‘A shift from an era of change to a change of era’

Amsterdam, Februari 26th 2015

Liquidity Days, International

Private banking

Han Mesters

Sector banker zakelijke

dienstverlening

Content

1 Conceptual framework: disruption!

The ‘Why”

Innovation

2

3

Findings 4

1. Conceptual framework: disruption

• Crisis

• Demography

• Governance

• Generation Z

• Geo-political shifts • Culture

• Environment

Where are we?

2 facts of life:

1. Change is exponential (Kurzweil - Singularity)

2. The Internet revolution has only just begun (ongoing ‘Ryanisation’ of business

models)

Computing

(processing)

Communication

(bandwidth)

Storage Content

Moore’s Law Fiber Law Disk Law Community Law

(Metcalf’s Law)

Doubles every

18 months

Doubles every

9 months

Doubles every

12 months

2n

(where n=

# of People)

6

Someone has Hit the “Reset” Button (Jeffrey Immelt, CEO, General Electric)

We believe:

‘The economy is in an early stage of a

fundamental change with regard to the way work

is organised, managed and executed’

We know:

Many companies are looking for their ‘Why” (why

do they exist?)

Ethos:

‘is a Greek word meaning "character" that is used to

describe the guiding beliefs or ideals that

characterize a community, nation, or ideology. The

Greeks also used this word to refer to the power of

music to influence its hearer's emotions, behaviors, and

even morals’

Nothing is safe……

IBM’s Watson and professionals… ‘singularity’ effect

PayPal does a real-time credit score in millisec., based on your EBay purchase history

http://www.businessinsider.com/these-startups-are-replacing-banks-2014-

2?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29&IR=T

Bron: http://fermi.vc/post/72559525330/disaggregation-of-a-bank

Fuzzy sector borders PayPal does a real-time credit score in millisec., based on your EBay purchase history

Forget Singularity:‘You don’t know what you don’t know’

How to deal with Black Swan: portfolio’s and focus on impact, not only chance

chance

‘By analyzing past returns, a distribution of returns is developed and the probabilities of achieving a

range of returns are calculated according to standard deviation’. Hmmm

(…) Extreme events have happened at a far higher rate than the bell curve model predicts. For example,

the October 1987 market crash was statistically impossible. It couldn’t happen. Yet it did. The same

impossibility applies to the back-to-back market crashes of 2000-2002 and 2007-2008. In fact, severe

losses (20% or more) happen about 5 times more frequently than estimated by most statistical models!

Source: www.investfortomorrow.com/newsletter/3rdQtr2011IFT.html

Innovation and institutions: unhappy marriage

“The rationale for a large firm is

that the internal transaction costs

are lower than the external ones,”

he believes. “But the Internet

has made external transaction

costs lower, so the enterprise can

become much smaller.”

IBM

15

Turbulence of the environment increases

Source: Ansoff

Communities on the rise

Between ‘Markets & Hierarchy’ and ‘The Nature of the Firm’ (Ronald Coase)

Clay Shirky: “Since we have grown up with hierarchical institutions

as models for organizational structure, it’s hard to visualize another

model. But this is where social media has come in. The development

of technological features such as #hashtags has allowed people with

like interests to find each other and organize around ideas

outside a traditional institutional model.

(…) So we have an old way of viewing the organization of people

(thesis: hierarchical institutions). Now there’s a new way of looking

at things (antithesis: unmanaged cooperative

collaboration).

We (as a society) are still trying to figure out how to

navigate this (synthesis) to produce results.

September 2013….longer term impact of ICT on work

18 Bron: Oxford

Experience based economy…

Cloud / sofware abonnementen

Who are we?

Power distance (hierarchy)

0

20

40

60

80

100

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Ca

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Fra

nkrijk

Ne

de

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nd

Ho

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Ko

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Indo

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st A

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a

Ru

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nd

Ch

ina

Masculinity

0

20

40

60

80

100

VS

Ca

na

da

Du

itsla

nd

Ja

pa

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Fra

nkrijk

Ne

de

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nd

Ho

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Indo

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Ch

ina

Low power distance, feminine culture

Trust matters a lot

NL open air museum for Chinese tourists? Not really Nice fit with ‘Top 10 most competitive countries’

The Global creative Class

2. The ‘Why’

The heart of the problem

Companies experience 3 major problems

1. Gross margin pressure

2. Unique selling point/competitive edge

3. Value added proposition

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

15% 20% 25% 30% 35% 40%

Brunel The Netherlands

Adecco The Netherlands

USG People The Netherlands*

Randstad Group Netherlands

Olympia Nederland

Bruto marge

EBIT marge

2010

2009

20102009

20092010

2010

2009 2010

2009

1) USG People, EBIT Margin = EBITA Margin, Gross Margin not available, estimate

Bron: Annual Reports

Standard ‘reflex’ to these Three Big Challenges

The ‘WHY’: ABN Amro roots: 1824

NHM: Nederlandsche Handel-Maatschappij

De N.V. Nederlandsche Handel-Maatschappij werd op initiatief van koning

Willem I in Den Haag opgericht op dinsdag 9 maart 1824

De doelstelling was (Art. 59) "bevordering van handel, scheepvaart,

scheepsbouw, visserij, landbouw en (het fabriekswezen)", in voortzetting van

wat tijdens de Franse overheersing van 1795 tot 1813 was ingezet.

Het hogere doel was volgens de koning dat de NHM zou fungeren als een

“large lever to stimulate and support the national

wealth of our country".

Professional services: From a Brand to a ‘Stand’

29

Can institutions make this shift…..

► autonomy/trust

► mastery

► purpose

Bron : Daniel Pink

‘The purpose of work is to work on purpose!’ Joey Reiman

3. Innovation

Profitability without growth……… S&P 500 Q3 2014

Source: www.zerohedge.com/news/2014-12-08/q3-2014-earnings-breakdown-do-you-still-believe-miracles

Eps + 268% Hoe kan dat? Share buy backs…with debt

Non financial (soft) indicators are basis for future competitive edge

The People versus the Balanced Score Card: ‘Death by KPI’

‘Culture attracts the right professionals, who will generate added value’

Case: recruitment…a few years ago

Adverteren van

vacature

Zoeken met

profiel

Beoordelen

sollicitaties

Benaderen

prospect

Opstellen profiel Selectie

kandidaat

Actief

werv

en

Passie

f w

erv

en

…..and now

Adverteren van

vacature

Zoeken met

profiel

Beoordelen

sollicitaties

Benaderen

prospect

Opstellen profiel Selectie

kandidaat

Actief

werv

en

Passie

f w

erv

en

1. Agility score:

• % of non owned assets/contingency (non employed) labour

2. Innovation score

3. ‘Futureproofness’ of ICT infrastructure

Why innovation?

Assessment of ‘Probability of Default’ driven by future based

variables, not by historical financials!

Different types of innovation

1. Strengthen:

Huidige dienst verbeteren / proces efficiëntie

2. Stretchen:

Huidige dienst aanbieden aan andere

eindmarkten/nieuwe dienst aan bestaande

klanten

3. Blue Ocean:

Nieuwe dienst, nieuwe eindmarkt

Incrementeel

Disruptief

The innovator’s dilemma

Rise of the Network economy

Passion and craftmanship belong to an analog world?

The end of ‘pace setting’ leadership

The eldest of four children, Dunham enlisted in the Marine Corps in 2000.

Jason Dunham stepped into the role of protector long before he ever donned a

Marine uniform.

As a teenager, he put himself between a friend and an adversary to protect his

buddy during a fight. As a brother, he would warn his little sister to watch out

for boys. As a man, he dreamed of becoming a state trooper — so long as

work didn’t take him too far from home, where he could keep an eye on those

he loved most. Dunham died as he had lived, said the minister at his burial last

May: “Caring more for others than himself.”

4. Findings

The rise of the network economy

1. Facts of Life not well understood

2. Structural/disruptive changes outweigh the business cycle

3. ‘Never waste a good crisis’

4. Growth returns in 2015 or: ‘profitability without growth’?

5. Innovate or die

6. Institutions are ….so nineties?

7. The Innovator’s dilemma indeed: most of your clients are not smarter than we are

…but the wisdom of the crowd beats everybody

8. Trust is crucial for letting your professionals shine

9. You don’t know what you don’t know

10.Culture determines success ‘culture eats strategy for breakfast’, but…

11. ..culture is not measured/appraised well enough