Author Archives: Sabah al-Binali

What the Board Should Expect of a Management Presentation

February 2, 2015 By in Corporate Governance Tags:

In a previous article I discussed how to conduct an effective board meeting. One of the main elements discussed in making board meetings effective was management presentations. In this article I will explain why most management presentations to the board are less than useful and how the board can help change that. It is a continuation of my discussion on operational corporate governance.

The first misunderstanding is assuming that a management presentation means a PowerPoint presentation. It doesn’t. PowerPoint presentations can certainly be part of the management presentation, but cannot be the sole document as PowerPoint, or any other visual slide presentation software, does not have the ability to present the full depth and breadth of information needed. For this reason it is better to call it the management pack so as avoid any confusion.

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Things That Would Probably Make Tony Say Hmmmm…

January 31, 2015 By in HR Tags:

I first became exposed to the term Limousine Liberal when I arrived in the United States to attend university. For those who don’t know, Limousine Liberal is a less than flattering term used in politics to describe rich people who espouse left leaning policies but don’t adhere by them. You must use an environmental friendly Prius, please ignore my 12 cylinder gas guzzling Land Cruiser. You must use the bus, please excuse my S63 Mercedes. You know the type of person.

I believe that I have uncovered a similar sickness in the world of business. I have decided on a preliminary name of Bourgeois Bolshevik. This is a person who espouses complete garbage under the guise of being a friend of the regular employee. I have collected some evidence. Shall we begin?

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The Pirate Code is behind Pay Inequality

January 28, 2015 By in Game Theory Tags: , , , ,

In the fourth article of the game theory series, we build on the Saudis out-bluffing OPEC and The Joker forcing the good people of Gotham to choose between game theory and Batman. In this installment, you will learn how blood thirsty, treasure hunting pirates might just explain the ridiculously large wage gaps in modern day corporations. To set the stage, one must think like a pirate, indeed be the pirate. I do not mean the rum soaked debauchery of commercially suggestible women in a tavern named Hurricane. What I mean when I say ‘think like a pirate’ is think selfishly. That’s what successful senior executives do. Isn’t it?

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Delegation Will Set You Free

January 27, 2015 By in Management Tags: , ,

Centralised control has failed in every single economic endeavor known to man. As a national economic system centralised control, better known as communism, failed spectacularly in the USSR. More recently China’s attempt to incorporate capitalist elements to its centralised economic control framework lead to the country wasting USD 6.8 trillion in investment according to a recent report by the Financial Times.

Such failure tends to be true at the company level as well. Centralised management, or non-delegation, restricts the potential for a company. The CEO is a single person and if he retains complete control and refuses to delegate then he will limit the potential of the company to his personal ability to manage all of it. On the other hand, a more distributed control structure allows the company to scale its business by scaling its human resources.

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Gotham Game Theory: The Joker's Dilemma

January 26, 2015 By in Game Theory Tags: , ,

The most famous example used to explain game theory is a game called The Prisoner’s Dilemma. A far more fun approach is looking at a game that The Joker introduces to the hit movie The Dark Knight, one of the Batman movies.

In the movie The Joker rigs two ferries with bombs. Ferry A is filled with innocent civilians and Ferry B is filled with prisoners and their police escort. Ferry A has a detonator for the bombs on Ferry B, and Ferry B has the detonator for the bombs on Ferry A. That is the setup, now for the rules.

If Ferry A detonates Ferry B and kills everyone on it, then the passengers on Ferry A survive. If Ferry B detonates first, then they survive. If nobody detonates within 30 minutes, then both ferries explode and everybody dies.

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Game Theory's Relevance to Investing: The Basics

January 25, 2015 By in Game Theory Tags: ,

In many ways academia is no more immune to politics and arrogance than Wall Street. A great example is the view taken by pure mathematicians, who study abstract concepts regardless of real world applicability and think of their subject as intellectually uncontaminated as opposed to physicists, who think they are masters of the universe because they can understand it. This is a shame as it has created unnecessary barriers to the integration of mathematics as a useful tool for businesses and investors.

Physicists have had greater success, possibly due to their interaction with the real world in terms of such facets as flight, space travel, nuclear power, etc. However, the absence in the business world of other areas related to math has created market shattering fiascos such as Long Term Capital Management and the Doom’s Day Formula. In this post I’ll explain why and what to do about it.

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The Bluff: An Important Strategy Tool

January 25, 2015 By in Game Theory Tags: , ,
This entry is part 3 of 6 in the series Negotiation

There seems to be a strong belief that playing poker teaches people how to invest or run a business. This is of course nonsense. The mathematics behind poker is complex and needs years of formal study to understand the game. The more appropriate notion is that a strong understanding of game playing is extremely useful to investing and business.

The branch of mathematics relevant to game playing is not, as most believe, probability but is called, not surprisingly, game theory. Game theory was made famous by the film A Beautiful Mind, depicting the life of one of the main developers of this mathematical field.

In this article I’d like to address just one facet of a successful poker strategy and that is bluffing. Somehow bluffing has taken on the connotation of lying or otherwise being dishonest. Many of the proponents of “poker as a substitute for an education” believe that this gives them license to be dishonest in their business dealing, in particular in negotiations. Their interpretation is wrong both mathematically and ethically. They might not care about the ethics, but from a mathematical point of view, lying is extremely sub-optimal and completely misses the point.

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The Rise of the Alternative Lender

January 20, 2015 By in Credit Tags: , ,

Standard Chartered, HSBC, Lloyds and RBS have all withdrawn from the SME sector in the UAE. Is this an indication of problems in the UAE SME sector? Absolutely not. It is an indication of troubled global banks and a flawed banking strategy.

Understanding the issue, and the opportunities that it presents, requires an understanding of the common attributes of these four banks and their failures. The starting point is that all of these banks are known as strong commercial banks catering exclusively to retail and corporate clients for most of their 150 to 270 year history.

Then along came Wall Street, its investment banks and fat deal fees. Mortgage backed securities, collateralised loan obligations, foreign exchange futures, interest rate derivatives. Fast talking MBAs backed by deep thinking PhDs. Black Scholes equations, Ito’s lemma, Gaussian copula functions and stochastic calculus. Easy as taking candy from a baby. What could go wrong?

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Bankers Speaking Greek and the Fall of Wall Street

January 19, 2015 By in Investment Banking

There was a time when I would regularly run into a particular investment banker. After trying to sell me something he would invariably speak about various topics. On one particular occasion we were speaking about a potential event occurring and the banker asked me what my delta was on the event. I was confused and asked him what he meant. The banker responded “You know, your delta? What’s your delta? What’s the probability that you think this event will happen?”

For those of you who don’t know, delta is a Greek letter used by traders that, in simple terms, is used to denote the change of price in one security due to a change in price of another security. For example, if a $1 change in the price of a share causes a $0.2 change in the price of an option then the delta is 0.2.

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