What Jolito Ortizo Padilla says about Innovation

Four years ago, this mission was submitted to a strategic committee to one of the colleges in the Middle East where I was a mentor, but outright rejected. Now, thousand of universities and colleges refers to this insight.  

Innovation involves the creation of new knowledge. At the same time most innovations are new combinations of old insights. They come out of an interaction where people with different talents, interests, insights and experience get together in open communication and willing to share their knowledge with others.

Innovation processes that neglect the needs of users are inefficient. Science based innovations that are not supported by experience based learning are not successful. Therefore, innovations are best seen as outcomes of collected entrepreneurship. A generalized trust among people in working life contributes to innovation.

Science plays a growing role for innovation, but without experience based knowledge about production, markets and organization investment in science has little impact on economic performance. Innovation strategies and policies need to be broad. Firms need to combine research and development with building a learning organization that includes networking with external organizations. Public policy that aims at harnessing innovation for growth needs to combine science and technology policy with institutional change in education and labor market systems.

We are in a learning economy where success of people, organizations and countries reflects the capacity to learn. Old knowledge becomes less relevant as technologies change and global competition transforms working life, making some types of jobs disappear and others grow. Whatever knowledge you have, it does not constitute a lifelong guarantee of success for firms or for individuals. This is very important in the designs of education, in labor markets and for strategies of organizational trade and unions. All institutions need to focus on how to facilitate learning.

Oil and Gas Sector in Troubled Water

Write a list of all industrial hazards you know and most, will be present in the oil and gas industry. From high pressures and flammable liquids to working at height, confined space entry and radiation, the list goes on. On land you can spread your plant out, take parts away for maintenance, repair or upgrade and get away from danger areas by truck ( or even running). More importantly, on land you can go home to a safe bed for the night.

In the oil and gas industry , a plant is packed into a smallest possible space with accommodation for up to 200 people placed in the middle of some of the world's harshest marine environments for 30 years. During a two week shift, employees work, rest and sleep on site and escape is by lifeboat or helicopter -you can't just run away from danger.

Repairs and upgrades are done in situ and take place continually. Nothing is the same to day as it was yesterday and change management enters the daily vocabulary. It may be something as obvious as a replacement part or a changed procedure or a less obvious change in some operating parameter. People make mistakes but the trick is to make sure that mistakes don't add up to disaster. This was clearly illustrated on July 6, 1988 hen a string of fairly incidents-none of which have been fatal on its own -led by the deaths of 167 people on the Piper Alpha platform.

You can's stop people making mistakes, nor can you design an installation that is foolproof. You can to manage people and manage change. Some people still believe that documenting procedures down to the smallest detail will keep everything safe, but who routinely reads the instruction manual or procedure in detail when doing a job? Management systems have to identify and manage risks, recognize weaknesses and, most importantly, work with people.

ISO and multinational businesses can see benefits that can be gained from the adoption of global standards and systems but people aren't the same the world over. You can see different cultures at different businesses in the same town, so why do we expect the same culture in different countries?

The TV series Oil Riggers may have been a compulsive viewing for some and perhaps it portrayed real life on a Texan land rig , but it bore little relation to work in the North Sea. Offshore drilling is certainly hard work and dangerous, but risk is managed not challenged. We may never really really know what happened on the Deepwater Horizon on 20 April-the inevitable legal battles will ensure that- but it has stated that it was not a result of a single failure.

So how do you audit health, safety and the environment in the oil and gas sector? What makes HSE different from quality? To answer the second question first, not a lot. Quality is a word notably absent from many oil company discussions. Instead the frequently used term is "integrity management". That tends to put the in-house focus on HSE and competence , with quality relegated to a supplier and subcontractor issue. But any quality failing on their part will lead to an increased HSE risk for the oil company as BP is now discovering.

Audit don't pick up every deficiency in a system and any belief or attempt to achieve that is doomed to failure. Far more important is to identify the culture in the company and the drivers : do they fit with the customer's own? Will the customer and supplier be able to communicate clearly with each other? Do they understand each other needs? As everyone involved in the Deepwater Horizon disaster will discover , whether you are based at land or sea, taking cultural differences onto account can be key.

What Jolito Ortizo Padilla say about "Flexibility" and the Dow Jones Sustainability Indexes..

On the News:
Adidas, BMW and Unilever are among the best performing sustainable companies in the world, according to 2011 Dow Jones Sustainability Index. Launched in 1999, the indexes tracked the financial performance of leading sustainability-driven companies worldwide.

The World Index analyses the largest 2,500 companies in the world, assessing them against long term economic, environmental and social criteria and lists the top 10%. The research includes evaluating each corporation's approach to climate change strategies, energy consumption, risk management and supply chain standards.

This year saw 33 companies deleted from the indexes and new additions that included Coca-Cola and Samsung Electrics.

The organizations listed are broken down into 19 "super sectors" and the top company for each was also announced. BMW topped the automotive sector and Unilever led the food and beverage sector for the 12th year in a row.

 A new index analysing the top 40 companies in Japan was launched this year, just weeks before the Japanese prime minister vowed to lower carbon dioxide emissions to 25% below the levels of 1990 by 2020.

In a business context, flexibility can refer to a number of different ideas. Today its most common usage is in the workplace where it refers to such things as flexi-time. But the word has a longer pedigree in the area of strategy, where it generally refer to a firm's ability to respond to changes in its environment rapidly and at low cost. in the (limited) sense that strategy is an unchanging commitment to something, it is the antithesis of flexibility.

A firm's strategic  flexibility depends partly on its liquidity, since its ability to respond speedily is inevitably determined by access to funds. More importantly, it depends on its organizational structure, on the way in which its units work with each other, and the freedom hey have to take decisions.

The trade off between flexibility and firmness has been a long running subject of management discussion. GA Business and Management Consultancy wrote" For a company to succeed over a long term it needs to master both adaptability and alignment-an attribute that is sometimes referred to a ambidexterity".

For adaptability, read flexibility, and for alignment, read firmness. The balance between he two, ambidexterity, is a term was used in this sense in 1976.

Sumatra Ghosal put the dilemma slightly differently, writing: "One of the most fundamental and enduring tensions in all but very small companies is between sub-unit autonomy and empowerment on the one hand, and overall organizational integration and cohesion on the other hand."

For most of the past century, firmness has had the upper in corporate strategy. Companies have set themselves on a particular course and it has taken a huge effort to divert them. A big company, wrote one author "is a bit like an oil tanker. There is no way it can turn on a fills".

What jolito Ortizo Padilla says about Strategic Alliance

A strategic alliance is a relationship between two or more organizations that falls somewhere between the extremes of an arms-lenght sourcing arrangement on the one hand and a full blown acquisition on the other.

In general, there are two types of strategic alliance:a bilateral alliance (between two organizations) and a network alliance ( between several organizations). They have many advantages:they require little immediate financial commitment,they get soaked and they offer a quiet retreat should a venture not work out as the partners had hoped.However,going into something knowing that it is (literally) not a big deal, and that there is a face saving exit route , may not be the best way to make those charged with running it hungry for success.

The most popular use for alliances is a means to try out a foreign market.Not surprisingly there are more alliances in Europe and Asia (where there are more foreign markets nearby) than in the US. In some cases, alliances are used by companies because other means of entering a market are closed to them.

One thing crucial to a successful alliance is a degree of cultural compatibility. Companies are advised for example, to pick on someone their own size. Alliances between very big organizations and very small ones are hard  to operate not least because of the different significance that the alliance assumes in each organization's scale things

Strategic alliances grew at a phenomenal rate during the 1990s.Some companies such as General Electric set up several hundred. But aliances have not always been successful. In 1998 BT and AT@T agreed to bundle their international assets into a single joint venture that started off with annual revenue of 11bn dollars, annual operating profits of 1bn dollars and some 5,000 employees. In 2001 the two companies agreed to unwind the alliance-at considerable cost.

Quality in the Mainstream by Jolito Ortizo Padilla

In the late 1990s I became infatuated with the Community Quality Council movement in Singapore. These councils were invariably founded by Deming enthusiasts and focused on transforming communities to the quality way. At the same time in Asia we were seeing the development of PQASSO, a standard for voluntary organizations, the Charter Mark and Investors in People in the public sector. It seemed to me that everywhere I looked quality was finally emerging from the manufacturing industry to take its rightful place at the heart of communities.

I was so enthusiastic that in 2000  I began an intensive two year project in a town of Cavite with the sole purpose of spreading the quality message. The plan was to engage with individuals, interest groups, industries and institution to help them achieve their goals through the use of various tools and techniques. Over the two years we maintained a staffs office and work with voluntary groups , local industries, schools and church. It wasn't easy but it was never dull, as a preconceived notion and conviction I held about quality and people's desire to practice it were tested to the limit.

Around early 2000 a bombshell struck;it seems the CQM movement in Asia was a failure. This was shocking, but it did not surprise me as it had become obvious the CQM approach was not going to work in the mainstream. The people we engaged with had no time for quality tools and techniques training. They wanted action and saw quality as adding nothing but time. Of course, they wanted to do a good job and do the right things right, but they told us that this trait cam after from within and could not be taught.

I was faced with a dilemma as I was equally convinced that quality had a major contribution to make community level whether in the form of ISO 9001 certification, Whole School Evaluation scheme or the application of lean or six sigma. I was enthusiastic about what quality could do in the mainstream that I was blind and do as to what community could do for quality.

Everyday the community was showing me and telling me that quality has become a core value embedded in every individual, interest group, institution and industry in the community. Most quality professionals reading this article will accept this at face value. The problem for a layperson is that there is no vocabulary to help describe and practice this "quality" at such an important personal level. What the quality profession has to offer appears alien and "organizational" to them. Communities are not organizations, but we all know that organisations are communities are communities; both are also systems.

Most professionals recognize that 21st century systems are socio-cultural, self organizing, open, purposeful and information bonded. They have the power to determine the task and he means of achieving it. Intrinsically they want they want to do the right thing and require a high degree of autonomy to be able to adapt and grow in a rapidly changing environment. The task facing the quality profession is to provide a structure to harness this dynamism and help these systems to succeed.

The closest quality has come to this so far is the promotion of concept of excellence, but definition of excellence is weak and organizational. What is needed is a definition of excellence that people can embrace as intuitively good. I propose the following definition: "Excellence is a voluntary ongoing process of agreeing emerging expectations. It involves all creators, consumers and complement's. in the system defining, realizing and delivering these expectations in an effective, efficient, ethical, elegant and enjoyable manner."

People accept this definition of excellence as it emphasizes what they know already. Its practice must become the universal aim of all systems and it must become the universal method underpinning every activity. It needs to attach itself like a good virus to very task and system undertakes.

Before embarking on your own community crusade, recognize that community systems operate in your workplace and this is where experimentation should begin. The formality of organizations makes it easier to hold people's attention.

At a community level both inside and outside organizations we can all promote the core value of doing the right things right. Nobody will resist this fundamental desire and it opens up a questions of "who decides?" and " by what method?" Your answers will come easily. The system decides by practicing excellence. The systems serves us. Now let the fun begin as we all develop systems capable of practicing excellence and reaping its just rewards.

Cutting down Quality with Cost by Jolito Ortizo Padilla

In the 1980s most of the companies were desperately trying to cope with yet another recession.It was during those tough times that the term " downsizing" was invented to describe the efforts being taken to improve efficiency and focus on core values. Unfortunately, because managers took the easy way out and simply cut resources and staff levels rather than work to create real effeciency improvements, it wasn't long before the term became discredited.

Instead of building new business through improved value propositions and competitiveness, many organizations simply became less capable and continued in a spiral decline. Major companies in UK like Ferranti and Marconi sacrificed themselves to this flawed strategy and thier long and honorable tradition of excellence in engineering was lost forever.

The term "rightsizing" was invented to desguise the impications of change, backed up wih assurances that the companies were " refocusing" and "reasserting core values". For short whil people were fooled , but it didn't take long to realize that nothing had changed and the end results were exactly the same: people still lost their jobs, companies still failed.

The companies that formed the core of the UK motor industry Austin , Rover, Triumph, and Jaguar, became synonymous with poor quality in the 1970s and the 1989s and this gave European and Japanese engineering companies an entry into our domestic market, which they have continued to extend ever since.

In the next five years, the global automotive industry has been desperate to reduce costs, but instead of improving effeciency and value focus there has been a discernable tendency to reduce product quality. This is not simply a reduction in bodywork metal and the increased use of plastic, as those measure could still return a good quality product overall, it seems the companies have resorted to poor quality build quality and mechanical components that only have a short life. The entire automotive sector seems to be following the example of the failed British motor manufacturing industry of 20 years ago.

Users and maintenance workshops of top brands such as BMW, Toyota and Audi have said that the build quality of new cars is worse that they have ever seen and replacement mechanical items have a significantly shoter lifetime than the originals. Corners have also been cut in overall vehicle design, meaning that gaining access to worn-out parts now involves the disassembly of a greater number of unrelated components increasing the time and cost of routine maintenance.

The word for this trend is "downengineering". It implies not simply reducing the complexity and cost of mechanical components, but completely losing sight of the need to maintain product value. After a disastrous quality failure in early 2010, the chairman of Toyota admitted that his company had "lost its way" from the heyday of automotive excellence, and sadly this failure was soon followed to another problem.

But Toyota was simply the first to get caught out on safety issues, and therefore publicly pilloried:other top marques are heading along the same path, and several other high profile failures followed last year. These quality failures are not just economic catastrophes for manufacturers, they are also causing serious problems for thier customers.Numerous people have found that after trading in their tatty old car for a new vehicle on the scappage scheme, their new vehicles may have attractive-sounding features such as better sound systems with iPod sockets and satnav options, the ownership experience is actually worse than it was previously.

But if the word "downengineering" is used to descibe production cost economies , how long will it be before everybody understands that it really means poor quality? And how long will it be before "rightenginnering" is invented to replace it?

Increased Risks from Global Political Upheavel

New research has found that the level of political risk has risen in more countries than it has declined. This comes as no surprise to a world that is still growing accustomed to the changes in Egypt and Tunisia.

The research conducted by GA Business and Management Consultancy, measured the political risk in 211 countries and territories based on the level of risks such as currency inconvertibility and exchange transfer, strikes, riots, and civil commotion, war, civil war, sovereign non-payment, political interference, supply chain disruption and legal and regulatory risk.

The findings demonstrated the negative effects of the global financial crisis on the economies of nations with traditionally low levels of risk. At the same time the continued emergence of several markets in Africa where more international trade and investment occurring has led to a greater need for political risk insurance cover.

The annual research has seen a nearly 30% increase in the number of countries in the middle of risk rankings-the medium high categories-as this countries have become more active in the world economy and their prosperity has increased. In addition, in recent research, GABMC pointed to continued tension between sovereign risks in the euro zone in the emerging countries. In 2012, the key issue for country risk will be private debt monitoring and growth financing.

GABMC found that the winners of the financial crisis are the emerging countries, which will continue their solid growth trajectory in 2012 with a slight slowdown: 6.4% compared to 6.2% in 2011.