For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left, how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 6 Change, but don’t rush to change everything

Mr. Roumani at BBSF over the course of 8 years of employment had 6 different CEOs. Every newcomer, particularly at the CEO level wishes to relay now this is how things should be done or change is about. A good leader has the ability to lead a change process.

An effective leader in an crisis recognizes the unhealthy triggers of change and is capable of identifying areas that need transformation, but does not uproot core values. They usually get 4 things correct

Being mindful of opposing forces in a changing context – in a crisis there are opposing forces at play. Change induces stress and people want some form of stability. An example is asset-liability meetings were boring before the war because the levels were comfortable. When the war started and continued the meetings could last a couple of hours due to different viewpoints.

Rewiring their thinking: from temporary and permanent changes to changes mapped against CSFs – in normal times temporary measures are done for temporary changes and permanent measures for permanent challenges. In a crisis, it is hard to draw the line between the 2. Therefore it is better to identify and changing criticality of the CSFs and can you still meet them.

Having a strong sense of the organization’s core values – core values are the unwritten rules that an organization is run by. These procedures were started long ago, for good reasons, a crisis happens and someone wants to change it.

Always asking the 5 whys – a successful leader in a crisis asks the 5 whys behind every change. Ask why 5 times to identify the true reason for the change. This method helps people become aware of the structured approach to assessing the need for change, and will be more diligent in making requests for change.

The 5 outcomes of change

Good outcomes

change to less – there was a desire to triple check everything, sounds great. Reality is that the other 2 relied on the someone else doing most of the work. Better ensure one robust control layer or sometimes less is more.

another example how to find a ghost worker. People cheat the system, but there are tell tale signs for example: a manager with a 300 employees has discretion and people were put on payroll. Trying to vertify was frustrating, however everyone takes holidays. Vertifying those that do not take holidays led to the fraud.

change to more – creative accounting is bad. Creative finance is good. Having the right information at the right time is always vital.

an example is all banks have provisions for their doubtful debt. It is usually between 0 and 2%. In the war the ratio went up to 40%. What to do? What can you control? how systematic this figure is to everyone including your competitors? if you adjust the ratios, with explanations, the Board will accept it.

remain the same – sometimes the answer is no change needs to be done. For example the change may not be a CSF and better left alone for now.

Bad outcomes

remain passive – do not do anything this means not doing the assessments to even consider changing, just try to wait it out.

change things half-heartly -f if change is going to happen, then all in, not at the margins.

Linking to dividend paying stocks, a constant in life is change and how an organization deals with it. If you examine the biggest companies from 20 years ago, they have changed. If companies are not dealing with change and how to adjust to it, find an alternative.

There are more questions than answers, till the next time – to raising questions.

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left, how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 5 Be a situational leader

Leadership in all times, people need clarity, purpose and direction.

There are two distinctive leadership styles – the autocratic (leader makes the decision himself) and the participatory (involving as many people as possible) and everything in between. There are advantages and disadvantages to both. In a crisis there tends to more autocratic thinking. What is needed is more situational leadership.

Strategic, yet always on the ground – ask the front line people what they see and need. You make policy, but does it make sense when it is implemented?

Persistent, yet knowing when to stop digging – in a crisis, you will likely find you are in a hole you dug yourself, you need to stop digging. How do you tolerate mistakes and learning from them.

Focused, but not yet restrained – in every crisis, things happen all at once. Most of them will be things you never really worried about before, now they are a problem. The challenge is always keeping an eye on the strategic focus and vision.

Adaptive, yet not submissive in stakeholder management – when a crisis unfolds, people’s needs change. The change will be more demanding, not less. Know your priorities and your readily available tools, as well as the time that you have to commit to changing needs. Strong empathy is needed.

Leading change, but not changing everything. see Chapter 6

Linking to dividend paying stocks, everyone pays attention to the actions of the leader. Sometimes as an investor, you love the leader and that is partly why you invested in the company. Sometimes you wonder, as an investor you should pay attention to leadership.

There are more questions than answers, till the next time – to raising questions.

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left, how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 4 – Now could be the best time to create a strategic rift

No one likes a crisis, expects a crisis, looks forward to a crisis and life is better if it does not happen. However, crisis do happen and how you react is key. The first aspect is to know your CSF or Critical Success Factors and ensure they stay in place.

BBSF was similar to most banks in operation, everyone had the same goal to be liquid and meet the government regulations. In normal times, it is not hard. When there is a crisis or a series of events that cascade through the country, suddenly a routine aspect can be a competitive advantage.

Mr. Roumani studied for his MBA at Harvard and was exposed to Michael Porter’s 5 Forces Model and he likes it. Competitive Rivalry is impacted by Threat of New Entry, Buyer Power, Threat of Substitution and Supplier Power.

Competitive Rivalry

What cost does my client incur to switch from my product/service to another? If low, how can I make in higher?

In banking, the switching cost for depositors is almost nil. The way a bank makes it more difficult is add products and services. If they are reasonably happy, they are more likely to be anchored.

In banking, there is very little differentiation when it comes to loans. The money comes from Bank A or B and the rate is the only determinant for differentiation. The CSF is to price competitively. During the crisis, the liquidity of banks was different. Analyzing other banks for liquidity, made rate setting a more important CSF.

Threat of New Entry

In every stable economy, there are always plans to add more competition. In times of conflict, those who wanted to come into the market hold their plans.

What is different can be technology. Prior to the conflict, the main servers would be located centrally because it made logical sense to do so. In Syria the center of the country was where the fighting started, how does the company change to a star system to allow greater independence in the network? For a bank, do the ATMs work?

Supplier Power

Who are your main suppliers? Who is at risk of going out of business? Do you have alternative suppliers? At BSF, they stockpiled things banks used such as ATM paper rolls, printer ink. During a war, the basics of water and diesel are more important, can the business be supplied?

Threat of Substitution

What products/services were usually substituted for yours before the crisis? are there emerging substitutes in the market? One area, BBSF saw as an opportunity, when people moved their money from the bank, where was it going? Some went into gold, BBSF offered safe deposit boxes.

Buyer Power

How powerful is your client in deciding to choose your product over another? Has the crisis changed this? Is the buyer more in demand?

What to do with the competitive analysis: Focus on what matters

In times of crisis, having a clear vision of what your company aspires to achieve is fundamental; it provides clarity, purpose and direction. In unsettled times, the room for misunderstanding, miscommunication and disorientation grows.

A corporate strategy relates to the overall direction of the company. A company should have corporate strategic objectives it wishes to fulfill. At BBSF, the vision is to be the number one bank of all Syrians. One of the strategic objectives was to be a great employer.

Achieving this requires several tactics. A one page strategy map is laid out. The next aspect is a SWOT or Strentgths, Weaknesses, Opportunities, Threats is clearly laid out.

Your vision should be one sentence. Keep it simple.

The strategic objectives should in principle work towards satisfying the vision. The tactics explain the how to element. They help explain the actions to be taken. No more than 5 tactics for each strategic objectives.

Finally, a set of 5 overriding values and business principles that govern the overall ethics and code of conduct expected from your company. Setting the ethical compass is important.

Linking to dividend paying stocks, when you buy these types of companies, it should be easy to see the vision and values of the company. There are many voices and consultants to ensure they exist and the company lives the vision. As an investor, if you agree you can invest your money into the company, understanding you want to see a profit to pay dividends. The company can do other things, but as an investor you have your priorities.

There are more questions than answers, till the next time – to raising questions.

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left, how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 3: Chase opportunities relentlessly and don’t die until death comes to you

the souq must go on. The souq is an outdoor market mentioned in the bible that has been operating for generations. When an operation exists for generations it has gone through every economic up and down the world has endeavored or the souq must go on. There are lessons in how merchants treat customers.

Mr. Roumani worked for a bank. In times of crisis, people want their money back. When more and more people have access to internet banking, it will change how they do it, but a decade ago, most people went to the bank. What should BBSF do? Similar to all banks, there is a desire to avoid a rush to withdraw funds, partly because banks cash is used in loans, there is not a 100% cash deposits in the bank, it is typically less than 5%. What to do? limit withdraws? raise the deposit rate? BBSF decided to stack banknotes next to the glass counters so everyone could see they had enough money. For any client to withdraw 1 million Syrian pounds, they could. The approach, BBSF said was we understood the motives, they are same as ours, but after withdrawing the funds, we made sure to say if and when you feel safer, you can deposit back anytime.

We learned that that to put the customers at the forefront of everything was fundamental to us. After that it was easier to search for opportunities. An opportunity was in many countries, there are people working outside of the country, but send money back to their families. In conflicts, the price of real estate falls because of lack of demand. However, those working outside the country may be able to afford the mortgages because prices have decreased and they want to invest in the country. BBSF offered housing loans and some people took out loans.

In most businesses, there is a Pareto rule which states that roughly 80% of the effects stem from 20% of the causes. Transferring this principle to customers, 20% of your clients would give you 80% of your revenue.  

In adverse times, the rule changes to 95/5 or 5% of your clients would generate 95% of your revenue. 

This implies you have to know which ones are successful and be flexible with your pricing to keep them satisfied in the short-term knowing in the long term the benefit of a long-term strategic partnership is possible.  

In addition to maintaining profitable customers, you need the right information systems that will enable you to break down accurately the profitability per channel, platform and customer.  

Linking to dividend paying stocks, there is opportunities somewhere and with the recurring dividends you have the ability to search and locate the opportunities. Once you see them, the world is better.  

There are more questions than answers, till the next time – to raising questions.  

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 2 Transform your concept of time

Syria is one of the oldest countries in the world, in the bible Cain and Abel happened in Syria. In the corporate world, management is inclined to view time as being chunks of fiscal years. The short term is about a year; the long term is 5 years. In a crisis the most important aspect is to identify the strategic core elements that you believe will make your business sustainable, regardless of the different situations, because the war will end someday.

Knowing the Critical Success Factors (CSFs) of your industry and how their criticality shifts in a crisis- is of utmost importance.

What are the CSFs in this industry, assuming there was no war today?

If the war ends tomorrow, or in 5 years, would these CSFs still be critical?

At the bank, one CSF was having a high-liquidity ratio and low cost of funds or having enough cash reserves from deposits at a relatively low price.

War is destructive, but it does not necessarily destroy an industry’s general dynamics. It is likely to lead to a shift in the criticality of some factors and the difficulty in fulfilling them.

Having high liquidity or high cash reserves was identified as an integral CSF. You can only lend when you have enough funds, that was not going to change today, tomorrow or in the future. What changed was before the war, all banks fulfilled this CSF easily. A bank could not differentiate itself having this advantage. When the war started and people withdrew their funds, the success factor shifted to become much more comparatively critical than before.

Another CSF was trust. Banking is built on trust. BBSF decided that in whatever we did and no matter what the context was, gaining and maintaining the trust of the public was a CSF.

It is not always about the money or play the long game like a 3rd-generation family business does.

Questions:

Do you think this crisis will eventually be over?

Are you asking questions about the timeline of the crisis? Does anyone know the answer? Do you have control of the answer?

What are the Critical Success Factors of your industry? How has their criticality changed? How valid are they now? Will they be valid next year? 5 years? should your actions fulfill them?

Do you let your actions today shape your long-term aspirations or the other way round? which do your think is better?

If your goal is to maximize shareholder wealth in the long run, are there areas where you could be better off sacrificing short-term profitability, if that builds long-term value?

Linking to dividend paying stocks, for your investments do have an understanding of the what the Critical Success Factors of your investment are? If you do then you can evaluate the company based on the CSFs and you will have a reasonable idea of whether to hold or look for alternatives.

There are more questions than answers, till the next time – to raising questions.

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

In a war, almost everything is thrown into question. It is tremendously difficult to make any assumptions, because anything can change at any moment. The unthinkable becomes thinkable. Mr. Roumani’s position was the CFO in charge of leading the strategic planning of the bank in addition to the oversight of the finance function. The BBSF had 700 employees and 39 branches and continues to operate in Syria. Mr. Roumani was with the bank from 2011 to 2015.

Businesses are dynamic, and every business is bound to go through turbulence or tough times at some point. The lessons we learn in life usually happen at critical times. The more critical the context, the more valuable the experience may become. War increases your exposure to many different scenarios and accelerates the learning process, adding clarity concerning what really matters and what does not.

The book is divided into 10 chapters or 10 lessons.

Chapter 1 Don’t do things right; do the right thing

Many turning points, but no turning back. In the conflict of Syria, from the outside we often think in terms of for the government or against the government. In the country it can be neither, just trying to keep the operation functioning. It benefits customers.

One profound moment was in 2012, the conflict was going on but it was not going on where Mr. Roumani lived and worked, it was another part of the country. In 2012, it came closer to home.

Know thyself – 2 simple words by Socrates that have survived timelessly through the years. Self-awareness is key. Knowing yourself, to determine whether or not it is strategically worth navigating a crisis is fundamental.

All privately owned banks in Syria were founded by large regional banking groups. At the outset of war, BBSF was the largest privately operated bank in Syria.

The first decision made by owners is it worth saying in business. Some banks had a small presence in Syria and for them managing Syria was a big headache and not worth it. The owners did not have the risk willingness to operate. BBSF was a merger between a bank in Lebanon and a bank in Saudi Arabia with significant French ownership. The ownership helped BBSF develop a distinct identity that felt like it had sovereignty as a core advantage to be built upon. We had something belonging to us at the Syrian bank that we had to fight for. What is the culture of the organization?

Looking back from the comfort of my London, England home, make no mistake no one enjoys working in a crisis. But a crisis is sometimes part of the cycle of the business. Operating in a crisis can become a very enriching and rewarding experience. It allows you to choose to do the right thing, as opposed to doing things right.

The book has a few examples of doing the right thing.

Doing the right thing entails playing the long game, which requires your long-term goals to preside over your immediate short term goals.

Strategically, is the crisis worth navigating? Do you have the option of exiting, if it is not worth navigating?

Are you inclined to self-impose limits from the start on what to do and what not to do? Do you think these might limit your future self?

What opportunities can you seek out to exhibit noble behavior? What does it cost to be noble?

What is the downside to intentionally shocking some of the systems in place that have become more vulnerable in the crisis? what is the upside? can the upside be achieved instead in controlled environments?

Linking to dividend paying stocks, in an ideal world, you should be able to by these types of stocks and rarely look at them in terms of market price for quarters. All you have to do is to ensure the company is profitable and can pay a dividend. In reality, there are short term events that will focus your attention, but the short-term attention can mean when you receive your dividends you purchase stocks that allow you to weather storms, because you are buying at good prices and holding for the long term.

There are more questions than answers, till the next time – to raising questions.

On April 2, President Trump titled the day Liberation Day and sought to change global trade patterns for the past 80 years. President Trump has the ability to install tariffs and in the short term prices will go higher. In the longer run, maybe manufacturing will come back, but not all of it.

One of the reasons not all of it in terms of auto and truck manufacturing is the internal combustion engine has many parts and some of them are sourced out to parts companies who can produce millions of parts at a quality needed and more importantly a price that is as low as possible. On the other side of the coin is electric vehicles and they have less parts. Perhaps President Trump will be a boon to EVs because they will have the fewest tariffs.

In an article by Matthew McClearn of the Globe and Mail, he used the National Highway Traffic Safety Administration (NHTSA) data from 360 vehicles on sale from the 2025 model year. Every single vehicle contains some proportion of its components originating from outside North America, varying from 1/5 to the entire vehicle.

The NHTSA publishes the data because in 1992, the American Automobile Labeling Act was passed and requires car makers to affix a label to every vehicle they sell in the US. They must calculate these percentages prior to the start of each model year and the NHTSA publishes them annually.

The highest vehicle content is the Kia EV6 with 80% content made in the US and 15% made in South Korea. The biggest selling truck is the Ford F150 and has a 45% US content.

It is important to note the world market for vehicles is 95 million, with the US market is about 16 million.

In 2018, a report said North American vehicle production internationally competitive. The reason is the low and high wage jobs are distributed to optimal regional location based on cost, capability and proximity to critical assets. President Trump’s tariffs will strength the domestic industry at a cost of international sales.

Linking to dividend paying stocks, all industries evolve for various reasons. Before the interstates highways were built, most people travelled by train. Then there was move to cars and planes, everything evolves for multiple reasons. Changing the systems means someone has to invest in bringing the change about, will tariffs be enough of a carrot to change the system?

There are more questions than answers, till the next time – to raising questions.

The biggest company in the world in terms of assets under administration (AUM) is BlackRock with over $11.6 trillion. This means the investment world pays attention to the annual letter by Chairman Larry Fink.

One of the reasons BlackRock is so big is their tradition investment in technology. In the 1980’s the banks generally had better technology than the buy side, and this exacerbated an information asymmetry. BlackRock’s founders wanted to better understand portfolio risks and protect against downsides but could not find any products that suited their needs. This led BlackRock to invest in and develop Aladdin, its robust investment platform and risk-management system. By the 1990’s, institutional clients were expressing an interest in using Aladdin to oversee their full portfolio, not just the assets that BlackRock managed on their behalf. By 2020, Aladdin has grown to cover every asset class and is used by BlackRock and more than 200 insurance companies, pension funds, and asset managers in nearly 50 countries. BlackRock continues to improve the platform at scale and realize the benefit as an overall ecosystem. (think Microsoft on your laptop).

In an article written by Iain Withers and Ross Kerber of Reuters, Larry Fink wrote in his letter that protectionism has returned with force.

Mr. Fink wrote about the wealth divide that too many people are currently missing out on prosperity in twin-speed economies, where the wealthy build more wealth and others face deeper hardship.

Mr. Fink’s part solution is to democratize markets by helping a greater number of consumers access to potentially higher returns in private markets such as infrastructure and private credit.

BlackRock is a world leader in passive index-tracking funds. He believes that individuals should move from 60% stocks and 40% bonds to 50% stocks, 30% bonds and 20% in private assets.

One method to do this was first BlackRock bought infrastructure specialist Global Infrastructure Partners, private credit provider HPS and private data firm Prequin. The companies will provide the deals and BlackRock will figure out how individuals can invest in them. The big problem is most publicly traded assets are priced daily on the market while private stocks are not listed, trade less frequently and pricing can vary.

Linking to dividend paying stocks, in the last couple of decades we have seen the growth of private equity and as the growth came it has allowed more companies a choice in raising capital. Do they issue bonds, stocks or using private equity and all have advantages and disadvantages. One thing investors do like about BlackRock is the leader in index funds and the Aladdin software system that gives institutional investors an edge. As long as the two assets are world leaders, expect BlackRock to continue to build on AUM.

There are more questions than answers, till the next time – to raising questions.

For an investor, one method of doing research is court documents, because companies get sued on a regular basis. Every large company has a law department and they are also have retainers to the larger law firms that are known nationally. One of the good things for investors, unlike Public Relations outside the court which is design to ensure the company is a favorable light, inside the court truth must be told. However, when it comes to paying for actions, who is responsible needs a court to decide and how much?

In an article by Josh Funk of the Associated Press, in 2023 a train derailed near the town of East Palestine, Ohio and toxic chemicals were released into the environment. Who should pay and how much?

The train carrying the load was Norfolk Southern and it is looking for 2 other companies to share the cost of a $600 million payment. The other two companies are: GATX Corp who owns the railcar and OxyVinyls which made the chemicals in the railway car.

The train derailed and Norfolk is responsible for the derailment because its job is to maintain the railway line and run the train properly. However, similar to most railways, the railway does not own most of the cars it hauls, and that means everyone involved in shipping hazardous chemicals bears some responsibility for ensuring their safety under federal regulations.

GATX which owns railway cars and rents or leases to companies says it compiled with all the relevant regulations for taking care of its railway cars. If there was a problem, NS should have spotted the problem, repaired it and sent GATX the bill for the repairs.

OxyVinyls which made the chemical inside the car, noted NS runs the railway, they are responsible for the safety. The train company operated and inspected the train and was responsible for delivering the cargo safely. NS says they relied on information from OxyVinyls on what to do with the chemicals when the derailment happened. What happens in a fire? how do they handle the chemicals.

Linking to dividend paying stocks, given there are only a few railway companies and they are not building more tracks for new players, railways are often seen as a good long term investment. Most of the railways although there is some overlap tend to have a near monopoly over a portion of the country. Most of the time, railways are doing a good job of moving freight back and forth across the country at very competitive prices. Lawsuits allow you to understand how the railways have evolved and actually operate.

There are more questions than answers, till the next time – to raising questions.