THE JOURNAL FOR BUSINESS LEADERS ISSUE 2 AUTUMN 2009
PRESSURE PAGE 13
UNITED NATIONS CLIMATE
CHANGE CONFERENCE 2009
LORD NICHOLAS STERN, JOSÉ MARÍA FIGUERES
GLOBAL MELTDOWN RULE
NUMBER 1: DO THE MATH
HERNANDO DE SOTO
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Pankaj Ghemawat, Professor of Global Strategy at IESE and bestselling
author, talks restructuring and opportunity in this post-recession period
and how globalization will change.
The global economic downturn creates
obvious pressures to restructure. When even
companies like HSBC, the world’s largest
bank by market capitalization, and Unilever,
the world’s second largest consumer products
company, start pulling out of, respectively,
the U.S. markets for consumer ﬁnance and
for detergents, one is reminded that many
multinationals have chronically unproﬁtable
operations in their global portfolios. Thus, a
detailed analysis of a number of companies
indicated that half had signiﬁcant geographic
units that earn negative economic returns—
on an ongoing basis. Downturns are more
obvious times to restructure such portfolios
But the downturn also presents
opportunities for multinationals to build.
Thus, for many multinationals from
advanced countries, the recession is likely to
amplify a refocusing of interest on emerging
markets that was already underway. Thus,
in beer, with medium term growth forecasts
of less than 1% for advanced markets even
before the dowturn, it looks as if all growth,
not just most of it, will be accounted for by
emerging markets, particularly China—
already the world’s largest market by volume.
Of course, the opportunities are not
conﬁned to emerging markets. Fiat just
grabbed 35% of Chrysler for nothing more
than promises to share small car technology
and its global dealer network— much more
economical than what Cerberus recently paid
for its stake in the company less than two
Figuring out which opportunities to
pass on and which ones to pursue requires
detailed analysis of why you want to enter
global markets and whether or not volume,
growth, and scale economies will actually
add value—instead of the blithe assumption
that global expansion is an imperative that
can be counted on to pay for itself. And
actually proﬁting from those moves requires
creativity in recognizing and responding to
the major differences across countries which,
as recent developments remind us, continue
to be substantial.
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RESPONDING TO THE
OPPORTUNITIES OF A RECESSION
Lynda Gratton, Professor at The London Business School
and Founder of the Hot Spots Research Institute, reveals
the hidden opportunities in a post-recession.
preponderance of face to face meetings – Question the dominant logic about
which can go on for many hours. There is how decisions are made by following
no doubt that in highly skilled hands these Nokia’s lead and experimenting with
meetings can be a dynamic activity and a strategy formation from the bottom up
crucial decision making platform – but too – rather than always going from the top
often they decay into something much down. Use the travel ban to really build
less productive. So now is a good time to experiments around virtual teams. Take
creatively question the accumulation of a closer look at how they actually work,
meetings. And if some of these meetings experiment with ways of supporting them.
are crucial, then take a leaf out of BP’s Put group-ware technologies at the top
book and train even the most senior of the performance agenda. Experiment
executives in facilitation and dialogue with video conferencing, web casts and
skills. group decision making tools.
Not all of these experiments will
WHAT CAN BE EXPERIMENTED WITH? ﬂourish and some will die out over time.
So how best can executives respond to the Next, consider what experiments can I would expect for example that whilst
opportunities this recession will provide be run right now that would enable we will see more virtual teams and the
for innovation and the emergence of new the business to develop new and use of the technologies that can support
management practices? In my view it is innovative management practices. Here them, once the cost cutting is relaxed,
a two stage process. First create space by are some candidates for the challenging some people will return to the airports.
jettisoning what is not needed, and second experimentation that can work so well in Others, however, will have fundamentally
begin to experiment with new practices. a recession when some of the most dearly changed their habits and begun to build
held beliefs are shattered: working communities which are virtual
WHAT CAN BE JETTISONED? Take advantage of the concerns about and highly productive.
Recessions provide wonderful leadership by following the lead of the Recessions are a time of destruction of
opportunities to stop doing things. All Norwegian Government and rapidly the old order, a time when assumptions
that accumulated fat and those sacred increase gender diversity at senior are questioned and nascent practices and
cows can be looked at in the cold light of levels by putting in place quotas for the ideas are given space to ﬂourish. That is
cost cutting. In my view one of the most proportion of women on the shortlist and little cheer for now but, in the longer term,
damaging fat accumulations has been the appointed roles. an enormous stimulus for change.
CHALLENGES FACING MARKETERS
IN THE POST-RECESSION PERIOD
Philip Kotler, the ‘Godfather of Marketing’, discusses
what marketing will be like in the post-recession.
Marketers have been so busy making percent and unemployment will still of brands including a price ﬁghter brand.
downward adjustments to the current be at a higher than normal level. A price ﬁghting brand requires that the
recession that they haven’t had time to Marketers will have the task of trying to company keeps searching for lowest costs
gear up for post-recession marketing. sell cars, furniture, large appliances, and and this drives them to produce in lower
What will marketing be like in the post- other goods against the legacy of thrift labor cost countries such as in Asia, South
recession? that buyers cultivated during the ﬁnancial America and Africa.
First we must answer: What will the meltdown. This means marketers need This will partly explain why the post-
post-recession economy be like? I would to sell value for the money as they had recession period will be more of a jobless
expect a slow recovery rather than a fast to do during the recession period. More recovery initially.
takeoff. GDP will grow at best by a few companies might want to erect a hierarchy While the recession may be over )
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turbulence will continue to haunt
companies in the post recession period. ACQUIRING,
In fact, I would expect that companies
will experience a heightened level of
turbulence in the form of more and AND GROWING
sharper disturbances, disruptions, and CUSTOMERS
surprises. The heightened turbulence will THROUGH
be the result of increased globalization,
digitalization, and desperation of CREATING
competitors to retain or grow their market VALUE IS
shares. John Caslione and I detail this THE DEFINING
message about the future in our new book,
'Chaotics: The Business of Managing and
Marketing in The Age of Turbulence'.
And we advise companies to establish
three systems: an early warning system,
a system for scenario planning, and a
system of ﬂexible budgeting.
Within this context, the marketing staff
will have to wrestle with three issues: the
new media, marketing accountability, and
marketing’s new role. We describe them
THE NEW MEDIA
Before the invention of the Internet, most purpose of a business is “to create 2 Getting all employees and partners
communication was carried on using customers”. This is the best means to (wholesalers, retailers, advertising agency,
seven traditional media: telephone, mail, produce a proﬁtable future. And he singled etc.) to think about creating, improving
television, radio, magazines, newspapers, out marketing and innovation as the two and delivering customer value.
and billboards. Companies relied heavily most important functions of a company.
on these traditional media to send their These functions produce value: the other 3 Practicing good corporate citizenship
one-way messages to their target audience. functions act as costs. through consistent social responsibility
The Internet opened up a veritable ﬂood Marketing’s traditional role was to and ethical behavior.
of new communication possibilities. handle marketing research and advertising
Companies and persons could and assist the sales force. The formulation 4 Aiming to build strong lasting relations
communicate with other persons or groups of marketing’s role improved when the 4P with all the stakeholders and making them
using the new social media (Facebook, framework was developed, assigning to all into winners.
MySpace, Twitter), blogging, webcasts, marketing the responsibility of handling
YouTube, podcasts, and other new media. product, price, place, and promotion. Some companies are even moving to
Now we say that today’s marketers must The formulation improved further a larger holistic view of the marketing
incorporate the new media and blend when we added that marketing should function. One is to assign to marketing the
it with traditional media if they hope to precede the work on the 4Ps by ﬁrst doing responsibility for planning the company’s
effectively reach target customers. segmentation, targeting and positioning growth trajectory. Marketing is in the
(STP). best position to identify, test and propose
MARKETING ACCOUNTABILITY Even this doesn’t tell the whole the best opportunities that the company
The marketing staff is under increasing story of marketing’s role. Marketing’s should pursue. The other is to assign to
pressure to provide ﬁnancial metrics role must be seen more holistically. marketing the responsibility for managing
showing the impact of their various Companies such as P&G, Starbucks, the ﬁrm’s revenue. In this latter case, the
activities, programs and campaigns. If Amazon, Harley-Davidson, Ikea, Whole marketing head would be renamed the
they can’t supply ﬁnancial metrics, they Foods, Toyota, Fed Ex, and several other company’s Chief Revenue Ofﬁcer. We will
must at least provide proximate measures companies see marketing this way. watch to see if these two new directions
of impact on such variables as awareness, Marketing is the driving force in these for the marketing department’s role start
interest, knowledge, preference or intent companies. Acquiring, keeping, and taking place.
to buy. Otherwise the Vice President of growing customers through creating, In summary, I don’t foresee rapid
Finance will continue to whisper to the communicating and delivering value is economic growth in the post-recession
CEO that the marketing budget has a lot of the deﬁning mission. These market-and- period. I see marketing under increasing
waste and this would only have the effect customer-driven companies focus on four pressure to turn to the new media,
of reducing the marketing budget which goals: to provide more accountability for its
probably will hurt sales and produce its expenditures, and to deﬁne a new and
own downward spiral. 1 Integrating products, services, more holistic view of its role in the
communications, channels and prices company’s constellation of activities.
MARKETING’S NEW ROLE around a strong brand concept and
Peter Drucker reminded us that the promise.
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Don Strickland, former top executive at Apple & Kodak,
on lessons to be learned in a post-recession economy.
Most of the world was not affected by the strategy but react quickly to the changed
collapse of the “Internet Bubble” in 2000- circumstances in a way that supports your
2001. That economic crisis was mostly felt longer term goals. Executing a long term
in the United States. Within a year, almost strategy by doing a thousand things in
90% of the “dotcoms” had gone out of concert will always win over a company
business. that quickly throws a thousand darts and
I was the CEO of a Silicon Valley hopes some will hit the mark.
startup company that emerged from the
dotcom bust successfully. And I credit LESSON THREE
the economic crisis with creating the EXPERIENCE COUNTS
opportunities that enabled my company History is valuable in terms of providing
to innovate new business models and perspective, but it does not provide the
product offerings (now labeled “Web speciﬁcs that a company needs to re-
2.0”), giving us an advantage over slower engineer its business coming out of an
and more established competitors. economic crisis or at any other time.
Charting a course for the future cannot
TODAY’S ECONOMIC CRISIS, A happen by looking to the past. It must be
“GLOBAL BUBBLE”, CAN LEARN based on experience.
FROM THE BURSTING OF THE YOUR CUSTOMERS Executive management must strike
INTERNET BUBBLE. a delicate balance between a company’s
WILL DEFINITELY technology, products, sales, marketing
LESSON ONE CHANGE AFTER and business models, to name just a few.
CHANGE YOUR BUSINESS MODEL A RECESSION, The most important vision to have of the
Customers are looking for new ways of
doing business and are actively seeking
PARTICULARLY future relates to your customers. They
will deﬁnitely change after a recession,
alternatives to the status quo. ONE THAT IS AS particularly one that is as deep and wide
Successful companies will ﬁnd ways to DEEP AND WIDE as now. Charting a new course depends
signiﬁcantly increase the value of their AS NOW… heavily upon experience. You need to
products and services to their customers. anticipate where your customers are
The most powerful way is to change the headed and re-engineer your company
rules of competition by changing your to provide superior value to your
business model to your advantage and “new” customers. Insights into the
your competitors’ disadvantage. future often come from where you least
expect it – a new employee, someone
LESSON TWO that hasn’t spoken up at meetings, or
STRATEGIC REACTION from outside your company (suppliers,
Small companies are inherently faster customers, external communities, etc.)
than established large companies. Understanding the future is largely a
However, they tend to focus on short matter of listening with an open mind and
term goals, which often detract from assimilating what you hear.
long term success. Do not abandon your
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THE CUSTOMER – POST RECESSION
Lior Arussy, author, visionary car penalty free, credit score unaffected.
and leading expert on Customer The question remains, should this be
a temporary ﬁx or a new way of doing
Experience Management, business? Think of yourself as a customer,
discusses customers’ would you want a better offer to cease just
expectations and demands in because the economy improved?
the post-recession world. Post-recession customers will be
subjecting companies to greater scrutiny.
The current economic situation will have So, companies need to develop and
a lasting impact on customer experience. deliver greater value, a more complete
Certain ﬁnancial and emotional issues will experience and engage customers’
inﬂuence customers for years to come; levels rise are running a great risk, which emotions; otherwise they stand little
concerns about employment and ﬁnancial has little empiric evidence to support it. chance of overcoming the recession impact
security remain. As a result, customers The more responsible assumption is that on customer psychology, and spending
will demand greater value and be seeking these customer conditions are here to stay. behavior.
the best deal and relationship with So, products, services, business models, Many aspects of the future are
vendors. And they will be more selective pricing and the overall deﬁnition of value uncertain. However, one thing I am certain
in whom they trust and are loyal to. This must be adapted accordingly. about is that customers in the future will
combination of uncertainty, demand for Hyundai’s payment protection program demand greater value for their money.
value and selective loyalty may sound is a brilliant example of adaptation. If a They will seek greater experience and
like a perfect storm. However, those customer is made redundant, the program penalize harshly those who will not deliver
organizations that hope these conditions covers their car payments for up to three it. Are you planning for the post-recession
will evaporate as soon as employment months, then allows them to return the world?
IDENTITY IN THE 21ST CENTURY
experience of feeling rewarded, with the
Baroness Susan Greenﬁeld aim of reading a book, to ﬁnd out more
CBE, renowned scientist and about the princess herself! And what about
broadcaster and Director at identity; perhaps with fast-paced, instant
the Royal Institution of Great screen reactions the next generation will
be deﬁned by the responses of others, as
Britain, explains how the next evidenced by the increasing popularity of
generation’s minds might be Twitter. Social networking sites might tap
transformed by the constant use into the basic brain systems for delivering
of technology. pleasurable experiences, but ones devoid
of narrative or long-term signiﬁcance.
‘Mind’ is a term usually reserved for As a consequence, the mid-21st Century
philosophy and the arts, and is traditionally mind might be almost infantilised into one
distinct from ‘brain’. However, we can characterised by short attention spans,
now view ‘mind’ from a neuroscience sensationalism, inability to empathise and
perspective thanks to an increasing a shaky sense of identity.
knowledge of the incessant dynamism We should be considering what type of
of the brain, whereby individual brain environment will be best for us to realise
cell circuitry is driven and shaped by our individual potential. If we could
unique individual experiences. So, if the harness screen technologies to deliver
human brain adapts very sensitively to the experiences that cater for the deﬁciencies
environment and if that environment is of current software, then children and
changing in unprecedented ways, might then continued rapid interchange might adults alike will be able to make the most
the brain and hence the mind, also be become the normal time scale of operation. of the longer life span and increased
transformed in unprecedented ways? Related to this change might be a marked leisure time that science and technology
preference for the here-and-now where are delivering. And this is undoubtedly an
THE FOLLOWING FEATURES OF THE the immediacy of the experience trumps issue which has obvious relevance to many
HUMAN MIND-SET MAY BE LIABLE TO regard to any consequences. Another sectors, including the ﬁnance industry, risk
A MAKEOVER possible change is one in empathy. managers, educationalists, policy makers
Attention span. If the young brain is Compare a computer game to rescue the and human resources.
exposed to a world of fast action-reaction, princess where the goal is for the personal
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UNITED NATIONS CLIMATE CHANGE CONFERENCE
WHAT DOES THE that we need to make in energy efﬁciency,
for example in buildings, would make
COP15 MEAN TO YOU use of construction labour. Second, we
should reﬂect on how the ﬁnancial crisis
AND YOUR BUSINESS? arose and draw some basic lessons. The
ﬁnancial crisis and the economic crisis it
generated arose from ignoring growing
ALEXANDER HASSLACHER risk. The longer this risk was ignored, the
bigger it grew, and hence the bigger the
From December 7-18, 2009 statesmen decreasing not only exhaust and consequences. And further, we should
and other ofﬁcials from 192 nations will industry emissions, but will also put a recognise that the housing bubble was
take part in the “15th Conference of large focus on the production of power, promoted by a lengthy period of easy
Parties to the United Nations Framework looking to build sustainable platforms money arising from policy in response to
Convention on Climate Change” in for green energy. This will surely affect the bursting of the dot.com bubble around
Copenhagen. each and every one of us in our daily the turn of this century. This time we must
This will be one of the most lives ﬁnancially and within society, but come out of the recession by investing in
important conferences since the whether you fall under this ‘big energy’ sound and sustainable technologies. The
inception of the UNFCCC in 1992. As category, are a ‘one-man show’ or big growth over the next two or three
the Kyoto Protocol meets the expiration anywhere in between, the real bottom decades will be in low-carbon and energy-
of its ﬁrst commitment period in 2012, line is that together we all have to do efﬁcient technologies.
the main goal of this year’s conference our part in building a better and cleaner
will be to establish a new global climate tomorrow. HOW REALISTIC IS IT TO EXPECT
change agreement. In the meantime, here is what the WORLD LEADERS TO BE UNITED ON A
The new deal to be struck this real experts have to say… CLIMATE CHANGE PROTOCOL? WHAT
year will most certainly be aimed at ARE THE RISKS IF THEY DON’T UNITE?
One of the key contributions of the Kyoto
agreement in 1997 was the signal that
only global action could tackle climate
change. And it embodied the necessity of
a common but differentiated response for
action; in other words, the rich countries
had to act ﬁrst and strongly, but all
countries had to be involved. The scale of
the cuts necessary mean that if any major
countries are left out of a new global deal
on climate change in Copenhagen in
December 2009, developed or developing,
the necessary targets will be difﬁcult to
achieve. Delay is costly because, without
action, concentrations of greenhouse
gases will continue their rapid upward
movement. Further, an absence of unity,
weak policies or delayed action will
undermine the private sector conﬁdence
which is crucial to investment.
HOW MIGHT POLICY ON CLIMATE
CHANGE PROMOTE ECONOMIC
NICHOLAS STERN The transition to a low-carbon economy
over the next 2 or 3 decades is likely
to be a creative and exciting period of
In an exclusive interview, Lord WHAT ARE THE TENSIONS BETWEEN discovery, innovation and investment. It
Nicholas Stern of Brentford, GLOBAL ECONOMIC RECOVERY AND will be analogous to, but larger than, the
ADDRESSING CLIMATE CHANGE? role of railways and electricity in spurring
Kt, FBA, former World Bank Tensions arise only from confused growth in the earlier periods of economic
Chief Economist, and author of analysis and narrow vested interests. If history. Low-carbon growth will be highly
the renowned Stern Report on we examine the issues carefully then we attractive: cleaner, more energy-secure,
climate change looks at the can see that this is a good time to invest safer, quieter and more bio-diverse. High-
in energy efﬁciency and low-carbon carbon growth will kill itself, ﬁrst on very
post-recession prospects technologies. First, it makes sense to high prices of hydrocarbons, and second
for global investment and invest when resources are less scarce. on the very hostile physical environment
sustainable recovery. In particular many of the investments it will create.
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UNITED NATIONS CLIMATE CHANGE CONFERENCE
HOW CAN YOU GET PEOPLE AND that so many people around the world do and droughts. There will be even bigger
POLITICIANS ALIKE TO PRIORITISE understand the issues. One of the reasons risks from the massive migration that
CLIMATE CHANGE WHEN IT FEELS SO is that the scientists have done a good job unmanaged climate change would imply.
REMOTE AND IS PERHAPS PERCEIVED of explaining, and another is that some of Hundreds of millions of people threatened
AS SOMETHING THAT WON’T HAPPEN the effects are already visible. We should by desertiﬁcation and inundation will
IN THEIR LIFETIME? remember that the effects that we are now have to move. The consequences of that
Humans learn from experience and seeing, as signiﬁcant as they are already are likely to include extended and severe
they will often draw strong lessons from for many people, are very small relative to global conﬂict. Further, since many of the
bitter experiences, such as the period the kinds of risks that we run in the future. effects operate through water in some
of 30 years before 1945, during which shape or form, conﬂict over that scarce
there were two world wars and the great WHAT ARE THE IMPLICATIONS FOR resource is likely to intensify. There is
depression. This time we have to learn SECURITY IF CLIMATE CHANGE IS NOT no doubt that climate change is a major
by looking ahead. That presents the ADDRESSED? security issue, whether one considers
challenge of understanding, leadership There will be many direct risks over the security in human, economic, or conﬂict
and communication. Yet it is remarkable next few decades from storms, ﬂoods, terms.
INTERVIEW WITH JOSÉ MARÍA FIGUERES
José María Figueres, President the answers needed to reinvent the way
we live our lives within the boundaries
of Costa Rica, 1994-1998, talks of a lower carbon footprint. However,
exclusively to CSA World about we certainly can implement changes
the 15th Conference of Parties. and solutions we know will reduce our
Politicians: focus on the next carbon emissions. Hence politicians at
Copenhagen need to focus on the next
generations, and not only on generations, and not only on their next
the next elections! elections. In other words we need them
to rise to the occasion and put forward
WHY IS COP15 SO IMPORTANT? the best of humanity, to agree on a way
As if the melting of the polar ice caps forward without further loss of time.
was not enough to conﬁrm something is Every year we wait without decisive
radically wrong, today the verdict from action increases the cost of mitigation,
the scientiﬁc community is conclusive: and adaptation to Climate Change.
Climate Change is happening and is
beginning to affect our daily lives. WHAT DO YOU SEE AS THE GREATEST
To correct this, we need to decouple CHALLENGE FOR THE COP15
development and increased economic NEGOTIATIONS?
activity, from carbon emission growth. In Defeating the temptation of a mediocre
other words, we need to continue fulﬁlling agreement. Such an agreement would
the justiﬁable development aspirations seemingly deal with the challenges at
of millions of persons around the world, hand, and therefore get everybody “off the to be heard by their political leaders,
while ﬁrst curbing, and then lowering the hook” without adequately addressing the because collectively they can make a
carbon emissions that so far have always fundamental Climate Change challenges. huge difference. Let us show our political
accompanied development. We have a As a matter of fact, confronted between a leaders we care about Climate Change,
window of opportunity of about ten years mediocre agreement and no agreement and we expect them to do so as well.
in which to do this, beyond which we at all, I would prefer the second. This Future generations will remember us for
will lose the opportunity to do so with outcome would maintain the pressure either having had the courage to stand up
relative low cost. For this to happen, COP on global leaders to reconvene in the very and rectify the problem we have created
15 must produce a high quality agreement near future, to agree on a responsible way with our present development style, or for
between the developed and developing forward. having failed in our responsibility to act
world, together with a comprehensive even though we knew the consequences.
and binding action plan that makes this HOW CAN WE MAKE AN IMPACT I would rather be remembered for the ﬁrst,
profound transformation a win-win ON COP15? and thus why I have conceptualized the
situation for both. We live in the midst of a technology and Global Observatory (globalobservatory.
information revolution that has reached net), which together with a group of
WHAT IS NEEDED AT COP15? and empowered millions around the collaborators we are now launching to
Leadership, and courageous political world, who previously could not keep help the process!
will to produce an agreement we can all up to date with global issues such as
feel proud of! Today we may not have all Climate Change. Today these voices need
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HERNANDO DE SOTO
RULE NUMBER 1:
DO THE MATH
Hernando de Soto, an authority on western and third-world
economies and widely held to be the world’s greatest living economist,
describes the steps to be taken to ensure credit ﬂows once more.
measuring: they are now the principal
reason for today’s massive credit
contraction. The fear among ﬁnancial
institutions that potential borrowers
and users of credit and capital could be
burdened with so many nonperforming
derivatives that they would be unable
to repay their loans and protect their
investments has plunged the global
economy into a recession.
The Securities and Exchange
Commission estimates that derivative
paper is worth $596 trillion (10 times the
value of total world production), while
studies at the Bank for International
Settlements in Basel, Switzerland,
conclude that it could be twice as much
- $1.2 quadrillion. And exactly how
many of those derivatives are actually
nonperforming and would have to be
surgically removed to stop their toxicity
from spreading and destroying trust among
creditors and investors? Nobody knows
that for sure either. U.S. Treasury Secretary
Timothy F. Geithner has set aside $1 trillion
to assist in buying those toxic assets, but
the SEC has guesstimated that there might
be upward of $3 trillion worth.
With so much at stake, clearly an
accurate accounting is in order; “doing the
WE CAN ONLY START FIXING followed by conﬁdence. I learned the math” - right now - is still the best strategy
THINGS ONCE WE GET A HANDLE lesson: You cannot manage what you for halting the global economic meltdown
ON THE TOXIC ASSETS BEHIND THE have not previously measured. threatening us.
FINANCIAL CRISIS So imagine how I have felt watching If you want to get credit ﬂowing again,
I learned never to embark on a major my role models go to war over weapons you must restore trust in paper as soon
task without ﬁrst “doing the math.” of mass destruction that they never as possible. And that means measuring
Without measurement, I wouldn’t be actually assessed, or now, watching them the assets, recording them, ﬁnding and
able to identify and disentangle the very wage a losing war against derivatives - purging those that are toxic and preventing
reality before my eyes. By doing the which both Warren Buffett and George future debasement of the paper - in
math, I would see order and coherence, Soros have called “ﬁnancial weapons of essence, submitting it to property law just
the way things were organized; invisible mass destruction” - without locating or like all the other assets that we own and
relationships would come into view, and counting them either. value. We have to do the math.
right behind order would come meaning, Those ﬁnancial instruments need Courtesy of the L.A.Times
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THE EURO – AN ANCHOR
OF STABILITY IN THE CRISIS
Otmar Issing, former Member
of the Executive Board of the
European Central Bank,
explains how we greatly
beneﬁted from having the
euro in place across so many
countries during the crisis.
In its eleventh year of existence the euro
by all measures is still a young currency.
Yet it has become a reality of daily life for
almost 330 million people in 16 European
countries. The euro is a success story right
from the beginning and its performance
during the crisis in ﬁnancial markets
underpinned its role as an anchor of
stability. dollar and as a stabilising factor in the distortions in trade and capital ﬂows would
Conﬁdence in the euro is based international monetary system. have endangered the Single Market.
on its internal stability. The monetary If the countries, which now form the The euro was a true anchor of stability
policy of the European Central Bank euro area, still had had their national in this deep crisis. This is, however, no
has maintained price stability and ﬁrmly currencies during the ﬁnancial crisis, a reason for complacency. Major challenges
anchored inﬂation expectations. On this series of turbulences in foreign exchange lie ahead. But, there are good reasons
fundament the euro has strengthened markets, waves of massive speculation to expect that the euro will continue its
its role as the second most important and abrupt changes in exchange rates success story.
international currency after the US would have been the consequence. Severe
ALL EYES ON CHINA
James Kynge, author 'China signiﬁcant degree on the answer.
The way I see it is this: China is mid-way
Shakes the World' and Editor, through a transformation as wrenching
China Conﬁdential, a specialist and as thorough as that of the US in the
China research service of the 19th century. During that momentous
Financial Times, discusses the century America suffered no fewer than
10 boom-to-bust cycles, some caused
economic impact China will by convulsions in Europe and some by
have on the world during the domestic forces. But beyond short-term
years ahead. oscillations, the thrust of American
progress was unstoppable, driven by the
Investor sentiment toward China is as multipliers that are unleashed when an
ﬁckle as the autumn sky. In early 2008, economy the size of a continent hits the
before the squalls of crisis blew, we road. The exact same thing is in play in
had allowed ourselves to be convinced China today. Its emergence is propelled
that China’s economic fortunes had by a myriad of multipliers in technology,
“decoupled” from those of America. But That was then. This year, the debate supply chains, infrastructure, labour
when the US’ ﬁnancial turbulence hit, that is swivelling again on its axis. As Chinese migration, rural modernisation, social
theory ﬂew off its hinges. As US consumers growth surges while the US remains welfare, education, the spread of credit,
spent less, Chinese exports plummeted, becalmed, part of the punditocracy is using the globalisation of manufacturing and the
throwing some 20 million Chinese migrant the “d” word again and hailing Beijing as privatisation of land.
workers out of work within weeks. Seeing the locomotive to haul the world out of Thus to gauge the force behind China’s
this, commentators opined that decoupling recession. Others, however, see a great big momentum, it is more instructive to
had been a myth all along - the only real bubble wobbling before it pops. examine the energy in such multipliers
estrangement had been that of investors So what is really going on? The fate than to be swayed by the fashions of
from their powers of reason. of the global economy depends to a economic commentary.
+44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 11
Ray Hammond Europe’s
leading futurologist, explains
why sustainability and
pursuing globalization are
essential for the future.
Economic growth has started again,
but this time we have to pursue growth
with new awareness. The reborn world
must be based upon sustainability.
Sustainability will govern every activity
in the future whether it is bank lending,
energy generation, manufacturing or food
While annual expenditure cuts
abound, the budget many companies
are providing for environmental and
sustainability programmes has either
remained or increased. These companies
know that in the future customers,
partners and stakeholders will judge
commercial activity on its long-term
Our politicians know it too. Later this
year, the world’s leaders will gather to
save the planet from the worst effects of
global warming. The argument about the
cause of climate heating is over, efforts
must centre on making sure it doesn’t get
worse through unchecked greenhouse gas
emissions. sources. We have to think hard about our are the natural yardsticks of our lives and,
Will there be a post-Kyoto agreement corporate and personal energy use and our provided they are pursued sustainably,
to limit emissions? Yes. The world’s activities that generate or indirectly cause must be encouraged.
leaders know that a failure to ameliorate greenhouse gas emissions. We can make Those driven by ideology more than
climate change problems will lead to more real savings if we focus on sustainability understanding say that globalization
extreme weather events, mass population and conservation. is over or going into reverse. Such
migrations, food shortages and, ultimately, Some environmentalists and extreme views are mistaken. Globalization is
outbreaks of war. left-wing commentators argue that the unstoppable and, when pursed ethically
Will there be arguments and long capitalist model is wrong and that instead and sustainably, it is the greatest force for
negotiations? Certainly. There’s a lot of of pursuing economic growth we should be good and peace that exists. Over a billion
money at stake and a leader getting the using alternative indices to gauge progress; people have been lifted out of absolute
wrong deal could hold back their nation’s they are naïve and mistaken. poverty by global trade in the last ﬁfteen
development for decades. Economic growth is part of our years. In the next ﬁfteen years another
It is clear that in reshaping how we evolutionary imperative. It goes along with two billion people will be able to enjoy a
do business and go about our lives we personal growth through education, sports new prosperity. That’s something worth
have to switch to new, sustainable energy and the arts. Progress, success and growth working for.
12 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
MAKING TOUGH DECISIONS UNDER PRESSURE
Pierluigi Collina, believed by many to be the world’s greatest
football referee, talks exclusively to CSA World about the
similarities between business boardrooms and refereeing.
Pierluigi, you are obviously a man who Important decisions can have big
has a vast experience in making tough consequences. All these characteristics
decisions quickly. What do you think are there.
is the main importance, from your
experience, of decision making during How do you make good and fair
this economic crisis for CEOs? decisions under the extreme pressure
To stand by their decisions and know with millions of people watching you on
the company stands behind you. I always TV, not to mention the tens of thousands
say that the ﬁnal goal for the referee is to in the stadium?
be accepted even if he is wrong, because As a referee you have to be very self-
it means that the players trust you. You conﬁdent and you have to make sure normally when you’re 17 you never have
are accepted not because of the role but you do everything you can to be perfectly to decide much about anything. You have
because of what you do within your prepared for the job. You have to know parents, teachers, coaches, everybody is
role. This is the same for a manager. You everything about a match beforehand – deciding for you. When I became a referee
cannot be accepted because you are a how the teams play, how the individual at 17 I became involved with players older
CEO. You are accepted because you have players play. So you have to walk out onto than me. This is something that helps
shown everybody that your way to run a the pitch knowing all there is to know. The you be more mature and to build up your
company is correct. same goes for managers and CEOs. personality.
One of the main problems for people
What are some of the similarities of How has being a referee helped you and in every activity is decision making. It is
making quick and important decisions what traits do you think can be brought something that can’t be taught…making
on the pitch and in the boardroom? to the boardroom? a decision under stress is something you
There are things that are very similar I have to be grateful to what I did and for have to learn, for example, if you want
between my activity and the business what refereeing gave me. I was 17 when to be a top manager in any big company.
world. A businessman takes decisions I started. The experience as a referee is How better to learn these things than to
very quickly and often under pressure. something a youngster never has, because have been a referee?
CSA AUDIENCE FEEDBACK
“Ram Charan presented at our annual
awards and was very erudite and
Sir Bob Geldof is a genius! It was the perfect combination articulate; he kept things simple yet
of business, CSR, climate, future/past and personality. very useful and easy to understand. His
message about leadership at all levels
His delivery was striking, unrivalled and absolutely amazing. really showed our staff that no matter
He received a standing ovation, some with tears in their eyes. what their title, each had an integral role
He had no script, a truly genuine performance by an artist, at this company.”
intelligent human with a soul!”
European Investment Organization “José María Figueres Olsen's speech
was exactly what we asked for. His points
“Nassim Taleb was thought provoking, “Joseph Stiglitz was the highlight of the on the environment and the global
intellectual and very relaxed in his style. event! His speech covering the beneﬁts economic context really opened the eyes
He put into perspective that we really of globalization and the effect it will of many of our members.”
should not be looking back at the past for have on our business was very good and Worldwide Humanitarian/Charity Network
guidance but rather focus on the future interesting. A truly charming man, who
which we can still have an impact on. stayed for the whole event and spoke “What a man – what a speaker! It does not
It was a truly fantastic session.” articulately and with a fantastic message.” get any better than Neil Armstrong!”
Leading IT Company Global Electronics Solutions Provider Global Publishing House
+44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 13
CLEVER THIS TIME IS DIFFERENT:
Rob Goffee and Gareth Jones EIGHT CENTURIES OF FINANCIAL FOLLY
Kenneth Rogoff and Carmen Reinhardt
If your company is like most, it has a handful
of people who generate disproportionate Throughout history, rich and poor countries
quantities of value: A researcher creates alike have been lending, borrowing, crashing
products that bankroll the entire organization and recovering their way through an
for decades. A manager spots consumer- extraordinary range of ﬁnancial crises. Each
spending patterns no one else sees and time, the experts have chimed, “this time
deﬁnes new market categories your is different” claiming that the old rules of
enterprise can serve, and so on… Companies’ valuation no longer apply. The authors prove
competitiveness, even survival, increasingly that premise wrong. Covering 66 countries
hinge on such ‘clever people’. But the truth across ﬁve continents, 'This Time Is Different'
is, clever people are as ﬁercely independent as they are clever presents a comprehensive look at the varieties of ﬁnancial crises,
- they don’t want to be led. So how do you corral these players and guides us through eight astonishing centuries of government
in your organization and inspire them to achieve their highest defaults, banking panics, and inﬂationary spikes from medieval
potential? The authors of 'Clever' offer potent insights drawn currency debasements to today’s subprime catastrophe. The
from their extensive research. Leading clever people can be authors draw important lessons from history to show us how
enormously challenging, yet doing so effectively is the key to much or how little we have learned.
your organization’s sustained success.
GETTING CHINA AND INDIA RIGHT
CLOUD: SEVEN CLEAR BUSINESS MODELS Anil Gupta and Haiyan Wang
Many multinational corporations think of
Based on a series of lectures at Stanford China and India largely for off-shoring and
University, Timothy Chou discusses cloud cost reduction and limit their marketing
computing from a business perspective. His to the wealthiest few people. With such
book serves as an excellent, easy-to-read, shortsightedness, the opportunity of the
introduction to cloud computing for anyone century will pass them by, argue business
who builds, sells or purchases applications strategists Anil K. Gupta & Haiyan Wang.
or infrastructure delivered as a cloud service. To help business leaders develop robust global
Timothy Chou provides numerous examples strategies in the age of China and India, the
and stories from many of the leaders in the authors uncover the surprising range of
ﬁeld. You’ll be amused to even ﬁnd a story hidden opportunities and challenges presented by these emerging
about Brad and Angelina. giants. They reveal the secrets to capturing the hearts, minds, and
wallets of consumers there and to leveraging the complementary
strengths of each country to achieve global dominance.
THE BLACK SWAN:
THE IMPACT OF THE HIGHLY IMPROBABLE
Nassim Nicholas Taleb THE TROUBLE WITH MARKETS:
SAVING CAPITALISM FROM ITSELF
'The Black Swan' is a concept that will change Roger Bootle
the way you look at the world. Black Swans
underlie almost everything, from the rise In his major new book Roger Bootle, founder
of religions, to events in our own personal and MD of Capital Economics and author of
lives. A Black Swan is a highly improbable the bestselling 'Money for Nothing' and 'The
event with three principle characteristics: it Death of Inﬂation' discusses both measures to
is unpredictable; it carries a massive impact; get the world out of the immediate hole and
and, after the fact, we concoct an explanation the reforms that will be necessary to keep
that makes it appear less random and more it on the straight and narrow in the future.
predictable than it was. The astonishing These truly radical proposals encompass
success of Google was a black swan; so was 9/11. And why do much tighter regulation of banks, reform
we always ignore the phenomenon of Black Swans until after of corporate boardrooms and changes affecting institutional
they occur? In this revelatory book, Taleb explains everything investors. Written in Roger Bootle’s characteristically highly
we know about what we don’t know, and shows us how to face readable and acerbically witty style is the must-have book from
the world. one of Britain’s most respected economists.
14 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
CONNECT WITH THE WORLD’S ELITE
We are proud to announce the launch of our new global others at the very top of their profession.
portal. This has been completely redesigned to incorporate This represents the start of an ongoing programme to
new functionality such as a video viewing room, improved provide a superior level of service to our clients. The portal’s
search and a client area – ‘myCSA’ – which allows our clients content will also include news and topics of interest, such as
to select and save their user preferences. The look and feel is business trends and other industry-leading thought pieces.
also completely refreshed, and the site has improved, dynamic Content will be provided in English, Spanish and German,
navigation. which reﬂects both our global reach and the depth of interest in
At the top level, our portal focuses on CSA’s Global Elite our elite speakers.
speakers – 300 former heads of state, Nobel Laureates and www.csaspeakers.com
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+44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 15
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on stage or page...
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16 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com