We must be crazy.

As I write this post, I am surrounded and inspired by a view of trees, plants, fields and mountains and nearby, although not in view, are some of the most spectacular areas of Turkey's Mediterranean coastline. These natural surroundings are not just aesthetically pleasing but also fascinate me from engineering and managerial perspectives. I spent my early career in a design engineering environment before moving into various managerial positions. I found that my engineering training helped me tremendously in understanding commercial business from a systems perspective, particularly when trying to optimise productivity. Now productivity is the product of efficiency and effectiveness, or put another way, a measure of doing things right and doing the right things. As an example and in a production environment, if a factory is producing 100 units per day of which 20% are defective, the productivity is 80 units per day. The same productivity could be achieved by slowing down the production rate to 80 units per day but ensuring no defects. So reducing the efficiency (production rate) but improving the effectiveness (number without defects, i.e. quality) achieves the same productivity.

As I gaze through the window in my office I see natural efficiency and effectiveness in action. For example, in close proximity is a group of 20 mature trees, which collectively absorb about 400 kilograms of carbon dioxide a year and produce enough oxygen to satisfy the needs of about 40 human beings. Also, that group of trees is absorbing about 7000 litres of water each day through the root systems as well producing glucose to feed the trees! Those numbers impress me from the points of view of both efficiency and effectiveness. I can't imagine a man-made machine that could operate 24/7 in my front garden absorbing that amount of dangerous carbon dioxide, that could otherwise add to the frightening build-up of greenhouse gases, as well as produce life-sustaining oxygen for our planet's inhabitants and glucose for the tree. I live on a flood plain so it's also very reassuring to know that the trees are 'pumping' so much water out of the ground each day. Those trees are clearly both highly efficient and effective and therefore extremely productive.

But these trees and millions of others in the world are under constant threat from the very species that they are helping to survive - mankind! As I look around inside my office I see many products that are derived from trees, including furniture, printer paper, books, bills, receipts, filing boxes full of important documents, etc. so these products have reduced the amount of natural absorption of carbon dioxide as well as reducing the generation of life-sustaining oxygen. The products that aren't derived from trees, e.g. plastics, metals, concrete, glass, etc, all use fossil fuels in their manufacture and distribution, pumping carbon dioxide into the atmosphere.

So the extremely efficient, effective and therefore, productive natural processes are constantly battling against the human species' desire to plunder the earth's resources. In the case of carbon dioxide, a major contributor to greenhouse gases, there is now very strong evidence that we are creating more than is being absorbed and the climatic consequences are being felt. Yet despite our ingenuity and track record of innovation, we continue to be oblivious to our actions. The population continues to increase, economic growth is seen as a prerequisite to support the rising population and so the viscous cycle continues........ We must be crazy.

It's not a problem.

Recently I watched a BBC TV programme, 'Homes Under the Hammer'. The experiences of buyers of properties sold at auctions, are followed. Homes sold 'under the hammer' are usually in need of significant renovation but the outcomes can be very profitable. For each of the experiences followed, the programme presenters compare the purchase price plus the subsequent renovation costs, with estimates of the resale value and rental income. In the programme that I watched, there were two homes sold under the hammer that, in my view, demonstrated the strong link between the attitudes of the buyers and the qualities of their overall experiences.

A couple bought a mid-terrace property in the Greater London area, which was a bit of a wreck with a very dated interior and some nasty damp areas. The couple, who both had full time jobs, were very positive about their purchase and the male partner said that what really turned him on was solving problems. At the end of their project, they were both very enthusiastic about what they had achieved, a very desirable property that should give them a healthy profit if they sold it on, which was their intention, or a good income should they decide to pursue the rental market. They had completed their project within their budget and although they had exceeded their anticipated timescale, that was because they hadn't let the renovation work take over their lives by ensuring they allocated adequate time to their day-jobs, family commitments and holidays. They thoroughly enjoyed their first experience of property renovation and were psyched up to take on another similar challenge.

On the same programme another guy had purchased a shabby ground-floor flat but with lots of space and potential, also in the Greater London area and he was intending to renovate it with a view to making it his home. It was his first experience of renovation work and whilst he was in full time employment, he felt he had sufficient time on his hands to undertake quite a bit of the building work himself. At the end of the project he had exceeded his budget but had achieved a very acceptable outcome with a good profit potential should he sell, or a healthy income if he rented the property. But wasn't the property going to become his home? Possibly not now! He hadn't enjoyed the experience and said that only completing the job brought a smile to his face. The problems en route to completion had totally frustrated him and whilst he liked the finished result, he had missed his friends and saw the location of his potential new home as yet another problem. He certainly did not intend to take on any more similar projects.

These two experiences both ended in successful financial outcomes but there were, as I have described, very different personal experiences for the participants. In my opinion, the enjoyment for the couple renovating the terraced house versus the frustration for the guy renovating the ground-floor flat, demonstrates the link between problem-solving attitudes and feel-good (or feel-bad) factors. I am reminded of the following quote from the Dalai Lama XIV (the present incumbent):

"If a problem is fixable, if a solution is such that you can do something about it, then there is no need to worry. If it's not fixable, then there is no help in worrying. There is no benefit in worrying whatsoever."

So life is full of problems but the Dalai Lama's advice is sound, whether or not there's a solution, worrying is an ineffective and potentially destructive use of personal energy. In the Mediterranean coastal region of Turkey where I live, two commonly-heard phrases are "sorun değil" and "problem yok", which mean "it's not a problem" and "there isn't a problem". When you are in need of assistance, seeking guidance or apologising for confusion caused by, for example, language difficulties, it's very comforting to be told "sorun değil" or "problem yok". Those statements immediately guide you towards a solution rather than a problem.

When we worry about situations we are using our imagination to create something we don't want. Now how stupid is that?! Yet we do it all the time!! We get ourselves totally frustrated over situations that are unlikely to arise. Now it's easy for me to pontificate on what we should or shouldn't do but how do we think differently? What is the solution to that problem?! Our brains are 'hard wired', through years of experience, to react to circumstances in predetermined ways and old habits die hard. In my opinion, when we feel periods of frustration or anxiety coming on, we should pause for thought, look for solutions rather than problems as well as diverting our mental energy away from imagining outcomes that might never happen.

Maybe it's easier said than done but whatever, it's really not a problem!

Exciting Breakfast!

Exciting Breakfast!

My breakfast each morning is two boiled eggs, two slices of toast and a glass of Ayran. For those of you who don't live in Turkey, Ayran is a drink of yoghurt, mixed with cold water and salt. Sometimes I might deviate from this selection but only if my wife can persuade me to, for example, have a bowl of porridge. Well this morning I stuck to my normal routine, which included my well-tried cooking method for the eggs to ensure the right outcome, neither hard nor soft. The eggs are placed in the pan and covered with cold water, then when the water starts to boil, the eggs are cooked for four minutes, no more no less ........perfect! :-). In order to ensure accurate timing, I often watch the pan and wait for the water to boil, at which point I start my electronic timer, which has been preset for four minutes. This seems to take forever because, as we all know, a watched pot never boils!

So why do you need to know about my bizarre breakfast routine? Well, what is normally a mundane ritual turned put to be quite exciting this morning. As I observed the water heating up, I noticed the eggs started to rotate counterclockwise around the perimeter of the pan, quite slowly at first but gradually speeding up and at the point of time when the water had started to boil, they were doing one rotation every two or three seconds. I remained composed and started the timer. I use a medium-sized pan and what I observed during the boiling period was truly amazing, the eggs started growing! After four minutes cooking, the eggs, which were still rotating, had filled the pan and were the size of Ostrich eggs! They were each too big to stand in an egg cup, but I love eggs , so I just cracked them open and sampled the end product - absolutely delicious!

So what had happened to my eggs? These days, with the availability of the Internet, there is no excuse for failing to understand almost every phenomenon, although I must admit on this occasion, my Internet research was extremely time consuming. But eventually I discovered the Looflirpa Phenomenon, named after Professor Looflirpa who discovered it in the late 19th century. To cut a very long story short, under certain conditions, currents in water when it is being heated can cause a rotation of the water. This is particularly the case if the heating element (on my cooker, a gas flame) is not central to the bottom of the pan. Apparently, if the rotating current causes the eggs to swirl at a rate of greater than 0.3 revs/sec, growth of the eggs can occur, although this effect is extremely rare. So this morning I was privileged to experience an extremely rare event.

But hang on a minute, check the date, Professor LOOFLIRPA, what's that surname backwards? Yes, you've got it........APRIL FOOL! :-D

Red Nose or Red Face?

Red Nose Day is a biennial event organised by the British charity, Comic Relief. The charity's stated aim is to "bring about positive and lasting change in the lives of poor and disadvantaged people, which we believe requires investing in work that addresses people's immediate needs as well as tackling the root causes of poverty and injustice". That aim is highly laudable and the commitment and work by all involved are fantastic. That said, I watched the highlights of Red Nose Day on UK television and it left me feeling embarrassed, maybe red-faced! Embarrassed not just for myself but for the whole of society. So why should I feel that way? I am certainly not belittling the funds, in excess of £800 million, that have been raised since Red Nose Day's inception 25 years ago. That money has made and will continue to make, a difference to people's lives. My embarrassment is twofold. Firstly, I am embarrassed at the state of the world's economy that allows the current levels of poverty and social injustice. Secondly, I am embarrassed at the TV manifestation of the Red Nose Day's events.

Let's start with some stark facts. 925 million people do not have enough to eat. 2.8 billion people survive on less than $2 a day. 1 billion people are illiterate and 1 billion do not have safe water. Yet, on the other side of the coin, less than 1% of the world's population control 40% of the world's wealth. What is really worrying is that the gap between rich and poor is continuing to widen, so it is a systemic problem. Now, £800 million raised in the past 25 years for the poor and disadvantaged by Red Nose Days, sounds pretty good. However, to put it into context, this year's welfare budget in the UK is around £200 billion, so the annual amounts raised for Red Nose Days is around 0.016% of the UK's annual welfare expenditure. I don't think I need to bombard the reader with more statistics, I am sure the overall picture of inequality is clear and, in my view, embarrassing.

What about the television manifestation of the Red Nose Day events? Maybe I'm getting old, but I thought the quality of the fund-raising entertainment, particularly the 'humorous' sketches, was poor, but that's a question of personal taste. What I did find distasteful and I don't believe I'm alone, were the video clips of highly-paid celebrities alongside extremely poor African children. Some of the celebrities were in tears. Were they embarrassed by their own personal financial positions? I doubt it.

I'm not knocking any charity's efforts to help those in need but I do feel it's about time the global community came to its senses and took a hard look at priorities. As a parting shot, I will summarise my view of the world's malaise and a possible plan for recovery. We are taking more out of the planet than we are putting back in, primarily as a result of our obsession with economic growth. The developed countries are finding growth more difficult because of their past excesses and spiralling debt. The developing countries are growing but demand for their goods and services from the developed world is slowing down. Poverty is rife in the developing world and developed countries are also experiencing an increasing divide between 'haves' and 'have nots' . Against this background, my proposed recovery plan would be to encourage growth in the developing world, compensated by a flattening of the economies in the developed countries. With limited global resources, growth in one area can, in my opinion, only be achieved by easing back in the countries that have already reached maturity and I know that will not be easy to stomach. But maybe in a more egalitarian world, red noses and red faces would be a thing of the past........Utopia!

Robot, friend or foe?

Throughout history and particularly since the start of the industrial revolution in the late eighteenth century, homo sapiens' innovative skills have transformed life on this planet. But is this transformation for better or worse? Well that depends from which perspective you view life on earth now and what it might be heading for. There is no doubt that large sections of society in all parts of the world are better off today than their predecessors were, say, one hundred years ago. There are also large sections of society that live in poverty and the gap between rich and poor, in most countries, continues to get bigger. And what about the planet? Well, homo sapiens continue to take more out than they put back in, driven by an obsession with economic growth, and the waste products pumped into the atmosphere are creating notable destructive changes in the climate. So it's a mixed picture.

Against that background, innovation continues relentlessly particularly in engineering and technology. Indeed, for those lucky enough to have meaningful employment with a good income in return for their efforts, living standards can be good with a healthy balance between work and play. Automation in all the employment sectors has improved productivity reducing working hours for some, whilst making the less fortunate redundant. So is automation a good or bad thing? Are robots going to make us all redundant? Well, in the nineteenth century the Luddites thought they knew the answers to those questions. They protested violently against the machinery introduced in the textile industry during the industrial revolution, which made it possible to replace them with low-skilled, low-wage labourers, making them redundant. Their protest took the form of wrecking the machines, particularly the automated looms. An agricultural variant of Luddism consisted of breaking up threshing machines. Despite their efforts, automation continued. Indeed, many economists believe in the 'Luddite Fallacy', which says that advancing technology creates more jobs than it destroys. Returning to the case of the Luddites, the automated looms made clothes cheaper, so consumers experienced lower prices and after buying the same amount of clothes, had money left to buy other goods, for example scarves and hats, which created more jobs. Simple economic theory isn't it?! But what happens when robots get a foothold in the service sector and, for example, cut our hair? Well the same principle applies. Haircuts are cheaper meaning that we have money left over to buy other things thus creating employment in other sectors.

Whenever I am assessing the validity of arguments like the one I have just proposed, I like to engage in thought exercises that explore the extremes. So imagine a world where everything is done by robots. Unlike humans, robots don't want to buy the products and services that they produce and if there are no human jobs, people will have no money to buy the products and services. So the whole economy will collapse, because without money there is no market. If we move back slightly from that extreme scenario and consider the case where there is a mixed manufacturing and service economy of robots and humans, then people will be paid for doing a job, the owners of the robots will get returns on their capital investments, so the robot owners and humans in employment will have the purchasing power to buy goods and services produced by humans and robots. What these two thought exercises illustrate, however, is that eventually total automation leads to economic collapse. Searching for a solution to this problem, led me to the concept of Peoples' Capitalism, which sounds like an oxymoron!

The late Dr James Albus was an American engineer and former head of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards and Technology. He was noted for his contribution to robotics but he was also a strong proponent of People's Capitalism, which tried to answer the question - how do we live without jobs? His vision was a world without poverty, a world of prosperity, a world of opportunity, a world without pollution and a world without war. Sounds good doesn't it?!

One of the important facets of his proposal was to provide everyone, whether poor or rich, the opportunity to acquire capital by way of credit for investment in credit-worthy, wealth-producing capital assets. In other words, in the extreme thought experiment that I described earlier, everyone would have a share in the ownership of the robots. In that extreme case, peoples' incomes would be the return on their capital investments rather than selling their labour because in a totally automated society, the market for labour wouldn't exist. Moving back from the extreme to a more likely scenario, peoples' incomes would be a mix of returns on capital investment as well as revenues for their physical or mental efforts.

What about poverty? Well Dr Albus made the point that the 2.8 billion people living in poverty on the planet are there not because they don't have a need for products and services but because they don't have the means to purchase anything beyond their basic needs and even the basics suffer. Yet there is no shortage of manufacturing capability and the shelves of stores are always full of products. In recessions, companies don't blame lack of capacity but do point the finger at lack of demand. So the 2.8 billion very low income market represents a fantastic opportunity if the incomes were higher. Dr Albus claimed his alternative model would address the problem by providing income to the current poor population through their investments in capital, which would be funded by loans paid off over, say, 30 years through the returns on their investments.

Now this short post cannot adequately cover the work of the late Dr Albus on Peoples' Capitalism or the work of others in the economic field often referred to as binary economics and neither would it be right for me to endorse it or otherwise. But what I do know is that innovation will continue and that should make life better for all of us yet current trends suggest that won't be the case. Albert Einstein said insanity was doing the same thing over and over again and expecting different results. There are things that we are doing wrong on the planet but we continue doing the same things regardless. So perhaps the time has come to embrace the new world with its robots and challenge mindsets, economic and others, that are heading us in the direction of an apocalypse........I love robots!!

The Butterfly Effect

There are many versions of the butterfly effect but the one I like is the theory that a butterfly flapping its wings in Brazil could set off a tornado in Texas. The theory assumes that the flap of the wings could create tiny changes in the atmosphere that may affect the path of a tornado. The name of the effect was coined by Edward Lorenz who, in 1961, was using a computer (an extremely basic model compared with today's PCs) to re-run a weather prediction. As a shortcut, he entered 0.506, instead of the full 0.506127, as one of the initial conditions and the result was a completely different weather scenario. In general, he concluded that a small change in the initial conditions of what is known as a 'chaotic system', like the weather, can result in large differences to a later state. Hence the butterfly effect.

Now I think our lives are full of butterfly effects, which are seldom obvious after the event. Because they are not obvious, we rarely recognise them but instead try to rationalise situations using conventional logic. We then kid ourselves that we have 'learnt' from our experiences and apply the same false logic to guide us in the future - a recipe for disaster! For this reason, I hate the expression 'wise with the benefit of hindsight'. The assumption being that you know how you got to where you are now because you have the 'benefit of hindsight'. Well I would argue against that premise. Sure, there are major decisions that you took in your life that if you had made different choices, would have led to a different result but what about the butterflies? Those little things that you never spotted that months or even years later took you down a completely different path to your original intentions.

We are still feeling the pain of the 2007-2008 financial crisis, which politicians are conveniently using as a scapegoat for many of their subsequent bad decisions. It was considered to be the worst financial crisis since the depression of the 1930s and resulted in the collapse of large financial institutions, bailout of banks, downturn in the stock and housing markets, evictions and widespread unemployment. Many economists are blaming the 'burst' of the previous housing bubble in the USA for the problem but is it that simple? I suggest not. Do I have a better theory? Definitely not! What I do believe is that in the same way as chaos theory can be applied to weather prediction, it is equally applicable to financial markets. The similarity being that a tiny change in initial conditions can lead to a large change in results, which is the definition of a chaotic system. Financial bubbles grow because of positive feedback. So, property prices are rising, people panic and buy. This causes the prices to rise further (classic demand greater than supply) and more people buy .........and so it goes on until the loans aren't repaid, repossession kicks in and the bubble bursts. Now the initial rise in prices might have been caused by something quite innocuous like lunchtime speculative chit chat in a pub - the butterfly flapping its wings! Just as the butterfly might not directly cause a tornado but affect its destination, so the chit chat might not directly cause property speculation but could act as a stimulus to panic buying.

We can theorise all day until the cows come home and if we can't test our theories by re-running history, they are of little value. But what is important is to recognise the limitations of our analysis of the past and prediction of the future in the chaotic environment within which we all live. Returning to the subject of the weather, meteorologists have long since abandoned expending much effort on long range (greater than 7 days) weather forecasts, which were based on past weather patterns and were rarely accurate. So when someone says with an air of confidence 'they say' we're in for a cold winter or a dry hot summer, take it with a pinch of salt! But whilst the weather is accepted by most as chaotic and highly unpredictable, why is it that the financial and business world, which has been proved from experience to be highly chaotic, is regarded as predictable? When stocks and currencies fluctuate on a daily basis, usually by fractions of a percent, analysts come up with all sorts of seemingly plausible reasons and declare with certainty what will happen in the future even though history has proved they don't really know!

I will continue to enjoy life's unpredictability and be amused by the pet theories of the 'experts'. Who knows, one day politicians might not blame the opposition or global economic circumstances beyond their control, for their own failures. They might just point the finger at a harmless and beautiful butterfly!!

Don't take it for granted.

Or for my Turkish friends, kendiliğinden olmalarını bekleme.

You get up in the night, it's dark, you flick the light switch and the room is illuminated. You probably took that for granted, but should you? Electric fish were reported in ancient Egyptian texts dating back to 2750 BC. The rapid progress in electrical science took place in the nineteenth century, when electricity moved on from being a scientific curiosity to something that was essential for modern life, including the second industrial revolution. So when you turn on the light, you can probably take the existence of electricity for granted but at the same time marvel at the human race's ingenuity in the application of electricity to life.

What you cannot take for granted is the generation and transmission of electricity. You know you can't take it for granted when the supply is lost from a fault or perhaps even industrial action. Your supply has been and continues to be dependent on billions of dollars of investment into research, design, development, manufacture and support of equipment and facilities, employing hundreds of thousands of people worldwide. But the electrical supply industry is not a charity. You pay for it. So although you cannot take the electricity supply for granted, if you pay for the service you should expect to be supplied with electricity. Is your expectation any different from taking something for granted?! It's a moot point.

Recently there has been a furore over the sale of products marked as containing beef, found to have horsemeat. The CEO of Tesco, Philip Clarke, has apologised for Tesco's involvement in this scandal and promised a "root and branch" review of its supply chains. The reason he and others are concerned about the horsemeat scandal is because of 'reputational damage'. Reputation can be damaged when products or services fall short of expectations and companies live or die by customers' willingness to part with their money for products or services. So companies that take reputation for granted are living very dangerously. What's more, it can take years of hard work to establish a reputation but one foolish incident can destroy it overnight.

Reputation is part of what some businesses call Relationship Capital, arguing that it is an intangible asset, but just as powerful, if not stronger, than tangible assets such as cash in the bank. The Beatles summed it up in Can't Buy Me Love:

I'll buy you a diamond ring my friend
If it makes you feel all right
I'll get you anything my friend
If it makes you feel all right
Cause I don't care too much for money
For money can't buy me love

In other words, you can't buy happy relationships. In the same way as a shop's reputation takes years to establish so, for example, a marital relationship doesn't establish itself overnight but takes years of tender loving care to develop into something really meaningful. However, the relationship can be damaged, sometimes irreparably, by foolish incidents and should not, therefore, be taken for granted.

To conclude, it doesn't matter if we consider tangibles, like the supply of electricity, or intangibles, such as love, neither should be taken for granted. If we don't take things for granted, we become more appreciative of what we have.

This probably won't be my last blogpost, but don't take it for granted!