controls – Page 29 – Maverisk / Étoiles du Nord

From Sedlacek to accountancy

While going through Sedláček’s seminal Economics of Good and Evil – which should be a mandatory read for all economics, business, and audit (-of-all-sorts) students, I came across one part that struck me as possibly relevant for direct application in accountancy.
Oh but of course, there’s so great a many more parts that should be applied, the sooner the better. I’ll return one day, in the next couple of months, with probably a series of Book by Quote posts on the book, including some analysis and comments maybe this time. And by ‘direct application’ I meant application as useful underpinning undercurrent, root cause, in tha analysis, of what’s wrong with latter-day accountancy, helping as pointers towards possible improvement(s) there. The kicker is in the tail of this post …

First, this:
[According to legend, the exact spot (flag) where St. George slew the dragon, at the St. Jordi (of course) gate, Montblanc, Catalunya. Somewhat fittingly a bus stop 2 yards away, if you could make this post a similar exact slaying spot of accountancy’s woes ;-]

OK. To start. Sedláček has this chapter where a number of Value systems are lined up. On the far left is Kant, with the good-ness of a man’s actions being everything, regardless of the results. Next from the left towards the middle are Christian and Judean thought, and on with Aristoteles, Epicurists (which I think he interprets, and places, incorrectly), Hedonists and finally on the far Right flank, Utilitarians and Mandeville – Greed is Good or rather: only (!?) vice is good (for progress – and we all need that, right?). When reading this (and, as said, I don’t agree with everything there even taking into account Sedláček’s clear statement that the abbreviation may bend the correctness of content), something struck me:

What if, when, the utilitarians have kidnapped the meek of the middle-to-left; have made them believe that they could remain true to themselves in this hostile world, while at the same time the villains have isolated them from the real world and just harvest their proceeds?

[From here on, it gets contentious. Don’t be put off by what you might interpret as rebellious bluntness. I just have not sufficient time to write it all out in a diplomatic, friendly fashion – a diplomat is someone who tells you to go to heck in such a way that you look forward to the journey]
This, e.g., in the wider society where Jaron Lanier’s siren servers harvest all the data production that consumers do; promising benefits but keeping all the humongous moneys to themselves. And, as said, in accountancy, where the individual accountant (partner) is still allowed to believe (s)he works for the greater good of society, to be a really important cog in (economic) society’s good behavior machine. Where in the mean time, the leading partners (or the jump from individual to collective!) roam off all the vast margins and don’t care less about quality. The latter may sound coarse but considering the pressure on productivity levels and budgets, and considering the declared Holy goal of profit increase (second derivative!) …

Such kidnapping points at the improvements required in accountancy today, in particular re the ‘Big’ 4 their handywork for large organisations i.e. just signing off and caring less (proven) about the quality of investigative work done. The horror to think one would dig deep enough for root causes, that would only cost mo-ney…! and could set us up for confrontation with the client, even by causing the hassle or having to amend (processes – cumbersome and costly, and books – the same).

As stated, this may help in the current discussions about the ‘business model’ in accountancy in particular re the ‘Big’ 4. Where talk is of what the client is that should be served, and how to align payment accordingly. As now, in practice the Board, the very auditee, pays. Officially, the Board of Supervisors (Raad van Commissarissen) does, that in an ideal world would represent not only stockholders’ interests but also other stakeholders’; we live in not quite an ideal world where the RvC has to deal with Regulatory Capture if (not when) they’d be aware of that and would even be aware of the need to break the old boys’ networks. And even then, the client could be the RvC but paying the (external) accountant out of profits comes down to the Board registering that in the organization’s books after the best placed to understand and estimate, the Board, would negotiate the budget. In the end, the auditee pays. Who pays, stays. ‘Whose bread one eats, his words one speaks’ (Dutch). Despite the Good ones trying to maintain their independence, in appearance and practice; this shouldn’t be a struggle but an easy stable starting point not having to depart from or returned back to. Certainly not in public opinion..! But now, is troublesome.
Another option, to hire accountants via the insurance companies that insure the auditee organisations qua malpractice, may work but makes accountants dependent in other ways; insurance co’s aren’t philanthropic institutions and would have their own ways of setting budgets, not ex ante aligned with accountants’ societal interests first.

Thirdly, nationalization of accountants also pops up here and there again and again. Where all accountants – not; only the ones to audit organisations of societal interest – would then be allocated in some way or another to auditees. Regulatory capture and other distortions may readily start off in this mode as well; is this studied well enough? Though in this model, accountants with their legally protected task would earn much capped incomes in line with all (?) other civil servants like street cleaners and PMs.

And, of course, there’s the BOHICA approach.
Which might not even be that bad, if, IF paired with an introspection plus real change where the profit seekers are ousted (and not allowed to re-enter, through changed promotion paths) and the kidnapped are released. So that they can again do their best work, as virtuous (wo)men.

So, this above reasoning all the way from Sedláček to current accountancy business models, leads to the distinction of two different sorts of ‘Big’ 4 partners. Which in turn leads to the kidnap interpretation. Which, in turn, leads to changed promotion paths as way forward.

Aren’t we lucky that accountants know everything about true transparency … because that’s what will be needed when progressing with this. So that no lip service will be paid to these changed business principles.

But wait … all the above should not be news. And appears to be insufficient since, as accountants, the very few who actually do, discussed: shouting for ‘cultural change’ is just window dressing that in itself will not result in said change and may not prove to be doable, as goal. To put it very mildly. We may need more. Along the lines of Mandeville, where the Bad are allowed to exist, are required to exist but don’t tell them (no need), in order for the whole of virtuous society to benefit from them; if there were only virtuous citizens, society would come to a standstill until destroyed (from the outside, mostly).
What if we can devise a (business) model that would actually kidnap the despicable, the money grabbers, and turn them into the nible thrifty termites that we the virtuous ants could live off ..?
[Edited to add: This may require Piketty-style progressive taxes on specific professions, but would that be impossible ..? ‘t Might be done in-house in some way, e.g., by setting limits on the income range, the top 10% earning a max per person of … whatever, times the earning per person of the lower 20%]

I’ll leave you now. A much more extensive analysis may be in order of this subject. Which may or may not follow. In particular re the jump from (sum of) individuals to collective à la Ortega y Gasset and Brian (and followers); an oft overlooked but still Very Hard Problem. But your comments are welcomed already…:

Not yet one IoTA; Auditing ‘technology’

[Apologies for the date/time stamp; couldn’t pass.]
First, a pic:
20140226_113554
[Classy classic industrial; Binckhorst]

Recently, I was triggered by an old friend about some speaking engagement of mine a number of years back. As in this deck (in Dutch…).
The point being; we have hardly progressed past the point I mentioned in that, being that ‘we’ auditors, also IT/IS auditors!, didn’t fully adapt to the, then, Stuxnet kind of threats. (Not adopt, adapt; I will be a grammar and semantics n.z. on that.)
As we dwelled in our Administrative view of how to control the world, and commonly though not fully comprehensively, had never learned that the control paradigms there, were but sloppy copies of the control paradigms that Industry had known for a long time already, effectively in the environment of use there. As in this post of mine. Etc.

But guess what – now many years later, we still as a profession haven’t moved past the administrative borders yet. Hence, herewith

A declaration of intent to develop an audit framework for the IoT world.

Yes, there’s a lot of ground to cover. All the way from classification of sensors and networks, up to discussions about privacy, ethics and optimistic/pessimistic (dystopian) views of the Singularity. And all in between that auditors, the right kind, IS auditors with core binary skills and understanding of supra-supra-governance issues, might have to tackle. Can tackle, when with the right methodologies, tools, attitude, and marketing to be able to make a living.

Hm, there’s so much to cover. Will first re-cover, then cover, step by step. All your comments are welcomed already.
[Edited to add: Apparently, at least Checkpoint (of firewall fame oh yes don’t complain I know you do a lot more than that yesterday’s stuff; as here) has some offerings for SCADA security. And so does Netop (here). And of course, Splunk). But admit; that’s not many.]

Meet no more, continuously, and excel

I posted before on the atrocities of current-day meeting practices. And on the changing role of the Document, here.
The latter, provided some thought towards predicting the demise of the former: When we’re connected (at the information level, not mere technically) constantly and continuously, wouldn’t all the errors of meetings be resolved (resolvable) by not having them anymore, or at least, re-styling them in a wholesale manner?
First, a picture:
[Reflections of – the way life used to be (lyrics)]

I mean, all the meeting errors have been allowed to play out because the in-charge’s liked them, for the display of faux leadership caricature they provided. But with the change towards always-on mesh communications, which is do-or-die, the very reasons to have meetings diminishes. Social advantages of meeting F2F, that were collateral ‘damage’, may still be around but in the form of having drinks. Who’d need more? and now recognize the benefits outright, without the formal hassle and hilarious chair and topper pomp.

Though I treasure the value of the Document, if, very big if, it is in itself an attempt to Masterpiece. Which it sometimes is, in organisations, but then, so desperately few would survive public muster. Yes, there’s a trend towards deployment of Narratives everywhere. But that’s not what I mean here. I mean stuff like Books, nuggets of Culture carried through the ages. Where mere documents, even, let alone casual socmed conversations, will leave no (! storage re-use needs, TLA?) trace of your existence. As the Greek Hell beyond the underworld: In the underworld, even the villains were still known by name. But beyond that, in Hell, wailed the spirits of the Forgotten, the nameless. That truly was as bad as hell could get. And, of course, true heroes would attach to the pantheon, become stars and constellations. Do you strive for that, when filling out the TPS report at Initech? If you had to look that up, you’re on the naïve side of young…

Well then, to summarise: Meeting mania is curable, and Documents sharpen our skills. What a blunt conclusion. But don’t blame me when your greatness takes off.

Clustering the future

Was clustering my themes for the future of this blog. Came up with:
[Sizes, colours, or text sizes not very reflective of the attention the various subjects will get]
Low sophistication tool, eh? Never mind. Do mind, to comment. On the various things that would need to be added. As yes I know, I have left much out of the picture, for brevity purposes. But will want to hear whether I missed major things before I miss them, in next year’s posts. Thank you!
And, for the latter,
[Bah-t’yó! indeed]

Pulling, and pushing the compliance boundaries

A reblog again, delving into the breath of being the peers that pressure towards conformity or be the Maverisk that wants to prevent stale and mould. Read past the starting stuff, and find the value of nonconformity explained. If you don’t see that… You may be the one most in need …
And,
[Accelerating, not so bad]

Spam (out) of control

How is it that for decades, we had been used to managerial spans of control being in the 5-to-10, optimal (sic) 8 range, whereas what we had in the past couple of decades is spans of control in the 2-3 range mostly ..? [Duh, exceptions and successful organisations aside…]

Because I came across some post on a well-known business site where there’s an early simple statement that a span of control of 10 would not only be normal, but outdated as well, as the span could be at 30.
Well, I doubt the latter, as this would conflict with a lower ‘Dunbar’ number which indeed is about 8, with ramifications for informal control as outlined in this Bruce masterpiece. Oh yes now it springs to mind the 8 figure was taken by the military, the ultimate built-for-survival organization, to be the optimal span of control, and taken over to business for its apparently attractive all-business-is-war metaphor – where the attraction is there only for those not really exposed to the gore of war, I guess.

But whether it’s 8, 10 or 30, the optimal span of control clearly is larger than the common today’s practice.
Which has implications:

Too low a number will inevitably lead managers to seek to have something to do. Busywork, in their role leading to excessive micromanagement (yes pleonasm but on purpose) and/or excessive meeting behavior, in particular with their underlings and/or likewise trapped colleagues, like an AA group. Thus burdening the underlings with time taken away from actual content work and the need for Action item lists and reporting blub. Thus burdening colleagues with all sorts of time lost on, what actually is, whining.
Too low a number and the micromanagement leads to extreme (far overextended) controls burdens on the ones who’d actually produce anything of value instead of producing negative value with all their externalities like managers may commonly do. This burdening then leads to ‘process’, ‘procedures’ etc., to ‘standardise’ (otherwise, understanding of actual content would be required; the horror to managers!), hollowing out even further the value of any work done. As in the abovementioned / linked Forbes article; the Peter principle will reign.
Too low a number and the standardisation will drive out the creativity (in process and in product/service design/production/delivery) that is required ever more than before to counter the ever more changing environment. As I typed this, this article arrived…

So yes, we all need to focus on upping the number. To counter stalemates. To counter bureaucracy heavens. To regain flexibility.
But still, still, this could only work IF, very very big IF, ‘managers’ (not to address actual managers, that I value enormously!) can loosen their frantic, fear-of-death-like Totalitarian Control attitude.
Which I doubt. But then, organisations relying on these (whether already or after they will have crowded-out the actual managers via the Peter principle and acolyte behavior) will loose out to the upstarts that do keep the mold out.

And, finally, of course:
[Was safe, now the highway passes by somewhere down below, leaving the ‘secured’ stranded upon high; Carmona]

SPICE things up, maturely

Where just about everyone in my Spheres was busy ‘implementing’ (quod non) all sorts of quality ‘assurance’ or ‘control’ (2x quod non) models, in the background there was quite some development in another, related area that may boomerang back into the limelight, for good reason.
First, this:
[Zuid-A(rt)sifyed]

The subject of course regards SPICE, or rather the ISO 15504 that it has turned into. Of the Old School of software development quality improvement era. Now transformed into much more…
In particular, there’s Capabilities instead of ‘maturity levels’.

What more can I add ..? Systematic, rigorous, robust, resistant against commercial panhandling. The intricacies … let’s just point to the wiki page again; ’tis clear enough or you need other instruction…

Lemme just close off with asking you for your experiences with this Standard…?

In that Case, No.

Is your organization still replying on ‘business’ ‘cases’ to fund projects? Then there’s a special place for you in Dorchester.
When building such business cases – apologies for not mocking that newspeak already –, have you ever come up with one that did not pass the hurdle rate ..? Or come across a case where no business case was needed because the case for investing was so obvious or it wasn’t most clearly but someone of the Board wanted it so whatever dreadful return was expected all still had to be done?

Which made business cases the spider web that catches the little flies when the big ones simply smash on through.

And the insects that game-change and disrupt your feeding/business model and/or market share, don’t even fly near your web or turned inedible.

How many start-ups go through formal business cases for every investment or pivot ..? And only just making the 10% rate ..? With all costs so exactly calculable as you present those (the 100%+ error rates you leave out ’cause band widths are too difficult to understand by the ones with the money bags. You presume that, they deny that vehemently because it would show them to be the emperors in their newest clothes (but with piggy-fat pay checks), but you are certain of not being able to mark the averages for the cost items so you take lowest estimates), and the benefits monetized [my italics, auth.] to fabulously inflated figures. With oh so many unethical rounds of ‘adjustments’. Newspeak for: cooking the books of your business case. By lack of the hardest of scientifically concrete counterevidence you maintain your weakest of kindergarten estimates still hold.
Again, not very much like the start-ups you envy. You envy for their success rate. Ah, you now say the failure rate of start-ups is dismal. How about the failure rate of your projects; if they had been single initiatives, wouldn’t they have gone bankrupt at an even higher rate? Aren’t your successes the panting hanging-in-by-the-thread shrill-shouts of objectives achievement? Where the start-ups are considered successful only after passing the … maybe 500% return rate; reflective of … business value through non-monetary returns you could only dream of.

Don’t feel like I’m just bullying you like all the rest, with the weapon of slight. I’m trying to provide ammo so you can be allowed to move away from the bleak common business case of ‘decks’ full of PPTs where the content would be much, much better presented in Word and the 6 words shoud be per sheet not per half inch; unreadable, not made to understand. [Why!?!? Why use PPT; why are you using a truck to get a dozen of eggs from the Walmart ..!?]

So, what pointer can you provide to beat the business case system; not to game it but to replace it with another that might actually be useful, functional, in (larger) organisations …?

Unfreeze, the quest for ~ in business

How do Those In Business that deal with the all-sorts of überbureaucratisation, think the Second Law, of thermodynamics of course, wouldn’t apply to their work as well?
Let’s kick off with:
DSCN8580
[Appropriately named the Airplane building. Zuid-As]

Happened to attend a conference last week. And was able to read back a great many days of twitter feed. Due to the utter boredom. Because the presentations were all about … introducing control frameworks, under the guise of governance frameworks, that aren’t (fact).

Still, all was presented as if there would be little in place already;
Still, it appeared none looked past ‘first-time’ implementation. Albeit that some (not all…) mentioned the repeat of the PDCA (some, as just an element of a PDCA cycle they, how Ecce Huomo, completely erroneously mixed up with the management control cycle!), none seemed to have had any experience with an actual (hence very shoddy) implementation of ‘GRC’ let alone found the root cause of its continued, law-of-nature certain decline. Law of nature, as the system of control of which we speak, having entropy-aversion as its rationale, will suffer from the Second Law of Thermodynamics. The entropy of a closed system never decreases. These systems, leak all the way, and aren’t rigorously consistent and/or stable in the first place. I.e., all these systems tend towards Chaos; no Man, half-god or god(s) has ever been able to (or wanted to!) prevent this.
As if the concept of Life Cycle wouldn’t apply to the totalitarian system of bureaucratic control that GRC is; the Decline has been set in everywhere as it has set in throughout the Culture Of GRC.
As if there weren’t already serious errors in the system itself: Trying, repeat ad nauseam, in vain to control the uncontrollable, to capture the thing that is defined by its escape from control, i.e., Risk.
As if it were a good thing to consider GRC as necessarily (sic) one-size-fits-all within an organization; all elements should be in all corners. That is not ‘governance’ (which already is nothing in itself) but genocide-by-dehumanization-and-slavery over all involved.
As if GRC isn’t self-defeating or rather, self-destroying by crushing initiative (that necessarily is over the edge of Control’s allowance; the more perfect GRC the more so!) and hence straightjacketing anything and everyone into tighter and tighter harnases whilst the competition, muddy-ocean to blue ocean whatever, would not overrun and eradicate your organization. ‘The fish starts to rot at the head’, here too.
As if… as if the step-wise activities approach still depicted, would possibly work anywhere and not fit, as any day at the office (sic) would be swamped with all activities all the time in an insurmountable mix.
Where the likes of Nassim Taleb did already prove that when one thinks to control better by being displayed less variance in some results variable, that is only a sign of the powers of nature prepping up for the big Bang that kill those very results. Which is the force of nature, demonstrated since the dawn of humanity to having plagued all systems of cooperation and society: The Apollo side may think to triumph, but the Dionysos side in Man will get even no matter what. The more the latter is pushed aside, tha harder it will strike back in unforeseen directions. No doubt; fact of godly nature.

You get it. I hope. Now, go understand Road to Nowhere.

Detachment

First, this:
DSCN9250
[Fantasy, sorcery, in the end Harry wins. Porto]

Just to start your day with a bit of freshness.

Then this: Hardly any surprise that Big Corp advertises like a headless monster
7e55ec92-20ab-11e4-8ead-22000ab926d3-large
Where the ‘joke’ is that this is from a company (note: it’s just an example, others are similar (..?)) where staff is pushed to the edge to deliver on hardly-quality-related shortest-term-possible KPIs, have had to hand in holiday days to keep up the profit shares of the partners (‘voluntarily’ as otherwise it might be illegal), etc. etc. Stepping one millimeter out of line is punished with all but physical beheading. So, the ad is just false advertising of the worst, culpable, kind, or displays the utter ignorance of those involved.

Or both. Which again are signs of dinosaur behavior. Detachment of where actual work is done. Same as outsourcing production abroad and claiming ignorance about work conditions – ignorance on purpose is still very, very culpable; do we need a SOx for what should be normal, human, humane treatment of employees ..? Hopefully not, as this would open the floodgates of totalitarian bureaucrat advisors and consultants once again (…), yes those that Holier Than Thou folks (see above) who display to don’t know a thing about practical management. As proven (!) by Mintzberg.
Detachment. Isolation, islands of bounty at the ‘top’. That will be swept into oblivion by a mere floodwave. Where a tsunami’s approaching.

Oh, for the unattentive reader: There’s a great many posts on this site (just do a search) that I am not against leadership, by actual leaders… This just being a rant against the falsehood of advertising and against bad ‘leadership’ …