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

A NEW ROLE FOR THE BANKS IN THE EUROPE OF THE FUTURE. Marc LUYCKX GHISI Dean of Cotrugli Business Academy Fo r mer member of the EU “Forward Studies Unit”. CHAPTER 1: EU ECONOMY IN A TIME OF DEEP TRANSFORMATION. P. Drucker: Transformation.

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

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  1. A NEW ROLE FOR THE BANKS IN THE EUROPE OF THE FUTURE Marc LUYCKX GHISI Dean of Cotrugli Business Academy Former member of the EU “Forward Studies Unit” European Parliament 16 april 2007

  2. CHAPTER 1:EU ECONOMY IN A TIME OF DEEP TRANSFORMATION European Parliament 16 april 2007

  3. P. Drucker: Transformation Every few hundred years in Western History there occurs a sharp transformation. Within a few short decades, society rearranges itself : its worldview (paradigm), its basic values, its social and political structures, its arts, its key institutions. Fifty years later there is a new world.” Peter DRUCKER: “Post Capitalist Society”.Butterworth Heinemann, 1993, 2001, p.1. European Parliament 16 april 2007

  4. One of the most fundamental shifts • “We are living through one of the most fundamental shifts in History: a change in the actual belief structure of Western Society. No economics, political or military power can compare with the power of a change of mind. By deliberately changing their images of reality, people are changing the world.” Willis HARMAN Stanford Research Institute (+1997), Founder of the “World Business Academy” European Parliament 16 april 2007

  5. Transformation’s five levels • Humanity is in danger of collective death • End of the Patriarchal values (CCC) • End of modernity---Transmodernity= post secular, flat, tolerant, new level of responsibility and consciousness. • Knowledge society as a turbo of change • Crisis of all institutions. EU = the First transmodern structure worldwide... European Parliament 16 april 2007

  6. Transition to Transmodern Death ? European Parliament 16 april 2007

  7. NEW POLITICS AND NEW ECONOMY ARE THERE... • We have at our disposal, a new political structure (transmodern) which is the EU. But unfortunately we still continue to consider EU with “modern” eyes... • We have a new economy in our hands (=Lisbon strategy), but we tend to consider it with “industrial”eyes... European Parliament 16 april 2007

  8. CONSEQUENCE: POLITICAL CHOICES (I) • EU should be presented as the 1° Transmodern political project of the XXI° century. • Politicians should dear to say that we are like at the beginning of a political Renaissance... • They should call people to reflect worldwide on the new sustainable structures of the future in the Knowledge economy. (Lisbon Strategy !) European Parliament 16 april 2007

  9. CONSEQUENCE: ECONOMIC CHOICES (I) • Politicians and economist should have the courage to say that we are not anymore in the industrial capitalist period. (max 50%) • We are already (50%) in the knowledge economy which is post capitalist (Drucker). • But nobody dears to say the truth to the citizens. Although they know it .... subconsciously. European Parliament 16 april 2007

  10. CONSEQUENCE: ECONOMIC CHOICES (II) • And this “knowldege economy” (Lisbon Strategy of the EU 2000-2010), has to be oriented towards sutainability and social inclusion. (Goteborg and Barcelona Summits) • A debate with the citizens is needed and urgent. • But this presupposes that the economists and politicians understand the transition from the “free trade” industrial vision to a new “knowledge economy” approach. European Parliament 16 april 2007

  11. CHAPTER 2:WHAT IS KNOWLEDGE ECONOMICS?(Level 4! ) European Parliament 16 april 2007

  12. DEFINITIONS • Data: what is on the web, unorganised • Information: is already sorted by google. Overabundance. • Knowledge: is digested by human brain. • Human brain and networks are the NEW TOOLS of PRODUCTION • Wisdom, Knowledge are rare. Not enough. European Parliament 16 april 2007

  13. A NEW WORLD... • New tool of production : human brain • New CEO: Enabling creativity and sharing, Caring for humans = new human-centered management • New value creation process : adding K to K. • New Trade: from Free Trade to Free Sharing • New measurements = qualitative “intangibles” • New strategy: beyond war: win-win not win-loose • New definition of Progress = qualitative • Beyond patenting towards “Open Source” • Beyond pyramids towards networks • Capitalizing on cultural capital + gender capital European Parliament 16 april 2007

  14. Post industrial -capitalist Vision: human capital Human centeredness Real Respect Machine at service Keeping the industrial vision: machine+€+patent Manipulation of Human Mind Engineering of Human Mind Machine is First TWO SCENARIOS European Parliament 16 april 2007

  15. 1. NEW TOOL OF PRODUCTION • The tool of production is not anymore machine + technol.+ € • It is human brain = Networks sharing knowledge in order to create new K. • This new tool of productionis more important than capital and technol. • Hence Post capitalist society! European Parliament 16 april 2007

  16. 2 NEW CEO FUNCTION • Old CEO: command, control, capture • New CEO: • enables the creativity of his “human capital”= tool of Production • Enables and creates networks around his team. Cannot control networks! • Care for the intangible assets= brand European Parliament 16 april 2007

  17. 2. CEO AND NEW MANAGEMENT • Human capital is central because it is the NEW tool of production: Please come back! • Thus Management : shifts 180° towards human centeredness = more creativity-centred, gender & culture – centred. European Parliament 16 april 2007

  18. INDUSTRIAL SOC. Add value to object From steel to car ! Tool is Machine Humans are cost Management is machine-centered Machine is central KNOWLEDGE SOC. Create new K From data, info to K Tool is Human brain in Networks Humans are capital Management is Human-centered Machine is at service 3. NEW VALUE CREATION PROCES European Parliament 16 april 2007

  19. 4. BEYOND TRADE (I) • If I exchange an object against money, I loose the object. This is “trade”: I win and I loose. “Win-Loose” logic • If I exchange knowledge, I do not loose my knowledge. I win and you win. I am not trading anymore. I share. This is a “win-win logic” of sharing. European Parliament 16 april 2007

  20. INDUSTRIAL SOC. Free trade of objects Industrial structure Pyramids Unemployment Pollution Quantitative growth KNOWLEDGE SOC. Free sharing of knowl. Post-industrial-capitalist. Network =value creation Self-creation of my job Immetrialization of prod. Qualitaitve growth 4. BEYOND TRADE (II) European Parliament 16 april 2007

  21. 5. A NEW SYSTEM OF MEASUREMENTS • « Intangible assets » is a new concept invented by Karl Erik SVEIBY (Sweden) • They are becoming more and more important in the knowledge society • IF EU economy is 45% in the knowledge eonomy, intangibles account for 45% !. European Parliament 16 april 2007

  22. 5. A NEW SYSTEM OF MEASURE.INTANGIBLE ASSETS (I) • Intangibles assets = • Know how, • Reputation, • Trust in the company, • Structure of the company, • Strategy (balanced scorecards) • Relations with personnel, • Relations with clients, European Parliament 16 april 2007

  23. 5. A NEW SYSTEM OF MEASURE.INTANGIBLE ASSETS (II) • Relation with civil society • Relation to environment • Relation to our collective Future and sustainability • But also quality of the Networks European Parliament 16 april 2007

  24. 5. MEASURING INTANGIBLE ASSETS ? • Stock exchange measurements are still looking at financial “tangible” assets (quantitative) but they increasingly look at “intangible” assets (qualitative). • Today a company is measured more and more by its intangible assets. • Example: “Men’s Wear” USA. & “World Business Academy”, “Spirit in Business”. • See also Neskey: www.neskey.com European Parliament 16 april 2007

  25. Potential for greaterparticipation andwider accountability Non-financial indicators grow in importance Transparency Financial indicators remain important 1990 2006 2015 ICT Proliferation 5. Intangible indicators grow European Parliament 16 april 2007

  26. 5. GROWING IMPORTANCE OF INTANGIBLE ASSETS (II) European Parliament 16 april 2007

  27. 6. NEW BUSINESS STRATEGY/ WIN-WIN • Old business strategy is warlike. Battlefield images are frequent. Patriarchal values dominate: “win-loose” • New business strategy: much less violent, “competition through collaboration” is the new motto. • There could be a conflict between 2 visions of competition inside the EU, and the Commission... • Knowledge behaves like love! Capital NOT ! European Parliament 16 april 2007

  28. 7. NEW DEFINTION OF PROGRESS • The industrial & modern defintion of progress is quantitative. More is better. • This defintion is UNSUSTAINABLE • The knowledge society implies a qualitative defintion of progress. • Good new this allows a reorientation of our societies towards sustainability!! European Parliament 16 april 2007

  29. 8. BEYOND PATENTING • The whole of the industrial production system is based on secrecy and patenting. I have this technology and you have not. So I win! • “Information and knowledge always leak” • In the knowledge economy we will NOT be able to maintain secrecy, neither patenting. • See generic medecines, I-Pod music etc,. European Parliament 16 april 2007

  30. 9. BEYOND PYRAMIDS TOWARDS NETWORKS • Pyramids are the « normal » structure of all organizaions. • But knowledge is created only in networks. This is the form that could prevail in the XXIst century. • Pyramids are all in crisis everywhere. In Govenrments, Military, Churches, NGO etc. European Parliament 16 april 2007

  31. 10. CAPITALIZING ON CULTURAL AND GENDER CAPITAL • Paradoxically culture and gender diversity becomes important as they feed creativity • The knowledge management is thus potentially socially inclusive and sustainable • The Lisbon strategy wsa thus excellent and forward looking. European Parliament 16 april 2007

  32. CONCLUSION : NEW VALUES… • Underlying values needed in the industrial capitalist society are freedom, initiative, ceativity… • NEW Values are needed: • Freedom (of sharing) beyond patents... • Solidarity, Caring, Respect for the Earth.. • 360° Transparency • Concern for our Common Good and future European Parliament 16 april 2007

  33. CHAPTER 2:THE BANKS IN THIS KNOWLEDGE ECONOMY European Parliament 16 april 2007

  34. EXAMPLE: ANZ BANK • Australia New Zealand Bank had problems of credibility... See http://www.anz.com/aus/values/message.asp • The CEO has embarqued in Corporate Social responsibility, Sustainability and Human capital enhancement. • Meditation has been offered to each empoyee.. • ANZ has received an award of “Spirit in Business” association... European Parliament 16 april 2007

  35. BANKS IN THE KNOWLEDGE ECONOMY I • In the Knowledge economy, intangible assets (personnel, customers, sustainability, and social inclusion...) are becoming 50% of the assets. • What distinguishes your Bank from others are mainly the intangible assets European Parliament 16 april 2007

  36. BANKS IN THE KNOWLEDGE ECONOMY II • In the industrial economy Banks were acustomed to look only at tangible assets. • This is not enough today • One must also look at the intangible assets European Parliament 16 april 2007

  37. BANKS IN THE KNOWLEDGE ECONOMY III • In the industrial economy we were in an “offer economy” : “Buy my new gadget !” • In the knowledge economy we are entering into an “Demand economy”. • This means that the Banks will be obliged to respond the implicit demand of the citizens worldwide. European Parliament 16 april 2007

  38. BANKS IN THE KNOWLEDGE ECONOMY 4 • Citizens implicitly demand: • HUMAN VALUES and friendliness • SUSTAINABILITY Is your/our Bank “part of the problem” of “part of the solution”? • SOCIAL INCLUSION: Is the Bank helping the poor? • WISDOM: • Citizens want also to spend in an intelligent way avoiding the gadgets and stupid spending. Can the Bank help? • Citizens want to make “good” and wise investments. • TRANSPARENCY: Is the Bank honest and transparent? European Parliament 16 april 2007

  39. CONCLUSION • Banks may choose the “manipulation” scenario • If they choose the “human centered-sustainable” path, they should improve • Human values with personnel and clients • Clear actions for sustainabilty and social inclusion • Real and efficient help towards WISE investments • 360° transparency • This is a question of survival. • Otherwise other Banks will do it (ANZ ?) and invade the EU market with a new image European Parliament 16 april 2007

  40. Some good Books… • Peter DRUCKER: “Post capitalist society”, Harper Business, New York, 1993. • Verna ALLEE: “The future of knowledge” Elsevier Science, 2003, USA. • Harvard Business Review on Knowledge management. 2006. Book with 8 articles. • Paul T KIDD (ed.): “European visions for the Knowledge Age: a quest for new horizon in the information society” Cheshire Henbury, UK, 2007. European Parliament 16 april 2007

  41. Good Books (II) • Jeremy RIFKIN: “The European Dream: when Europe’s vision of the future is silently eclipsing the American dream” Penguin 2004. • Ray ANDERSON: “Mid Course correction” 1998. www.chelseagreen.com (Interface) • World Business Academy: www.worldbusiness.org • “Neskey” on intangible measurements : www.neskey.com European Parliament 16 april 2007

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