F#-Time, Functions and Processes: Towards Sustainable Investment Risk Benchmarks

‘I made a mistake’: Alan Greenspan (Financial Times: Alan Beattie and James Politi: Washington, 23rd October 2008). Such are the words of great men, for even in troubled times their self-effacing manner provides useful guidance. Whilst Mr Greenspan may feel this way, he is a product of his environment, one that has seen the cumulative development of financial instruments and strategies that have not been thought through as to their impact on a complex economy. Mainly this is because risk is thought to be discrete and the methods used to price it are flawed. To an engineer the control of a machine is built-in. Although the economy is not a machine, but an intensely connected complex of ever emerging businesses, the process of control needs to be structured in a similar manner. Pricing investment risk in this environment should never have been left to opaque institutions, or processes that do not recognise the co-dependencies of business and systemic functionality. To do so is to ignore the correlation of events in a highly connected world. These events are dynamic and conditional, whose outturns are unknowable. This does not mean unmanageable, but that the control process be built-in to businesses and government in a consistent manner, transparent yet using different parameters. Transparent means that data, assumptions and processes need to be monitored and published in timely manner. As far as accounting for results is concerned it should be recognised that budgeting and reporting to investors is founded on dynamic processes that are therefore changeable; usually out of date; and co-dependent upon others within a complex dynamic network that is both internal and external to the business. The works of Stafford Beer (Brain of the Firm, Heart of the Enterprise, Diagnosing the System) Fredrick Vestor (The Art of Interconnected Thinking) and others are examples of how to manage the internal dynamics of a business and point to a methodology that synthesises the approaches of investors such as Warren Buffett so that extreme outcomes such as the Credit-Crunch 2008 can be reduced in frequency but investors are free to ‘take their risks’. This research aims to compare two extreme events in the financial arena, the ‘Reinsurance Spiral of the late 1980s’ and the ‘2008 Credit-Crunch’, show their commonalities and propose methods that supply liquidity in all but gross systemic failure and allow investment risk to be more ably assessed and priced. It is not meant to be an exhaustive analysis but one focused on how ignoring the proper relationship of time, functions and processes brought about the current problem in both insurance and the capital markets and how a solution may be found. This research note offers an overview on the ongoing PhD research on the topic.

ELECTRONIC DISCLOSURE AND FINANCIAL KNOWLEDGE MANAGEMENT

1. Introduction Majority of financial information are disseminated through the Internet, every day, huge amount of financial information are generated but the utilization is not good enough: according to the 10th WWW User Survey by the Graphics, Visualization, and Usability Centre (GVU 1998), more than 45 percent of the respondents felt that they were not able to find the information they needed. A study of the Internet demography showed that searching, retrieving, and utilizing the avail…     

Performance Management for Social Enterprises

All organisations face the challenge of how to assess performance beyond current financial metrics. These challenges are felt especially strongly by social enterprises, organisations that use business methods to achieve social goals. Social enterprises need to evidence superior social outcomes, are normally accountable to a complex range of stakeholders and yet are often rated low to medium in terms of organisational capacity—thus whilst they have a great need for rounded measurement, they may in practice lack the ability to make use of the different approaches on offer. This paper examines the current and potential use of the conventional Balanced Scorecard model, by social enterprises. The Adventure Capital Fund provides case study evidence of extensive use of a modified Scorecard. The model used is dynamic, combining reflection on the organisation’s current position, ‘near term’ and long term issues. It aims to take a holistic and coherent view of the management of social enterprises. Experience to date suggests that the medium term snapshot provided by the Scorecard is the most valuable, allowing organisations and especially boards and senior executives to keep a ‘strategic grip’ in a period of rapid change and focus on those actions that have best chance of changing performance in the round.     

Peirce and Beer

This paper considers the philosophical background of Stafford Beer's Viable Systems Diagnosis (VSD) as profoundly influenced by Charles Peirce. In a general sense, our work discusses the VSD theory base in the development of a model for actionable theory in organizations. This paper examines VSD theory in the Beer trilogy ‘Brain of the Firm,’ ‘The Heart of the Enterprise’ and ‘Diagnosing the System’ and we propose that a sound set of VSD action principles can be derived from this trilogy. We contend that the philosophical background underpinning these principles is important. Using Beer’s ‘Decision and Control,’ we consider that philosophical background and link Operational Research and the interdisciplinary learning within Cybernetics to modern general systems theory. We explore Beer’s viewpoint on the Peirce depiction of four main methods of fixing belief; tenacity, authority, a priori and finally the scientific to assist in that expansion. We consider how knowledge of Beer’s perspective on making sense of the world is important in the linkage of VSD theory to the managerial problem arena. We relate the Peirce methods to previously reported problem solving exercises involving the VSD ideology, which we will develop individually at a later date. This paper reflects our desire to express the interpretation of VSD theory in a language that the well-informed manager may readily translate into the third step of testing theory in practice.     

SERVICE VALUE NETWORKS： VALUE, PERFORMANCE AND STRATEGY FOR THE SERVICES INDUSTRY

1. Introduction The services industry provides services notgoods (Hughes and Mitchell et al., 1993). Thisindustry is moving towards globalization(Kathawala and Abdou, 2003). In 1870 theservice sector employed slightly more than 20%of the U.S.…     

The Viable Systems Model Applied to a National System of Innovation to Inform Policy Development

This paper outlines how the viable systems model (VSM) can provide insights into a National System of Innovation by focussing on the necessary variety needed to match the system's changing external environment. Because an innovation system is more diffuse than a firm, the VSM needs to be described within an ‘ecological’ metaphor. This approach gives insights into the system's learning processes, showing that there can be a trade-off between variety and control for the system to maintain a fixed level of viability. Furthermore, for many innovation systemsthe coordination is ‘soft’; taking place through markets, through Government directions, and through relationships embodied in clusters, unions or industry groups, etc.Governments generally can only manage the system indirectly by facilitating the generation of the necessary variety, influencing strategic directions, filling gaps in the system and encouraging coordination. Societal or cultural innovations, such as new forms of citizen participation in decision-making, may well improve the viability of an innovation system. However, if these innovations are pursued for societal rather than economic purposes, they fall outside the usual definition of innovation within an NSI.     

Conflict analysis approaches for investigating attitudes and misperceptions in the War of 1812

Formal systems engineering approaches to modeling misperceptions and attitudes are employed within the framework of the graph model for conflict resolution to systematically study the War of 1812 between the United States of America and Great Britain in order to provide enhanced insights into the causes of the war. More specifically, relational definitions for preferences, movements and stability concepts are defined for describing the attitudes and associated behavior of decision makers involved in a conflict. To capture misperceptions of decision makers in the War of 1812, attitudes are studied within the structure of a hypergame. Combining attitudes and misperceptions within the paradigm of the graph model furnishes the flexible analytical tool which demonstrates that misunderstanding of attitudes by Great Britain and the United States may have contributed to the outbreak of this nasty war.     

Leadership and Learning: A Critical Reexamination of Senge’s Learning Organization

From its inception the concept of the learning organization has been identified with a particular type of organization or new forms of organizational learning. But it is often forgotten that Senge’s ‘system thinking’ formulation of the learning organization was inseparable from an attempt to reformulate a new way of thinking about change agency and leadership in organizations. Here it is argued that Senge’s learning organization can be re-conceptualised as a partial fusion of ‘systems thinking’ and learning theories that leads to a concept of organizational learning as a form of ‘distributed leadership’. However, the concept is critically flawed because it cannot theorise the organizing practices by which learning to lead and leading to learn are shared or distributed in organizations. It is concluded that Senge’s under-theorized focus on distributed leadership consistently neglects issues of practice and issues of power. As such his work does not provide an exploration of the possibilities for increasing the dispersal of human agency, power, knowledge and autonomy within the workplace.     

Towards an Holistic Framework for Environmental Change: The Role of Normative Behaviour and Informal Networking to Enhance Sustainable Business Practices

The term ‘Sustainable Development’ is brandished by modern businesses as a marketing ploy used to suggest evidence of ethical conduct, innovative thinking and moral superiority. However, when analysing an organisations’ adoption of sustainable practices, it is often clear—within the UK—that there are few activities that have been undertaken as an ethical stance instead of legal obligation (McCormick in Environmental politics and policy in industrialized countries, MIT, London, 2002). Our hypothesis is that most methodologies and practices for environmental management do not adopt a holistic perspective, causing significant problems in implementation from inadequate structures and communication channels (Espinosa et al. in Eur J Oper Res, 187:636–651, 2008). In particular we consider that most organisations are currently stifled with management hierarchies that prevent informal/social networking, which may be one of the most powerful natural forms for self-organisation. It is proposed that sustainable development requires more efficient communication channels that foster self-organisation and self-regulation as a method for more productive change processes. In this paper, we explain the reasons why meta-systemic principles of self-organisation and distributed network management offer clear criteria to design an environmental management system that operates on the basis of self-controlled individuals and communities.     

PERSPECTIVES ON URBAN WATER INFRASTRUCTURE IN CHINA FOR THE 21^ST C0ENTURY： SDMUWEIC MODEL

Based on system dynamics approach, SDMUWEIC model is developed in order to evaluatefuture dynamics of urban water infrastructure development in China. Firstly, this paper presents thebasic structure and characteristics of the model, focusing on water infrastructure‘s dynamicrelationships with population increase, economic development, water resources shortage and waterconservation practices. Secondly, model veracity and robustness tests based on behavior reproductionand uncertainty analyses are illustrated. Thirdly, based on the model, future pattems of China‘s urbanwater infrastructure investment requirements are simulated, and effectiveness of two different policyscenarios are evaluated. Finally, conclusion,; and policy implications are drawn, allowing insights intoChina‘s sustainable water infrastructure policies and managements.     

The Viable System Model and Its Application to Complex Organizations

Stafford Beer’s Viable System Model is the best known of the many cybernetic models he constructed over a career spanning more than 50 years. He explored the necessary conditions for viability in any complex system whether an organism, an organization or a country. Although the model was first applied in his work in the steel industry, many further applications were made during his later work as a consultant. The best known of these was when he was invited by President Salvadore Allende of Chile in 1970 to model the social economy of that country. That experiment was brutally cut short in 1973 by the CIA assisted coup during which Allende was killed and Pinochet’s dictatorship installed. The model itself draws on mathematics, psychology, biology, neurophysiology, communication theory, anthropology and philosophy. It was first expressed in mathematical terms in ‘The Cybernetic Factory’; next it was described in neurophysiological terms in Brain of the firm; and finally according to logic and graphic presentation in Heart of Enterprise and Diagnosing the System for Organizations. This last version is the one that is most accessible. It enables people to address organizational issues in a way that skirts the usual categories and organization charts and gets down to the actual necessary functions, no matter who is performing them. With this model people can get a boost as they diagnose or design an organizations. One aspect is to discover what the organization’s critical variables are and to find or install the homeostats that will show that they are maintaining equilibrium. Within that context, the model will help you ascertain that the principle functions and communications channels are in place and can function effectively. A crucial aspect of the VSM is that it is recursive; that is that the same relationships can be traced from the shop floor to the corporation or from the village to the country. Two examples will be discussed: a small business and the Chilean work from the 1970s. It is hoped that this will encourage people to imagine a world that works much better than it does now and where management is not defeated by complexity. A version of this paper was delivered as the first Stafford Beer Memorial Lecture on July 8, 2007 at the World Multiconference on Systems, Cybernetics and Informatics in Orlando Florida.     

Pricing of LIBOR futures by martingale method in Cox-Ingersoll-Ross model

<正> This paper considers the pricing of LIBOR futures in the Cox-Ingersoll-Ross(CIR)modelunder Pozdnyakov and Steele(2004)'s martingale framework for futures prices.Under the CIR modelfor short term interest rate,we prove that there exists a unique futures price process associated withthe terminal value and the standard financial market,and that this unique futures price process has amartingale representation.Moreover,a general closed-form pricing formula for LIBOR futures contractsis obtained in the CIR model.     

A Systemic Development of the Interrogative Pronouns and Adverbs

This paper is about the questions used to design two large-scale organizational systems. It is thought that for these questions to be asked in a systematic manner they need to be drawn from some explicit framework. The most common framework for creating questions in the English language is the interrogative pronouns and adverts, more commonly known as Kipling’s six honest serving men. This paper re-visits these pronouns and adverbs drawing on a range of literatures to establish them into a coherent framework for designing and implementing the two large-scale projects. The paper is structured using the nodes in Checkland’s LUMAS model. It concludes with a systematically developed Interrogative Pronouns and Adverbs Framework that is worthy of further research and application.     

A Systems Theoretical Approach to Interoperability of Information

A rapid process of hybridisation of man and technology, organisation and technology and society and technology is currently sweeping the world. This process requires a way of (scientific) thinking that takes hybrid systems as the starting point. Such an approach makes it increasingly important for hybrid systems to be interlinked, enabling them to exchange and share information through these links. This linking of (hybrid) systems to enable them to exchange and share information can also be denoted as the realisation of interoperability between (hybrid) systems. Five principles from Luhmann’s systems theory can help us understand interoperability. Interoperability enables (hybrid) systems to join random coalitions and networks. The network centric warfare concept is currently the basis for international efforts aimed at the development and application of interoperability that would enable armed forces to act effectively and efficiently. This paper demonstrates what we can learn from Luhmann’s system’s theory.     

SUPPORTING SALESPERSONS＇ CRM EFFORTS THROUGH LOCATION-BASED MOBILE SUPPORT SYSTEMS

This paper aims at assessing how location-based mobile support systems can support salespersons‘ CRM efforts when they are operating within a highly mobile work environment. After briefly discussing the state-of-the-art issues associated with mobile location technologies, the paper conceptualizes key dimensions for location-based mobile support systems. The paper then discusses the dual role of salespersons in CRM. A fourth section suggests a categorization of salespersons‘ CRM tasks based on both properties of location-based mobile support and the areas of salespersons‘ CRM-related tasks that may be affected by mobile location technologies. Finally, the paper suggests potential mobile location services and applications that can help salespersons perform effectively their everyday CRM tasks and link such applications to the determinant of salespersons““ performance. The paper concludes with a discussion of some critical issues and suggests areas for further research.     

Problem Conceptualisation Using Idea Networks

The social act of conceptualising a situation as problematic is thought to determine what will later be seen as a satisfactory solution. Pierce argues that conceptualising something (or an event) is a process of thinking about it through a set of conceptual frames. This paper presents a method for emerging those conceptual frames from preliminary discussions with participants. It draws on the work of Christopher Alexander and the Small Worlds phenomenon. Alexander suggests that participants’ statements can be thought of as being networked. The Small Worlds phenomenon then suggests that this network will not be uniform but rather be made up of a number of clusters (small worlds). These can be used to identify the conceptual frames in the participants’ statements. Therefore, the argument of this paper is that this method can be used to conceptualise problems. Having an explicit method is thought preferable to calling for unspecified creativity. The creativity comes from the method taking Dewey’s advice to switch between analysis and synthesis. The paper’s argument will be supported by explaining how the method can be practiced, while explaining why (theorising) the steps advised might be creative.

AGENT-BASED SIMULATION FOR KANSEI ENGINEERING： TESTING A FUZZY LINEAR QUANTIFICATION METHOD IN AN ARTIFICIAL WORLD

This paper argues that agent-based simulation can be used as a way for testing Kansei Engineering methods which deal with the human reaction from sensory to mental state, that is, sensitivity, sense, sensibility, feeling, esthetics, emotion affection and intuition. A new fuzzy linear quantification method is tested in an artificial world by agent-based modeling and simulations, and the performance of the fuzzy linear method is compared with that of a genetic algorithm. The simulations can expand people＇s imagination and enhance people＇s intuition that the new fuzzy linear quantification method is effective.     

A game theoretical study of cooperative advertising with multiple retailers in a distribution channel

Extant studies of cooperative advertising mainly consider a single-manufacturer-single-retailer channel structure.This can provide limited insights,because a manufacturer,in real practices,usually deals with multiple retailers simultaneously.In order to examine the impact of the retailer’s multiplicity on channel members’ decisions and on total channel efficiencies,this paper develops a multiple-retailer model.In this model,the manufacturer and the retailers play a Stackelberg game to make the optimal advertising decisions.Based on the quantitative results,it is observed that:1) When there are multiple symmetric retailers,as the number of retailers scales up,the manufacturer’s national advertising investment contributes increasingly to add to channel members’ profits in equilibrium,but the total channel efficiency deteriorates quickly and converges down to a certain value;2) When there are multiple asymmetric retailers,the distribution channel suffers from the manufacturer’s uniform participation strategy due to the retailer’s free-riding,and benefits with the manufacturer’s retailer-specific participation strategy.This study derives equilibrium solutions in closed form for all games considered and measures explicitly the gains/losses of channel efficiencies under different game settings.     

积极风险预算和管理者组合投资决策研究

将积极风险预算分解为总量预算和结构预算,建立风险预算框架下的组合投资决策模型,分别在基准组合是有效组合和非有效组合的情况下对模型求解,并详细分析了两种情况下最优投资决策的性质.结果表明:风险预算框架下投资决策的有效性将完全取决于基准组合的有效性;基准组合为非有效组合的情况下,结构预算决定了投资决策的结构,而总量预算决定了投资决策偏离基准组合的程度;由于结构预算中较小的β对基准风险形成了有效的对冲,因而在总风险一致的情况下,有助于提高总期望收益.