MANAGEMENT

Highlights from “It Can’t Be True”

The book “It Can’t Be True”, published in February 2015, was based on 2 years of research from over 200 in-depth interviews in the City of London. In his book. Luyendijk makes comparisons with the world of animals: traders are baboons, investment bankers are tigers, back-office employees are hard-working beavers and the departments of compliance and risk management are ants. The majority of the employees in the sector are therefore beavers and ants whose task is to control the tigers and baboons. Mission impossible!

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Top management and change

We frequently ask ourselves “Why doesn’t top management see change?” In 2014, the Dutch financial newspaper, Het Financieele Dagblad, published an astonishing article about another international Dutch company taken by surprise: SBM Offshore. This company is active in the global offshore oil & gas exploration business. The newspaper heading was “Market forces us to lay off jobs”.

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Management suffers from three crucial biases

We are forced to establish beliefs about the world, our lives, the economy, investments, and our careers among others. We deal mostly in assumptions, and the more indistinct these are, the stronger the confirmation bias. The ‘confirmation bias’ is the mother of all misconceptions: It reflects our tendency to interpret new information so that it becomes compatible with our existing theories, beliefs and convictions.

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Antifragility

Black swans are large-scale unpredictable and irregular events that have a massive consequence. Examples are a tsunami, huge storms like Sandy in 2012, 9/11, Madrid 2004, and the loss of MH17. Antifragility means randomness, uncertainty, dealing with the unknown, doing things without understanding them and doing them well. However, it is easier to find out if something is fragile.

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The corpocracy of companies

The story starts every year with the World Economic Forum in Davos, Switzerland, where the heads of the corporate world meet: CEOs, political friends and the consultancy-whisperers. They blame the politicians who are not able to solve the crisis, corporate management already has a focus on the future, and multinationals take the lead in solving the big future challenges: sustainability, growth and poverty.

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To win the strategic game

‘Strategic’ is one of the most misused words in management today and is often used to mean ‘important’. However, strategic decisions are about decisions with consequences of future impact for the organization. Compare this with M&A activity. Numerous research studies during the past 25 years have confirmed that 85 percent of all mergers and acquisitions fail.

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Banks, business as usual

Can you imagine that five years after the financial crisis, the financial system in Europe has still not yet improved? Banks still continue to package ‘risky financial products’ into special entities. Our bankers still behave the same as they did before the financial crisis. Why is this so? Bankers think they are better protected against the next financial crisis, because they have a higher percentage of equity on total assets. It’s business as usual all over again.

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