Saturday, April 22, 2006

Values and Spirituality

Evalueserve is a Knowledge Partner of the Summit for the Future - May 3-5, 2006

by Aditya Joshi, Anshuman Dash, Evalueserve

Terrorism and conflict dominate the political landscape of most countries around the world. From Nepal to Columbia and from the Parisian suburbs to the streets of Grozny, Chechnya, differences between people and their opinion have transformed into bloody conflicts.

These conflicts originate mainly because of intolerance and a lack of commitment to a peaceful resolution of differences. Such a commitment to peace and progress through dialogue has to be brought about by restoring public faith in the immense potential of human values and dialogue as the means to resolving differences.

Values form the core of any individual. Application of these values results in development of ideas, formation of opinions and establishment of beliefs, influencing relationships with surroundings and one’s kind. These values inspire an individual to be virtuous as well as to be imaginative and inventive in his or her approach, leading to advancement.


Dialogue and Conflict

A continuous interaction between the values of an individual and those of other members of society gives rise to the collective thought of society. This continuous dialogue on values and collective thought processes is the fundamental mode of their evolution. Evolution thus reinvents these values and thought processes to make them relevant for their subscribers as the times change. This dialogue is essential to the progress of humanity. According to Amartya Sen, Nobel laureate professor of economics and philosophy at Harvard University, from his book The Argumentative Indian, it is due to the tradition of open argument and public dialogue that India has been able to create a plural society with many religions co-existing and flourishing. In fact, this argumentative tradition has contributed to cementing the integrity of this vast and diverse nation.

The halt of the dialogue amongst thought processes leads to a lack of mutual understanding amongst people and consequently, significantly increases the risk of conflict between the subscribers of different thought processes. This establishes the necessity of dialogue as the fundamental mode to avoid conflict. At this juncture, it is important to note that conflicts that continued for years, such as the struggle for abolition of apartheid in South Africa and the struggle for India’s liberation from the British Empire, were resolved through dialogue and peaceful means. It is also important to note that in both these struggles, armed conflicts, in form riots or wars, did not result in any significant progress.


The Role of Faith

Faith is a result of the comfort that an individual finds from a relative certitude displayed by kin and surroundings. Faith promotes greater interdependence amongst people. In return for this peace of mind and sense of security, the individual aspires to be more responsible and useful to those whom he depends on.

As a result, faith establishes bonhomie amongst people and facilitates the continuous dialogue process, which is essential for evolution of their values and thought. Also, faith ensures civility by reposing the trust of people in society, authorities and governments. This establishes faith as a fundamental ingredient in maintaining peace and harmony and as a driver of human progress.


Understanding Identity

It is an innate need of an individual to communicate and to be understood. This necessitates proper avenues where he can express himself as well as an audience that is willing to understand and appreciate his or her views. A lack of such forums, leads to marginalization of people, leaving an individual dissatisfied and frustrated. Such a situation may force them to resort to violence in order to make themselves heard.

In order to understand an individual completely, a complete understanding of different facets of this person’s life is important. Identity should not be ascribed to only profession, religion, ethnicity or nationality. In fact, such a reduction of one’s identity also leads to marginalization. Often, discrimination is a result of their identification with a certain religion and not with their identities as teachers, engineers, parents, students or scientists etc. This highlights the importance of plural identities of people. Understanding plural identities is key to keeping away dissatisfaction and hopelessness and thereby ensuring peace and progress.


Leadership and Progress

In order to resolve the wars and conflicts in the world today, bold decisions need to be taken on several issues, ranging from nuclear non-proliferation to environment, from street crime to religious freedom. A creative and pragmatic stewardship is very important to handle these issues and resolve them with the agreement of all concerned. Such leadership will not only have to find solutions to the problems of the present, but will have to think beyond to address the problems of the future; these leader will be fountainheads of ideas.

Umpteen examples of phenomenal leadership are buried in the annals of history. The role and the leadership of Mahatma Gandhi in the Indian freedom struggle is one such example. Till the rise of Gandhi’s movement against the colonial rule of the British, except the US, no colony had liberated itself. The methods chosen by the Americans were that of armed struggle and wars, but what Gandhi was going to propose was revolutionary. His choice of passive non-violence as an aggressive posturing to achieve an independent peaceful India was result of his foresight that a civil and peaceful society cannot be founded on bloody wars. His realization that the disunity and lack of self-esteem amongst Indians is the major cause of India’s continues subjugation to the British rule. These were the targets of his movement. He never preached hatred towards the British. By liberating India, he not only ended two centuries of British rule but also gave the world an example of what peaceful means can achieve.

The leadership of Rev. Martin Luther King of the civil rights campaign in the US is also exemplary. His commitment to achieve equal rights for the African Americans through peaceful protests achieved more for his cause than violent racial riots. Also to be noted is his urge to integrate his followers with American society; he did not preach any revenge or retribution of any section of society to achieve his goal.

A last example is of Dr. Mohammed Yunus, the founder of Grameen Bank, a microfinance organization in Bangladesh. His diagnosis that the cycle of poverty is vicious because the poor do not have the facilities to save any portion of their earnings revolutionized the approach to the issue of mass poverty. He conceptualized and executed a plan to extend financial and banking facilities to the poor led to the dramatic alleviation of their economic standard.

The sheer novelty of the ideas of such leaders not only addresses the issues at hand and but gives the world a new perspective to address issues of the future. The outmoded ways of leadership, of securing selfish interests and of exploiting public sentiments, should be relinquished. The new age leaders must look forward to lead the global thought rather than leading only a particular country or a section of society.

A greater integration of world’s peoples is an imperative for further progress of mankind. A pre-requisite for such integration is maturity in the global thought process that helps the mankind to move beyond the differences and focus on the synergies. Global thought needs to be led in a direction where we learn to value each individual, give him chance to flourish and resolve our difference with mutual respect and amity. The path to such a level of maturity would come through faith, understanding, compassion, persistence and at last, courageous leadership.


Corporate Governance – the controlled way to success

Evalueserve is a Knowledge Partner of the Summit for the Future - May 3-5, 2006

by Sutithi Chakraborty, Prince Batheja, Hedda Pahlson-Moller, Evalueserve

Summary

In the wake of large-scale financial failures such as those of Enron and WorldCom, the world of business has woken up to the need for internal controls. Such internal controls are necessary to ensure equitable distribution of rights among various stakeholders and make every corporate participant accountable for their practices. In other words, the concept of corporate governance has started gaining acceptance and popularity. Corporate governance is a system, which provides sufficient controls to the way an organization is managed and hence ensures transparency. Sound corporate governance demands focus on long-term financial returns to all shareowners, full and accurate information disclosure, accountability of board of directors and constructive dialogue with the government and legislators. It also demands adherence to all applicable legislation prevalent in the country of operation. Therefore, the model of corporate governance followed by an organization depends on its geographic location and thus, varies between organizations. Though adherence to corporate governance directives is the onus of all stakeholders, it is the probably the highest for top-level managerial staff. While the practice of sound corporate governance undoubtedly enhances the goodwill of an organization and ensures financial stability, a careful balance needs to be maintained to ensure that excessive focus on controls do not straitjacket innovation and hence affect customer satisfaction.

Corporate Governance – the controlled way to success

‘I am not saying there won't be an Accident now, mind you. They're funny things – Accidents. You never have them till you're having them.' — Winnie-the-Pooh

Unpleasant occurrences, like their pleasant counterparts, always happen unexpectedly. Over the years, the world of business has witnessed many such unexpected successes and failures. Enron, Worldcom and Parmalat are some of the examples of the latter in the US and Europe. These corporate failures, and many more, have each caused insurmountable losses – loss of wealth, loss of livelihood, and most importantly, irreparable loss of goodwill. Why did these organizations falter? What went wrong? Could the disasters have been prevented? Could the process of atrophy be arrested at the very onset?

This brings us to the discussion of a very important concept - Corporate Governance. Corporate governance refers to the set of rules or regulations that govern the functioning of an organization. According to OECD, "Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance".

The history of corporate governance dates back to the Watergate Scandal, which effectively involved a series of political scandals over 1972-74 and the abuse of power by the Nixon administration in attempts to undermine political opposition. During this period, many companies in the US had engaged in secret political contributions and corrupt payments, thus diluting shareholder value in the long-term. Later, in the nineteen eighties, a number of business failures took place, which made it apparent that the organizations severely lacked proper internal controls and independent audits. In other words, companies were not following the requisite corporate governance directives and instances of corporate failures due to management negligence, non-transparency, unequal distribution of power, etc, were rampant.

In last few years, this trend has changed. Companies have started adopting systematic approaches to manoeuvre and manage their business operations. In other words, corporate governance has gradually become popular in the corporate world. Due to its apparent importance in shaping the economic health of corporations, and therefore society in general, corporate governance has also succeeded in attracting a good deal of public interest.

Corporate governance ensures accountability, transparency, fairness and responsibility of companies on legal, social and economic affairs. In today’s world, characterised by intense competition, these elements are all crucial for success. According to a survey conducted by McKinsey, shareholders in Latin America and Asia are willing to pay around 20-28% premium for shares of well-governed companies. Similarly, in Europe and the US, shareholders are willing to pay 17-23% and 16-19% premium respectively. Hence the importance of corporate governance can hardly be overemphasised.

Sound corporate governance demands the following;

· Focus on long-term financial returns to all shareowners
· Full and accurate information disclosure
· Ultimate ownership structure disclosure
· Accountable and qualified Board of Directors
· Consistent corporate remuneration policy
· Adherence to all applicable laws of the jurisdictions
· Constructive dialogue with the government and legislators

In order to ensure compliance to corporate governance, several ratings scales have evolved in the recent past. These scales have set parameters to monitor and judge the ratings of individual organizations on compliance parameters. Companies, which are rated low due to non-adherence, are therefore losing goodwill among stakeholders

Adherence to sound corporate governance is not only the onus of the owners of the company, or those who hold top managerial positions. It is the responsibility of all stakeholders. In general, the most important factor in any organization’s success is its employees, and the responsibility falls heavily on their shoulders.

The model of corporate governance followed by an organization depends, to a large extent, on its geographical location. Some of the reasons for this are as follows:

· Difference in structure of board – The structure of the board differs per country. Boards of organizations in certain countries, such as Germany, Netherlands and France, follow a two-tier structure; whereas those of organizations in the UK and Spain follow a unitary structure. The two tier structure allows the upper-tier to oversee the work of lower-tier, and hence leads to better adherence to corporate governance.
· Difference in creditor profile – Since creditors are key stakeholders, difference in creditor profiles lead to different corporate governance models being followed in different countries. For instance, in the US and the UK, equity is the dominant form of long-term finance. Banks are thus relatively less important and do not enjoy much control in the operations of organizations. On the other hand, the higher component of debt in organizations in Japan gives banks significant ownership and control in organizational matters.
· Difference in power of customers – The legal framework of certain countries, such as the US and the UK, vests significant rights to customers. For instance, the Citizen’s Charter in the UK states that public services have to develop and publish a charter, which clearly lays down the rights of the customers and performance standards expected from the company over a period of time.

Good corporate governance practices include the following:

· Flexibility of special meetings on needs basis, in addition to regular meetings
· Maintaining clarity in the positions and titles of directors
· Regular management executive meetings
· Creation of a system to clarify responsibilities of directors
· Creation of a corporate advisory committee for better transparency and objectivity
· Improvement in the auditing system
· Fair, appropriate, and timely disclosure of information regarding corporate activities (such as management policies, management objectives, and financial position) to all stakeholders
· Educating employees about business conduct guidelines

Amidst all the emphasis on corporate governance, organizations should remember that better governance is not an end in itself, but rather, the means to a different end – that is customer satisfaction. While tight governance can protect organizations from frauds, errors and undue risk, it can also threaten agility and innovation. Organizations should ensure that regulations and controls do not get in the way of nimble delivery of customer expectations. Customer expectations should not be compromised against adherence and the two should be carefully integrated to create a transparent organization delivering customer value at all times.

A recent example of good corporate governance is the Sarbanes-Oxley Act passed in the United States in 2002. In the wake of the large-scale financial meltdowns of powerful corporations such as Enron and WorldCom, which shook the very foundation of the financial world, this act was designed to review the out-dated legislative audit requirements. Considered to be one of the most significant amendments in the United States’ securities laws, the act specifies the establishment of public company accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure.

Some organizations which have successfully used corporate governance to their benefit include Swiss RE, GE, Shell and IDC. About a decade ago, the board of Swiss Re, a large re-insurer, carried the image of “advance guard of the enemy”. There was little transparency in the system and important issues were hidden from the board. All this underwent a sea change and now the company boasts of sound strategy and proper information flow, resulting in better transparency within the company. The performance of non-executive directors has also come under scrutiny and external coaching is made available to enhance their performance.

Corporate governance at IDC is based on two principles:

1. Management must have the executive freedom to drive the enterprise forward without undue restraints
2. This freedom should be exercised within a framework of effective accountability

What are the emerging trends in corporate governance? Companies have already started being more transparent and accountable, demarcating the role and responsibilities of the board and conducting performance appraisals of the board members. There is also a trend towards more external representation in boards and shorter tenure for such externally appointed board members.

Creative Leadership

Evalueserve is a Knowledge Partner of the Summit for the Future - May 3-5, 2006

by Sooraj Mittal, Hedda Pahlson-Moller, Evalueserve

Is leadership limited to the ability of a person to influence other people in getting things done, above their normal standard and quality, or does the society need a new breed of leaders who can evolve on a continuous basis, addressing new challenges?

Traditionally, leaders have been known to possess the ability to motivate people, identifying their strengths, nurturing them and making their team function in a synthesized manner, thereby delivering up to its true potential. However, over a period of time societies and systems evolved and so have the dynamics of leadership.

Over a period of time, many nations have struggled for independence, apartheid, etc while, most resorted to violent means to achieve their cause, leading to mass destruction on both sides. But, only a few creative leaders like Mahatma Gandhi, Martin Luther King, Nelson Mandela resolved such issues through their revolutionary idea of non-violence. Thereby, not only helping attain the objective but also creating an example and inspiration for the coming generations that there is always a non-conventional and perhaps a less traveled path.

There are three sets of situations from where a leader can be identified or nurtured:
1) A person possessing a certain skill set and has the ability to take up the leadership role
2) Lack or absence of proper leadership or certainly a crisis situation brings out extraordinary leadership skills to handle the situation
3) People who choose to become leaders constantly try to develop the required skill set

As the world becomes flat, it has become a level playing field for all the players, irrespective of the geography, cast or creed. The availability of similar tangible resources to all the players has made the environment into a place of cutthroat competition. In order to develop in such a competitive environment companies have to heavily rely on the intellectual capital, primarily present in the form of its employees. They need leaders who can guide and bring out the best from its human capital.

Their role is not limited to merely guiding people in the right direction. They require creative leaders, who do not only limit their role to addressing problems through novel solutions, but by giving new viewpoints on how to resolve problems in the future as well.

This brings us to a pertinent question - can someone be taught how to think creatively? Organizations spend heavily on training their employees, especially training potential leaders and inculcating leadership values. However, this does not ensure imagination, creativity or ethical behavior in the audience. These qualities develop over a period of time with experience and exposure to various kinds of problems. In addition, it also requires a conscious effort on the part of the individual to grow in that direction.

Creative leaders can be broadly segregated as Re-definers and Re-directors. The former being those who introduce a new dimension to existing ideas (such as Bill Gates redefining the computer), while the latter could be those who find a new way of working (like what Henry Ford did when he introduced the assembly line production system).

Before any organization/society demands for a creative leader, it should ensure that an environment is created, where such a leader can be identified and groomed. Society needs to be flexible in terms of accepting new ideas.

For instance, at 3M, scientists spend almost 15% of their time on personal activities. As a result, Fry, one of the scientists, invented the simple, yet innovative, ‘Post-its’! During his free time, Fry used to sing at the church; however whenever he used small paper pieces as bookmarks, they would invariably fall. Fry recalled a weak adhesive developed by his company - he used it to develop easily detachable bookmarks, which we now see at homes and offices alike.

Essentially, the difference between a leader and a creative leader can be compared to the difference between Subash Chandra Bose, an extremist, and Mahatma Gandhi, a Moderate. They hold a significant place in the history books, as both had fought against the colonial rule of the British Empire. Yet both had adopted different ways to address the problem. While, Bose believed in the conventional way of violence (an eye for an eye), Mahatma addressed the problem by means of non-violence and non-cooperation movements. As a result, the approach adopted by Bose, resulted in fear amongst the British for some period of time and had a short-term impact on the people. While, the approach adopted by Mahatma Gandhi had a long lasting impact on British as well as the common public, leading to a united effort to achieve independence for the nation.

A society, as we know it, combines the likes of people from varied backgrounds, having differing skill-sets and divergent thoughts. Collective leadership ensures that this multicultural society moves in a cohesive and collective manner to attain the defined objectives into realistic and attainable goals. Today’s world is very chaotic and complex. The skill set required to address these problems are not present in one person. Moreover, the problems are not just limited to one system or society. Therefore, in order to address such problems a collective effort is required.
For instance, the war against terrorism has to be a collective effort on part of all the nations across the globe, as the problem is not just limited to the US or India. It has an equal chance of striking any nation at any given moment.

For instance, the defense force of a country would comprise of the Army, Navy and the Airforce. All have their own skill set and strategic importance to the security of a nation. Yet, when it comes to a war, a collective effort is required from all the three arms of win the battle.

If the role of the leader has evolved, so have team dynamics. No longer can a group/department of people be necessarily classified as a team. These are a set of individuals, who are doing the job assigned to them. Essentially, a team is a group of people who collectively collaborate to achieve one predefined objective.

The relationship of a leader with his/her team has evolved from a supervisory role to a multi-tasking role. The leader is a guide, mentor, motivator as well as a team member. Instead of moving ahead of the team, he/she has to move along with it. More than dependence, it is now a question of synergies and inter-dependence.

The only thing, which is constant, is change, over a period of time societies have evolved and so has the way in which people think and see each other. Yet the same old concepts still exist, although the ways they are handled and demanded by the society have evolved. From a leader who leads from the front and keeps people motivated, to a leader who can provide innovative solutions to new set of problems.


Sunday, April 16, 2006

INTEGRITY – The New Leadership Story

By Ed Konczal & Jeannette Galvanek
A contribution to the
Summit for the Future - May 3-5, 2006 - Creative Leadership

PROFILE OF THE 21st CENTURY LEADER

While leadership is vital to corporate performance, there is a growing realization that effective, trustworthy leaders are absolutely crucial to be successful in the future. In addition, leader characteristics are dramatically different than past leader, even the recent past.

Command and control is out, organizations are flatter, the competitive landscape is chaotic, people want meaningful work, and customers are in control. This transition is frequently compared to the Industrial and Information Economies, but the breadth of changes are so dramatic, little precedent exists.

Through our experience and research we defined 21st Century Leader characteristics needed in an increasingly changing business landscape. Leaders need to continuously adapt to their overall context. Application of these characteristics is more art than science.





While all characteristics are needed, Integrity is vital. Most companies are not ethically (and now financially) bankrupt like Enron, but we still have leaders lacking credibility. Lack of Integrity must not be tolerated. Otherwise everything else that contributes to corporate success will suffer.

LEADERSHIP INTEGRITY GUIDELINES

Integrity is a delicate jewel. Building integrity in leaders and organizations takes time and cannot be feigned. You must feel it in your gut, in your core beliefs that being honest and trustworthy is the right business practice. If you feel that integrity is only a route to financial success, you are doomed to failure.

Not financial acumen. Not vision. Not creativity. What employees want most from their business leaders are basic principles in practice such as honesty, integrity, ethics and caring, according to the results of a survey conducted by Right Management Consultants.

Consider these suggestions as you build integrity within your leadership team. They are aimed at integrating Integrity within the organizational culture. You must address “the way we do things here in company x”, or the norms governing how people make decisions each day.

A) Integrity starts with the Board of Directors who develops an ethical practices statement and demand adherence. Violators must be publicly admonished similar to what Jack Welch did at GE.

B) Insure these practices flow easily throughout the culture and embedded in the formal and informal company practices

C) Stop the scoundrels at the gate – when recruiting leadership positions, use new approaches to reviews and assessments designed to surface integrity issues. Bristol-Myers, Pfizer and smaller companies such as Spartan Stores are using innovative approaches to filter out candidates with Integrity issues.

D) Put Integrity components in compensation/incentives programs for all not just executives.

E) Communication between leaders and people in the organization deteriorated despite polished multimedia techniques. Your message may be lost in the technology. Tell stories about authentic leaders at company meetings, publish them in company newsletters. Tell them about company performance. Avoid fancy slides, just tell them the facts.

F) Leader development programs must include a first course/seminar in Integrity.

G) Be seen by your people. Let them see and talk with you in a relaxed place. If you “hide” in your office, it’s difficult to build Integrity.

H) Turn bureaucracy on its head.

I) Establish a “safe-haven” permitting employees to surface integrity problems without fear of retribution.

J) Tough decisions always challenge Integrity. Such times require courage to do the right things. Don’t waste time over analyzing. Embrace integrity and you’ll know what to do.

K) No more “yes men/women”. Surround yourself with trusted people with diverse viewpoints who tell you what they really think about your ideas. Building Integrity takes time and continuous vigilance to maintain.

These guidelines are not conclusive. We don’t know your business context. But if you follow these you will be off to a good start.


See also in our Book Shop "Simple Stories for Leadership Insights in the New Economy" by Jeannette Galvanek, Ed Konczal

Wednesday, April 12, 2006

The Ethical Economy

by Nicolai Peitersen, Actics Limited & Adam Arvidsson, Media Science, University of Copenhagen
A contribution to the
Summit for the Future - May 3-5, 2006

[...] What then is this real development of the productive forces? There have been lots of terms tossed around in recent years in order to describe, the 'New Economy' that is replacing the old, Fordist, industrial society: Information Economy, Knowledge Economy, Creative Economy, Experience Economy or New Economy (tout court) are some of the most frequently seen of these terms. We would like to introduce the concept of an Ethical Economy, not just to add another term to the list, but because we think that the Ethical Economy describes something more fundamental, something that lies beneath the surface of all or these concepts: cooperation.

The ethical problematic is intimately linked to the issue of cooperation. It is because people cooperate and create things together that they are ethical beings. Traditionally ethics and economics have been kept apart. Economics have been understood as the realm of objective needs and rational calculus, while the 'softer' ethical problem of how we matter to each other was thought of as something that arose only when one left the workplace and engaged in other forms social intercourse. Now however, things like ethical consumerism, or corporate ethics indicate that this boundary is no longer as rigid as before.

Now the introduction of ethics into mainstream economic thought is precisely a response to the new economic centrality of cooperation. Of course cooperation has always been the secret productive force of capitalism. Both Adam Smith and Karl Marx stressed how the efficiency of industrial production rested mainly on its ability to create new and more efficient forms of co-operation, like the division of labour in manufacture, and latter the assembly line and the complex production and distribution systems that developed around it. Marx was particularly foresighted in this respect. In an obscure passage from Grundrisse (a collection of sketches and notebooks that he never intended to publish himself) he argues that as large-scale industry develops and becomes more complex, the main productive force will be cooperation itself. He called this General Intellect, by which he referred to a ort of social intelligence, a collection of competences, know hows and skills that arose organically out of the complex forms of cooperation and social interaction that the large factory made possible. Machines were an important part of this General Intellect, but they did not exhaust the concept. Firstly, Marx argued that machines (or technology) was the result of this social intelligence, they were a materialization of knowledge and skills that had already developed through previous forms of cooperation. Secondly, he argued that the most important contribution of machines and technology was that they permitted more complex forms of cooperation, and thus further unleashed the key cooperative, or ethical productive force.

Marx wrote this in the 19th century. When he though of General Intellect he thought of the transmission-belts of huge steam-driven factories. But today's Information and Communication Technologies has generalized this enhanced capacity for cooperation across the whole social body. The General Intellect of the factory has become a mass intellectuality that empowers the cooperative potential of social relations generally. This is the fundamental element of the new economy. The production of knowledge, of experiences, of creativity of all the immaterial goods that Globaliseringsrådet hope will keep Denmark wealthy is in every case premised on the ability to activate and utilize the productive potential of social cooperation. It is the cooperation of the many, of the networked multitude, its ability to produce an ethical surplus, social relations, experiences, knowledge and styles, that supplies the raw material for the new, ethical economy. We would go as far as to say that the main economic contribution of information economy has been that it has enabled these new forms of productive cooperation, this new ethical economy.

That a generalized, technology-enhanced capacity for manifold cooperation has become the main productive force means that there is no longer any contradiction between ethics and economics. On the contrary, the ethical ability to open up to and share with others has become the most fundamental quality of a successful economic agent. This also means that the old models for institutionalizing ethics and economics, representative democracy and private property are becoming obsolete. Politics is no longer a separate practice, best handled by expert politicians. On the contrary the basic political practice of constructing a common social world, an ethical surplus has become a fundamental aspect of economic production. A brand community is like a social movement, open source is a political program, and a self-managed slum or a cooperative micro-credit system is also a project for a different political order. Private property, particularly as applied to immaterial goods like knowledge and innovations goes against the whole logic of maximizing sharing and cooperation that stands behind the new economy. This means that a successful policy for the new economy cannot just be a matter of surface alterations to an outdated neo-liberal model. The whole institutional order of society needs to be thought through again. It must be geared towards maximizing the cooperative abilities, the ethical productivity of the many. We have some modest suggestions.

The principles for the ethical economy.
We use the term 'ethical economy' not because we think that present productive conditions are necessarily nicer or more socially conscious, but because the economy of technologically enhanced networks of cooperation puts the ethical dimension of human existence directly to work. This in the sense that the ethics of the particular encounter is a determining factor behind its economic productivity. Value, the value of an actor or a service becomes primarily based on his, her or its ability to matter in an ethical sense, to give something back, to expand the ethical surplus that is produced in the encounter. We suggest that the three general principles put forth by Peitersen and Skibsted can be useful to think about the ethical productivity of actors and encounters.

Proximity
Actors are best suited to matter to those things or people to which they feel closeness. This means that actors should be empowered and given maximum freedom to determine their own horizons of action. It also means that the management and evaluation of a productive activity should occur as close as possible to where it matters, ideally by the actors that are present in its proximity-horizon.

Maximization
The productive potential of each actor should be maximized by choosing the actions that generate the greatest additional value to his or her proximity-horizon. On a macro level, this means improving sharing instead of competition and encouraging self-organization instead of discipline.

Expansion
An economic agent is more productive the wider his or her horizon of proximity. Thus, it is of economic importance for the agent to continuously expand its feeling of closeness: to get involved with more people and situations. Actors should be encouraged to learn from and coach each other, policy should encourage the highest degrees of tolerance and respect. Not primarily because these are nice humanistic values, but because, as Richard Florida has so convincingly demonstrated, they are key economic resources.

FOUR MODEST POLICY PROPOSALS
... continue reading: click here

Tuesday, April 11, 2006

Intellectual Capital Report

Leif Edvinsson, CEO, Universal Networking Intellectual Capital, is a speaker in the Knowledge Stream about Life Sciences at the Summit for the Future, May 3-5, 2006

Member of the project team 'Intellectual Capital Report 2004' by the Center for Molecular Medicine, CMM.

Excerpts from the report:
"Research is driven by a need for knowledge. The CMM knowledge goals are formed by society, science and various interest groups with the common aspiration to improve public health. In order to reach the knowledge goals, human, structural, and relational capital is invested in the key processes of CMM - research and knowledge transfer.

In turn, research and knowledge transfer generate results with various time-frames. Short-term results, output, are easily measured such as published discoveries or graduates from research training. These give rise to mid-term results, or outcome, when new medical treatments or science-based companies are developed. Most important, but also most difficult to measure, are
the long-term effects - the impact of the research and knowledge transfer on the public health.

The CMM Intellectual Capital Report is modelled after all these external and internal factors, capitals and results. [...]"

"Our research efforts build on four interdependent knowledge goals. The end goal is to improve quality of life. The means to meet this goal are to increase knowledge on common diseases, which in turn depends on the ability to strengthen the organizational knowledge and coaching for the future. These knowledge goals guide our daily activities as well as our long-term strategies.

1. Strengthening the organizational knowledge
The organizational knowledge base is not the sum of all facts. Sharing knowledge, networking and collaborating, form knowledge synergies which give rise to truly innovative ideas. Therefore, CMM strives to stimulate the mutual benefit between clinical experience and experimental competence, and aims to disseminate knowledge on medical technology and methodology relevant for molecular medicine. These measures strengthen the organizational knowledge base and increase the possibilities for major breakthroughs.

2. Coaching for the future
All experts have been beginners. To secure future generations of researchers in molecular medicine, we need to recruit young outstanding researchers and support their development. Our strategy is therefore to emphasize the intellectual, relational, and structural infrastructure for this group in particular.

3. Increasing knowledge on common diseases
The knowledge on common diseases is best developed through front line research. CMM is consequently aiming for competitive research and innovations, on the national as well as the international scene. Our joint efforts will successively reveal new potentials for better preemptive methods, diagnostics, and treatments.

4. Improving quality of life
The three previous objectives all aim at improving quality of life. With new knowledge, physicians can perform more accurate diagnoses and offer improved treatments. With increased awareness, all of us can choose a healthy life style and make conscious decisions about risk factors in our daily life."

[...]

This report is available as a *.pdf: click here

Innovation as Risk Taking

by B Vijayalakshmi, Hedda Pahlson-Moller, Evalueserve
Evalueserve is a Knowledge Partner of the
Summit for the Future - May 3-5, 2006

Innovation: The DNA for Growth
You can't solve a problem on the same level that it was created. You have to rise above it to the next level - Albert Einstein

This quote by Albert Einstein clarifies the common misconception about innovation. Innovation is not only about developing a product or service from scratch but is also about adding value to an existing product or service. Organisations across the world have focussed on innovation in order to achieve the competitive advantage required for creating and sustaining growth. The effect of globalisation on the world economy has also played a significant role in fostering innovation. Organisations soon realised that without innovation they faced the possibility of extinction.

Research and development (R&D) and innovation go hand in hand; however, R&D is only one aspect of innovation. While innovation is about introducing a new idea or process to the end customer or developing and improving an existing product or service, R&D is about conducting original investigations to gain new knowledge for improving products or services.

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fear of the new

Geoffrey Klempner, Philosophy for Business, is a "catalyst" in the knowledge stream about the future of Corporate Governance at the Summit for the Future - May 3-5, 2006

Monday, 10th April 2006: A colleague questioned a claim I made, commenting on the synopsis of Sir Paul Judge's keynote presentation for the Club of Amsterdam Summit for the Future 2006, when I said that, 'a risk is, in itself, always bad':

'Are you sure that the concept of "risk" is always bad, by the way? What about the "risk-lovers" who are mentioned?'

At first, I couldn't understand why anyone would think that. Obviously, risk lovers, by definition, are prepared to take bigger risks for a given reward than risk haters. But if you could get exactly the same thing that you wanted without having to take any risk, it would be idiotic to choose the option which allows even the smallest risk. A risk, again by definition, is always a risk that something bad might happen, to risk is to risk a bad consequence. When you take a risk, you gamble that you will get the thing you want and not the thing that you want to avoid. That's just what a risk is.

Then the penny dropped. This may be the strict meaning of 'risk', but this is not the only way in which we colloquially use the term risk. For example, a friend phones you up and invites you to a party. 'I don't know, I've got a lot of work to catch up on.' 'Yeah, you might risk enjoying yourself, or even meeting someone!' comes the sarcastic reply.

This is a different kind of risk aversion, the fear of the new. The introverted young man is reluctant to 'come out of his shell', preferring the 'familiar', the 'safe' to any situation which presents the slightest emotional challenge. The metaphor of the shell is very apt, because it conveys the idea of different realities, the reality that you know all too well, and the reality that you don't yet know, the unfamiliar, the new.

At one extreme, this fear takes the form of a psychological condition called chronophobia. I am lying in bed, imagining what it would be like to be sitting in the kitchen, eating breakfast. The very thought of a time different from now causes a peculiar kind of panic.

It is difficult to convey this fear, which for most persons lasts only seconds or fractions of a second, to someone who has never experienced it. It is the psychological equivalent of the ancient metaphysical problem of the nowness of now. There is no logical definition of 'now'. Let's say now is the time that GK writes, 'Now is the time...'. Already that time is gone. Now is now a different time. Every time you attempt to define now, you end up defining any or some now, rather than this unique now. However, in order to really appreciate the force of this problem you have to feel it. The endless succession of nows is nothing less than the succession of deaths and rebirths of the 'I'. When I am munching my breakfast toast, the I-now that lies here thinking this will be dead, annihilated.

Chronophobia is one possible explanation of the fear of the new, but by no means the only explanation. There is also the fear of relationship, which arguably plays a larger, more significant role in our fear of the new. This is a more plausible explanation for the case of the reluctant party goer.

However, in the context of the Amsterdam Summit, it is difficult to see that the fear of time, or fear of relationship are going to be key issues. Is there any other 'pathological' form of risk aversion?

There is another fear, which has a double aspect. It drives some people on, while it makes others hold back. I mean the fear of failure. If I gamble £1 on black and red comes up, I have 'failed' to win £1. That's too bad, especially if I needed the money for my fare home. Losing my bet on the roulette wheel is, according to my analysis of risk in the literal sense, something to fear. But if you like to gamble, why not take the risk? (There are actually very good reasons for not betting on roulette: There is no room for skill. If there are one or more 0's on the wheel then you can't win in the long run, but let's leave that aside.) The fear of failure is something else. Like chronophobia and the fear of relationship, it is an ego problem. But in this case, the object of the fear is our fragile sense of our own self-worth. The fear of failure can spur you on to compete more ruthlessly, determined to win at all costs, or it can paralyze you into inactivity.

Some very successful business people suffer from the pathological fear of failure. You would never know that there was a problem until an occasion arises where they have to take a loss, admit that they were beaten this time. But these executives and managers won't accept this. Often, they will go to extraordinary lengths to put the blame on someone else, or else refuse to face the facts and ending up with a bigger loss.

I remember once reading an article which made the case that the fear of failure is one of the legacies of a school system based on competition designed to produce the meritocracy for our 'brave new world'. That was thirty years ago. Now it's worse. In Japan, there have been reports of an alarming rise in suicide rates of young people as a result of the extreme demands of a school system which ruthlessly punishes failure. In Britain, the comprehensive state school system introduced in the 60's as the solution to the problem of a two-tier system where losers were consigned to second-class education, is now being dismantled, step by step, with the appearance once more of 'schools of excellence' which will cream of the most 'successful' pupils.

If the skeleton of the fear of failure is lurking in your closet, what can you do? It all depends whether you are asking a philosopher or a psychologist. There are various therapies and cures. Try a search on Google. Here's a typical statement I just found just looking at the listings: 'Combat stress and liberate your assertive self... Use affirmation and positive self-statements to counter fear of failure.'

Right.

And the philosophical approach? That would simply be to imagine you are advising someone else on what do about a similar situation to the one that faces you... then take your own advice. That's the rational way. I can't promise that it will work.
(c) Geoffrey Klempner 2006