"Don't call this Economy 2.0!!!"

Article

Didier Marlier

January 30, 2010

From Disruption to Engagement

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Such was the cry from the heart of Marco A. F. da Silva, a Brazilian banker this week, when we were confronting our visions of the profound mutation of the Economy… “Calling it Economy 2.0 will give it a flavor of the month taste. This is not a fad, something deeper has started” he added.

These words resonated strongly two days later when watching French President Nicolas Sarkozy opening Davos’ World Economic Forum , on a harsh criticism of “quick buck capitalism”. Add to this the stand of President Obama against a certain way of banking and it seems that politicians have also felt that wind is changing. For those who believe that such presidential reactions are populism driven, I’d like to remind the moving “apology” of an ex “Wall Street” ideology supporter, Stephen Roach (at the time chief economist at Morgan Stanley) in a May 14th 1996 article called “America’s recipe for industrial extinction”: “The so-called productivity resurgence has been built on slash and burn restructuring strategies that have put extraordinary pressures on the workforce. This approach is not a permanent solution. Tactics of open-ended downsizing and real wage compression are ultimately recipes for industrial extinction.” Nobody suspects Stephen Roach to be a left wing liberal.

Discussing today with a high ranking participant to the “Copenhagen fiasco”, his reply was: “Fiasco it was but there is one positive aspect: People seem to have understood that the situation is too important and that our common future is not something they can delegate to politicians. They need to do something about it themselves and across borders”…

Tuesday, in the project led by Fundação Dom Cabral with leading Brazilian CEO’s, Roland Kupers, a bright Shell executive, had been invited via Cisco’s amazing Telepresence system, to talk about “Complex Adaptive Systems” and how complexity could be used in today’s management. One of his key messages was to “challenge our mental models” about the economic environment. He compared the classic theory of economics (still based on the beliefs of XIXth century physics, which some have started to label “old Capitalism”) to new economics (based on XXIst century biology, already called “new Capitalism”). For Kupers, the traditional belief is that our economy is based on a system of equilibrium, stability and determinism. The “Zero sum game” mentality is its obvious consequence (meaning decreasing returns and the necessity of cut throat competition if I want to survive). The system he sees emerging is one where chaos, emotion and chance also play their role, leading the new economics model towards a world of increasing returns, based on systemic thinking, patterns, self organization, life cycles and complexity. What was very interesting and bringing credibility to Roland Kupers speech was that he wasn’t an agitated believer into a new “economic faith”… For him, the two systems (traditional, mechanistic, sequential, uni-dimensional, linear and rational and the new quantum, concurrent, multi-dimensional, non-linear, emotional and unforecastable one) will co-exist, adding to the confusion and uncertainty.

The “Open Economy” that we see emerge is exactly all that together. And it will bring, as suggested now by some politicians, business people and scientists, very different rules of the game:

  • The interconnected world, the globalization and our dramatically increased capacities of damaging/supporting if not the whole globe at once, at least sizeable parts of it, means a level of interdependence never seen before. Non-linear scientists would refer to the Butterfly causing a hurricane somewhere else; I would simply say that wherever we operate in the world, what happens elsewhere can have a huge impact. Who in Victorinox (makers of famous Swiss Army Knives) would have predicted the dramatic impact of post 9/11 legislations all over the world for their business?
  • Trust is becoming the currency of the connected world. The major ecommerce platforms all have a feedback system which enables us to know who we deal with. New technology has enabled the citizen to rapidly cry foul and challenge traditional sources of authority (remember the costly “mistake” of then Senator H. Clinton claiming to have landed under the bullets in Sarajevo, proven lying by the internet half an hour later).
  • In a March 2009 lecture at Columbia, Umair Haque was warning us that the old system was largely under-estimating costs and overstating benefits. The “polluter payer”, the “who needed public funding will be held accountable” trends are part of it. Haque sees Authentic Value become a trademark of new capitalism.
  • From “zero-sum game” to unconditional collaboration: As per explained above and seen in some of the higher technology sector, my success doesn’t necessarily mean less for you. The term “Co-opetition” is sometimes used. The Principle of abundance will sometime replace the defensive and competitive attitude.
  • Fighting for getting heard, non intrusive/truly value adding advertising, “content for free” and the “Open Source” phenomenon and philosophy will also mean that a certain level of Generosity will be expected as the norm. Those still jealously holding on to their old conception of IP may head for trouble. Brazilians and Chinese, leave aside our own adolescents have a very different view of copyrights than we do.
  • Linked to the generosity, a sharing attitude will become the norm, as it is already the case on the social network sites as Facebook where people share with their “friends” clips, tunes, articles, pictures and other meaningful emotions.
  • This doesn’t mean that everything will go for free. New ways to monetize “Content” will be invented. My son is a wannabe musician (excellent, see his website on www.betinhomendes.com). He already is clear on the fact that he won’t make any revenues from “selling records”. However he hopes to be able to monetize his image through merchandizing, publicity etc… He will cash in on concerts or even small “private events” broadcasted on per pay view internet channels… The record companies are suffering and LiveNation (the world’s bigger show producer) has now Madonna and U2 under contract.
  • Self discipline and responsibility will increasingly be felt as the necessary counterweights to the increased levels of freedom and opportunities we are granted today. Indeed, looking at some worrying behaviours in our cities, this seems like wishful thinking. However, collaborative websites such as Wikipedia, even if not 100% perfectly reliable (by the way none of the encyclopedias are either) are still remarkable gold mines of information due to the discipline of their members.
  • Finally, as many of us will have experienced, Authenticity (an obvious link to Trust) will be requested as the license to operate for leaders. In a world of increasing complexity, ambiguity and uncertainty, people will not follow unauthentic, “painting the walls in pink” types of leaders. Their credibility will not simply rely on their competences (as in the past) but also on their capacity to talk straight.

I apologize for this longer than usual post. There was a lot to share with you from very rich and diverse conversations, posts, clips, articles and events which came on my radar these last weeks. On my way to Amsterdam to study and learn how Rational Emotive Behavior Therapy may help business leaders change the mental models which prevent their people and organizations to progress. Couldn’t come at a better time… Have a great week all and please agree, disagree, comment. Challenge is a sign of engagement!

2 Comments

  1. doug

    OK, so I am sitting here in Kuala Lumpur at a franchised Starbucks wannabe, trying to tune out the every- song-you-ever- knew- done-Cuban-style piping through the café, because I need to google Didier Marlier. And, what pops up as item 3, page 1 on the list? This latest blog. Considering Search Engine Optimization algorithms, the likelihood that a newly minted blog, released in the wee hours of the morning in Switzerland, appears as a top hit in Malaysia can either be considered a perfect example of the convergence of chaos, emotion and chance or simply that there are a hell of a lot of folks who stagger out of bed and open Didier’s blog the minute it is released.

    Reply
  2. Michael

    Dear Didier,

    What you have set out, perhaps sub-consciously, but more likely unconsciously, is a charter / template for a successful network. I have over the years worked in at least twenty networks of leadership consultants; only a few have flourished; some have crashed and burnt in a flurry of emotional recrimination whilst others have never taken off through lack of basic competence or integrity. Looking at the ones that I am still actively part of, I see your 9 rules in action. I gain comfort from this new insight, as I find myself only able to authentically speak about a model or framework if I have experienced it in action, making a real difference. My intention to share the insight means I now need to remember the rules. Interestingly an appropriate mnemonic has just leapt out at me: GRAVITAS, which comes from Latin and means quality of substance or depth of personality:
    G Generosity
    R Responsibility / Self Discipline
    A Abundance
    V Value
    I Interdependence
    T Trust
    A Authenticity
    S Sharing Attitude

    Those of you fully alert on Monday morning will note the absence of ‘Monetise Content’ in GRAVITAS. Using the principle of Open Source I will challenge those bloggers with bigger brains than me to build on my whimsy and complete the model.

    Michael

    Reply

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