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Volume Four, Number Twenty-six

"Zest for Enlightenment"

The Irregular Newsletter of Z/Yen Limited

May 2004

 

Standard Practice

If you can send coal to Newcastle, why not Italians to Rome?  Michael recently led an interesting strategic retreat facilitation assignment with the International Social & Environmental Accreditation and Labeling (ISEAL) Alliance.

ISEAL Alliance is an association of leading international standard-setting, certification and accreditation organisations that focus on social and environmental issues, and includes members such as one of our favourite clients [That’s not allowed! – Ed.] the Marine Stewardship Council.

 

Yo-Ho-Ho & a Barrel of Rum

 

The new season of Lady Daphne boat trips is underway and this year we are running a new game. Smuggler's Choice involves six smuggling barges, with 250 barrels of rum each, working the waters of the Penrose Archipelago’s 23 rhombus islands.

We designed Smuggler’s Choice so that teams could see, in a relaxed way, how to make tough decisions under uncertainty, how to cooperate, when not to cooperate and how to gather information through negotiation.  Smuggler’s Choice illustrates two particular theories - the Prisoner’s Dilemma and Prospect Theory.

The Prisoner’s Dilemma is met by teams having to decide whether to cooperate or not!! This has been a fertile research area for games theorists & computer boffins, e.g. the promotion of Tit-for-Tat as the best way to deal with most real-life situations.

Prospect Theory, for which one of the proponents, Daniel Kahneman, won a Nobel prize in 2002, explains how framing problems is crucial.  Teams who feel behind tend to take riskier decisions than teams who feel they are in the lead.  The first two games proved highly popular with the Blue Beards winning both.  Is this a trend??


Up Up and Away

 

Jeremy Smith and Francesca Birch have just returned from a hectic weeklong trip to New York.  Our US client list has grown significantly this year and we are currently working with 9 major banks on our annual US Securities Survey.  Jeremy will be returning in June to initiate the next phase of the project.


Although the meeting schedule was tight, Jeremy and Francesca found time to shop and visit one of New York’s less austere institutions, namely “Jeremy’s Ale House”.  Rumours of M&A activity would of course be denied by the parties concerned.



As Predicted by PropheZy

 

PropheZy, Z/Yen’s world-class risk/ reward prediction engine, keeps getting it right. A year ago, Michael Mainelli, Alan Helmore-Simpson & Ian Harris used PropheZy on the BvD FAME database of UK companies to predict that audit fees would rise by 58% over two years in response to tighter regulation and the loss of non-audit income by the “Final Four” accountancy firms. [See “The Auditor's Cross-Subsidy Or Anti-Dumping Measures”]

 

In April 2004, Time Magazine published “Revenge of the Bean Counters” highlighting, amongst other things, a 38% annual increase in audit fees paid by large US companies.  There’s little more irritating than hearing Mainelli and Harris saying “told you so” ad nauseum, but it seems that PropheZy will be helping them to do just that in more and more areas.

 

Ian Harris, for example, is currently working with two grant-making foundations extending the use of PropheZy to predict the potential effectiveness of charitable grants.  Early indications show that their grant-giving could be better targeted using what is effectively a “score card” in PropheZy.  The technique can similarly be used to help evaluate financial investment propositions.  Ian claims that he anticipated a favourable result for his PropheZy tests.  “Told you so”, he said. [I saw that punch-line coming – Ed.]

 

An International Cast of Stars

 

Yes, we used this title last month but it continues to be relevant as Z/Yen welcomes new staff and associates to its growing financial services practice.

In London, Mark Guerriero and Rohan Wardena have joined Giles Wright, Francesca Birch and James Pitcher.  In New York, Jonathan Davies and Nicole Avrami Blomfield will be working on Z/Yen projects while Rob Long will be kicking off Z/Yen’s first Asian survey from Kuala Lumpur.