URSABLOG: Challenging Process
I’ve always had a nagging feeling that systems, process and efficiency – and by extension, self-discipline, and focus – are overrated. Obviously in ship management, these are essential for the safety of ships and those that are on them. I am in constant awe of how companies with many ships at sea efficiently and safely manage them – and the crew – with so few people ashore. I would argue that International Safety Management, and by extension Health, Safety, Quality and Environment (HQSE) has done more than anything to decrease casualties at sea, and improve the quality of life of officers and crew on board, than anything else. And this is all about procedures, check lists, compliance (and non-compliance), and efficiency. And the more efficient the ship, the more time it has to earn money.
But when I am talking about systems, process and efficiency being overrated, I am talking about in my side of the shipping industry, the bit that concentrates on making money, or at least optimising it. And this very word – optimisation – carries with it the threat of standardising and dulling – commoditising perhaps – things which by their very nature should not be standardised or dull. Making money – this may come as a shock to those outside shipping – does not happen naturally just because you have a ship, or want a ship. It comes from taking risks, getting timing right and – living in the world of perfect competition as we do – offering the same product as everyone else, with access to the same information, but still trying to differentiate ourselves from the competition to attract business to come our way. And all this whilst knowing that data alone, or even with data combined with a strong sense of the past, and – dare I say it – gut feeling cannot make us right all of the time, or even the majority of the time. But still we look to systems, efficiency, data for success.
Sometimes – as many of my brother and sister brokers will know – the best ideas are the ones that come by chance, through a conversation, or an idea that seems on first glance really stupid but is nonetheless, against the advice of our better angels, spoken, shared and then developed into real business. But these ideas are often dulled by the bitter experience of having them rejected or worse never expressed because people will think we are stupid and misguided. So we go through the motions, hide behind procedure and systems, do what we think everyone else is doing, and if we succeed it is down to luck, or being in the right place at the right time. These are nice deals to do of course – any deal is a nice deal – but the best ones are those that started with an idea, even a stupid one, that then turns into something strange and beautiful, that we will remember with fondness.
Therefore I have always thought that the ideal broking environment is one where these ideas can be allowed to surface, be discussed and tried, modified, forgotten, or taken up and perhaps even converted into business. This environment can be created by strong internal competition, or a more collegiate atmosphere, or even a cerebral one that then leads to action. It all depends on the team, and the leaders, but I am convinced that it can only really work when all voices are allowed to be heard, and are not routinely dismissed due to lack of age, experience or a track record of established success. But, and this is the hard part, it also depends on all members of the team being able to take constructive and difficult criticism without it becoming too personal or belittling. Including the leaders.
But this of course rarely happens, and what I am describing is an ideal. Speaking for myself I know well that I become defensive when someone pushes back on my ideas, and over the years I have had to work on myself to separate the emotional from the practical: they are not having a go at me as a human being, but about the way that something has been expressed, or done, or simply that the idea is indeed truly terrible. And I have also come to recognise that other people – sometimes the most successful ones in broking – have an aggressive way of expressing their ideas but a very short memory when their ideas prove incorrect; they just move on. I have come to understand that it is not necessarily the aggression that makes them successful, but their ability not to become too emotionally attached to their ideas.
Ideas mean money, and money means success, at least in shipbroking, however much we would like to think otherwise. If ideas are not successful, they can be interpreted as failure. But I still cling onto the belief that there is no such thing as a stupid question – except the one that is not asked – and a genuinely held opinion should be expressed if there is a reason for it to be expressed. Not saying something – whether to a colleague, competitor or client – can lead to resentment and frustration, and stasis, and above all misunderstandings and real failure: a breakdown in communication.
I read recently a lovely story about two aspiring research mathematicians who applied for a part-time summer research programme. Without trying to explain the intricacies of the mathematics that they were working on – I am not sure if I entirely understand it really myself – they were given the time and space to look at Apollonian circle packing, the ancient study of how circles can harmoniously squeeze into one larger circle. By creating and then analysing large data sets, they – inadvertently perhaps – corrected an assumption that had been widely believed since Apollonius of Perga 2,200 years ago, and maintained and developed by Descartes, and more recently by Frederick Soddy, a Nobel Prize winning radiochemist.
This discovery – disproving such a long and widely held conjecture in number theory – was astounding, and now puts many other similarly unchallenged theories in doubt. But the lesson for me is: how did this happen? The two researchers were given a week long primer in Apollonian circle packing and then left to get on with looking into it, assisted by others who created tools and code to examine data sets. At the end of their part time summer research, they had completely changed the landscape of their corner of the mathematics world. They had not only been given the space, but the tools and the time to explore, and they found something new, something that had not been known for over 2,200 years.
Procedures, optimisation, systems all rely on measuring and creating models for best performance, and for some things – like ship operations and management – this is not only advisable but necessary. Making things better, and safer, and taking as much risk as possible out of humans navigating ships around the world is a good thing. But is this necessary for the commercial side?
One of the downsides of data-driven technology, and the astounding successes they have achieved, is the reliance on processing data as the holy grail of success and it has become the only way of doing it. And of course the more information available – properly processed and analysed – can be used to unearth greater and more valuable insights. But thinking about shipbroking in particular, the Silicon Valley mantra of “what gets measured gets managed” is not always appropriate.
The business of shipping is not only about the management of ships. Ships – particularly in the tramp markets, but also in the liner trades as has been recently experienced in the Covid induced boom – make most money (and lose a lot of it) during periods of extreme market inefficiency, most notably in the imbalances of supply and demand. Contrary to most classical and neoclassical economic thought, in the shipping markets we don’t want market efficiency. We want and live by and through brutal market cycles. Our business is driven by frequent breakdowns in market efficiency, which bring huge rewards and losses, and also opportunities. It is the timing and taking of those opportunities that define success – and failure – in our worlds.
If systems, optimisation and procedures – a given input will lead to an expected output – work on a local scale, within a shipmanagement company for example, they will collapse on a much larger scale if we use them as the only way of understanding how the markets work. Shipbrokers do not only succeed when they are most efficient, quicker, passing on information that they have not taken the time to analyse themselves. They also succeed when they have taken the time to process and understand the information and tailor it to the needs of their clients, and added value to it. They succeed when they take the time and space to question it, and place it in a wider context. For me at least, shipbroking at its best is when the stupid questions lead to beautiful answers. This may come from looking at data, or simply asking questions like ‘why?’, ‘what if?’ or ‘how?’
In shipbroking, relying on systems, process and efficiency can lead us to become wedded to a particular robotic and machine-like way of working that can succeed during periods of high turnover and market activity, but can also make us reliant on trying to repeat our success when the markets are not behaving as we would wish. We think it should work now, because it worked in the past, and if it doesn’t work it is because we are not efficient, or self-disciplines, or hard-working, or aggressive enough. But we are trusting too much in process and not in ourselves or those around us.
The lesson I take from the two young mathematics researchers who changed their corner of the world so dramatically is not only that two fresh pairs of eyes looked at something long assumed to be correct and found it wanting, but that they were given time and space to not only learn about something, but to think about it, and then explore it and share their findings with people who recognised that their long held assumptions were wrong, and had the openness of mind to embrace it. I hope I have the openness of mind, and patience – in shipping and in life – to encourage those around me to not only think, but not to hide behind and within procedures, but to challenge the status quo.
Nothing is written in stone. Changes come, deals come, profits come when ideas become conversations, and are then acted on. As I am fond of saying, deals don’t come off the machine, they come from ideas and relationships. Our willingness to challenge our own instincts, our own culture, our own procedures, our own instinct to optimise our lives (rather than take risks to change it more fundamentally), to change our minds, will – and I know of what I speak – make our lives more fulfilling, more lived, more alive. It will cause turbulence and tension – but for me at least – an efficient life is not necessary a fulfilling or successful one. And a great deal is one which does not necessarily tick all the boxes at the outset, does not proceed smoothly from beginning to end, has many kinks and obstacles in the road as it progresses as perceptions and assumptions change, but nonetheless proves to be business changing – and life changing – in the process. And that, to me, seems to be a process worth investing in.