LEADERSLEADERS OF THE NEW OF THE NEW ECONOMYECONOMY5 Dimensions5 Dimensions

Marcelo Bulk (marcelo@bkcolombia.com)Marcelo Bulk (marcelo@bkcolombia.com)

Why should we care about Why should we care about the New Economythe New Economy??

• In the past, many countries, In the past, many countries, communities and companies communities and companies didn’t see the approaching didn’t see the approaching changes and their leaders couldn’t changes and their leaders couldn’t save them from the suffrage.save them from the suffrage.

• Present demands are:Present demands are:– Low costsLow costs– Customer serviceCustomer service– High TechnologyHigh Technology– Office environmentOffice environment

The leader’s challengeThe leader’s challenge

• Cut costs, but without going against Cut costs, but without going against quality and other demands.quality and other demands.

• Give force to customer service, Give force to customer service, investing in fidelity and commiting the investing in fidelity and commiting the customer in the organisation growth.customer in the organisation growth.

• Understand that technology is the Understand that technology is the needed infra-structure to help other needed infra-structure to help other demands to be fulfilled.demands to be fulfilled.

• The leader knows his organisation The leader knows his organisation relies on people, who are the same relies on people, who are the same heart of it.heart of it.

Un poco de HistoriaUn poco de Historia• Agricultural AgeAgricultural Age• Industrial AgeIndustrial Age

– 1800 – 1800 – First Industrial RevolutionFirst Industrial Revolution– Siglo XIX – Siglo XIX – Second Industrial Second Industrial

RevolutionRevolution• ComCommmercialercial Aged Aged

– First “shaken” into the Old First “shaken” into the Old Economy, based in goods and Economy, based in goods and capitalcapital

– The concept of The concept of SERVICE SERVICE was was enforcedenforced

• Information AgeInformation Age– New Economy First fall: 2000 New Economy First fall: 2000

(NASDAQ)(NASDAQ)– Second New Economy fall: 2003 Second New Economy fall: 2003

(ENRON)(ENRON)1983, 30th. MayThe term comes in Time Magazine

From Old to NewFrom Old to New• It is a change from the Old Economy – It is a change from the Old Economy –

structured on industrial goods – and the structured on industrial goods – and the New Econony – structured on the New Econony – structured on the information.information.

• Even though the term Even though the term New EconomyNew Economy is not is not 100% accepted, there is no doubt hat it helps us 100% accepted, there is no doubt hat it helps us to create a frame for today world.to create a frame for today world.

• In the beginning, it only meant the basic infra-In the beginning, it only meant the basic infra-structure that allows consumers and companies structure that allows consumers and companies to deal and trade around the globe.to deal and trade around the globe.

• Initially, it was restricted to the United States Initially, it was restricted to the United States and its economy specially that which is linked to and its economy specially that which is linked to the technology of information and the technology of information and communication.communication.

• Slowly, it is accepted in a wider range, signalling Slowly, it is accepted in a wider range, signalling a behavior of an economy where technology and a behavior of an economy where technology and information is strongly there.information is strongly there.

Technology, the engineTechnology, the engine

Moore Law

Technology has become the “people’s science” and it has pushed the Information Age just like engines pushed the Industrial Age out of the factories.

One of the reasons is the cost of the tech elements. The Moore Law has foreseen this. In fact, sending 1 trillion bits three decades ago has reduced from US$ US$ 150,000 to US$ 0.12.

Old Old EconomEconomy versus New y versus New EconomyEconomy

• Offer/demandOffer/demand

• ControlControl

• Distance is importantDistance is important

• Mass productionMass production

• ProductsProducts

• PredictiblePredictible

• It is based in the It is based in the Industrial RevolutionIndustrial Revolution

• ConsumismConsumism

• Value comes with Value comes with abundance (more abundance (more availability/more sales)availability/more sales)

• CollaborationCollaboration• Distance is not so Distance is not so

importantimportant• Relationships with the Relationships with the

communitycommunity• ServiceService• ExperimentalExperimental• Information AgeInformation Age• Experience and useExperience and use

Value according to Value according to ……

• It is assigned It is assigned according to physical according to physical factors (parts, etc.)factors (parts, etc.)

• Non-physical costs Non-physical costs (labour and design) (labour and design) are minimalare minimal

• Formula: an object Formula: an object value is the sum of value is the sum of those obvious partsthose obvious parts

• A complex interaction A complex interaction of obvious parts and of obvious parts and intangibles (design, intangibles (design, engineering, brand)engineering, brand)

• Formula: it is more Formula: it is more than the sum of the than the sum of the parts – a bit of parts – a bit of chemistry and magic; chemistry and magic; it includes knowledge it includes knowledge and emotionand emotion

Old Economy New Economy

Probable value distribution Probable value distribution in the New Economyin the New Economy• Creation of knowledge (innovation) – 10%Creation of knowledge (innovation) – 10%• Coordination (marketing, distribution, Coordination (marketing, distribution,

administration, etc.) – 20%administration, etc.) – 20%• Internal knowledge transference – 3%Internal knowledge transference – 3%• Production routine – 14%Production routine – 14%• Control, supervision – 8%Control, supervision – 8%• Direct production – 20%Direct production – 20%• Internal transport, assets – 3%Internal transport, assets – 3%• External purchases of service – 22%External purchases of service – 22%

As customers, we start to understand the intangible aspects of the product, like prestige and brand. As suppliers, we find that understand how to do it is

more importan than doing it.

New Economy – creating a New Economy – creating a frame Iframe I

• 4 4 key-key-concepts:concepts:– CoordinaCoordinattiioonn– InnovaInnovattiioonn– SelecSelecttiioonn– LearningLearning

• Essencial eEssencial elements:lements:– Digitalization and intensive use of informationDigitalization and intensive use of information– Knowledge codificationKnowledge codification– Transformation of the information in a means Transformation of the information in a means

of profitof profit– New ways to organise the work and New ways to organise the work and

productionproduction

New Economy – creating a New Economy – creating a frame IIframe II

• Defining wordsDefining words::– Information SocietyInformation Society– Digital EconomyDigital Economy– Knowledge-base SocietyKnowledge-base Society– Net EconomyNet Economy

• New New expresexpresssions:ions:– 24/7/36524/7/365– BlackberryBlackberry– Extreme jobExtreme job– Knowledge workersKnowledge workers– Emotional InteligenceEmotional Inteligence

The New The New ParadigmParadigm

• A paradigm is created based in two A paradigm is created based in two soucressoucres::

•KnowledgeKnowledge

•ExperiencExperiencee

• Apart from the knowledge formerly Apart from the knowledge formerly given, let’s know more from the given, let’s know more from the globalised world where we live.globalised world where we live.

A few data of our planetA few data of our planet

• 30% 30% of the world population don’t have of the world population don’t have proper food yetproper food yet..

• Every year, 25 million people in the Every year, 25 million people in the world goes down the poverty level.world goes down the poverty level.

• 1.3 billion of people live with less than 1.3 billion of people live with less than US$ 1 per day.US$ 1 per day.

What is going on in the work What is going on in the work areaarea

• There is around one billion unemployed people There is around one billion unemployed people or people who are not formally employed.or people who are not formally employed.

• An increase of time in work during the week for An increase of time in work during the week for women: now they work 44 hours (from 39 women: now they work 44 hours (from 39 hours in ’77).hours in ’77).

• An increase of time in work during the week for An increase of time in work during the week for men: now they work 49.9 hours (from 47.1 men: now they work 49.9 hours (from 47.1 hours in ’77).hours in ’77).

• In recent researchs, executives prefer a job In recent researchs, executives prefer a job with less hours and more quality of life.with less hours and more quality of life.

The The JapJapaann case case

At the end of the Crisis:

In 2002, there were 160 cases

of death for work

excess (43 suicides).

Now, let’s see our Now, let’s see our experienceexperience

• Try to identify what happend in Try to identify what happend in your career in the last 20 years.your career in the last 20 years.

• Identify the organisations where Identify the organisations where you have worked, which experience you have worked, which experience did you have there?did you have there?

• Try to establish some pattern from Try to establish some pattern from those experiences.those experiences.

From hereFrom here……

• In the point you are today, what In the point you are today, what can be foreseen in the future?can be foreseen in the future?

• Which important elements do you Which important elements do you have to face this future?have to face this future?

• What is lacking to you to live the What is lacking to you to live the future?future?

• What can you do to create the What can you do to create the future?future?

• Is there any future threaten you Is there any future threaten you can foresee?can foresee?

The The TransformaTransformationtion

• In reality, the economy is in the In reality, the economy is in the transformation process, draging transformation process, draging with it the whole civilisation.with it the whole civilisation.

• This has happened whenever an This has happened whenever an Age changed. And in all changes, Age changed. And in all changes, leaders emerged who enabled us leaders emerged who enabled us to reach where we are today.to reach where we are today.

• Are you this leader of the new Are you this leader of the new paradigm?paradigm?

The ChangeThe Change

• This is how we call the This is how we call the transformation process.transformation process.

• There are 3 types of change:There are 3 types of change:– TransiTransittiioonn– CrisisCrisis– CChhaosaos

• How leadership works with each How leadership works with each type of change?type of change?

The leader in the Transition The leader in the Transition changechange

•Few changes, low impact or Few changes, low impact or previsible impact changes.previsible impact changes.

• It is the case of monopolies It is the case of monopolies which keep power, but change which keep power, but change something in their image, or something in their image, or use sale promotions.use sale promotions.

•The leader has little impact, The leader has little impact, he/she is more a boss than he/she is more a boss than anything.anything.

The leader in the CThe leader in the Crisisrisis changechange• Many changes, high impact or Many changes, high impact or

imprevisible changes. Normally, in imprevisible changes. Normally, in a short time.a short time.

• This is the case of the finantial This is the case of the finantial crisis of many countries, or the crisis of many countries, or the moral crisis that affects the world.moral crisis that affects the world.

• The leader is fundamental. He/she The leader is fundamental. He/she is the one who can help to go out is the one who can help to go out of the crisis or, at least, to live of the crisis or, at least, to live with i and find viable alternatives.with i and find viable alternatives.

The leader in the Chaos The leader in the Chaos changechange

•Too many changes or huge Too many changes or huge impact changes.impact changes.

• It is the case of tragedies as the It is the case of tragedies as the Twin Towers of the Asian Twin Towers of the Asian Tsunami.Tsunami.

•The leader doesn’t have a role The leader doesn’t have a role in there. He/she should, much in there. He/she should, much before, create a group of “self-before, create a group of “self-leaders”, capable to handle leaders”, capable to handle surviving before chaos.surviving before chaos.

Leadership in the New Leadership in the New ParadigmParadigm

• Present paradigm has two basic Present paradigm has two basic complexities:complexities:– It is still in the process of formationIt is still in the process of formation– It has an unaccounted number of criteriaIt has an unaccounted number of criteria

• Due to that, the leader has to use the Due to that, the leader has to use the elements he/she has, which enable elements he/she has, which enable him/her to run the organisation in him/her to run the organisation in times of uncertainty.times of uncertainty.

• One of the elements is to understand One of the elements is to understand the 5 forces that affect the work of the the 5 forces that affect the work of the organisation.organisation.

Leadership in the New Leadership in the New ParadigmParadigm

• Apart from that, to understand Apart from that, to understand these forces not as something these forces not as something contrary or a kind of resistence, contrary or a kind of resistence, but something that will help in but something that will help in the organisational vision the organisational vision fulfillment.fulfillment.

• So, instead of calling them So, instead of calling them FORCES, we will call them FORCES, we will call them DIMENSIONS.DIMENSIONS.

The DimensionsThe Dimensions

• Classicaly, This expression is refered to Classicaly, This expression is refered to the space-time we work. For instance, the space-time we work. For instance, we experience 2 dimensions on the we experience 2 dimensions on the earth (wide and long) and 3 in the earth (wide and long) and 3 in the water or air (adding depth and height). water or air (adding depth and height). Some people consider time as another Some people consider time as another dimension.dimension.

• In the organisations, there are 5 basic In the organisations, there are 5 basic dimensions, apart from those we talked dimensions, apart from those we talked briefly. They are the key for a good briefly. They are the key for a good leadership and success in business.leadership and success in business.

TheThe 5 Dimensions 5 Dimensions

Superiors/Superiors/shareholdersshareholders

Work-teamWork-team

Internal CustomersInternal Customers

External customers/suppliersExternal customers/suppliersThe SelfThe Self

TheThe 5 Dimensions - 5 Dimensions - SuperiorsSuperiors//shareholdersshareholders

• They are the owners of the vision They are the owners of the vision and strategy.and strategy.

• The leader has a commitment The leader has a commitment with them as he/she was hired for with them as he/she was hired for the company to follow a strategy the company to follow a strategy and fulfill a vision.and fulfill a vision.

• To conquer them, the leader To conquer them, the leader needs to generate RESULTS and needs to generate RESULTS and to have proposals aligned with the to have proposals aligned with the vision.vision.

TheThe 5 Dimensions – 5 Dimensions –The work-teamThe work-team

• They are the ones who will put They are the ones who will put strategies into practice, bringin strategies into practice, bringin vision about.vision about.

• The leader needs to position The leader needs to position himself/herself with the team so himself/herself with the team so that he/she can fulfill what is that he/she can fulfill what is needed.needed.

• To run a team, the leader needs To run a team, the leader needs TO DEAL THEM KINDLY and WITH TO DEAL THEM KINDLY and WITH COHERENCE.COHERENCE.

TheThe 5 Dimensions – 5 Dimensions –Inner CustomersInner Customers

• They are the ones who will They are the ones who will support the team from inside.support the team from inside.

• The leader needs to generate a The leader needs to generate a friendship and mutual support friendship and mutual support policy to prevent obstacles to get policy to prevent obstacles to get the objectives done.the objectives done.

• To satisfy the inner customers, To satisfy the inner customers, the leader needs TO HAVE GOOD the leader needs TO HAVE GOOD RELATIONSHIP and EFICIENCY.RELATIONSHIP and EFICIENCY.

TheThe 5 Dimensions – 5 Dimensions –External External customers/supplierscustomers/suppliers• They are the ones who will make They are the ones who will make

the results.the results.

• The leader needs to generate an The leader needs to generate an attitude of service with both, attitude of service with both, customers and suppliers.customers and suppliers.

• To satisfy them, it is necessary a To satisfy them, it is necessary a SERVICE and GOOD EXTERNAL SERVICE and GOOD EXTERNAL RELATIONS policy.RELATIONS policy.

TheThe 5 Dimensions – 5 Dimensions –The SelfThe Self

• Self-leadership is fundamental to Self-leadership is fundamental to overcome various situations.overcome various situations.

• It is within where the true It is within where the true leadership spirit and the vision leadership spirit and the vision are born and it is there where the are born and it is there where the strategies are idealised.strategies are idealised.

• For self-leadership, the leader For self-leadership, the leader needes SELF-CONTROL and a needes SELF-CONTROL and a CLEAR LIFE MAP.CLEAR LIFE MAP.