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Jaap Winter The Limits of Control

Jaap Winter The Limits of Control. A gentle breeze. 2. Grew into a perfect storm. 3. Disaster averted by massive state aid. 4. But all was fine for some. 5. On to the next crisis. 6. Who can we blame ?.

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Jaap Winter The Limits of Control

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  1. Jaap Winter The Limits of Control

  2. A gentlebreeze 2

  3. Grewinto a perfect storm 3

  4. Disasteravertedbymassive state aid 4

  5. But all was fine forsome 5

  6. On to the next crisis 6

  7. Whocan we blame? BankersNon-ExecutivesRegulators Credit rating agenciesRemuneration Consultants ShareholdersConsumersAdvisersAcademics The Market The Government 7

  8. Shaggy defence 8

  9. Let’sfix the system • Separate commercial from investment banking (ring-fencing) • European supervision on banks • European Systemic Risk Board • Restrict and restructure remuneration • Expertise requirement non-executives • New risk management • More transparancy • Prohibit naked short selling • Pension system review • Product approval 9

  10. System building andchanginggivesanessential but false sense of control 10

  11. Blamingothersand the system avoidslooking at ourselves 11

  12. Keysystemic building blocks (institutions): rulesand incentives 12

  13. The Paradox of Rules: more rules (incl procedures, policies, control mechanisms, enforcement, punishment) reduceourresponsibilityto compliance responsibility • Barry Schwartz (ted.com): • more and more rules chip awayourmoralskills • Impairourjudgement 13

  14. Anotherproblemwithrules • Illusion of implasticity of ourbehaviour • 90% of innovation in financial industry is ‘regulatoryinnovation’ 14

  15. Rules are scaffoldingthatallowsustobuild 15

  16. Andscaffoldingcanbeweak 16

  17. Incentives corrupt Perverse Crowd out motivation Cheat andlie Schwartz: more and more incentives destroyourmoralwill 17

  18. Anddon’twork the way we think • Constrictourcognitive skills, justwhen we needthem Pink: Drive, the suprisingtruthDan Ariely aboutwhatmotivatesus 18

  19. A reminder: the law of diminishingmarginalutilityappliestoinstitutions as well First law of Gossen Goodsandinstitutions Organisationsand Society at large 19

  20. Organisationis often more like a sailboat 20

  21. Thanlike a speedboat 21

  22. We needtoresist the standard leadership reflex “We willensurethatthiswillnot happen again” 22

  23. Andoururgeto control 23

  24. Control Department Risk • Outsourcing risk: diminishesownresponsibility • Over-control: dissatisfactionand end of enterpreneurship • Behaviourtranslated in technical procedures, language, policies: remotenessdiminishesresponsibility 24

  25. Needto get (back) to the heart of the matter: whatit means tobe human 25

  26. Whatmotivatesus 26

  27. Whatmakesusresponsible: abletorespond Francis Bradley (1876) My station anditsduties 27

  28. Shared languageof Integrity • Michael Jensen, Steve Zaffron • HonouryourWord • keep your word, or • say youwillnot as soon as youknowandsolveresultingproblems of others • Effectiveness • Habitus • Common language • call to account • Response-ability • Serenity 28

  29. CanControl handle soft controls? 29

  30. BeingHuman is practicing • Aristotel • Virtueethics, practical wisdom • Thomas Acquinas • Habitus • Benjamin Franklin • Daily practice • Peter Sloterdijk • Denn da istkeine Stelle, die dich nicht • sieht. Du musst dein LebenÄndern(Rilke) 30

  31. How can Control contributetoConversation, Language (Integrity) andPractice? 31

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