What CFOs worry about

You know how generals tend to prepare to fight the last war. It appears that chief financial officers (CFO) worry about a repeat of the most recent disasters but have trouble identifying future risks. The risks that CFOs say will be their greatest concerns over the next five years — financial meltdowns and supply-chain disruptions — are the disasters that have happened in the last few years, according to an article and survey by CFO magazine.

Top risks identified by 168 senior finance executives

  1. Financial exposure (51%)
  2. Supply-chain/logistics disruption (37%)
  3. Legal liability/reputational harm (35%)
  4. Technology failure (33%)
  5. Security breach (23%)

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Multiple responses allowed.
Source: CFO Research Services and Liberty Mutual Insurance Co., June 2010

“The research suggests that many companies would benefit from a more forward-looking approach to managing risk,” the article says Continue reading “What CFOs worry about”

The future of agriculture: Two scenarios

Here are links to two scenarios for the future of agriculture. The first, from the U.S. Department of Agriculture, is the “expected future.” It assumes zero disruptive change, a mere mid-point extrapolation of current conditions.  The second is from a group of scientists concerned about the effects of global climate change on agriculture — including lower crop yields, flooding and crop disease — and thinking about the possibilities of biotech to deal with that. Continue reading “The future of agriculture: Two scenarios”

The president-elect will face big problems, threats

It’ll be a short honeymoon. The next U.S. president will face high expectations (which may be impossible to fulfill), a recessionary economy and huge budget deficits. And that’s just domestically. Mike McConnell, the director of national intelligence, gave a speech this week that lays out the broader threats. As The Washington Post reported:

The next U.S. president will govern in an era of increasing international instability, including a heightened risk of terrorist attacks in the near future, long-term prospects of regional conflicts and diminished U.S. dominance across the globe, the nation’s top intelligence officer said Thursday.

Competition for energy, water and food will drive conflicts between nations to a degree not seen in decades, and climate change and global economic upheaval will amplify the effects, [McConnell said].

“After the new president-elect’s excitement subsides after winning the election, it is going to be dampened somewhat when he begins to focus on the realities of the myriad of changes and challenges,” he said.

Of course, besides the predictable conflicts and threats, “there is always surprise,” McConnell said. (Futurists call ’em wild cards.)

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Most companies fail at forecasting earnings

Two out of every three companies are unable to accurately forecast earnings for the next quarter, missing the mark by anywhere from 6% to over 30%, according to a study of 70 multinational companies by The Hackett Group.

We’ve all seen cases where missed earnings projections led to sharp stock declines, CFO firings, or worse. But often companies don’t take the steps necessary to get better at forecasting, Hackett analysts say.

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Six Sigma: Innovation-killer?

Arik Johnson’s e-newsletter — “ReconG2 Weekly” (15 October 2007) — from Aurora Worldwide Development Corp. (a competitive intelligence firm) asks this question: Have you ever considered that innovation only really happens when companies make mistakes?

What then happens when organizations become so obsessed with quality and performance — for example, the Six Sigma revolution of the past few years — that mistakes are specifically engineered out of the system?

Consider, for example, the oft-told story behind 3M’s Post-it Notes, after its inventor, Art Fry, spent years searching for a valuable application of an oddball new adhesive that wouldn’t stay stuck before the product finally went into production in 1980.

Fast forward 20 years and you would find that “Spirit of Innovation” under the decidedly more results-oriented gaze of CEO Jim McNerney, where during his tenure from 2000 to 2005 the company became a kind of poster child for Six Sigma….

But today’s 3M finds CEO George Buckley and his management rolling back many of the company’s Six Sigma initiatives, having found the program incompatible with the spirit of innovation that made 3M great in the first place.

Invention, after all, is inherently risky, wasteful and chaotic… exactly the conditions Six Sigma seeks to eliminate.

Continue reading “Six Sigma: Innovation-killer?”