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[[Legal eagles]] will exercise themselves about what happens if a client asks for its excess back ''before'' you have had a chance to adjust the margin your require. They will say, “well, this would look bad. Optically, you see. How would you explain that to a judge” | |||
I’m not so sure it ''would'' look bad. A commercial court would understand it [[Commercial imperative|quite simply]]. ''This is how service contracts work''. It is a relationship business. One keeps one’s powder dry. | |||
Firstly, we can take it as a given that ''no [[prime broker]] will adjust margins if it thinks it really doesn’t have to'' — why have a difficult conversation now, if things might be better in the morning? If you are running a large excess, generally, you are covered — the security package bites; possession is nine-tenths of the law and, ''In sha’Allah'', things might well look better in the morning. | |||
It is only when the customer wants to ''take away'' that excess that you feel truly at the point of a pitchfork. The answer to the question, “okay so, if the margin was so important why didn’t you ask for it till now?” is easy: “''Because I had it in the bank.''” Who wants, unnecessarily, to upset a [[platinum client]]? | |||
If, and only if — ''when'', that is to say — the client asks for all that excess back do I need to confront my demons and deliver that bad news. At that point, I can decide, ''do I blow up my relationship or not?'' Why would I have to do that a moment before I have to? | |||
It may be that CS didn’t quite realise their moment of truth was upon them: if so, this is a different kind failing: of expertise, not commercial management. When you gingerly ask to adjust your margin up and the customer asks for all his money back, your defcon alarms should be ''blaring''. | |||
===Formal versus informal systems=== | ===Formal versus informal systems=== | ||
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I mean, out of the mouths of babes. There was quite a bit of human wreckage at CS in the aftermath, but you really hope the author of that email wasn’t part of it. But the wider point is this: when all is plain sailing, you can, if you wish, operate a complex business through the agency of cheap staff in remote locations with an instruction manual, which you hope has been suitably translated into Bulgarian. But the thing about complex businesses navigating open water is that ocean weather can quickly change, and a quiet potter around the heads can turn into a Fastnet tempest, and then your Bratislavan school-leavers are going to be hopelessly out of their depth. Relying on rigid application of [[playbook]], [[policy]], [[Process|processes]], [[system]], [[algorithm]] or work-to-rules especially when, as it happens, your senior management are disinclined to enforce them properly anyway, is no way to survive a hurricane. | I mean, out of the mouths of babes. There was quite a bit of human wreckage at CS in the aftermath, but you really hope the author of that email wasn’t part of it. But the wider point is this: when all is plain sailing, you can, if you wish, operate a complex business through the agency of cheap staff in remote locations with an instruction manual, which you hope has been suitably translated into Bulgarian. But the thing about complex businesses navigating open water is that ocean weather can quickly change, and a quiet potter around the heads can turn into a Fastnet tempest, and then your Bratislavan school-leavers are going to be hopelessly out of their depth. Relying on rigid application of [[playbook]], [[policy]], [[Process|processes]], [[system]], [[algorithm]] or work-to-rules especially when, as it happens, your senior management are disinclined to enforce them properly anyway, is no way to survive a hurricane. | ||
=== How organisations work === | === How organisations work === | ||