Jaap WinterThe Limits of Control

 A gentle breeze

2

 Grew into a perfect storm

3

 Disaster averted by massive state aid

4

 But all was fine for some

5

 On to the next crisis

6

 Who can we blame?

7

BankersNon-Executives

Regulators Credit rating agencies

Remuneration Consultants ShareholdersConsumers

AdvisersAcademics

The Market The Government

 Shaggy defence

8

 Let’s fix the system

9

»Separate commercial from investment banking (ring-fencing)

» European supervision on banks

»European Systemic Risk Board»Restrict and restructure remuneration»Expertise requirement non-executives»New risk management»More transparancy»Prohibit naked short selling»Pension system review» Product approval

 System building and changing gives an essential but false 

sense of control 

10

 Blaming others and the system avoids looking at ourselves

11

 Key systemic building blocks (institutions): rules and incentives

12

 The Paradox of Rules: more rules (incl procedures, policies, control mechanisms, enforcement, punishment) reduce our 

responsibility to compliance responsibility

13

• Barry Schwartz (ted.com): • more and more rules chip

away our moral skills• Impair our judgement

• Illusion of implasticity of our behaviour

• 90% of innovation in financial industry is ‘regulatory innovation’

  Another problem with rules

14

 Rules are scaffolding that allows us to build

15

 And scaffolding can be weak

16

 Incentives corrupt 

17

PerverseCrowd out motivationCheat and lie

Schwartz: more and more incentives destroy our moral will

 And don’t work the way we think

18

• Constrict our cognitive skills, just when we need them

Pink: Drive, the suprising truth Dan Arielyabout what motivates us

 A reminder: the law of diminishing marginal utility applies to 

institutions as well 

19

First law of GossenGoods and institutionsOrganisations and Society at large

 Organisation is often more like a sailboat

20

 Than like a speedboat

21

  We need to resist the standard leadership reflex

22

“We will ensure that this will not happen again”

 And our urge to control

23

• Outsourcing risk: diminishes own responsibility• Over-control: dissatisfaction and end of enterpreneurship• Behaviour translated in technical procedures, language, policies: remoteness diminishes

responsibility

 Control Department Risk

24

 Need to get (back) to the heart of the matter: what it means to 

be human

25

 What motivates us

26

 What makes us responsible: able to respond

27

Francis Bradley (1876)My station and its duties

 Shared languageof Integrity

28

Michael Jensen, Steve ZaffronHonour your Wordo keep your word, oro say you will not as soon as you know and

solve resulting problems of others EffectivenessHabitusCommon languageo call to accounto Response-ability Serenity

 Can Control handle soft controls?

29

 Being Human is practicing

30

• Aristotel• Virtue ethics, practical wisdom

• Thomas Acquinas• Habitus

• Benjamin Franklin• Daily practice

• Peter Sloterdijk

• Denn da ist keine Stelle, die dich nicht • sieht. Du musst dein Leben Ändern (Rilke)

 How can Control contribute to Conversation, Language 

(Integrity) and Practice?

31