Leading in Turbulent Times PowerPoint Presentation Federal Deposit Insurance Corporation

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					The Mining Association of Nova Scotia

Building The Sustainable Extractive Industry Enterprise
                     (Part Two):
         Leading in Turbulent Times


                  David Wheeler
               Dean of Management
               Dalhousie University
 A virtuous cycle for sustainable
            business



                       Mission & Strategy
Staying Connected      (Commitments)

 Aligning Culture      Building
 and Values            Capabilities
                  Identity:
                 How we see
                  ourselves




Social Capital                  Competitive
                 Brand &
  (Trust)        Reputation     Advantage




                   Image:
                  How our
                 stakeholders
                    see us
Chaos Theory & The Butterfly Effect
                             Edward Lorenz (1979)




                     Does the flap of a butterfly's
                     wings in Brazil set off a
                     tornado in Texas?
                            Systems Thinking Means
                           Seeing Four Different Levels
                                                 Peter Senge, Bryan Smith et al


The “Iceberg” View

                                 Events
 Increased Leverage &
Opportunity for Learning
       & Change                 Trends &
                                Patterns
                                              The "Water Line"




                            Systemic Forces
                            Mental Models
The financial system is collapsing..
          Events…..one month in 2008
September 7, 2008: Federal takeover of Fannie Mae and Freddie Mac
September 14, 2008: Merrill Lynch sold to Bank of America amidst fears of
a liquidity crisis and Lehman Brothers collapse
September 15, 2008: Lehman Brothers files for bankruptcy protection
September 16, 2008: Moody's and Standard and Poor's downgrade ratings
on AIG's credit on concerns over continuing losses to mortgage-backed
securities, sending the company into fears of insolvency.
September 17, 2008: The US Federal Reserve loans $85 billion to
American International Group (AIG) to avoid bankruptcy.
September 19, 2008: Paulson financial rescue plan unveiled after a volatile
week in stock and debt markets.
                            Events….
September 25, 2008: Washington Mutual was seized by the Federal Deposit
Insurance Corporation, and its banking assets were sold to JP MorganChase for
$1.9bn.
September 29, 2008: Emergency Economic Stabilization Act defeated 228-205 in
the United States House of Representatives.
September 29, 2008: Federal Deposit Insurance Corporation announces that
Citigroup Inc would acquire banking operations of Wachovia.
October 1, 2008: The U.S. Senate passes HR1424, their version of the bailout bill.
October 3, 2008: The U.S. House of Representatives passes HR1424 and President
George W. Bush signs it into law. It contains also easing of the accounting rules
(FASB 157) that forced companies to collapse because of the existence of toxic
mortgage-related investments.
October 6, 2008: The London market declines by 8% - its biggest one day fall ever.
Other European markets fell by a similar amount.
        Trends and Patterns

Increase in credit (toxic debt)
Spreading of risk (leveraging)
Write downs and loss of confidence
Credit and liquidity crisis
Bank collapses
Stock market declines
               Systemic Forces

Economic growth
Low interest rates
Cheap credit
Desire for home ownership
Desire for consumer goods
Deregulation
                        Mental Models 1




“The present financial crisis springs from a catastrophic collapse in
confidence. The banks were laying huge bets with each other over loans and
assets. Complex transactions were designed to move risk and disguise the
sliding value of assets. In this game there are winners and losers. And it's not
a zero-sum game, it's a negative-sum game: as people wake up to the smoke
and mirrors in the financial system, as people grow averse to risk, losses
occur; the market as a whole plummets and everyone loses.”
                          Joseph Stiglitz




“The present financial crisis springs from a catastrophic collapse in
confidence. The banks were laying huge bets with each other over loans and
assets. Complex transactions were designed to move risk and disguise the
sliding value of assets. In this game there are winners and losers. And it's not
a zero-sum game, it's a negative-sum game: as people wake up to the smoke
and mirrors in the financial system, as people grow averse to risk, losses
occur; the market as a whole plummets and everyone loses.”
                   Mental Models 2




"You know, the thing is so outrageous, it is hard to convey it
and keep one's indignation level down….There seems to be no
degradation of our democratic processes that will arouse either
the media, the commentators or citizens, with very few
exceptions.”
                      Ralph Nader




"You know, the thing is so outrageous, it is hard to convey it
and keep one's indignation level down….There seems to be no
degradation of our democratic processes that will arouse either
the media, the commentators or citizens, with very few
exceptions.”
                         Mental Models 3




"Whoever builds his life on this reality, on material things, on success ...
builds (his house) on sand. Only the word of God is the foundation of all
reality….We are now seeing, in the collapse of major banks, that money
vanishes, it is nothing. All these things that appear to be real are in fact
secondary. Only God's words are a solid reality”
                               The Pope




"Whoever builds his life on this reality, on material things, on success ...
builds (his house) on sand. Only the word of God is the foundation of all
reality….We are now seeing, in the collapse of major banks, that money
vanishes, it is nothing. All these things that appear to be real are in fact
secondary. Only God's words are a solid reality”
Mental Models in a Crisis:


 Bold action or play it safe?
Clayton M Christensen on disruptive technologies
                  Deliberate
                   Strategy




                                 Investment in
    The          The Resource   New Products,               Actual
Organization’s     Allocation      Services,
                                Processes, and            Strategy
   Values           Process
                                  Acquisitions




                  Emergent
                   Strategy

                                           After (Christensen & Raynor, 2003)
       TMANS Members: Time to Take Risks




Audentes fortuna iuvat
        Publius Vergilius Maro
                (70 BC– 19 BC)
TMANS Members: Time to Make Some Educated
                Guesses


                       “A good hockey player plays
                       where the puck is. A great
                       hockey player plays where
                       the puck is going to be.”

				
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