Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Recommended Posts

Does predatory activity happen in the market all the time? Does a predatory mindset help in trading?

 

I think that adapting a mentality of being ruthless, predatory, opportunistic and stalking your "prey" may help some people be more successful at trading. I get the impression that some traders take on this mentality, and this point of view as a strategy to put themselves into a mental state that helps them to be more objective and disciplined in their trading.

 

I'm not saying it doesn't work. And I'm not saying that I wouldn't, sort of, engage in those things myself when trading. I guess I would practice opportunistic and "predatory" strategies in the sense that it will make a profit.

 

Is this view of trading good in the long term? Can it affect your life outside of trading? Is it morally right or wrong?

 

Personally, I have a mixture of feelings about the whole investment industry, how it works, who it benefits, and what the implications are for the predators and the victims.

 

But let's hear what you have to say.

Share this post


Link to post
Share on other sites
Does predatory activity happen in the market all the time? Does a predatory mindset help in trading?

 

I think that adapting a mentality of being ruthless, predatory, opportunistic and stalking your "prey" may help some people be more successful at trading. I get the impression that some traders take on this mentality, and this point of view as a strategy to put themselves into a mental state that helps them to be more objective and disciplined in their trading.

 

I'm not saying it doesn't work. And I'm not saying that I wouldn't, sort of, engage in those things myself when trading. I guess I would practice opportunistic and "predatory" strategies in the sense that it will make a profit.

 

Is this view of trading good in the long term? Can it affect your life outside of trading? Is it morally right or wrong?

 

Personally, I have a mixture of feelings about the whole investment industry, how it works, who it benefits, and what the implications are for the predators and the victims.

 

But let's hear what you have to say.

 

It is perfectly natural. As long as you are not breaking rules, then there is nothing wrong with it, since if you are not breaking the rules, you are playing by them.

 

Is it morally right? Is it morally right for you to lose money in the market to someone who knows how to take it from you? So, is it wrong if you take money from others that are less skilled at trading than you?

 

In nature you do not see a cheetah stalking the largest, meatiest animal; instead, it stalks the youngest and weakest.

 

MM

Share this post


Link to post
Share on other sites
As long as you are not breaking rules, then there is nothing wrong with it, since if you are not breaking the rules, you are playing by them.

 

Rules are not inherently right. There have been plenty of people, groups, governments and rulers that have made some very bad rules. There are good rules, there are bad rules. Right at this moment, I'm not saying that the rules governing the markets or trading are good or bad. I'm saying that there needs to be a deeper look at good and bad, moral or not moral, than just looking at the rules alone.

Share this post


Link to post
Share on other sites
In nature you do not see a cheetah stalking the largest, meatiest animal; instead, it stalks the youngest and weakest.

MM

 

This is true. And in the animal world, that system works very well. The natural world is a system of overcompensation to balance out high attrition. Many of the young, weak and sick need to killed off, and eaten, or the population would go out of control.

 

The human population is growing out of control. When lemmings overpopulate, they all run over a cliff into the sea and die. Human's do find innovate and better weapons to kill each other off. But we are also keeping more and more people alive with better standards of living and modern medicine. Plagues and wars killed off large percentages of the population in the past, but we haven't had any big plagues lately.

 

Trading is a system of high attrition, but it doesn't kill off large percentages of the population. "Feeding" off the young and the weak in the investment markets doesn't solve the overpopulation problem.

 

If people who make a lot of money in the investment world, are genetically superior, then they should have more children in order to keep the genetic pool healthy. But it seems like poor people have more children. So that isn't working.

 

The system of killing and eating the weak and the young in the animal world keeps things in balance. I'm not sure that the investment industry is keeping the world in a healthy balance.

Share this post


Link to post
Share on other sites

Depending on your emotional needs and maturity an agressive attitude toward the market may help some participants..... In my office we go about business in a subdued manner. We expect to make money (otherwise you are gone)...At this level the participants view the market as a puzzle to be solved within a limited amount of time....we're expected to get it right in time for the market open....if we do that (and most of the time we do) then there is a congratulatory moment at the end of the day...but thats it, because we know that each day is just a dot in the (yearly) distribution, and you're expected to come back and do it again the next day....if you plan to be in this business over the long run, it may be advisable to maintain a more consistent and low stress emotional mindset during market hours.

 

Good luck

Edited by steve46

Share this post


Link to post
Share on other sites
if you plan to be in this business over the long run, it may be advisable to maintain a more consistent and low stress emotional mindset during market hours.

Good luck

 

So my question is, does the predator mentality cause more stress or less stress? I suppose a predator mentality could mask stress, or be a very strong counter balance against it. But masking something doesn't make it go away, and counter balances can swing wildly the other way.

Share this post


Link to post
Share on other sites

One of the pivotal ‘moments’ of my trading development was when it clicked at an operational level that trading is best seen as “Predator vs Predator” (zdo) instead of predator vs prey….

Direct side benefit - instantaneous resolution of the largest part of those mostly enculturation based ‘moral’ issues …

OP it’s excellent that you’re confronting this. Many traders never even get into awareness of how that enculturation is conditioning/limiting their trading…as you get to know them you can start picking up the subtle suppressions diverting and wasting their energies…

hth

Share this post


Link to post
Share on other sites
So my question is, does the predator mentality cause more stress or less stress? I suppose a predator mentality could mask stress, or be a very strong counter balance against it. But masking something doesn't make it go away, and counter balances can swing wildly the other way.

 

Sir or Madam

 

I think the answer to your question is that it depends on the individual (as I stated in my original comment).

Personally I don't know what else I could add that would help you....I believe that a professional orientation is helpful because I see it every day....of course there are bound to be exceptions..another way of putting it is, that I tend to be agressive in terms of ability to tolerate risk, to put on size in the market and in terms of looking for opportunity....I was trained to be agressive with respect to those elements of trading....otherwise I tend to be more thoughtful and subdued in my approach....I notice that some very successful individuals have a similar orientation to the market.... I leave it to others to decide which approach works best..

 

Good luck

Share this post


Link to post
Share on other sites
I think the answer to your question is that it depends on the individual

 

I think it also depends on how good a person's strategy is. If a trader aggressively executes the worst strategy in the world, then aggressiveness doesn't help. Even predators avoid being injured at all cost. Predators don't like getting kicked in the head or speared by the horns of a herbivore.

Share this post


Link to post
Share on other sites
One of the pivotal ‘moments’ of my trading development was when it clicked at an operational level that trading is best seen as “Predator vs Predator” (zdo) instead of predator vs prey….

hth

 

Good point. Bears will take over a kill that wolves have taken down. If the bear is big enough, and at the prime of it's life, a whole pack of wolves may not even dare to challenge one single bear.

 

I'm not necessarily convinced that the whole animal world vs. trading is an accurate analogy, but maybe it does serve some purpose.

Share this post


Link to post
Share on other sites
I tend to be agressive in terms of ability to tolerate risk, to put on size in the market and in terms of looking for opportunity....I was trained to be agressive with respect to those elements of trading

 

Thank you for describing what being aggressive really means to you in terms of trading. The first thing you mentioned was risk toleration. One thing I find ironic in the market, is that what most people may initially or intuitively perceive as risk, in reality may be very little risk at all, and in fact be the best opportunity.

 

For example, price dropping very hard. That may be the bottom. Not necessarily, but it happens quite often. If a trader is looking to go long, you may want to "catch a falling knife". That phrase "catch a falling knife" is something that many traders use as an analogy that implies terrible danger. But it may actually be the least dangerous situation, depending upon the situation.

 

Some people like fire breathing, sword swallowing and lion taming. And people will pay them to do it. :rofl:

 

So, my point is this. What typically is defined as "risk" by the general public, may just be opportunity for a trader. The market rewards risk. It's a risk/reward system. So being aggressive towards risk tolerance, may be consciously forcing oneself to go against the "natural" perception of what risk in the market is.

Share this post


Link to post
Share on other sites

There are two very basic issues that professionals must learn, either the "hard way" or the "easy way"....

One is that there is a unmistakable relationship between the effort a person puts out and the rewards they reap in the market.

Two is that there is an unbreakable relationship between risk and reward, and in order to survive in the markets one must learn how to characterize risk accurately and how to manage it effectively.

For those few of you who really want to transform your lives, I suggest you take a moment and look around your neighborhoods...go to the nicest most expensive neighborhoods near you and look carefully at how those people live....look at the cars they drive at the clothes they wear, drive by the shopping malls they frequent and the restuarants they eat at...and ask yourself, "is this the kind of life I want"? "Do I want to be free of the concern for money..."

The fact is there are few people willing to put in effort necessary to really be successful at this or any profession for that matter. They say they want it, but when push comes to shove, are unwilling to do what it takes to get there.

Read Jack Schwager's books and notice that there are only a few who really "make it" and even those few have volatile careers. Often that is because early in their lives, before they learned these few "truths", they took unecessary risks, or were beneficiaries of simple random good luck...then at some point, things reversed and they "blew out" their accounts....(there are quite a few stories of folks who lost fortunes several times over before learning the most important lessons...just think back to Jesse Livermore).

Personally I would prefer not to leave my career to chance....I think a person can learn these few important lessons by researching and learning about careers of these unusual folks....

Finally I am sure (because it happened to me) that one can find a good mentor and good education, and with a little perserverance and hard work, get to their financial goals.

 

Best of luck in the markets

Steve

Share this post


Link to post
Share on other sites

In order for some traders to unfairly profit from other traders, there would need to be a way to manipulate the market. The market reacts to news and earnings reports. Those two influences on the market can't really be manipulated unless there is insider knowledge. I'm not saying that insider trading might not happen, but it would need to be happening on a large scale. I doubt that is the case.

 

So my point is, in order for "predation" to occur, the markets would need to be manipulated. If the market is an unbiased entity, that always returns to a fair valuation, then it's kind of difficult to manipulate it in the longer term. Day to day, and minute to minute trading is a little different I think.

Share this post


Link to post
Share on other sites
In order for some traders to unfairly profit from other traders, there would need to be a way to manipulate the market. The market reacts to news and earnings reports. Those two influences on the market can't really be manipulated unless there is insider knowledge. I'm not saying that insider trading might not happen, but it would need to be happening on a large scale. I doubt that is the case.

 

So my point is, in order for "predation" to occur, the markets would need to be manipulated. If the market is an unbiased entity, that always returns to a fair valuation, then it's kind of difficult to manipulate it in the longer term. Day to day, and minute to minute trading is a little different I think.

 

On any give day, in any given market, look at the depth of market. From time to time you will see the bid side with far more bids than the ask side and at other times you will see the ask side with far more offers than the bid side. Intuitively, you would guess that if the bid side has more size, then there are more people bidding and there is more demand and price should be rising when there is more demand. Likewise when the Offer side is stacked you would assume that meant that there is more people wanting to sell and price should be falling.

 

What is actually happening when the bid is stacked is that traders are trying to sell, and they put large size up on the bid hoping that impatient buyers who want to buy will enter at the market and fill the sellers limit orders. The end result is that the seller receives a better price than he would if he would have sold at the market. The buyer pays slightly more for being impatient. Its a similar story for traders who want to buy. The put large size up on the offer and hope that someone who sees the large size that wants to sell, will sell at market and right into the buyers standing limit order to buy.

 

If someone puts up size on the bid and has no intentions of buying and is in fact selling and his sole purpose of putting up size on the bid was to lure traders into buying at market so their standing limit sell orders would get filled on the inside, is that manipulation?

Share this post


Link to post
Share on other sites
On any give day, in any given market, look at the depth of market. From time to time you will see the bid side with far more bids than the ask side and at other times you will see the ask side with far more offers than the bid side. Intuitively, you would guess that if the bid side has more size, then there are more people bidding and there is more demand and price should be rising when there is more demand. Likewise when the Offer side is stacked you would assume that meant that there is more people wanting to sell and price should be falling.

 

What is actually happening when the bid is stacked is that traders are trying to sell, and they put large size up on the bid hoping that impatient buyers who want to buy will enter at the market and fill the sellers limit orders. The end result is that the seller receives a better price than he would if he would have sold at the market. The buyer pays slightly more for being impatient. Its a similar story for traders who want to buy. The put large size up on the offer and hope that someone who sees the large size that wants to sell, will sell at market and right into the buyers standing limit order to buy.

 

If someone puts up size on the bid and has no intentions of buying and is in fact selling and his sole purpose of putting up size on the bid was to lure traders into buying at market so their standing limit sell orders would get filled on the inside, is that manipulation?

 

Well, I think we would need to make a distinction between what is manipulation, and what is just people trying to get the price they want.

 

Here is an analogy: If I were selling an automobile, and the book value was $5,000 but I convinced someone to pay $10,000 for it, I would call that manipulation. My daughter bought a car a few months ago for $4,000. It ran for 2 weeks. The mechanic put $2,000 dollars worth of parts and labor into it. It still wouldn't run. So $6,000 was spent on a car that is worthless. That's price manipulation.

 

It's all about fair value vs. what is paid. Day traders don't calculate fair value. (Maybe some traders do have a way to calculate fair value. I don't know. I don't.)

 

If you are a trader, and your trend line tells you the trend is going up, it doesn't tell you that this security might be worthless. So unless you are a long term value investor who really knows the company and the management, there is a lot of speculation about what the future value is going to be. It's a very murky situation.

 

In the case of the $5,000 car sold for $10,000, the price markup was 200% percent. The bid and ask orders you are talking about probably don't have a markup anywhere near that. So, on the surface, I wouldn't call it manipulation. If it's done, knowing that there are unsuspecting traders who don't know what the real value is, and it is intentionally done as a deceptive act, then it's mild price manipulation. I'm not sure how something like that would be regulated or stopped. Besides, there might be big buyers and sellers who are not worried about the same price ranges that a day trader is looking at. They might be looking at longer term holdings, and are not that concerned with the price movement caused by level two orders over the course of a few minutes.

Share this post


Link to post
Share on other sites
Well, I think we would need to make a distinction between what is manipulation, and what is just people trying to get the price they want.

 

Here is an analogy: If I were selling an automobile, and the book value was $5,000 but I convinced someone to pay $10,000 for it, I would call that manipulation. My daughter bought a car a few months ago for $4,000. It ran for 2 weeks. The mechanic put $2,000 dollars worth of parts and labor into it. It still wouldn't run. So $6,000 was spent on a car that is worthless. That's price manipulation.

 

It's all about fair value vs. what is paid. Day traders don't calculate fair value. (Maybe some traders do have a way to calculate fair value. I don't know. I don't.)

 

If you are a trader, and your trend line tells you the trend is going up, it doesn't tell you that this security might be worthless. So unless you are a long term value investor who really knows the company and the management, there is a lot of speculation about what the future value is going to be. It's a very murky situation.

 

In the case of the $5,000 car sold for $10,000, the price markup was 200% percent. The bid and ask orders you are talking about probably don't have a markup anywhere near that. So, on the surface, I wouldn't call it manipulation. If it's done, knowing that there are unsuspecting traders who don't know what the real value is, and it is intentionally done as a deceptive act, then it's mild price manipulation. I'm not sure how something like that would be regulated or stopped. Besides, there might be big buyers and sellers who are not worried about the same price ranges that a day trader is looking at. They might be looking at longer term holdings, and are not that concerned with the price movement caused by level two orders over the course of a few minutes.

 

Either is fair game. You do not have to sell or buy a security if you do not want to in the market and if you bring money to the market, you should be wise enough to understand how the market participants attempt to get the best price for themselves. You do not have to buy or sell, you can walk away.

 

When you approach a person selling a car, you have every right to check the car over before you buy it to assess whether you want to pay $10k for it. If you do decide to pay 10k for it, that is not price manipulation, it is very good salesmanship if that car is actually only worth $5k. If the individual does not want to let you check it over, then you should walk away.

 

In trading it is our decision that gets us in or gets us out. The market is constantly advertising both sides, attempting to sell us on why it is a good time to act. If we buy the BS, then we probably will end up with a lemon, just like the car buyer.

 

MM

Share this post


Link to post
Share on other sites
Either is fair game. You do not have to sell or buy a security if you do not want to in the market and if you bring money to the market, you should be wise enough to understand how the market participants attempt to get the best price for themselves. You do not have to buy or sell, you can walk away.

 

When you approach a person selling a car, you have every right to check the car over before you buy it to assess whether you want to pay $10k for it. If you do decide to pay 10k for it, that is not price manipulation, it is very good salesmanship if that car is actually only worth $5k. If the individual does not want to let you check it over, then you should walk away.

 

In trading it is our decision that gets us in or gets us out. The market is constantly advertising both sides, attempting to sell us on why it is a good time to act. If we buy the BS, then we probably will end up with a lemon, just like the car buyer.

 

MM

 

Is there any situation that you would call price manipulation? Because I get the impression, that you are saying there is never such a thing as price manipulation. That price manipulation is totally non-existent. Are you implying that there is no such thing as price manipulation?

 

Actually, I could technically agree to that, depending upon how "price manipulation" is defined.

 

Now we are getting deeper into the details and meaning "price manipulation", predator mentality, and what should be allowed or not allowed. And it's not just about trading.

 

I guess what you are saying, is that the deciding factor, is a person's freedom to make the choice or not. If someone held a gun to my head, and said, "You WILL pay $10,000 dollars for this car that is not worth more than $5,000, or I will shoot you in the head." then would it be price manipulation? The person handing over the money, had a severely overwhelming influence to make a decision a certain way. However, even with a gun to your head, and the threat of death, technically, the person paying the $10,000 for the $5,000 car was still making a decision of their own free will. They just might die for their decision. So even in that case, you could say it's not price manipulation, because they could choose to die. I just want to make it very clear to people reading this, that what I just described is not my perspective or mentality towards the situation. I'm trying to point out a possible view point as a way to define, and compare and contrast different perspectives.

 

It's the age old question of "where do you draw the line?". Where I draw the line is: "If it promotes long term, sustainable and constructive behavior, then it's good." The intentions and desires of selling a $5,000 car for $10,000 does not promote long term constructive behavior. There is a high probability that it will cause hardship, difficulty, anger, feelings of injustice, feelings of revenge, hatred and conflict. So far, situations like selling a $5,000 car for $10,000 haven't stopped the world from turning, or caused the human race to go into decline, or disappear. The case could actually be made, that predation and excessive gains at another person's expense, is actually good for the long term survival of the human race. Kill off and suppress some of the population for the greater good. Unfortunately, things like predation, usury, exploitation, manipulation and abuse don't seem to be forecasting a very good end to the human race. Ultimately, it's not going to end well.

Edited by Tradewinds

Share this post


Link to post
Share on other sites

interesting side note on market manipulation....

at most exchanges its deemed inappropriate or out right illegal. Putting in false bids and offers (spoofing) to lure people into trading. Many operators and brokers have been pulled up on that by the regulators.

 

However if you look at the recent advances in algorithmic trading thats is exactly what they are generally designed to do....flush out orders and snip snip snip between them.....and yet the exchanges dont seem to think that this is market manipulation. :)

 

From an old school perspective, and many of my colleagues agree....its exactly the same. Its just that in the old days the operator was a human, and now its a computer.

 

However on saying that, I dont watch volume, I dont care about the numbers of buyers and sellers showing as I know that the market is formed only by the price action of the trades.....and so the market manipulation side of it is irrelevant to me. My view is if you are showing in the market and are live then it irrelvant until you trade.....ever had the problem of being in the cue and not getting set at the low, even though it traded there....?

potential means nothing, deal with the reality.

 

(This also ties in with my ideas of the market that they can go up and down based on a lack of traders on the other side - sort of like a vacuum. (others say the same things but in different ways)

example; trading the SPI (Australian equity market futures index) look at a 1 min chart recently. Even though the market has been going down the last week, the index often fell slowly, and yet got sucked up very quickly - say 30 mins to fall 30 ticks, and then rallied back 20 ticks in 4 mins.)

Share this post


Link to post
Share on other sites

A mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them. In finance, a predator instinct would relate to instances in which individuals gravitate to the same or similar investments, based almost solely on the fact that many others are investing in those stocks. The fear of regret of missing out on a good investment is often a driving force behind herd instinct.

Share this post


Link to post
Share on other sites
Does predatory activity happen in the market all the time? Does a predatory mindset help in trading?

 

I think that adapting a mentality of being ruthless, predatory, opportunistic and stalking your "prey" may help some people be more successful at trading. I get the impression that some traders take on this mentality, and this point of view as a strategy to put themselves into a mental state that helps them to be more objective and disciplined in their trading.

 

I'm not saying it doesn't work. And I'm not saying that I wouldn't, sort of, engage in those things myself when trading. I guess I would practice opportunistic and "predatory" strategies in the sense that it will make a profit.

 

Is this view of trading good in the long term? Can it affect your life outside of trading? Is it morally right or wrong?

 

Personally, I have a mixture of feelings about the whole investment industry, how it works, who it benefits, and what the implications are for the predators and the victims.

 

But let's hear what you have to say.

 

I remember someone advising me to trade as a crocodile, meaning a predator will wait for a sure catch and will not try to run everytime a protential prey is around. Spare your strength (account) because it costs everytime you use it.

Share this post


Link to post
Share on other sites
I remember someone advising me to trade as a crocodile, meaning a predator will wait for a sure catch and will not try to run everytime a protential prey is around. Spare your strength (account) because it costs everytime you use it.

I can't remember the actual statistic from National Geographic, but they still miss something like 75% of the time.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Nice way to start! Don't get used to it haha. Netted 2.28R. However, I made a mistake with my position size calculation and accidentally only entered at 91.4% of the size I intended, so based on the actual risk rather than the intended risk, this trade was about a 2.5R winner.
    • Potential EUR/JPY short
    • 27 IS NOT 10 27 More Hilarious Spelling Mistakes That People On Twitter Can’t Stop Making By Michael Koh, February 8th 2014   31.4k             I just can’t believe that these men and women do not use spell check on their phones. I mean, doesn’t it come pre-enabled? They must be pretty confident in their spelling abilities! Here’s more spelling mistakes on Twitter for your enjoyment. Read the original 27 post here. 1. “apidimi” This word is seriously the epitome of all that is wrong with not spell checking. 2. “…winey” Wait, when they’re saying “winey” voices, do they mean drunk voices? 3. “…go to collage” You can’t go to collage, you make ’em. 4. “…barley…” Barley is a great source of fiber, I think. Right? 5. “Aifel Tower” 6. “corn roads” I’m just shaking my head right now. 7. “I’m a genious” 8. “sillowet “ 9. “human bean” *bangs head on desk* 10. “fake an organism” 11. “mysery “ 12. “lewbuttons” 13. “klamidia” 14. “flaming young” 15. “seizure salad” 16. “quarterroys” 17. “alluminati” 18. “…dairy air” 19. “…aliterate” 20. “sellulite” 21. “masterbait” Goddamn, people, TMI. T.M.I. 22. “subliminol” 23. “dognuts” 24. “…raping presents…” 25. “ginger rale” 26. “kukies” 27. “alphet” They mean outfit. There, I saved you the trouble of trying to figure it out. image – Twitter   Funny Humor Informative List LMAO Spelling Mistakes The Digital Age The Internet Twitter    
    • This took the article right out of my idea. There's always someone quicker than you though. Dont forget to like and subscribe I know you cant get your replies in quick enough these days but keep trying. Scraping the hull: Ridding your organization of barnacles Award-winning author Gary Conner is president of Lean Enterprise Training. 5-6 minutes   Editor's Note: A version of this article previously appeared in the March 2004Lean Into It newsletter. What do barnacles and lean manufacturing have in common? Let me explain. Barnacles are a form of sea life that everyone's heard of but probably knows little about. Many different types exist, but let's talk about the type of barnacles that attach themselves to ships. These crustaceans are roughly the size of a quarter, and they attach themselves to a host (ship) for life. The adhesive properties of the cement that they excrete are amazing. This small animal glues itself to a host with a compound so strong that it could hold the weight of a compact car (2,500 pounds). Estimated costs associated with speed loss (caused by increased drag) and increased fuel consumption resulting from these marine mollusks' growth on ship hulls are an astronomical $1.4 billion per year. "Fouling," as it is referred to, can contribute to an increase in fuel consumption of up to 7 percent after only one month and 44 percent after six months (Swedish International Development Authority, 1986). For ships, the traditional remedy has been a regular visit to the dry dock. There, barnacles and other organisms are scraped or sandblasted off the hull, which is then covered with a coat of antifouling paint designed to discourage their return. As long as 2,000 years ago, hulls were sheathed with lead and smeared with concoctions of oil laced with sulfur and arsenic. In 1625 a lethal recipe combining arsenic, copper, and gunpowder was considered worthy of an English patent as an antifouling compound. The danger for shipping companies is that the barnacles are hidden below the water line. Out of sight, out of mind. The only indication that fouling has occurred is the vessel's reduced performance. Barnacles-Non-value-added Activities Parallel Could our companies be fouled—slowed down or consuming resources unnecessarily— by barnaclelike behaviors? How do we "scrape the hulls" of our organization to ensure smooth, unrestricted, and cost-efficient advancement? Barnacles can be likened to the non-value-added activities we perform every day. During a kaizen event at a client company in Nevada, we performed a value-added, non-value added (VA-NVA) observation of a sawing process. The operator was a large man (325-plus pounds). He was working in 95-degree-F heat and wearing a shop coat over his coveralls. This poor man was sweating profusely, to the degree that I was worried about his health. The initial observation showed that he was able to spend only 19 percent of his day in a value-adding mode. Eighty-one percent of his day was spent on either necessary non-value-added tasks (things like paperwork and stacking parts), or, worse yet, unnecessary non-value-added tasks (activities like looking for a supervisor or a pallet). After the kaizen team rearranged his work area, developed a new work standard, and set his operation up to run at takt time, this worker produced three times as many parts. He now spent well over 60 percent of his time in pure value-added activities (still room for improvement). At the time of our kaizen presentation, he was unaware that he was producing 200 percent more material through his two saws. Before we told him about the documented improvement, we asked him if the new layout and new work steps were easier or harder. He expressed a great deal of satisfaction with the new process, describing it as "so much easier than before." He was producing three times as much, with less effort. Kind of like pushing a ship through water with less effort because the barnacles had been scraped off. Nondiscriminating Suckers Organizational barnacles can grow anywhere. Engineering, order entry, purchasing, finance, and, of course, the production departments may need to be put into "dry-dock" and examined for non-value-added activities. A fabrication team VA-NVA examination found that 25 percent of its time was spent in non-value added activities. For this $14M company, this meant $3.5 million worth of potential sales opportunity was being left on the table each year. Interestingly, after a ship has had barnacles removed, the entire hull must be treated to inhibit barnacle regrowth. So it is with organizations; sustainment is by far the hardest part of improvement. Changing the behaviors of the individuals who comprise the organization is necessary to avoid reverting back to non-value-added activities. Continuous Improvement Kaizen must become a way of life, and one trip to the dry dock will not create a barnacle free ocean or organization. Continuous improvementis not just a program title, it is a verb, and verbs demand action. I'm sure that scraping barnacles off a ship isn't easy work, but the rewards of improved performance and reduced costs must be worth it, because every viable shipping company in the world does it. So, where will you start scraping?
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.