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  2. 2. A WORD FROM THE EDITOR Seeking order in chaos Immediately after a hurricane, there is be chaos rich and that it’s the new order. relief. A relief that the worst has passed Are there opportunities in chaos? We and those who have survived are thankful believe there are. History shows that the just to be alive. Yet, while losses are most innovative times follow the harshest mourned there is a gradual awakening of times. So, how exciting to think that to the aftermath, the chaos that ensues. we are at such a juncture; that yet to be There are new risks and uncertainties to discovered possibilities, ways of working deal with at a time when many are already and doing business await those who dare under par. Resources are strained and the to seek new order from the current chaos. demand to be innovative to survive comes We have drawn together a cohort of when many least welcome it. However, it is contributors who share our belief that we those who find order among the chaos, by are on the cusp of that new order. They evaluating, innovating and adapting, that offer forthright yet stimulating views will survive and thrive in the long-term. on how business leaders need to adapt Much is now known of the extent behaviours and strategies to make the DAGMAR O’TOOLE of the global economic crisis and it is most of the opportunities presented by dagmar@speakers.co.uk safe to say that we are in the financial the ‘new chaos normality’. See how we equivalent of post-hurricane chaos. can help you seek new order, visit Many predict that the 21st Century will www.csaspeakers.com today. CONTENTS FEATURES CREDITS 3 Rethinking Globalization 11 The Euro – An Anchor of Stability PUBLISHER – Pankaj Ghemawat in the Crisis CSA Celebrity Speakers – Otmar Issing 4 Responding to the Opportunities EDITOR IN CHIEF All Eyes on China of a Recession Dagmar O’Toole – James Kynge – Lynda Gratton SUB EDITOR Challenges Facing Markets in the 12 Sustainable Growth Lisa DiVito Post-Recession Period – Ray Hammond – Philip Kotler PRODUCTION COORDINATOR 13 CSA talks with the greatest Referee Penny Prideaux 6 History Helps; Experience Counts of all time – Don Strickland – Pierluigi Collina DESIGN Nucleus 7 The Customer – Post Recession – Lior Arussy CSA NEWS For further information on CSA World please Identity in the 21st Century contact Alexander Hasslacher on +44 (0)1628 13 Audience Feedback – Susan Greenfield 601 417 or email alexander@speakers.co.uk 15 CSA Launches New Website 8 What Does the COP 15 Mean to You and Your Business? © CSA World is published by CSA Celebrity – Alexander Hasslacher BOOK REVIEWS Speakers Ltd, Burnham, Buckinghamshire, Cover Story: Exclusive Interviews United Kingdom. All rights reserved. on Climate Change 14 New titles from some of the Reproduction in whole or part without – Lord Nicholas Stern greatest business minds written permission is strictly prohibited – José María Figueres 10 Global Meltdown Rule Number 1: Do the Math – Hernando de Soto 2 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
  3. 3. RETHINKING GLOBALIZATION RETHINKING GLOBALIZATION 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 than upturns. 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 years ago. 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. +44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 3
  4. 4. POST-RECESSION 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 ) 4 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
  5. 5. POST-RECESSION 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 KEEPING 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 MISSION 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 briefly here. 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. +44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 5
  6. 6. DON STRICKLAND HISTORY HELPS; EXPERIENCE COUNTS 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 6 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
  7. 7. POST RECESSION 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 +44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 7
  8. 8. 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 GROWTH? 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. 8 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
  9. 9. 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 +44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 9
  10. 10. HERNANDO DE SOTO GLOBAL MELTDOWN 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 10 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com
  11. 11. CSA WORLD 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
  12. 12. CSA WORLD SUSTAINABLE GROWTH 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 production. 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 sustainability. 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
  13. 13. MAKING TOUGH DECISIONS UNDER PRESSURE Q&A 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.” International Conglomerate 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
  14. 14. BOOK REVIEWS 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 Timothy Chou 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
  15. 15. 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 CSA OFFICES ANDORRA GERMANY POLAND SWITZERLAND Celebritat Internacional CSA-Celebrity Speakers Celebrity Speakers SP.z o.o. Menschen mit Meinungen Associats S.A. GmbH +48 58 321 75 52 +41 44 260 5960 +376 735 150 +49 (0) 211 386 0070 csa@speakers.pl janmarliermmm@bluewin.ch info@csaspeakers.es info@celebrity-speakers.de BULGARIA GREECE RUSSIA TURKEY CSA Bulgaria Celebrityworks CSA/Moscow Business School CSA-Celebrity Speakers +359 888 308180 +30 210 80 19 444 +7 495 234 0 234 +90 216 332 4444 info@speakersbulgaria.com info@celebrityworks.gr n_kislova@mbschool.ru speakers@groupcsa.com CHILE ITALY SCANDINAVIA UNITED KINGDOM CSA Speakers Chile CSA Italy CSA Nordic Celebrity Speakers Limited +569 9822 0630 +39 02 8900550 +358 40 821 6246 +44 (0) 1628 601 400 mvg@proton-chile.cl info@celebrityspeakers.it susanna@csa-nordic.com or info@speakers.co.uk +358 40 514 9717 CHINA MACEDONIA anna@csa-nordic.com USA China Global Speakers CSA Speakers@Triple S CSA Speakers LLC +86 (0)10 6580 3900 +389 (0)2 5208 826 SPAIN/LATIN AMERICA +1 (213) 239 0318 cgs@accapitalpr.com marija@triples.com.mk Celebritat Internacional lorry@speakers.co.uk Associats S.A. GERMANY MIDDLE EAST +376 735 150 Redner & Perspektiven GmbH CSA@MeetingMinds info@csaspeakers.es +49 (201) 87892-0 +971 4 4270492 x101 info@redneragentur.de medhat@speakers-dubai.com +44 (0) 1628 601 417 AUTUMN 2009 | CSA WORLD | 15
  16. 16. Voices of authority on stage or page... McGraw-Hill in partnership with CSA For more information about McGraw-Hill books and corporate discounts contact: Jon Shipley, McGraw-Hill Professional, Shoppenhangers Road, Maidenhead, Berkshire SL6 2QL, UK M: 07920 503860 T: 01628 502950 E: jon_shipley@mcgraw-hill.com W: mcgraw-hill.co.uk/b2b 16 | CSA WORLD | AUTUMN 2009 www.csaspeakers.com