European Parliament 16 april 2007 1 Marc Luyckx Ghisi A NEW ROLE FOR THE BANKS IN THE EUROPE OF THE FUTURE Marc LUYCKX GHISI Dean of Cotrugli Business

European Parliament 16 april 2007 European Parliament 16 april 2007

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Marc Luyckx Ghisi Marc Luyckx Ghisi

A NEW ROLE FOR THE BANKS A NEW ROLE FOR THE BANKS IN THE EUROPE OF THE IN THE EUROPE OF THE

FUTUREFUTURE

Marc LUYCKX GHISIMarc LUYCKX GHISIDean of Cotrugli Business AcademyDean of Cotrugli Business Academy

FoForrmer member of the EU “Forward Studies mer member of the EU “Forward Studies Unit”Unit”


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CHAPTER 1:CHAPTER 1:

EU ECONOMY IN A TIME EU ECONOMY IN A TIME OF DEEP TRANSFORMATIONOF DEEP TRANSFORMATION

Marc Luyckx Ghisi Marc Luyckx Ghisi European Parliament 16 april 2007 European Parliament 16 april 2007

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P. Drucker: TransformationP. Drucker: Transformation

Every few hundred years in Western History Every few hundred years in Western History there occurs a sharp transformation. there occurs a sharp transformation.

Within a few short decades, society Within a few short decades, society rearranges itself : its worldview (paradigm), rearranges itself : its worldview (paradigm), its basic values, its social and political its basic values, its social and political structures, its arts, its key institutions. structures, its arts, its key institutions.

Fifty years later there is a new world.”Fifty years later there is a new world.”

Peter DRUCKER: Peter DRUCKER: “Post Capitalist Society”.“Post Capitalist Society”. Butterworth Heinemann, 1993, 2001, Butterworth Heinemann, 1993, 2001, p.1.p.1.


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One of the most fundamental One of the most fundamental shiftsshifts• ““We are living through one of the most We are living through one of the most

fundamental shifts in History: a change in fundamental shifts in History: a change in the actual belief structure of Western the actual belief structure of Western Society. No economics, political or military Society. No economics, political or military power can compare with the power of a power can compare with the power of a change of mind. By deliberately changing change of mind. By deliberately changing their images of reality, people are changing their images of reality, people are changing the world.” the world.”

Willis HARMAN Stanford Research Institute Willis HARMAN Stanford Research Institute (+1997)(+1997), Founder of the , Founder of the “World Business “World Business Academy”Academy”


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Transformation’s five levelsTransformation’s five levels

1.1. Humanity is in danger of collective Humanity is in danger of collective death death

2.2. End of the Patriarchal values (CCC)End of the Patriarchal values (CCC)3.3. End of modernity---Transmodernity= End of modernity---Transmodernity=

post secular, flat, tolerant, new level of post secular, flat, tolerant, new level of responsibility and consciousness.responsibility and consciousness.

4.4. Knowledge society as a turbo of changeKnowledge society as a turbo of change5.5. Crisis of all institutions. EU = Crisis of all institutions. EU = the First the First

transmodern structuretransmodern structure worldwide... worldwide...


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Transmodern Business

Knowledge SocietyTRANSMODERN

Danger

Industrial leftovers who have not grasped the changeAgrarian

premodern

Agrarianleftovers

Culturalcreatives

IndustrialMODERN

Sept. 11, 2001?

New Women-Men Partnership Society

End ofPatriarchal Society

Transmodern Business

Knowledge SocietyTRANSMODERN

Danger

Industrial leftovers who have not grasped the changeAgrarian

premodern

Agrarianleftovers

Culturalcreatives

IndustrialMODERN

Sept. 11, 2001?

New Women-Men Partnership Society

End ofPatriarchal Society

Transition to Transmodern

Death ?


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NEW POLITICS AND NEW NEW POLITICS AND NEW ECONOMY ARE THERE...ECONOMY ARE THERE...

• We have at our disposal, We have at our disposal, a new political a new political structurestructure (transmodern) w (transmodern) whhiicch is the h is the EU. But unfortunately we still continue EU. But unfortunately we still continue to consider EU with “modern” eyes...to consider EU with “modern” eyes...

• We have We have a new economya new economy in our hands in our hands (=Lisbon strategy), but we tend to (=Lisbon strategy), but we tend to consider it with consider it with “industrial“industrial”” eyeseyes......


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CONSEQUENCE: CONSEQUENCE: POLITICAL CHOICES (I)POLITICAL CHOICES (I)

• EU should be presented as the 1° EU should be presented as the 1° Transmodern political project of the XXI° Transmodern political project of the XXI° century.century.

• Politicians should dear to say that we are like Politicians should dear to say that we are like at the beginning of at the beginning of a political a political Renaissance...Renaissance...

• They should call people to reflect worldwide They should call people to reflect worldwide on the new sustainable structures of the on the new sustainable structures of the future in the Knowledge economy. (Lisbon future in the Knowledge economy. (Lisbon Strategy !)Strategy !)


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CONSEQUENCE: CONSEQUENCE: ECONOMIC CHOICES (I)ECONOMIC CHOICES (I)

• Politicians and economist should have the Politicians and economist should have the courage to say that we are not anymore in courage to say that we are not anymore in the industrial capitalist period.the industrial capitalist period. (max 50%) (max 50%)

• We are already We are already (50%) (50%) in the knowledge in the knowledge economy which is post capitalist (Drucker).economy which is post capitalist (Drucker).

• But nobody dears to say the truth to the But nobody dears to say the truth to the citizens. Acitizens. Althoughlthough they know it .... they know it .... subconsciously.subconsciously.


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CONSEQUENCE: CONSEQUENCE: ECONOMIC CHOICES (II)ECONOMIC CHOICES (II)

• And this “knowldege And this “knowldege eeconomy” (Lisbon conomy” (Lisbon Strategy of the EU 2000-2010), Strategy of the EU 2000-2010), has to has to be be oriented towards sutainability and social oriented towards sutainability and social inclusion. inclusion. (Goteborg and Barcelona Summits)(Goteborg and Barcelona Summits)

• A debate with the citizens is needed and A debate with the citizens is needed and urgent. urgent.

• But this presupposes that the economists and But this presupposes that the economists and politicians understand the transition from the politicians understand the transition from the “free trade” industrial vision to a new “free trade” industrial vision to a new ““knowledge economyknowledge economy”” approach. approach.


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CHAPTER 2:CHAPTER 2:

WHAT IS KNOWLEDGE WHAT IS KNOWLEDGE ECONOMICS?ECONOMICS?

((Level 4! )Level 4! )


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DEFINITIONSDEFINITIONS

• Data:Data: what is on the web, unorganised what is on the web, unorganised

• Information:Information: is already sorted by is already sorted by google. google. Overabundance.Overabundance.

• Knowledge:Knowledge: is digested by is digested by human brain. human brain.

• Human brain and networks are the Human brain and networks are the NEW TOOLS of PRODUCTIONNEW TOOLS of PRODUCTION

• WisdomWisdom, Knowledge are , Knowledge are rare. Not rare. Not enough. enough.


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A A NEW WORLDNEW WORLD......

1.1. New tool of productionNew tool of production : : human brainhuman brain2.2. New CEONew CEO: Enabling creativity and sharing, Caring : Enabling creativity and sharing, Caring

for humans = new for humans = new human-centeredhuman-centered management management3.3. New value creation process : New value creation process : adding K to K.adding K to K.4.4. New TradeNew Trade: from : from Free TradeFree Trade to to Free SharingFree Sharing5.5. New measurementsNew measurements = = qualitative “qualitative “intangibles”intangibles” 6.6. New strategyNew strategy: beyond war: : beyond war: win-win win-win not win-loosenot win-loose7.7. New definition of ProgressNew definition of Progress = qualitative = qualitative8.8. Beyond patentingBeyond patenting towards towards “Open Source”“Open Source”9.9. Beyond pyramidsBeyond pyramids towards towards networksnetworks10.10.Capitalizing on Capitalizing on cultural cultural capital + capital + gendergender capital capital


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TWO SCENARIOSTWO SCENARIOS

• Post industrial -Post industrial -capitalist Vision: capitalist Vision: human capitalhuman capital

• Human Human centerednesscenteredness

• Real RespectReal Respect

• Machine at service Machine at service

• Keeping the Keeping the industrial vision: industrial vision: machine+€+patentmachine+€+patent

• Manipulation of Manipulation of Human MindHuman Mind

• Engineering of Engineering of Human MindHuman Mind

• Machine is FirstMachine is First


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1. NEW TOOL OF 1. NEW TOOL OF PRODUCTION PRODUCTION The tool of production is not The tool of production is not

anymore machine + technol.+ €anymore machine + technol.+ € It is human brain = Networks sharing It is human brain = Networks sharing

knowledge in order to create new K. knowledge in order to create new K. This This new tool of productionnew tool of production is more is more

important than important than capitalcapital and and technoltechnol. . Hence Post capitalist society!Hence Post capitalist society!


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2 NEW CEO FUNCTION2 NEW CEO FUNCTION

• Old CEO: command, control, captureOld CEO: command, control, capture

• New CEO: New CEO: – enableenabless the creativity of his “human the creativity of his “human

capital”= tool of Productioncapital”= tool of Production– EnableEnabless and create and createss networks around networks around

his team. Cannot control networks!his team. Cannot control networks!– Care for the intangible assetsCare for the intangible assets = brand= brand


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2. CEO AND NEW 2. CEO AND NEW MANAGEMENTMANAGEMENT

• Human capital is central because it is Human capital is central because it is the NEW tool of production: Please the NEW tool of production: Please come back! come back!

• Thus Thus Management : shifts 180° Management : shifts 180° towards human centeredness = towards human centeredness = more creativity-centred, gender & more creativity-centred, gender & culture – centred.culture – centred.


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3. 3. NEW VALUE CREATION NEW VALUE CREATION PROCESPROCES

• INDUSTRIAL SOC.INDUSTRIAL SOC.

• Add value to objectAdd value to object

• From steel to car !From steel to car !

• Tool is MachineTool is Machine

• Humans are costHumans are cost

• Management is Management is machine-centeredmachine-centered

• Machine is centralMachine is central

• KNOWLEDGE SOC.KNOWLEDGE SOC.• Create new K Create new K • From data, info to KFrom data, info to K• Tool is Human brain Tool is Human brain

in Networksin Networks• Humans are capitalHumans are capital• Management is Management is

Human-centeredHuman-centered• Machine is at Machine is at

serviceservice


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4. 4. BEYOND TRADE (I)BEYOND TRADE (I)

• If I exchange an object against money, If I exchange an object against money, I loose the object. This is “trade”: I win I loose the object. This is “trade”: I win and I loose. “Win-Loose” logicand I loose. “Win-Loose” logic

• If I exchange knowledge, If I exchange knowledge, I do not loose I do not loose my knowledge. my knowledge. I win and you win. I am I win and you win. I am not trading anymore. I share. This is a not trading anymore. I share. This is a ““win-win logic” of sharing.win-win logic” of sharing.


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4. 4. BEYOND TRADE (II)BEYOND TRADE (II)

• ININDUSTRIALDUSTRIAL SOC. SOC.

• Free trade Free trade of objectsof objects

• Industrial structureIndustrial structure

• PyramidsPyramids

• UnemploymentUnemployment

• PollutionPollution

• Quantitative growthQuantitative growth

• KNOWLEDGE SOC.KNOWLEDGE SOC.

• Free sharing of knowl.Free sharing of knowl.

• PoPost-industrialst-industrial--capitalistcapitalist. .

• Network =value Network =value creationcreation

• SSelf-creation of elf-creation of my my jobjob

• Immetrialization of Immetrialization of prod.prod.

• Qualitaitve growthQualitaitve growth


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5. 5. AA NEW NEW SYSTEM OF SYSTEM OF MEASUREMENTSMEASUREMENTS

• « Intangible assets » is a new « Intangible assets » is a new concept invented by Karl Erik SVEIBY concept invented by Karl Erik SVEIBY (Sweden)(Sweden)

• They are becoming more and more They are becoming more and more important in the knowledge societyimportant in the knowledge society

• IF EU economy is 45% in the IF EU economy is 45% in the knowledge eonomy, knowledge eonomy, intangibintangibles les account for 45% !account for 45% !..


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5. 5. AA NEW NEW SYSTEM OF SYSTEM OF MEASUREMEASURE.. INTANGIINTANGIBLE BLE

ASSETS (I)ASSETS (I)• Intangibles assets = Intangibles assets =

– Know how, Know how, – Reputation, Reputation, – Trust in the company, Trust in the company, – Structure of the company, Structure of the company, – Strategy (balanced scorecards)Strategy (balanced scorecards)– Relations with personnel, Relations with personnel, – Relations with clients,Relations with clients,


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5. 5. AA NEW NEW SYSTEM OF SYSTEM OF MEASUREMEASURE.. INTANGIINTANGIBLE BLE

ASSETS (II)ASSETS (II)• Relation with civil societyRelation with civil society

• Relation to environment Relation to environment

• Relation to our collective Future and Relation to our collective Future and sustainabilitysustainability

• But also But also quality of the Networksquality of the Networks


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5. M5. MEASURING INTANGIBLE EASURING INTANGIBLE ASSETS ASSETS ??

• Stock exchange measurements are still Stock exchange measurements are still looking at financial “tangible” assets looking at financial “tangible” assets (quantitative) but they increasingly look at (quantitative) but they increasingly look at “intangible” assets (qualitative). “intangible” assets (qualitative).

• Today a company is measured more and Today a company is measured more and more by its intangible assets. more by its intangible assets.

• Example: “Example: “Men’s WearMen’s Wear” USA. & “” USA. & “World World Business Academy”, “Spirit in Business”.Business Academy”, “Spirit in Business”.

• See also Neskey: See also Neskey: www.neskey.comwww.neskey.com

http://www.neskey.com/


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5. Intangible indicators grow5. Intangible indicators growT

rans

par

en

cy

ICT Proliferation

Financial indicators remain important

Non-financia

l indica

tors

grow in im

portance

Potential for greaterparticipation and

wider accountability

1990 2006 2015


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5. 5. GROWING IMPORTANCE GROWING IMPORTANCE OF INTANGIBLE ASSETS (II)OF INTANGIBLE ASSETS (II)

0%

10%

20%

30%

40%

50%

60%

70%

80%

1980 2006 2010 2020

Tangible

Intangible


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6. NEW BUSINESS STRATEGY/ 6. NEW BUSINESS STRATEGY/ WIN-WINWIN-WIN

• Old business strategy is warlike. Battlefield Old business strategy is warlike. Battlefield images are frequent. Patriarchal values images are frequent. Patriarchal values dominate: “win-loose”dominate: “win-loose”

• New business strategy: much less violent, New business strategy: much less violent, “competition through collaboration” is the “competition through collaboration” is the new motto.new motto.

• There could be a conflict between 2 There could be a conflict between 2 visions of competition inside the EU, and visions of competition inside the EU, and the Commission...the Commission...

• Knowledge behaves like love!Knowledge behaves like love! Capital Capital NOT !NOT !


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7. NEW DEFINTION OF 7. NEW DEFINTION OF PROGRESSPROGRESS

• The industrial & modern defintion of The industrial & modern defintion of progress is quantitative. More is better.progress is quantitative. More is better.

• This defintion is UNSUSTAINABLEThis defintion is UNSUSTAINABLE

• The knowledge society implies a The knowledge society implies a qualitative qualitative defintion of progress.defintion of progress.

• Good new this allows a reorientation of Good new this allows a reorientation of our societies towards sustainability!!our societies towards sustainability!!


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8. BEYOND PATENTING8. BEYOND PATENTING

• The whole of the industrial production The whole of the industrial production system is based on secrecy and patenting. system is based on secrecy and patenting. I have this technology and you have not. I have this technology and you have not. So I win!So I win!

• ““Information and knowledge always leak”Information and knowledge always leak”

• In the knowledge economy we will NOT be In the knowledge economy we will NOT be able to maintain secrecy, neither able to maintain secrecy, neither patenting. patenting.

• See generic medecines, I-Pod music etc,.See generic medecines, I-Pod music etc,.


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9. BEYOND PYRAMIDS TOWARDS 9. BEYOND PYRAMIDS TOWARDS NETWORKS NETWORKS

Pyramids are the « normal » Pyramids are the « normal » structure of all organizaions.structure of all organizaions.

But knowledge is created only in But knowledge is created only in networks. This is the form that networks. This is the form that could prevail in the XXIst century.could prevail in the XXIst century.

Pyramids are all in crisis Pyramids are all in crisis everywhere. In Govenrments, everywhere. In Govenrments, Military, Churches, NGO etc.Military, Churches, NGO etc.


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10. CAPITALIZING ON 10. CAPITALIZING ON CULTURAL AND GENDER CULTURAL AND GENDER

CAPITALCAPITAL• Paradoxically culture and gender Paradoxically culture and gender

diversity becomes important as they diversity becomes important as they feed creativityfeed creativity

• The knowledge management is thus The knowledge management is thus potentially socially inclusive and potentially socially inclusive and sustainablesustainable

• The Lisbon strategy wsa thus The Lisbon strategy wsa thus excellent and forward looking.excellent and forward looking.


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CONCLUSION CONCLUSION : : NEW NEW VALUES…VALUES…• Underlying values needed in the Underlying values needed in the

industrial capitalist society are industrial capitalist society are freedom, initiative, ceativity…freedom, initiative, ceativity…

• NEW Values are needed: NEW Values are needed: – Freedom (of sharing) beyond patents...Freedom (of sharing) beyond patents...– Solidarity, Caring, Respect for the Earth..Solidarity, Caring, Respect for the Earth..– 360° Transparency360° Transparency– Concern for our Common Good and futureConcern for our Common Good and future


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CHAPTER 2:CHAPTER 2:THE BANKS IN THIS THE BANKS IN THIS

KNOWLEDGE ECONOMYKNOWLEDGE ECONOMY


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EXAMPLE: ANZ BANKEXAMPLE: ANZ BANK

• Australia New Zealand Bank had problems Australia New Zealand Bank had problems of credibility... See of credibility... See http://www.anz.com/aus/values/message.ahttp://www.anz.com/aus/values/message.aspsp

• The CEO has embarqued in Corporate The CEO has embarqued in Corporate Social responsibility, Sustainability and Social responsibility, Sustainability and Human capital enhancement.Human capital enhancement.

• Meditation has been offered to each Meditation has been offered to each empoyee..empoyee..

• ANZ has received an award of “Spirit in ANZ has received an award of “Spirit in Business” association...Business” association...

http://www.anz.com/aus/values/message.asp

http://www.anz.com/aus/values/message.asp


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BANKS IN THE KNOWLEDGE BANKS IN THE KNOWLEDGE ECONOMYECONOMY I I

• In the Knowledge economy, In the Knowledge economy, intangible assets (personnel, intangible assets (personnel, customers, sustainability, and social customers, sustainability, and social inclusion...) are becoming 50% of the inclusion...) are becoming 50% of the assets.assets.

• What distinguishes What distinguishes your Bank your Bank from from others are mainly the others are mainly the intangible intangible assetsassets


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BANKS IN THE KNOWLEDGE BANKS IN THE KNOWLEDGE ECONOMY IIECONOMY II

• In the industrial economy Banks were In the industrial economy Banks were acustomed to look only at tangible acustomed to look only at tangible assets.assets.

• This is not enough todayThis is not enough today

• One One mustmust also look at the intangible also look at the intangible assetsassets


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BANKS IN THE KNOWLEDGE BANKS IN THE KNOWLEDGE ECONOMY IIIECONOMY III

• In the industrial economy we were in In the industrial economy we were in an an “offer economy” : ““offer economy” : “Buy my new Buy my new gadget !”gadget !”

• In the knowledge economy we are In the knowledge economy we are entering into an entering into an “Demand economy”.“Demand economy”.

• This means that the Banks will be This means that the Banks will be obliged to respond the obliged to respond the implicit implicit demanddemand of the citizens worldwide. of the citizens worldwide.


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BANKS IN THE KNOWLEDGE BANKS IN THE KNOWLEDGE ECONOMY 4ECONOMY 4

• CitizensCitizens implicitly implicitly demand: demand:– HUMAN VALUES and friendlinessHUMAN VALUES and friendliness– SUSTAINABILITY Is your/our Bank “part of the SUSTAINABILITY Is your/our Bank “part of the

problem” of “part of the solution”?problem” of “part of the solution”?– SOCIAL INCLUSION: Is the Bank helping the poor?SOCIAL INCLUSION: Is the Bank helping the poor?– WISDOM: WISDOM:

• Citizens want also to spend in an intelligent way Citizens want also to spend in an intelligent way avoiding the gadgets and stupid spending. Can the avoiding the gadgets and stupid spending. Can the Bank help? Bank help?

• Citizens want to make “good” and wise investments.Citizens want to make “good” and wise investments.

– TRANSPARENCY: Is the Bank honest and TRANSPARENCY: Is the Bank honest and transparent?transparent?


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CONCLUSIONCONCLUSION

• Banks may choose the “manipulation” scenarioBanks may choose the “manipulation” scenario• If they choose the “human centered-If they choose the “human centered-

sustainable” path, they should improvesustainable” path, they should improve1.1. Human values with personnel and clientsHuman values with personnel and clients2.2. Clear actions for sustainabilty and social inclusionClear actions for sustainabilty and social inclusion3.3. Real and efficient help towards WISE investmentsReal and efficient help towards WISE investments4.4. 360° transparency360° transparency

• This is a question of survival.This is a question of survival.• Otherwise other Banks will do it Otherwise other Banks will do it (ANZ ?) (ANZ ?) and and

invade the EU market with a new imageinvade the EU market with a new image


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Some good Books…Some good Books…

• Peter DRUCKER: “Peter DRUCKER: “Post capitalist societyPost capitalist society”, ”, Harper Business, New York, 1993.Harper Business, New York, 1993.

• Verna ALLEE: “Verna ALLEE: “The future of knowledge” The future of knowledge” Elsevier Science, 2003, USA.Elsevier Science, 2003, USA.

• Harvard Business Review on Harvard Business Review on Knowledge Knowledge management.management. 2006. Book with 8 articles. 2006. Book with 8 articles.

• Paul T KIDD (ed.): “Paul T KIDD (ed.): “European visions for European visions for the Knowledge Age: a quest for new the Knowledge Age: a quest for new horizon in the information society”horizon in the information society” Cheshire Henbury, UK, 2007.Cheshire Henbury, UK, 2007.


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Good Books (II)Good Books (II)

• Jeremy RIFKIN: “Jeremy RIFKIN: “The European Dream: The European Dream: when Europe’s vision of the future is when Europe’s vision of the future is silently eclipsing the American dream” silently eclipsing the American dream” Penguin 2004.Penguin 2004.

• Ray ANDERSON: “Ray ANDERSON: “Mid Course correctionMid Course correction” ” 1998. 1998. www.chelseagreen.comwww.chelseagreen.com (Interface) (Interface)

• World Business Academy: World Business Academy: www.worldbusiness.orgwww.worldbusiness.org

• ““Neskey” on intangible measurements : Neskey” on intangible measurements : www.neskey.comwww.neskey.com

http://www.chelseagreen.com/

http://www.worldbusiness.org/

http://www.neskey.com/

Documents

European Parliament 16 april 2007 1 Marc Luyckx Ghisi A NEW ROLE FOR THE BANKS IN THE EUROPE OF THE FUTURE Marc LUYCKX GHISI Dean of Cotrugli Business