The “clash” revisited
A long time ago I posted a forecast entitled “The Clash of the Models”. Every system needs a “model” to govern the way it works (or doesn’t work). It is the structure by which we “manage” and that is my purpose in writing this post
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In its most fundamental sense, “management” is nothing more than the "model" we use to organize our daily affairs to avoid the risk of failure and its negative consequences.
We manage in accordance with our objectives and the model dominates all of our actions and outcomes.
The simple act of crossing a street requires that we manage a wide array of variables: oncoming traffic and the risk of being struck by a vehicle; the existence or not of controls such as traffic lights to control threats to our security; the risk that a driver of a vehicle could ignore the controls in place; our ability to traverse the street in a timely manner that allows the controls to protect us. etc. etc. The more complex the system, the more variables that have to enter our “management structure”.
We manage our personal lives with a model, we manage our family lives with a model, we follow a model to do our business, we organize our communities around a model, and we organize our countries around a model – each model involving higher levels of complexity.
Each level of complexity implies specific risks that must be measured and managed to avoid failure. To return to our most simple example, if we do not manage our use of the traffic signal, the risk of being hit by a vehicle goes unmeasured and unmanaged. We fail in our objective to get to the other side at the lowest possible level of risk.
The PT and the administration keep talking about a “new economic framework” – (Nova Matriz Econômica). It is little more than a “new” management overlay to the way Brazil conducts the workings of its economy. I predicted in my post that this “model” would clash with the one created by the Real Plan.
The objectives of both models are essentially the same: to get to the “other side”. However, each specifies specific “modes of management” to achieve the objective of each. And they are in opposition to each other.
If you continue to ignore the consequences of crossing the street without “managing” your use of the controls implicit in the “model” you will eventually wind up dead or paralyzed and no longer able to cross the street.
The administration has relentlessly pursued the management overlay of the “New Economic Framework” in spite of the fact that it has suffered numerous setbacks as the unmanaged risks of the model materialized and were continuously ignored.
An important and fundamental objective of the “Framework” is to eradicate poverty of millions of Brazilians and create more “open access” to material and personal choice and prosperity.
The Real Plan facilitated the entrance of 40 million Brazilians to a higher standard of living, increased purchasing power, etc. However, thousands are now returning to their former status to next lowest rung on the income ladder. The new Framework (“model”) failed to achieve the stated objective.
The PT has now issued a “National Emergency Program” based precisely on the “management” that failed to achieve the announced objective of the model.
No enterprise, however simple, can function without an appropriate management model. Just crossing the street can be a complex decision.
In short, there is no way that the Brazilian economy can overcome the constraints and risks implicit in the proposed “Framework”.
Now, the PT has also proposed that the way to make the model work is to impose it rather than adjust it to the negative feedback it is receiving. Lula has invoked his “army” of supporters to take to the streets in what is highly likely to be a series of violent confrontations.
We are now entering the final phases of the “War of the Kleptocrats”. There is still more to be done. As suggested in an editorial by former President Fernando Henrique Cardoso in today’s Estado do São Paulo, it is necessary to rebuild the framework of governance of Brazil – in both the political and economic areas.
A “new” kleptocrat cannot do the job so it will take as much time as Brazil allows itself to “get it right”.
Your task is to shore up your own “model”, adapt and improvise as necessary to either weather the storm or get out of it. You need to evaluate your controls, policies and procedures, relationship with parent, opportunities in this and other economies to achieve the objectives of your enterprise.
Now is a good time to start if you have not already!
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