Lamentations on Chemistry

Wow!! It is unbelievable! Since wednesday, 1/10/07 Engelhard Material Services, a subsidiary of BASF Catalysts, has offered ruthenium at US$700 per troy ounce.  It is astounding. The rationale is that physical demand outstrips supply.  Gold bobs up and down with the market noise at US$621, platinum plods along at $1140, and perky rhodium is up to $5850. 

Gotta think that this is hard on the people doing ruthenium metathesis processing. I’m sure that end-users are scrutinizing their technology.  If it is truly physical demand that is doing this, I’ll guess that the price may stay high for a long time.  Zowie!

Update-  I have already commented on one possible reason for the uptick in Ru pricing.  The overall cause may be the overlap of many influences.  Given that Ru does not have significant Jewelry applications, and it has not been the subject of a lot of PGM investor speculation (like Pt, Pd, or Au) in the past, the cause seems to be actual physical demand. In other words, someone out there needs a large amount of this metal for some application. At some point the price will probably be influenced by speculators to a large degree, if not already.  Others are more tied into this than I am.  Try looking at Johnson Matthey or BASF Catalysts (formerly Engelhard). 

In some ways a company in it’s early years is like a stem cell.  It has the capacity to grow into many types of organizations. At some critical juncture a signal comes along that points it one direction or another. It can grow into a free form organization like the legendary Silicon Valley startups where imagination is expected, there are free cokes in the fridge, and there are open spaces where employees can toss Nerf balls. On the other extreme are organizations that wear a more grim decorum.  My experience has been that the petroleum and automotive industries are a little tighter in the puckerstrings.  Companies evolve in response to their circumstances and in response to the people who run them.

As a company grows, it has to take on more people to manage the workload. But a bigger head  count means more degrees of freedom; that is to say, there are more nodes in any given decision tree; more ways of doing things; more preferences to be managed.  A bigger head count means that more failure modes are possible. More ways of having a disaster.  More ways of having people problems.

In response to this, even the most well intended business founder must develop systems to contain and direct the energies of its people. Some people naturally pitch in and contribute to the good of the whole. Others specialize in gaming the system to their advantage.  But the overall tone of any organization is set by the leaders.  Some are old testament and others are new testament.  Some require stonings and blood sacrifice and others use the redemption approach.

Business isn’t just an math exercise. There is a lot of anthropology to it. Unfortunately, anthropology isn’t on the curriculum of most MBA programs.  MBA’s worry me. They seem to be hustling the rest of us into an Orwellian future with methodologies taught by faculty that may not have actually been business people. 

Readers may doubt the merits of this conclusion.  But, wait until you take a personality profile test to qualify for promotion or a job.  The examiner will sit you down afterwards and tell you that the numbers say that your path has already been determined by this profile.  What do you think the psychology graduates have been doing the last 30 years? Not all of them have been doing marriage counseling all this time. Many have been developing these test “instruments” for consultants and HR departments.  It’s a scary world.