Systemic Economy explained

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Systemic economy explained

From linear to systemic relations to fully exploit the value of the economy


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How we got there?

We started our research 13 years ago with deep intuition that we were on the verge of a major shift. It proved correct with the burst of the techno bubble and with the real estate crisis and the deep recession that followed. Following these years of research, on-the field observations, pilot projects, confidential forum with leaders and interviews with highly regarded experts we arrived at the systemic economy model.

RolandGillet:«Itisofutmostimportancetogetoutofthecurrenteconomicparadigmthatledustothiscurrentimbroglioofunsustainabledebt.Itis=metore‐thinktheroleofeachstakeholdersinachangingworld.»

CVofRolandGillet,professoratLaSorbonne,Paris


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A changing world

The world is drastically shifting in multiple dimensions. Never in history we have been coping with such changes. We have to shift – in less than one generation – from a debt-based growth economy to a human progress-based sustainable economy.

Sectorial folding up vs. contiguous redeployment Within this global shift, entire segments of business disappear, and new ones open up.


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Systemic challenges (1/2)

Some big issues requiring actions at multiple levels... Demographic growth and imbalance By 2100, 22.3% of people will be aged 65 or over, up from just 7.6% in 2010.

Managing diversity (age, gender, cultures) Diversity is otherness or those human qualities that are different from our own and outside the groups to which we belong, yet present in other individuals and groups increased thanks to the globalization and the communication media


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Systemic challenges (2/2)

Energy and material resources limits Peak oil, earth overshoot day, water described as Blue Gold, …

Vulnerability of currencies “Currency war” is a major example; with inter-connected economies and the free flow of currencies, a decision from one central bank affect all markets. “No taper brings back talk of currency war” - http://www.cnbc.com/id/101045968

Hyper-connected people and businesses e.g. Thomas Friedman – from connected to hyperconnected http://www.weforum.org/videos/insight-ideas-change-thomas-friedman-connected-hyperconnected Talent and competences Recognizing the strategic importance of human capital because of the enormous value that better talent creates (The war for talent, Ed Michaels, Helen Handfield-Jones, Beth Axelrod)


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Economy is topping almost everywhere

Specifically in advanced economies (US, Euro, Japan, …) but growth will exist, in a different form: intangible

Methodology:Intangiblebookvalueiscalculatedbysubtrac=ngthetangiblebookvaluefromthemarketcapitaliza=onofagivencompanyorindex.

Recognizedbythemarkets


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Systemic Economy - 2 cornerstones

7D‐Value©

Stakeholders’ecosystem

POTENTIALVALUE

current

‐

MaterialLine

ar ‐

Contribu=vevision

‐

System

ic ‐

‐‐‐‐‐

Knowledge

Communica=on

Emo=ons

Processes

Resources&Earth


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Stakeholders’ Ecosystem

The linear relation “Supplier – Company – Client” is out of fashion.

The future will be collaborative, connecting stakeholders needs and resources within new business models, creating more value for the whole.

Access more resources with less risk Faster go-to-market with higher ROI

«Companiescentertheirteamsaroundacommongoal.Oncedone,itdesagregatestorecreateitselfforanotherproject.Thereisatransportabilityofthecompanyinvariousdomains.Eachstakeholderasanevolvingrole.»(B.Colmant,PartneratRolandBerger)


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Ecosystem – Connect needs with resources

When drawing the ecosystem, the key is to link a stakeholder’s resource with another stakeholder’s need.

Office space vs. knowledge/Creativity Time vs. Reputation Sales network vs. Innovative services Combinations are endless…


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7D-Value & Potential

“Valuemaximiza=onisnotavisionorastrategyorevenapurpose,itisthescorecardfortheorganiza=on.Wemustgivepeopleenoughstructuretounderstandwhatmaximizingvaluemeansinsuchawaythattheycanbeguidedbyitandthereforehaveachancetoactuallyachieveit.”(M.Jensen,HarvardBusinessSchool)

What 7D-Value does: •  Detect value and liabilities on 7 levels •  Activate value at multiple levels to increase the global intangible value “C‐Suite managers es0mate that on average they use only 50% of the human capital available within their company.”

•  Make additional resources available (i.e. transform liabilities into resources, use of the ecosystem relations)

Powerful tool to communicate internally and externally on highest ROI leverage and biggest pockets of hidden value


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7D, Dimension 1 – Contributory vision

Purpose is the strongest mobilizer for people. A contributory vision taps into deep desire of human beings. Focus on a company’s future and reason of being, intertwined with the business model development. As a way to attract the top talent as well as clients. •  Google “Organize the world’s information and make it universally

accessible and useful” •  Starbucks “to inspire and nurture the human spirit – one person,

one cup and one neighborhood at a time” •  Essilor “Seeing the world better” •  Twitter: Not yet defined…

Without, the business cannot define its objectives, nor can it establish the strategies for success.


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Dimension 2 - Knowledge

“OECD economies are increasingly based on knowledge and information. Knowledge is now recognized as the driver of productivity and economic growth. As a result, there is a new focus on the role of information, technology and learning in economic performance.” (OECD Website)

Emergence of a knowledge-based economy in the 1960s. It’s time to evaluate it in hard currency. But certainly more the extent of not knowing Need to know what to search E.g. “Knowledge management” as a key strategic management tool. Creativity and innovation are key assets for the future


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Dimension 3 - Communication

Both internal and external efficient communication is crucial to add value : What, When, How and to Whom On multiple topics:

–  Internal culture and governance –  Internal communication:

•  Among colleagues •  During the process

–  Product/Service communication –  Client/Market communication –  …

The hyper-connected world we live in is changing constantly: reception channels but also the way they are used and the type of emitters (e.g. RFID tags, M2M, …)


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Dimension 4 - Emotions

“Emotions normally are associated with specific events or occurrences and are intense enough to disrupt thought processes.” (Brief, Weiss, 2002) Impacts the relations between all stakeholders of the ecosystem and includes terms such a confidence, motivation and trust. “Loving oneself, loving the client, loving the job, loving the team is much better than being frustrated with oneself, despising the client, hating the job, and being antisocial with the team... Open the heart of the company” (Michel de Kemmeter, 2013) Methods offer the possibility to calculate the managerial & productivity costs of an emotional incident (See e.g. The Cost Emotions workplace continuity) Suicides at workplace takes headlines which can decrease confidence in the company. Possible to calculate the cost of absenteeism for a national economy Estimated to be 16 Billions of € for France in 2013 (Source: Alma consulting)

Satisfaction and happiness at work is positively correlated with productivity


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Dimension 5 - Processes

Optimized processes must deliver higher value: –  Sustainability and efficiency of production processes –  Waste management – the seven types of waste –  Circular inclusion of stakeholders resources from the companies’ ecosystem

The inefficiency or unsustainability on the liabilities side, and the cyclical aspects and activation of hidden resources on the assets side of the balance sheet. In our view, the tech bubble burst due to a lack of effective transformation processes of knowledge into business (≈Monetization of the knowledge) E.g. Do the company work in Lean? Is there any destructive processes to cancel?

Tangible


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Dimension 6 - Assets

The traditional published balance sheet, displays health of the company

Tangible


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Dimension 7 – Resources & Earth

What is –  Taken/used by the company as material and natural resources vs. –  Compensate/given back to earth and biotope

e.g. carbon compensation, steam recycling in power plants, …

Tangible

“The European union is currently working on the potential obligation of publication of multiple balance sheets, including pollution (…) we could imagine that at some point some factories will have to close because they pollute too much.” (Ph. Maystadt, Special advisor to the EU)”


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It works!

"We cannot solve our problems with the same thinking we used when we created them.” (A. Einstein) Systemic Economy framework is a proved model, creating multiple value streams, extending the common understanding of value. Examples

–  Danone & Grameen Bank –  Emmaus (France) –  Google (US) –  Alibaba (China) looking to become first internet bank

Many elements of our model have been defined as important in the components of the next global economic system: http://www.millennium-project.org/millennium/RTD-Econ.html


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Systemic challenges require systemic response

When doubting projections (used by a lot of models…)

The Systemic Economy model:

–  Takes the here and now –  Challenges the traditional boundaries –  Focuses on a long-term perspective (i.e. potential) –  Proved rigorous methodology

1. Perfectly adapted to the current and future world 2. Flexible enough to sustain all shocks, including black swans 3. Necessary shift to ensure survival of many companies and acceptance of heritage by the Z-Generation 4. Global systemic value creation by linking needs and resources with a dedicated scanning of potential

Source: OECD – 2008 for expected data, 2012 for realized data


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Engage with us…

https://www.facebook.com/groups/608359662530417/

@UHDR

Company: UHDR Univercity

[email protected] [email protected]


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APPENDIX

•  Example 1: Qustomer – Digital loyalty card of the future http://www.qustomer.com/pages/home


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APPENDIX

•  Example 2: Google http://www.google.com


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APPENDIX

•  Example 3: Djengo - Carpooling for companies http://www.djengo.be/

Systemic Economy explained

Economy & Finance

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