written in long hand, it is still in force though seldom observed  in an age where receipts are more frequently received in electronic format than on paper.

Another case in point is the proposed Antiquities Bill that is presently under review. In its present form it will complicate the lives of thousands of Barbadians from all walks of life, threatening to criminalize them for not registering personal belongings that are more than 50 years old and which they may well be unaware of.

The Bill is so draconian, all encompassing and sweeping in its powers that it will adversely affect a wide swath of the entire population. A better approach to the important issue of protecting our historical heritage would be an education and public relations program to have individuals voluntarily list antiques, while providing information on the best way to preserve them and highlighting best practices to develop community involvement in a Protect Barbadian Heritage programme.

By inviting many inputs and stimulating the public to take ownership of our heritage we would, through trial and error, arrive at a more harmonious and effective solution to the problem of preserving items of historical importance. One interesting event in the UK that served heighten the awareness of antiques owned by the general population was the popular TV series, Antiques Road Show. We can surely come up with some ideas of our own rather than subscribe to heavy handed punitive legislation that will be met with hostility. The Bill was an error, now it’s time for us to try something else.

  

phillip.goddard@braggadax.com

The Bright Side and the Real Side

It is usually a good strategy to emphasize positive things in any human endeavor to encourage the team to excel and to perform beyond expectations.   But there is a danger of going too far in this direction, and ignoring critical factors that are necessary for success.

If a retail shop focuses solely on gaining more customers without measuring the cost of increasing sales, there is a very real danger of achieving stellar sales results at the expense of profit and ultimately a failure of the business. Thus a sound approach to increased sales and profit is to monitor gross profit and expenses while at the same time doing those things that encourage more people to patronize the establishment by delivering greater value for money to a well targeted customer base.

The cost of attracting new customers is a costly business, that requires expense in advertising; staff training; upgrading facilities; or in special discounts. Thus it is a sound practice to do everything possible to exceed expectations of existing customers to enhance the likelihood of repeat business and improved profitability. Above all, it is important to keep track of all aspects of the business and take a balanced view of the many success factors as well as the negative issues that need to be addressed.

This past week there were two items in the press that once again focused on the increase in arrivals of both long stay visitors and cruise ship passengers. The good news was that there were increases all around. In the subtext however, there was a strong indication that the arrivals did not translate into increased business. This is a disquieting trend that has continued for far too long and it indicates that we do not have our eye on the ball when it comes to the hospitality industry.

Policy makers and the BTA have been focused on arrival numbers and ignoring the receipts. There are continuing reports about seeking new business from non-traditional areas and developing the Chinese market while admitting that Beijing is a bit far. That’s the understatement of the year. The airlines would have to develop an in-flight refueling capacity to make the Beijing Bridgetown hop.

It is time thet we started measuring the profitability of our hospitality industry and focus on those things that add value to the visitor experience. We should use new technologies available to us in developing up market additional business from our traditional markets. By capitalizing on the positive experiences of generations of visitors we can develop word of mouth advertising.

It is time to focus on what works and the successes that we have had even in these difficult economic times, and there are some. The industry needs hard headed pragmatic individuals who have a clear perspective of the future of the industry and the direction that it must take. We need to start measuring the things that count and focus on the contribution that is made to our economy.

The steady decline in hospitality industry revenue, at many levels, indicates a policy failure of significant proportions. It is time to abandon the bottom feeding strategy to increase the numbers of visitors and to focus on high value customers and service excellence. It’s more work, but it’s worth it.

phillip.goddard@braggadax.com

The Pemberton Venture at Fresh water Bay

Fresh Water Bay, a place that was renamed Paradise Beach by Cunard Lines and mothballed by Sandals, is now referred to as the Four Seasons project by all and sundry. A private company, Cinnamon 88 purchased the property from Sandals and launched an ambitious and highly leveraged hotel and villa development complex that ran into financial difficulties and suspended construction activities three years ago.

The Four Seasons project as it has been dubbed has now become one of the most controversial of projects. It is a venture that seems to be as firmly impaled upon the shoals of a financial reef as is the Concordia on the isle of Giglio.

What started as a privately funded venture for profit by the promoters, Mike Pemberton and Robin Paterson, collapsed and eventually morphed into a project controlled by the Barbados government under circumstances that are not clear to this day. After three years, there is a growing perception that the venture has become a quagmire that is a growing financial drain on the government that it can ill afford.

First the government guaranteed a loan of BDS 120 million that was supposed to restart construction and put the project back on track. This proved to be insufficient to even meet the outstanding payables of the venture and after the money was disbursed to partially satisfy the claims of contractors and suppliers, in a remarkable display of corporate welfare, the venture remained in limbo.

Needless to say the initial investors who had paid up to 40% deposit on their multimillion dollar homes became seriously agitated and began to threaten legal action to recover their money. The lead promoter for the reconfigured project, Mr. Avinash Persaud, denied that there was any legal action being taken but persistent reports in the Irish and British newspapers contradict this.

Last year, in a last ditch maneuver, the Barbados National Insurance Board was asked to invest BDS 60 million in the project to put the project back on track and to buttress the argument for support from the Inter American Development Bank in the form of a BDS 180 million loan. The initial response from the NIS investment committee was that the investment carried too high a risk for its pension fund and declined the invitation to participate in the venture.

Subsequently, under pressure from the government, there are reports that the investment committee has reconsidered the risk and that the NIS Board will meet next week to reconsider their position on the matter. In the mean time in an astonishing display of clairvoyance, the Minister of Finance has announced that the NIS Board has agreed to the loan.

One wonders what has changed in the past few weeks to alter the risk factors for the NIS. Certainly it cannot be the claims piling up in the Supreme Court, the most recent of which is the one lodged by Mr. Aidan Heavey. Nor can it be the investment climate in Europe as the Euro Zone grapples with the continuing Greek crisis and the financial problems of Italy, Spain and Portugal.

One would have thought that after the Clico experience, we would have learnt the lesson that pension funds should not be used as venture capital.

The public of Barbados are being treated to a display of murkiness and obfuscation in this whole debacle. Mr. Persaud has sought to indicate that criticism of the financing of the project with public funds is purely political but there are legions of professional and business people who think that this is a disaster in the making.

The National Insurance Board has an obligation to the workers that contribute to the NIS pension fund to invest the contributions in stable and reliable investments. The criteria for this are well established. They should stay within the long established parameters of prudence and be prepared to resign rather than acquiesce to political pressure to do otherwise.

phillip.goddard@braggadax.com