The Volcano Business

I have recently returned from a volcanic island and noticed that the island is so much more than just about tourism, it has a ‘volcano’ business feel to it, anyone who’s been to a volcanic island or province will have a feeling of what I’m saying here, it’s just something a bit unique or special in a way that’s somehow related to the near-by volcano.

What I mean by this is that the island’s businesses of which there are many and varied in nature are nearly all concerned in some way with the volcano(s) that made the island millions of years ago. Yes there is the obvious tourism businesses; after all it’s an island in the sun 12 months of the year so tourism will feature strongly, that’s just a no-brainer.

But what I mean is that the volcano business is about making the most of what you have in the time available. The actual time when the mountain decides to explode is anybody’s guess. The last time this island had an eruption was in 1971 and it added an extra 6 km2 to the island which is just short of an extra 1% total surface area. So you can see the islanders are tasked with the uncertainty of when the next eruption will be and the level of devastation that may follow whilst carrying on in business and life.

What I can say with certainty is that the food stuffs grown on the side of the volcano are on the whole exceptional in taste. I bought a jar of honey and not 3 days had passed and it has almost disappeared, the taste was exquisite. I could taste the flower buds of the forest and the aroma was just unbelievable. I’ve been to a few islands now and all of the volcanic ones are the same, different products perhaps but the quality of the products; outstanding.

So the volcano business is based on quality of product, yes! The volcano business is artisan in nature, also yes! There is a scarcity to the number of, and range of products produced. The prices for some of these products is naturally quite high, after all scarcity is the order of the day. This therefore is just one of the business lessons the volcano business teaches us; scarcity + high quality = very high price.

The other defining factor at play is the uncertainty of supply. The volcano could erupt at any moment wiping away a life-times endeavour in the hot ash and lava flow. This is true but nonetheless essential for the quality of the products. The renewal of the land process is essential, the earth gives-up its inner secrets and these are transformed in to fantastic food stuffs, and experiences for the traveller and island dweller alike. I open my pot of honey and it is as if the earth has whispered her inner most secrets into the honey for me to taste each time I have honey and bread.

So the other business lesson the volcano business teaches us is that of renewal. Usher out the old and usher in the new. The timing should be decided not by schedules or plans but should be natural and spontaneous. Do it when it is necessary to do it, NOT when you deem it convenient to do it. The moment will be lost I assure you and the vibrant continuity of your business will be lost, possibly for ever.

Plans and schedules are for managers, change and spontaneity is the stuff that leaders are bothered with. Plans are important, yes, but not essential for leadership. The volcano business is a lesson in enforced spontaneity, it is unavoidable, it will happen. And in addition to this forced cycle of uncertain change is the essence of high quality, scarce and so highly valued goods and services.

So the questions you should be asking is;

Is your business situated at the foot of a volcano? Would it benefit from being at the foot of a volcano?

What would you do if your industry were to be suddenly changed for ever? How would your business respond to a fundamental change in the business environment it operates in?

Could you be the volcano? Could your business sweep all away before it by introducing a product or service so new, and special, and scarce, and highly valued?

That is the essence of modern business, that you are responsible for the change, you are responsible for the spontaneity, you are responsible!

Thank you for taking the time to read this blog post and if you have any comments or thoughts please feel free to be in touch.

Philip

The Government Aid Business

Government Aid is a Business, the Government Aid Business is concerned with giving aid that meets national requirements for furtherment of national interests (or so you would think).

What it is NOT is charitable aid in the sense that you or I understand as giving people in need the money and resources they probably desperately need.

What it IS therefore is a way a government can say to its people is that it is giving to needy causes internationally. This is probably not true.

Here’s how I think it works in outline;

A nation, normally an African nation but it doesn’t have to be but they are mostly the victims in this sort of set-up, well this nation has an economy that needs help and bolstering. Now to set the context; most modern African nations are a result of European colonial ambitions about 150 – 200 years ago but after the second world war became ungovernable. However, by this point most European nations had largely taken what they wanted in raw materials from these countries and basically given nothing back save for installing a few local despots to run the place on behalf of the Europeans. There was a move toward self-government and the Europeans didn’t need the headache of doing a proper job of hand over so just gave these new nations (and installed despots) independence without any real effort at helping them adjust to their new reality.

The new nations as they found themselves had no educations system, no health care system, little in the way of legal system but a centralised government system based in the previous European overlords system and as it soon came to be Big-Man Politics (a system of dictatorship based on the betterment of a very small number of people at the expense of the many). So most new nations found themselves with a nation of uneducated and rural peoples, no recognisable industrial or logistical structures in place often times some level of civil strife or war. Basically during the 1950’s and 60’s the Europeans allowed independence to sweep through these new nations with nothing in the way of recognisable assistance in running the newly free countries.

So that’s the fertile ground on which was built the calamities to come; nations of uneducated tribal peoples, no recognisable support from the previous colonial powers and then to top it off an East/West Cold War which was acted out through regional conflicts. So yes you’ve probably worked it out, the civil wars in these new nations were supported by Cold War adversaries. The Cold War adversaries gave massive inter-governmental loans to the new nations who spent the money on armaments, that’s right, NOT food, NOT agriculture, NOT health care, NOT education but guns and rockets and then proceeded to go to war with each other.

So to summarise; a new nation heavily in debt, no way of paying it back, devastated by war, a needy populace with no idea of how to function in the contemporary world of the day. And mostly governed by dictators who treated their newly found nation as a means for personal gain. Most ordinary people’s lives became effectively worthless and inescapable.

And this is how the Government Aid Business works to the advantage of the nation giving the aid;

The needy nation has massive debts, it’s politically unstable, rogue elements use cross border terror tactics for very localised gain, there is no way of controlling health problems from crossing borders and the debt mountain built up over years is never going to be repaid. Not a pretty picture this is it?

So the rich nation, the one doing the giving decides that they want to look good and in some way gain favour with the needy nation. After all the needy nation probably still has some raw materials to be mined or bought on the cheap so the rich nation decides to give some aid.

But the aid given comes with strings, strings that are not easy to break. The aid given must be spent in such a way that targets set by the rich nation are met. How does this work in practice? Let us say a target is set for production of a certain kind of cash crop and the only way it can be met is to stop growing a food crop and replace with the cash crop. But, the land is not suitable so the aid money is spent on fertilisers to make the cash crop grow but also poison the land for use growing food crops in the future. Aid granted, cash crop grown, cash crop sold but now the needy nation has to import food by spending the money from the cash crop.

Genius, make the needy nation even more needy.

Aid actually makes the needy nation poorer!

Yes that’s right by giving aid rich governments (our governments) make poor countries even poorer.

  1. Rich nations encourage new (poor) nations to take on debt to finance war
  2. The debt is spent with rich countries who sell arms to the new nations; rich nations get richer
  3. The new (poor) nations now have debt interest payments to make; rich nations get richer
  4. Debt interest payments mean even less social investment; the poor nation gets poorer
  5. Rich nations give aid with strings attached; the poor nations get a short-term gain
  6. The short-term gain runs out and the poor nations abilities are reduced still further; the rich nations get richer

This is the Government Aid Business as it presently stands. It’s complicated further by the any number of NGO’s each with their own agenda but basically following the patterns set by government aid.

Now a few years ago there was the Drop the Debt movement and a lot of fine words were spoken by some very prominent politicians of the day. I may be wrong, but my feeling is that the debt is still there by and large. That actually government aid is being used to in part alleviate the interest payments, but the debt remains. So here in the UK we hear of 0.7% GDP being used for International Development.

My guess is that the development is along the lines of how the UK can profit further from these very needy nations with no thought for nation building and the need of the people therein.

I know this blog post is possibly going some way off business best practice and self-fulfilment but think this through. If we honestly want to practice best practice then we must extend this to all people from wherever they may come and whatever religion they may or may not observe, and without question whatever their skin colour, male or female. And the Government Aid Business is just one area that could be massively improved allowing for greater business opportunity for all.

The Government Aid Business is a dirty business and could be done so much better.

I propose an 8 point plan that;

  1. The debt is wiped completely, no debt, no debt interest, all gone
  2. That Government Aid is doubled, yes we can afford it
  3. That it is given directly to the applicant nation state governments to spend as they will, no strings attached
  4. That it is all monitored by the IMF, but not managed by them just reported on
  5. That technical help is offered but this help is not paid for from the aid given but is additional with in-country training part of the deal
  6. That investment is the key with an emphasis on education and health care (in the longer-term the rest will take care of itself)
  7. That key markets are stripped of trade barriers (coffee, bananas, tea, sugar…)
  8. That fair prices are paid to the producers and this is enshrined in contracts for supply and monitored by the IMF

I think this plan may in a couple of generations mean that the Government Aid Business is really only concerned with natural disasters.

Thanks as always for reading this post. If you have any comments positive or negative, I’ll be happy to respond.

Philip