Power And Dollar

What Is Your Company’s Plan B?

Myanmar has finally accepted foreign experts to enter its soil, although only among its neighbors, the ASEAN countries.  Its death toll is above 100k now, half of 2004 Tsunami.  Myanmar is likely to miss the spring farming seasons, which will creates a second disaster: famine.  

 

China started its 3-day mourning on the 19th.  Flood is now another up and coming disaster.  Floods may damage railroad connecting Vietnam and transportation network to Myanmar.  This area has some research and development sites, including nuclear research facilities.  A destruction of the facilities does not present as much damage as the removal of the research community.  

 

135 dams/reservoirs are in danger, as in having cracks or not functional.  18 are in danger of collapse. 

 

Equipments can be replaced.  No matter how expensive the equipments are, a vendor can still produce another one.  However, if the research personnel are displaced (the better scenario) to other institutions, then the knowledge goes with it as well.  Physical capital is no longer the important critical factor to a modern economy.  The most important asset in a knowledge economy is community.  The value of research personnel community is not the knowledge stored in the brains of their individual brains.  If that were the case, one would just need to buy more disk space to store the knowledge.  A research community is facilitated by a group of research personnel where they interact with each other while having a chat off work, in the corridor, or even a conversation with colleagues who have only a peripheral relevance to their research project.  Once a community is disintegrated, it cannot be re-builded. 

 

A good example is the Canadian fighter jet research community.  Canada spent a lot of resources to research an ideal fighter jet suitable for the northern climate (metal fatigue, engine ignition, everything).  Given the strategic value Canada was during the Cold War to defend the Artic, a fighter jet designed for the Artic was invaluable.  However, US were unwilling to place a sizable order to make the production financially viable.  Canada’s order alone could not have made last either.  So, all the research personnel had to find their new employers.  Some people went to NASA.  Some people went to civilian aerospace industry.  However, the asset (being this research community) was forever gone.  

 

The same could be said about any company, not only technology companies.  Say financial industry.  Each company is more experienced in a specific kind of product; say yours is more experienced in smokers’ life insurance products or self-employed mortgage applications.  A spreadsheet (or database) can only go so far.  The knowledge / experience is among the seasoned employees and their collective ability to train to the others.  This is the same reason why big companies like GE would send their management staff across departments to get a better exposure.  GE continues their management culture, and sustains their P/E ratio, through this kind of cross department experience.  That contributes a great part of its asset.

Does your company have a Plan B to continue a critical part of your business?  In case of unforeseeable event, be it natural disaster or political risk event, does your company have a Plan B to protect your critical asset?  

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May 19, 2008 - Posted by | business, China, Current Events, environment, Investment, opinion, politics, Thoughts, wordpress-political-blogs | , , , ,

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