Explore vs. Exploit for Renewal and Recovery

published on July 13, 2020

hello and welcome to this webinar from AI ADP developing leaders I Ronnie Miller and I'm delighted to have Marc Ventresca associate professor of strategic management from the Oxford say School of Business leading today's

Presentation on explore versus exploit reimagining the firm and the economy for a new and recovery now mark is currently based in California and we're joining us in just a few minutes we're having a small technical problem but that he will

Be here very shortly and whilst we wait I thought I would just highlight the program that he will be leaving shortly online program Oxford strategic innovation program which like today's webinar is focusing on innovation

Strategies within the organization how to deconstruct and redefine what innovation means explore different ways of navigating innovation and engaging and it will engage with a global cohort of like-minded professionals like do

This will be six weeks and you can see on them on the screen the link that you would need to click on if you want to find out some further information but I think mark is now with us so let's go straight over to him mark you're very

Welcome okay Ronnie thank you happening so sorry for the hassle of coming in should we just punch right in let me just quickly kind of cut through to the chase we're here today to talk about exploit and

Explore an idea that comes on strategy to help us reimagine the firm and really the economy in this period of renewal and recover I'm really grateful to Ronnie for hosting and colleagues at Oxford Syed including me Kelly's got the

Leanings made this possible I'd like to just open up with really for I think important and rowdy I'm happy for to go back and forth with you and questions and also happy for her colleagues in the audience to share

Through the chat I think there are four things keep in mind we're in difficult times the times today are not historically unique there are many other difficult times rare confluence of large-scale public health initiatives

Complex politics and often economic difficulties economic turmoil so I want to briefly remind us about the work of shrimp etre an Austrian economist who gives us an imagery around creative destruction and really sits at the heart

Of a lot of their conversation today around innovation and innovation policy I want to talk a little bit about this idea of how exploited Explorer coming out of strategy helps us understand what firms do so in a sense we want to

Reimagine firm from simply a profit maximizing entity to a source of innovation often or major activities but we want to think about shifting from production machines to conveners and ecosystem activity I know that's a lot

Of German and I'm gonna try to unpack that with a couple of very concrete examples to help us think about that and then finally let's do something we've all for a lot of but it's hard to do to make experimentation for

Innovation Stanfill so the gist of what I'd like to share with you today I have conversation about how it is we are using a view to a kind of a world war two who view of the firm as a profit maximizing machine that is increasingly

Inconsistent with the wisdom that's coming from economists and many other social scientists in particular it's inconsistent what we know about what some people call evolutionary economics where we begin to think about markets

Not as naturally occurring zones but actually as institutional rules somebody makes the rules of the game there's contests over the rules of the game in the market and over time those institutions are

Designed if the language of battle off an experimental economist you got the Nobel Prize a few years ago those institutions are designed to foster innovation and so the the kind of car here is as we contemplate next steps

2020 and often we don't want to go back to business as usual we don't want to go back to an outdated understanding of both the firm and the wider economy in some sense this is what is really continuation of conversations that a

Long time ago really 2008 in the last time there was a global financial commercial and social crisis it's gone away you could think of the last 20 years as a kind of a conversation begins at schools to think about rebuilding

Firms and rebuilding the economy today any questions do you want to pose or anything that's come in from the crowd before I go further no anyway we just get a you know the the core of your I mean

And then we crystal um no that's become a kind of a touchstone we think about innovation challenge us to appreciate my Christensen's work with idea the disruptive innovation but really begin to look like not in a narrow technical

Space but really when we try to grab an understanding disrupt is if an energy robotic age sanitation water provisioning in other words have to think about innovation Christensen gave us a very compelling idea that new

Technologies come along initially are not unappealing or that efficient or that productive but over time they develop and become tactful enough to displace the the current imagery the current

Infrastructure that's an idea that has written in sugar and others but are longer eighty years ago game is done in created just for machi briefly Jupiter said every era is marked by a stable ecosystem of technologies and the

Complimentary offsets and the infrastructure that support those technologies and those different birth to markets and industries his point was that becomes a stable set of interactive elements the D comes quite productive

The creative destruction story there though is new technologies come along new ways of organizing new materials new forms the governance they emerge as well because the world is a complex contested place though there's newer ways and

Doing things come along and they will displace the old order so that's the destructive part the creative part though is for some there is to that new set of activities in displacing the old order frees up resources financial

Capital human capital talent energy it allows that resources financial capital and human couple others that were locked into the old ways of doing things to be freed up to recombine importantly for him to recombine into new kinds of

Activities new kinds of and there should be new kinds of imaginations and so that is creative and destructive not at the individual level in fact as we know that process of destruction is very difficult firms go bankrupt industries disappear

Careers and lives are severely impacted so the Sherman argument is not happy argument for an easy argument he would say Jupiter and say it's actually how capitalism works it keeps read I jesting itself it keeps

Incorporating new institutional arrangements and overtime that is both predictable and recognizable so the creative destruction part there is not a good or happy story it's descriptive about how

The world works I think Christensen follows through on that with his idea and again in a much more focused technical way but that raises for our question us it raises for us this question what do

You do as an executive what do you do as a government leader what do you do as someone in a civil society agency who is trying to cope with these kinds of turbulence I think the answer that I'm going to say comes from the work of a

Group of people political scientists economists innovation colleagues often associated with the Carnegie Mellon University or in the mid century the mid 20th century Carnegie Tech and really this work made most visible to us

Through the work of James March a dear colleague at Stanford University recently deceased people like my pushman in the management world and they managed to think of something very interesting they said too often firms when we think

About firms as production machines are too focused on making money today and insufficiently focused on building capabilities that will let that not only survive but prosper tomorrow so this ratio of exploiting to explore very

Powerful conversation to have with the most senior colleagues or members c-suite on through the entire organization it's a conversation that says for a long time we could be really successful it was done but doing it

Better or more efficiently or more reliably and that explained is very powerful and for many decades that claim was the workable recipe for success or success do more of what we do already and do it better more efficiently more

Reliably in periods of turmoil though and particularly in the last couple of decades that recipe do more what we did yesterday – hamat tomorrow is increasingly suspect it's increasingly unclear but that's

Correct we have a whole of stumbles by large firms prominently we've all talked about Kodak more recently to talk about blockbuster we could talk about we works in recent

Times in the digital space we Steve firms that were very successful under one set of conditions but as those conditions shift they are less able to make the transition in the continuum so the Explorer story here becomes a

Reminder at the most senior levels of decision-making in terms of criteria for what is the good decision in terms of the purposeful trajectory of firms you need to begin to think about what is that ratio of exploiters war in real

Terms how much of what we do today has to be about today making money today but also how much of today has to begin to be about tomorrow building capability is building competence to building imagination and importantly today

Building relationships we live in times that are shaped by platforms and increasingly by platform economies where the focus of competition is less at the level of individual firms and much more at the level of wider sets of firms

Platforms ecosystems networks all those languages become important so explain explore is a really interesting claim that says the old model do more of what we did yesterday for tomorrow while it had value at many times at places is

Less and less likely to help us the explaining for a story also reminds us firms need to begin to bit to build capabilities to explore all the time particularly in times of turbulence I want to give you a couple of examples of

That and then we'll open up for back and forth this slide is just a Oxford strategy proposition my colleagues on Oxford and I are broadly we are eclectic we're also probably not what you might call heterodox strategy facto

We do not share in some of the Main Street assumptions we think it existed here the greatest challenge the corporation face is to survive and thrive in a time of unprecedented turbulence that insight requires

Different ways of imagining the firm the role of top leadership executive and the nature of linkages to wider ecosystem we say here the roots of the challenge are well known globalization developments in technology the empowerment of digitally

Conscious consumers and citizens and then something we know well today geopolitical and economic instability we could add to that public health the pandemic and kind of new recognitions of the global nature of public health the

Claim here and this is the knowledge-based claim I'm in the work of many colleagues the Schumpeter based claim most of that knowledge has been capability needed to do this already exists somewhere I'll be it it's

Isolated or hidden in exceptional pockets about the practice it's in your supply base it's in your operations or with your customers I'll remind everyone of a quote from William Gibson well-known folk from the science fiction

Writer who and gives that he said the future is already here it is just very unevenly distributed and that point about the the bullet point here a lot of what we know what we need to know about going forward we already have available

To us we just aren't connected to it or we haven't assembled it or we haven't put the pieces together and so a lot of the work of Explorer is really about understanding how do you build capabilities to notice to see out in the

World beyond existing incumbent ways of doing things to imagine what's possible and then lastly that last point there what's required therefore are new forms of collaboration that make the exceptional normal and so enable greater

Economic efficiency drive innovation manage the environmental risks and so forth so that this proposition is sort of at the heart of what I'm asking to reflect on today and to build into your own leadership in your own practice none

Of it is new none of it is unfamiliar it is proven though it does involve reimagining the nature of the firm and in that looking building up an economy not only comprised of firms but also with

Recognition to the many other stakeholders and the many other kinds of organizations regulatory organizations civil society organizations all the kinds of organizations that we're interdependent on to engage and solve

Real issues in in transportation or sanitation or healthcare or other areas again this site is familiar our colleague at Oxford the chair of our school board pal Pullman has led many senior executives in this conversation

Other political leaders are saying the same thing there's broad convergence around saying the challenge it's not to make money by creating harms the challenge is how to make money by doing well by solving problems in the world

Rather than creating them and that's gonna sense that language that the challenge is to make money by solving problems in the world not creating them is a long conversation related to how people used to think about externalities

For example in pollution and the environment the question is not how to mitigate pollution but solve environmental sustainability issues that's a very bold and ambitious agenda it's an agenda uniquely suited to times

Like this times of turbulence times of economic disarray types of political and social tumult in other words the exploit explore analysis that conversation with your colleagues with your stakeholders with your teams that conversation how

Much of the day is about today and how much of today needs to be about tomorrow is a important curative to the over focus on only focused on today a few examples weren't involved in a research project now with colleagues at

Manchester University of Manchester as part of Cove in 19 as part of that recovery activity were interested in two kinds of cases one is the 90 deal hospital some of you will know this is a series of UK based in a sense pop-up

Hospitals I use that term not to me silly but to say these are hospitals that are built and created in short-term they reflect the long history of the experience of the military in many countries who are able to deploy

And create a field level hospitals within days so the nightingales are an effort to cope with the Pemex of urge to equip and multiplies UK with resources to support the people and support that national the NHS and national health

System the other case we're looking at is some of you know the case of the vaccine trials – prone at the University of Oxford at the Jenner Institute it's got a lot of media lately in both cases though these are processes

Of innovation that involved reimagining how we probably do things accelerating the process of innovation through clinical trials through regular activity through using modular activities and in a way these two cases the Nightingale's

Is a story about creating a template a modular template for a hospital and then proliferating that in different spaces and it raises these variation questions around what are the supply chains that have to be in place and what are the

Regulatory processes so we need to manage to get that done but it's a modular story take the same model and move it across different contexts different terrains the vaccine story isn't ending story it's a different

Story it's not a modular story it's saying at the gener Institute over the last 30 years researchers and other colleagues have been exploring viruses they've been exploring met large-scale production of vaccines now there's in

Our own specialty areas they've been experimenting from the legacy of SARS and mares through kovin 19 from the legacy of large-scale production of vaccines from the kind of experience of trying to test populations those

Colleagues are not using a modular form they're actually assembling in that Schumpeterian way they're assembling insights from many different trials for many different initiatives to help us understand a solution to the

Contemporary development production of AK over 19 relevant vaccine so I've been spied in to remind us this is real time we are watching firms and other agencies manage in new ways they are they are taking seriously

The long length nature of collaboration they're taking seriously the idea of recombining elements that will fit for purpose in one setting but have to be taken out of that setting we combined and made fit for a new purpose I'll give

You one other example and then wrap up we've done a lot of work on the changing space in the a of the energy services markets this is the shift over the last decade from the six large incumbent energy services providers then watching

The development of several score new digital energy services providers and how they are reshaping their activities here we take from some work we've done on a low energy a now well regarded and recognized digital energy services

Provider that in recent year has also bought the retail business of SSE and really become by by doing that one of the large players in the UK these are entrepreneurial startups who make as you can see from the graph curves who make

Links to many different players government players partners in other industries mobility energy financial services they are assembling overcoming this is a composite visual the deposit visual over 10 years but were they have

Done experiments learning trying things out assembly new relationships this is exploit explore in practice and this is also the way that many firms are beginning to understand how you build capacity and how do you succeed the

Boundaries to traditional firms are less using of traditional industries are less and less stable and these firms are actually these interesting kind of composite entities who build capabilities to manage relationships as

You see in this diagram to virtual power plants to the flexibility the energy grid to trading to mobility the electrification of transport to smartphones and the revolution in batteries and energy storage in those

Smart homes this last slide then is just a tough a temporal graphic that shows us the same UK ovale energy the range of relationships and partnerships and engagements and firms they have built over these 10 years right it reminds us

Of both the complexity the possibility that comes from complexity this is more like the general Institute vaccine trials this is not a modular template this is a series of relationships and experienced as in capabilities borrowed

And bundled together into something today UK over energy services that we could have hardly imagined five years ago let alone a decade ago that for me is the gist of really exploring exploit explore in the context of recovery and

Renewal let me stop here was two comments from my colleague Rafa Ramirez who summarizes this by saying whatever strategy used to be whatever Michael Porter thought strategy was that has not been the case for a long time today

Instead we focus on reinventing W and really the key strategic task is to rig reconfigure roles and relationships across uncharted spaces right there's no sign here saying do this instead firms have to explore imagine fail learn from

That failure over time as I just showed you in the UK energy space build new kinds of capabilities and new kinds of relationships but let me stop there comments questions let me see the screen TV can come back yeah

And identify the qiam I mean there's a change and that period in the 1950s and 1960s companies could rely on a long sense of their company being at that mature stage where profit verging on the super normal and and therefore it nicely

For them we're shifting this happen the dexterity there's got to be more focused now on preparing for the future just making money you're sitting here and it has a big focus write the book around four years ago value honesty that's a 40

Year old idea that's kind of contested now is he's deaf Akali they're very distinguished financial economist and comparative government scholar has really prompted us to realize the near the nearness the reason is that ideas

Poker value I think what I'm describing to you says it really comes down to this innovation tradition of a broth that says innovation is about a lot of things about nology but it's also a forms of

Governments kinds of supply chains products and services and organization so in shaprut area terms it's not surprising shareholder value was an ID that fit for purpose in that immediate post-war period was Ted affluence

Relevant disability and profits relative institutional stability at the global level a few large firms dominating large parts of the globe that was that that was a particular historical era and shareholder value kind of made sense and

If you if you reflect on it though it never really even makes sense for most firms in the world the well of sight the angular American tradition so the large scale conglomerates of south of southern and East Asia the surging roles of firms

In China Russia India the additional value was never even that well developed in the first place right so I think that because instead is the same types of turbulence how do what a firm stupid kind of thing

For and by the definition they what they do is they connect and build these more distributed sets of relationships which in terms of that shareholder value argument often make more prospects accountable to whom and so for a number

Of years you know people really downplayed the importance of conglomerates or downplayed multi-link their business terms for the reason that they may have heard to drop that kind of clear accountability what we know today

And what we see around the world is the removal of interest in conglomerates multi line of business firms why because they're more resilient why because they provide internal markets to support and grow the business and so again that I

Don't use the word ideological that had to simplify we're now at a time when many firms in many parts of the world for once again were launched does that raise other issues yes of course is the resistance of

Corruption is a raise issues of discretion mental discretion and accountability yes workers right but I guess I would say in times of turmoil in times of turbulence when were experiencing the real economy

Those kinds of I'm gonna call them conglomerates and it is large large pools of capital talent ability across many industries actually become sources of value and sustainability I think Colin and many other colleagues are

Arguing that we have to rethink the firm to really take cognizance of the limits the limits of the planet I think everyone knows that catchphrase planus profits and people recognize the elements to this firms has to be

Accountable with an Indian victim in the long term for me the exploit for conversation is an opportunity for executives and others to really engage that conversation what is about today what not to be happening today to enable

Us to have it tomorrow and to from a point of view of insight I think what we're seeing here a huge most ordinary increased in number of relationships with competitors too and that's what's that's what's really

Striking is is this evolution from being a very singular hard banded entity to something where the boundaries are much more porous and there's much more interchange that we're seeing and so these ecosystems are more critical but

We also know that in large organizations because of whether it's extremely difficult but people who have been manager to embrace it happens better and small stop where you know you can't do everything else but in a big

Organization we go about trying to change I think we learn smaller is that ability to be thoroughly dexterous to be able to do a lot of things is more common one of these we knows that as firms become larger they tend to become

More hierarchical they tend to become more internal looking and the test to account for what you describe many people many saw people look at the codec experience and say you know it would be incorrect to say that code I didn't

Understand official technology as you probably know in the 1980s correct own 30% of the patents are on digital technology so the incorrect to say they didn't get it it'd be incorrect to say that could I didn't understand the kind

Of coming to the transformation of their mark that's right and data they believe the China market would last a long time so that they should eventually hence of connect our complete what happen it just what you

Said twice its divisions we're becoming a division Chiefs as a lifelong aspiration and where people build careers to a steppin to those literally those divisions chief well that creates an enormous added inertia

No sign of duplication enormous amounts of difficulty to be flexible we know in general that those kinds of organizations it's hard for them to be flexible and hard for them to be sponsored the letters face today the

Many firms tighter the pennies from is probably one of those interval many of the Canadian firms some German firms are actually pushing the discretion to the edges so higher and other of those firms are often seen as consortia of a hundred

Enterprises where each of the enterprises pursues agendas relevant to itself you may recall that from assay abroad over IAB in the 80s and 90s very brilliant leadership amazing successes an alternative to the G model they

Didn't try to cut programs and get out of businesses and put in place an accountability mechanism the very thin reporting system weekly from you know 187 businesses in 90 countries on Friday morning each of those businesses would

Turn in seven indicators the leadership a small group of people last you know 20 to 20 people night porters look at those indicators those dashboards and notice what was wrong and by intent there weren't enough for them to do anything

About it they had to call the local people they did call the local leadership and ask them what was happening so lots of examples were to come up with interesting accountability tools that let the center notice the

Overall patterns and obviously deviations from expectations but still focused action at the local level so he right the clunky model of a of an anglo-american multinational firm is very different from some of the

Pioneering experiences we see over time and today people to attract some of the Chinese firms that are imagining control and accountability in different ways we've got some questions coming in and I

Encourage the people to the question panel to have some questions more question here from Vanessa I think it gets the know just what you were saying there she writes I think the strength of small teams is that decisions can be

Made and implemented sooner part of helping a big debate is allowing innovation to happen with like 16-level and she goes on we need to leave space for mistakes going given the significant difference Explorer can you share views

On options to both different capabilities different culture structures forgot the decision-making discretion I think we all know that Explorer is 30 years the conversation around how stuff works or I uh or Xerox

Power all the efforts to create physically and culturally separate units that in fact do generate experiments and innovation and those ending contrast to the four mainstream form or there's much type of accountability quarterly

Reporting kind of making your numbers and make your targets as you both those are two different worlds part of the genius his holidays and it's a we need to imagine leadership and management structures in the thing

Called ambidextrous organizations from the overlap with an indecorous both hands equally dexterous and I stay with their solutions yeah you build those effort or presentations for those capabilities and the most that has

Two implications what is it means to the work of the senior leaders it's not to run this is today is to actually treat that like it today and tomorrow so that's a very different ask for a steep sweep it implies somebody needs to be

Confident and run the organization on its own terms today and the work of the CEO the chair the leadership team that energy worker is actually two to reconcile today and tomorrow but that becomes the task a second implication

That is that's a structural solution it's still within the concept of a hierarchy it's still a way of saying oh yeah those ambidextrous firms they need to figure out how to reconcile those competing agendas not a daily basis but

In the level a formal structural leadership if some of us don't find that a compelling answer so I would say the research on that is probably 20 years old of the most really ten years old and there's a large group of colleagues that

Are really learning the relative success of this organization the trade-offs the pensions and Exploited Explorer we're early days in that knowledge I think Trish man and his colleagues have really given us that structural solution build

These two cultures build these two organizations and then link them the most senior levels of a firm with that idea that the sinaloa before are not running the firm today they're building the firm over time today I think there's

Going to be a generation of experiments as I said he was thinking as I was saying for the time of large scale learning from Chinese state-owned enterprises the increasingly active Russian space India Malaysia Vietnam

Brazil Canada as you know we're learning from many types of firms that are less closely linked so that shareholder pregnancy model those in their practices in the governance amok can list for you

Unilever DSM many of the firm's large multinational firms that are taking the lead in purpose conversations on corporate purpose we're at spot and what an exciting time of experimentation and

Ferment and we need to notice it in those ways and realized we're gonna be learning a lot in the next 20 years as the economy begins to digest and shift so the firm's be exploring and learning on Vanessa's concretely yeah mr Small's

Are more flexible like I'm a good division of labor the challenges are you then reintegrate that local flexibility and learning into the broader purposes and goals of the firm this is something Google has taught you may know a series

Of experiments to study stand by please many others famously a set of articles in the media about three years ago on how Google really took incredibly good data on three thousand teams and tried to understand what made them effective

And what not their statistical analyses conclusive been enough citing the work of Amy Edmondson a distinguished scholar of leadership after organization and saying it was those teams to created safe other created safe spaces to create

For people complete dissent and agree and debate those are the teams that work regardless to competition the composition or size of the team or nature of the technology the argument was confident said people speak out and

Not be punished confidence that they can try ideas out in the safety of the team emerges as a powerful idea again these are experiments these are these are times of learning I guess my comment overall

Would be when incredible time of learning I say dots turbulence we're in a time of global pandemic which I think will probably become more difficult than the next year I wanted time of economic

Downturns in many parts of the world you know those are times when wise organizations invest and innovate we learn and in conditions of duress now the work of that as a leader is incredibly hard you feed each articulate

Thoughtful is to bring upon many stakeholders you have to talk and waste they give people both a sense of the possible and also a sense of automatically today what do I need to do so this is not easy working this is the

Work that Roddy and his team have been doing for a long time I helped leaders become really effective at the very difficult work of leading in these complex times so I don't want to minimize but what I'm saying today is

Thought oh I've solved it let's go understand three core points the world is turbulent that's getting us to rethink what we think firms do and what the economy is we want to begin to think about exploit explore that is that

Sensitivity how much of today is you got today how much of today is about tomorrow and how do we talk about that with time stakeholders board members how do we have those conversations and then finally experimentation and innovation

Are heard of renewal and that's where we need to go now I I'm we're coming up to top the air and we normally like to be very prompt on these things but I think the difficulties we have bring you on at the beginning let's see we can run this

Questions coming in here from Andrew Campbell who you may know and he is sort of questioning whether it's the issues that the firm or oh it's more the chambers driven and he makes the point that summarized

Their management control is the marketplace because it has the biggest impact no management can fight against but but he's also saying he's gone around explore because inevitably investing money and things that are

Going to fail and big big organizations are set up so that they you know the best in it gives the highest best return so great questions and you know really important a really important debate I would say that we can join let me make a

Few very puppets and maybe go back and bring the exception that the market is ultimately the control probably make some sentence markets though in traditional need and classic theory markets have no temporal sensibility

Right what does a market supply and demand clears at that point of equilibrium price emerges endogenously they doäôt the world that another price is time homogeneous in other words there is no conception of time in that

Possible view and so the market today it's making decisions about the market today it assumes that tomorrow will follow from that I think we stopped this I think we one of the strongest cases in recent times really see empathy the

Incompleteness of market solutions or market allocation processes is in the case around PPE under the pandemic when we see what some economists call price gouging or surge pricing what other colors say is the

Natural response of the market to limits of supply and to excesses of demand so that kind of helps us realize the market is good as is really it's it's discipline is a discipline for allocating today if we begin to realize

That today is not necessarily continuous with tomorrow then the market as a pianist that is as efficient as it is for today becomes an unhelpful or incomplete discipline for the longer term and much

Of the debate as you know today is about the lot of pyramids the critique of short-termism it's the awareness of the long term belong now the language some people use is infinitely made up of many many today's

In a cascade so the good point is market to do exert a kind of discipline that displays time insensitive and that may be a source of difficulty second markets are also political constructions markets or institutional arrangements if we step

Back from that kind of neoclassical model of the market so planned man in collaborating we realized somebody builds markets either governments or domination actors or doors or lawyers or whoever your mother is are not naturally

Occurring they are built they're built objects and so this is where we get into some in the extreme you know this is the argument somebody mi canto PCL economists because become great power last year straightening things around

Innovation in the long term first you know she and many other fish wouldn't say the extreme from stood out our state socialism and all the inefficiencies there the reality though it must cut it will stay when we look at the rise of

Modern innovation that is funding by most of the US military agencies DARPA and others as well as European agencies not an organized way but across many different entities to many different so many different universities so there's

The plurality heterodox to you there that says the the state intervenes not simply to fix broken markets but also to enable the kinds of artists we mean that it is marketed or capital are saying anything

I can say well no suspect the emergence of large asset holders the pension funds that have become so dominant in the public markets those long-term holders of capital who are holding money for thirty or fifty or seventy years are

Increasingly restive at the idea of day-to-day short-term games this is the evolution of Blackrock some people are following that conversation with their above these long-term pensions and their intermediaries are increasingly

Skeptical of the near-term moment-to-moment discipline of the market so they've been a time of reimagining both honestly what our markets and how they were and whether the power of the market for

Efficient allocation in that a temporal sense that is today as if today were also tomorrow and yesterday that's becoming a really interesting debate because a perfect perfect segue question here from Guzman who I think he does he

Was one of your students I don't know who recently or long ago but he asks how can we have it how can we have the Explorer exploit conversation with that key stakeholder the investor that's just what you are wearing today yeah it's a

Great question I think explore explore start style is the conversation firm of the agency if people understand today's incredible critical today has to take into account what's possible work tomorrow so our colleague a Stuart

Kauffman and a computational biologist the Santa Fe Institute talks a lot about what he calls the adjacent possible what are the actions that are taken today that make possible tomorrow what's opening up and what's closing

Down yes I think first it's mine you have that conversation internally you line up your team you understand exactly what you need to do to be successful today but also to invest and build give it later on then you start going to

Investors again long and short-term investors are going to have different sensibilities the long-term investors are the people that are going to help you really steer for the longer term and those are conversations that I think are

Pretty obvious they're happening with institutional investors they're happening in intermediaries they're happening in financial services to happening in regulatory agencies increasing we're adding a time subscript

To those today's short-term investors are much tougher idea like as a respected as a good teacher I'd say you educate people why they're near-term interest is actually understanding the long term the summit is literally a

Dictator somebody is literally wanting popular stupid normal profit today a they're gonna be a tough sell help them understand what the long-term is better for the firm this also raises a really important question that was not

On the agenda 10 or 15 years ago which is what several people are suggesting why should firms persist why do we try throw down why did why do we manage fill mantra think of the firm as a pool of capital optimize the rents extracted

From that capital today and with after that it's about to be that is increasingly getting voiced in jurisprudence in corporate law and public policy that says you know why should we worry about the longer term

Why not just optimize rent collection or what rent extraction today and then ensure the care terms that for sales those assets are recombined and we move on the challenge there it's an important conversation chef's the challenge purse

Is it under specifies all the stakeholders other than the shareholders and that's that that's the challenge and that debate which I'm which at first blush that kind of libertarian arguing extract rents today make money optimize

On our technologies on our markets extract rest and then in ship your in terms of firm thighs those assets are recombined and put to new uses but again the the critique there is it only that really only attempts to shareholders as

The only I mean that's a really interesting dynamic but but the farm in its sort of public forum construct be able to raise capital otherwise the openness bridge lenders would never giving away those shares

Wouldn't they so so it's to do with that access to gap and we're seeing lots of different ways of that coming in it's an 80 year old idea it's an 80 year old solution how do you raise capital if you go back to the

British East Indies company if you go back to the trading companies of the 18th 19th century if you look at some of the long-term capital funds the sovereign debt if you look at these word again we're in a period of

Experimentation with many models of you pool capital and how do you access capital and in many ways the debates over shareholder value are kind of anachronism they're the last of their the last battles over one model how you

Ask this capital and we're watching the birth of new ways of doing again probably a lot a lot of historical sociologists economic cell just innovation there's like Mariano my staccato economist institutional

Economists are saying we need new institutions we need long-term that we need long-term venture capital funds not flipping in three or five years over the 30 or 40 or horizon what is that going to look like who's gonna build those are

Those gonna be public/private ventures unit right ventures like we're in a period of incredible excitement and experimentation with just that question that you're raising and that others are raising right I think again I'm asking

People to have a kind of a historical mindset here we're a moment in a set of trajectories we're in the middle of a bunch of experiments where there are legacy incumbent forms like that your capital or like the anglo-american model

Of the shareholder privacy firm those are models that are in the flow there are debates boundary skirmishes and increasingly and this is important the provision of alternatives well all those alternatives were probably not you know

But we're the business of providing alternatives seeing how they work seeing which gets traction that's the axis of innovation lots of variants and then you put in place some have a selection regime that's works through the variance

And you retain some fit forums but I think that same thing is true for the financial market to me and we've had a couple of people which is exploring the long-term

Comparative state a family-owned firms thinking and that's a really interesting conversation on governance for just the reasons you're saying stewardship purpose long term those are baked getting to the most of the family firms

And so they're a little experiment and understanding what that looks like and the questions from Vanessa another leader what does that look like in terms of the teams and the small groups within the firm does it look like in terms of

Governance by coupled with the always complex family dynamic this is a huge topic we could be we are back on Monday in fact with Professor Washington from Georgetown University who will be speaking on improving diversity

Inclusion which if you program of this topic and you just want to give a minute on the oxford strategic innovation program which we offer another version that is starting to come soon and then another in the fall these

Are six-week modular online courses very much welcome people explore those also be online any choice if I'm still sharing my screen I think people should see something but there's no great mark thank you very much indeed

It's always a pleasure working with you and I have a good rest of you today and thank you to all who have joined us it's great to have you thank you thank you thank you team and also your team take care of bye-bye


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