Simple^4 Xiaoming Wang

AAladdin.com is an agile organization transition framework that was created by me in order to help medium and large size company to transfer from current organization structure to an agile organization.

For details please check AAladdin.com (in English) and AAladdin.com/cn (In simple Chinese)

What is time & material model and when it applies

Corporation old procurement process

They just do not fit!

Change is inevitable

Solution

Change it!

If you paid a little bit attention to global finance for the last 3 to 6 months, “credit crunch”, “financial crisis”,” economic recession” and “downturn”, these keywords would not be strange to you. Whatever it was called, your life was less or more impacted by it. If we were only allowed to tell one reason for the financial crisis without mentioning any financial terminology, it could be described as simple as that both banks and consumers  did not have enough cash to pay off their over spending.

There were many reasons that behind it. Financial organization took too much risk in investment; credit rating agencies did not give a correct rates to some products. Governments, especially US was not able to monitor and manage the system strictly. The financial crisis has already caused an economic recession in western european countries and America. Even China and India had paid a huge bill for the lessons learnt. Real economics started going down because of weak demand.  

Even though, all around the world, not every country was so damaged by the credit crunch. I watched a BBC finance show last night, there is a small middle east country called Lebanon (Capital Beirut) whose economic was not impacted almost at all. The treasure minister revealed the reasons that they foresaw the big risk in American and Western european financial system and had pull all their investment from US and Europe since 2007. Meanwhile, they have these very strict regulations for banks, such as

• Banks must have enough cash otherwise they won’t be allowed to lend
• Borrowers must paid at least 30% of mortgage and successfully approved that their earning is at least 3 times of their monthly payment.

Government also played a critical role in financial system management and monitoring. All these regulations or rules that they made reminded me some basic principles in in Karl Marx’s Das Kapital that I learned from high school.

So far, US and UK have already nationalized some banks, insurance companies maybe car manufactories soon. In truth, part of the capital were actually owned by government, and nationalized. If there are more business which is danger, would government take them over and invest them? If that happens, the western financial system might look very much like Chinese financial system, which although is under construction from a very beginning stage compared to US and UK.

It seems that when western capitalism economics theory could not solve the problems that would happen anyway, they leaned to capital nationalized which was very similar to what Chinese government or Lebanon government do. Does it mean that Marx’s economic theories are the actually the way out to solve these problems?

It is obviously that China or Japan did much better than US and UK in this credit crunch till now. It does not mean what they did not make mistakes, in reality they did make a lot mistakes. However it might be the time to think of the reasons behind their success and mistakes that they made.