I was recently interviewed for a profile piece and the journalist asked who had had the most influence on me during the early part of my career. Yes, it’s a standard question, but it reminded me that it was not so much an individual who had helped shape my career, but rather my interest in understanding how certain people—in particular great people—think and act.

I’ve always had a great deal of interest in how best to reconcile the “pros and cons” of almost any issue we are coping with on a daily basis, especially when the picture is blurred or incomplete.

When confronted with a problem, many people tend to present a single dimensional solution, which solution frequently plants the seeds for tomorrow’s problems.

This reminds me of a story in which four people are told to go into a darkroom and hold on to whatever they find. They are then asked what it is. One says it is a snake, another says it is a leathery sail, the third person says it is a tree trunk and the last one says it is rope. The answer: it is an elephant.

The moral of the story: truth or the better solution is only observable when we see the complete picture. In today’s ‘foggy’ world with low visibility as regards what are the better questions and answers, fragmented observations by different people should not be the best way to create solid progress.

Of course once you’ve got gained more insight into what the relevant issues are, the challenge is to internalise the knowledge and emulate the thought processes. Roger Martin in his recent book ‘The Opposable Mind: How Successful Leaders Win Through Integrative Thinking’ points out that most people rather than emulating great thinking try to emulate what a leader did in one particular situation. This may lead to inappropriate actions being taken as each set of circumstances is different and best practice is only a guide—not a blueprint for success.

So what is required then? We need to revisit the way that we approach managing a company which requires, at times, creatively integrating and reconciling views that appear to be in opposition. As the American writer F. Scott Fitzgerald so powerfully phrased it: “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”

For instance, in a cost-cutting phase, the objectives ‘hiring freeze’ and ‘double-digit growth’ seem as congruent as the targets for CO2 reduction while aiming for high economic growth. Yet it is these seemingly opposing thoughts that have to be reconciled before clear, decisive plans can be articulated. As I wrote in one of my earlier columns (No progress without ideas at Boao Forum for Asia), if you have a problem, you need ideas. When managing opposing issues, you also need ideas on how to resolve them. Many people have presented ideas on how to be more cost effective while growing at high speed. An idea that usually works very well is to tap the minds and ideas of those whom you are already paying. By this I mean your staff and partners who work on the issues that need to be fixed on a day-to-day basis. Ask them how they would resolve the tensions, and you will be surprised how many seemingly opposing thoughts can be reconciled, therefore allowing the thinking (and acting) to progress.

In one of our offices, we looked at risk mitigation at the same time as obtaining significant increase in sales and cost efficiency. Again they were perceived as opposing challenges. After proper idea sharing and the creation of solid processes, it emerged that they can be reconciled, resulting in better controls, more efficiency and higher sales.

Yes, there are better ways of leading companies, and these are ideas which are urgently needed given the clearly increasing complexity within organisations. We complain about it and talk about fixing it, but the real challenge is ‘How’ to fix it. (For more on this please refer to a background paper I’ve written on reducing complexities.)

Once I have settled down in the Netherlands (after six fantastic years in Asia), I hope to continue to share my views and believes on this topic and others through my blog.
I wish you all the best, especially in reconciling the opposing thoughts around you!

Most organisations face increasingly complexities, resulting in a growing ‘waste’ in their productivity. As a result, stock markets now apply ‘corporate discounts’ when valuing large companies, because the costs of these complexities are often higher than the benefits of the economies of scale.

Every day, people in companies implement a lot of new initiatives and, by doing so, create future value but also add to the complexities. In a recent article in the Harvard Business Review, David J. Snowden and Mary E. Boone describe the characteristics of complex systems. According to them, complexities involve a large number of interacting elements, most of which are non-linear and minor changes which produce disproportionately major consequences. Since the environment in which we work is dynamic and relatively unpredictable, pre-designed and standard responses or solutions can be inappropriate. Constant adaptability is therefore key, as are local solutions, even for companies operating globally.

Well designed frameworks however can help reduce complexities.

The three overriding questions in corporations are, the ‘what’, ‘how’ and ‘who’ questions, asked when determining strategy (what), implementation (how) and governance (who).

At ING Asia/Pacific, we recognized this and as a result designed and implemented a framework for managing these three areas more effectively. We called it the “Towards Performance Excellence” framework or TPE for short. It is designed to align strategy and execution through an aligned organisation, and allowing us to measure results using Key Performance Indicators (KPIs) for each objective set.

The framework requires a three step implementation approach:

Step 1 – The “what” question: Identify market ‘positions’ which are ‘core’ to our business results and develop opportunities to grow and leverage the ‘core’ based on 5 strategic areas of focus. Decisions are made through an iterative process between the head office, business units and functions and are then translated into a picture. A 5-legged ’spider’ framework communicates the growth strategy of expansion through 1) Reach, 2) Lines of Business, 3) Products, 4) Distribution Channels and 5) Customer Segments.

Step 2 – The “how” question: Having set the strategic direction, the process moves on to set the strategic priorities, which in turn categorizes the priorities in a comprehensive and consistent process by listing all the main objectives and then adding KPIs.

This is done by grouping all business objectives into six ‘Drivers of Excellence’. This step ensures that everyone involved understands where they are placed to help execute the strategy. All their business targets, initiatives and personal objectives can also be placed in one of the six drivers.

Each Driver of Excellence consists of a variety of sub-drivers, which unambiguously define all businesses and functions in the same way.

This means, for example, that if an employee moves from a business unit in one country to another country he knows that the TPE framework is also applied in new business unit he moves into. Each of the ‘Level 1 Drivers’ drill deeper into the day-to-day work, while second level drivers define further e.g. operations can be further defined as grouping activities around new business sales processes, claims processing turn-around-time and so on.

Step 3 – The “who” question: The organisational framework allows the entire organisation to know who is doing what and who is responsible for which measures and objectives. All business units and functions apply the same organisational format, indexed in a matrix chart. This chart clearly distinguishes which unit within a business unit is a business line (with P&L responsibility) and which department has a functional role. This is different from the typical hierarchal organisational chart which misses the horizontal and vertical lines of the matrix organisation, needed to enforce people to work together and avoid silos within a company.
Through these three steps, addressing the “what, how, and who” question in a comprehensive, consistent and cohesive way, the corporation is connecting all the dots. It also connects the target setting for pay-for-performance schemes and even a knowledge management portal has been designed along the same framework.

A company that is determined to execute its strategy successfully can of course achieve this goal in a number of ways. However, when it comes to replication of a successful strategic execution across a diverse set of businesses in different countries, TPE has worked very well for ING. By unifying diversity, we now benefit from the richness of having that diversity by operating with 24 different business units in thirteen countries while eliminating the costs of the ambiguity it creates.

It was a great conference, the FinTech Asia 2008 Conference in Singapore. A wide variety of speakers from the financial services industry covered topics around the “divide between Technology and Finance”. Each presenter only had about 20 minutes presentation time and as such the conference was fully packed with content, high speed delivery and lively panel discussions. From networking perspective there were ample opportunities at cocktail and lunch gatherings to meet with interesting people.

I was invited to present about ING Asia Pacific and I was very pleased to receive many compliments about our achievements in the 2.0 space, which was part of my presentation. From my side, having attended quite some conferences in the past aimed at CIOs of financial service organizations, I see an interesting move away from old fashioned technology talk. Gone were the middleware, infrastructure or software packages that would cure the headaches of financial businesses that try to move forth. I remember having seen only one complex architectural picture.

This is a clear sign to me me that the divide between technology and business in the financial services industry is slowly disappearing. Financial services industry executives talk business now. This was also reflected on the finale of the conference, the FIAA 2008 Award for best Asia Pacific projects in 2007. Out of 150 entries, 10 Awards were given for projects that to me seemed remarkably business oriented … like the FIAA 2008 Award we won for our project of introducing (see also e-newsletter) the strategic framework Towards Performance Excellence (TPE) to Bank of Beijing, including an entire intranet, TPEX.

David Garceran Nieuwenburg

The Our Virtual Holland site mentions the ending of ING Retail Netherlands further development of the Our Virtual Holland Second Life concept. Main reason is that in the not-so-virtual Holland ING is working hard to merge and integrate two of the country’s major banks, Postbank and ING Bank, into one (brand).

I got a lot of inquiries about this. On this blog we described in various entries about Asia Pacific building our Cha Lounge in Our Virtual Holland. What is going to happen with that?

Not so much. We will continue building our Cha Lounge in Second Life. In coordination with various ING entities we agreed that we still find it important to be in one of the virtual worlds. Therefore, we are moving the Cha Lounge to the ING Island which will be opened up to the public early March.

Teas to choose from … Cha Lounge open early March!

We hope to see you there, listen to our lounge music, read, talk and learn about tea, virtually taste it or buy it for real world consumption.

Let’s celebrate: Second Life is not hype anymore!

David Garceran Nieuwenburg

Put ten managers in a room and ask them to define their company’s strategy in a sentence and you’d get ten different responses. This is not usually for any lack of understanding as to what their company is doing, but rather due to the interpretation. Most managers struggle to explain to each other what strategy means because what needs to be done is typically expressed in (arbitrary) notions, which are either inconsistent or do not properly explain the strategic direction of a company using real information.

According to the strategic management professor Richard Rumelt at the UCLA Anderson School of Management, strategy starts with identifying changes. How do we improve our existing positions given the dynamics around us? For this, we have to take a position; we have to take a view which in many cases involves taking risks.

Strategic thinking starts with identifying changes around us, which will determine where we have to ‘go’ and what the options are given a changing world. For instance, should a telecom company invest in high-bandwidth opportunities of 3G, or not? Should a company invest in or divest from country X or Y? It’s really about seeking opportunities and identifying threats, and less about individual concepts such as distribution, cost-cutting, etc, which Rumelt calls “doorknob polishing strategies”.

In my experience one of the better ways to think about strategy is to use a simple framework with five dimensions by which to expand or allocate resources: 1) extending your geographical or virtual reach; 2) adding new lines of business; 3) developing new products; 4) increasing distribution through new channels; 5) targeting new customer segments. Obviously, it is also part of the strategic thinking process to analyse where we should reduce activities along these five dimensions if things haven’t been successful.

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IAP’s strategic direction in line with the Group’s thrust on wealth management (click to view enlarged)

Strategy is also about predatory behaviour—waiting for the right opportunity before attacking. For example, those who correctly identified that emerging technologies and the evolving internet would change the way banks interact with customers, were the early adapters when they changed their business models accordingly. Today, we can see that companies such as PayPal and ING Direct are paving the way for more improvements, and are applying new technology in very successful ways.

But what is needed to stay abreast of these changes? One of the key factors in building the right organisational capabilities to capture new opportunities successfully begins with an entrepreneurial insight and attitude; knowledge of what works and what doesn’t work in the area in which you want to capture value; and of course the ‘guts’ to try out your new ideas.

Strategy development and strategic thinking are both dynamic processes. Most of the themes we apply today within organisations are too static. We have to be able to identify any changes around us in terms of threats and opportunities both for our customers and competitors. We must be able to think creatively about new ways to combine resources, technology and processes as, for instance, Apple did with the availability of cheap e-music (Napster) and new inexpensive storage MP3 players, resulting in the iPod.

Good leaders nurture this thinking. They ensure companies are healthy i.e. that they are stable, well aligned and people/departments work as efficiently with as few complexities and bottle necks as possible. Against this backdrop, they leverage and grow the core of the existing organisation in a dynamic way, while adapting to new market opportunities.

For the tools to discover new products, I would like to urge you to think along ‘value denials’ (another Rumelt term) where certain things are needed but are not yet available. Everyday we see things around us that can be improved. So the next time you are frustrated when using a product or service, don’t just grumble but take a step back and think about a solution that could be your own iPod. I’ve decided that irritation is the best fodder for innovation!

JK

Our eBARP (e-Business Asia Regional Peers) newsletter aims at informing ING colleagues in Asia Pacific about our online activities in the region. Curiously, old beliefs turned into immediate truth when we produced Asia Pacific content that was as borderless as internet intrinsically can be. Take this blog for example. From our visitors statistics we see that well over half of our readers are not from Asia Pacific. For the newsletter, therefore, we created an intranet version, easily accessible not only for people in Asia Pacific, but for all our ING colleagues worldwide.

Gradually grasping pieces of conventional wisdom from earlier immediate truth it furthermore became clear to us that the borderless internet is not only about geographies, it also relates to the ING inside and outside world. Talking about Second Life, or better, let’s take this blog again, in the earliest entries some readers were confused as to who this blog is having conversations with: customers, prospects, stakeholders, employees, people interested in finance or financial companies? The answer was and is: all of them, and more.

Thus, for our newsletter we also created an internet copy of our intranet version and although some links might not work, we are pleased to share our exciting projects with a broadest public audience possible – and of course we always hope for some feedback.

In the third edition we mention a Bank of Beijing TPE project as well as information about ING in Second Life and on Facebook. Have a look: we hope you enjoy our newsletter (to which you of course can subscribe).

David Garceran Nieuwenburg

To me personally, the real-life magic of Christmas makes the virtual magic of Second Life rather dull. And I had already decided that without compelling reason I would not write about Second Life anymore in 2007. So much is said and done already, or better phrased in our case: we are simply doing what we are saying as we continue to develop our position in that virtual world.

You can read about our Asia Pacific cha lounge project and other activities in various entries on this blog, but interesting is also that here from Asia Pacific we cooperate with the ING Our Virtual Holland initiative in the Netherlands in various other ways.

Take for example the OVH blog … it looks very much like this blog. It is actually a straight copy that we created for OVH from our own blog template and it is hosted here with us in Hong Kong.

We are therefore specially proud that, amidst competition from Microsoft and PricewaterhouseCoopers and such, the OVH blog won the European Excellence Award for blogs in the Corporate Media category (page 8).

The real-life magic of a small piece of Asia Pacific in Europe: compelling enough to me! Cheers Santa, and from all of us here, a Merry Christmas!

David Garceran Nieuwenburg

Rembrandt and some of his contemporaries from the Rijksmuseum are in Shanghai. This first-time for China is sponsored by Philips and ING and of course made possible by a hundred other parties: the Rijksmuseum and Shanghai Museum to start with, then logistic companies, insurers, as well as the China custom authorities and such.

Jacques Kemp at the opening of the exhibition that lasts until February 13 2008

I am proud to mention my department also played a small supporting role: the website www.rembrandtinchina.com came to being through an exciting project organized from Hong Kong with mainland China IT companies and Rijksmuseum in Amsterdam.

The website contains a flash game, e-mail cards, a movie and even a souvenir shop where you can buy t-shirts online with an imprint of your favorite exhibited painting. A purchase will donate about 2 euro to the ING Chances for Children fund. No, this is not a hidden effort to sell t-shirt or so.

Let’s put things in perspective. A shock went through New York last week when some paintings did not fetch the auction prices that people got used to. Sotheby’s stock was reported to have fallen almost 30 percent on November 8 when almost a third of the lots remained unsold and pre-sales generated about US$3 million less than the low estimate of US$65 million.

A t-shirt sold more or less, or one or two more entry fee (20 Renminbi, about 2 euro) paying visitors do not change anything in the greater picture of art as a commercial vehicle or asset class.

And that is what I like best about this initiative. Visit the site online, or if you can in Shanghai of course, and just enjoy for the sake of enjoyment, the informative environment that shows Rembrandt and his gifted colleagues in the Dutch Golden age. An era in which commerce and art both flourished alongside, if not hand in hand.

It wouldn’t harm to buy that t-shirt after all …

David Garceran Nieuwenburg

Do you think Boeing 787 will be delivered in 2008 to All Nippon Airlines? If you think ‘yes’, you can buy that result, a stock, for $0.4 (today’s price). If it indeed happens, the stock you own will be worth 1$. You do not need to wait until the expiry date to get some results; you can sell your shares any time, possibly for a higher price.

To the suspicious reader this might look like a rather obscure betting proposition. But then, betting, gambling and predicting stem from the same roots: anticipating a future event, be it a number on a roulette table, a price development of company stock or who will be the next President in the USA.

Betting on Presidents was exactly what the University of Iowa experimented with first, in 1988, continuing with such activities as we speak. Interestingly, other universities followed and parallel to platforms like the Hollywood Stock Exchange (bet on the success of an opening night or so) also parties like Goldman Sachs and Deutsche Bank, according to a Stanford Graduate School of Business research paper of April 2004 on this topic, have launched markets on the likely outcome of future readings of economic statistics around employment, retail sales, industrial production, and business confidence.

The reason for an increased interest, in what is called a prediction market, lies probably in the fact that there is some evidence that final results, e.g., election outcomes, highly correlate with what was “predicted” on the prediction market. Another angle to the Wisdom of Crowds (see on this blog) and the power of the masses which can be mobilized better than ever through the Internet.

So, in the meanwhile, what can we do to create a beautiful self-fulfilling prophecy for ourselves? Simple: buy low, sell high – and keep on dreaming!

David Garceran Nieuwenburg

With the end of ING’s premiere of holding a contest in Second Life we might want to catch our breath in coming less hectic times. What a ride it was. With 47 contest entries and the many hundreds of votes, the effects of the virtual logo contest continued deep into Real Life, across time zones, blog and e-mail dimensions. The otherwise clear boundaries between private and work time had largely vanished.

But finally, we have a winner! You can find the result details on the Our Virtual Holland blog but let me congratulate the winner here again: known by the Second Life identity Darkharmony Dingson.

The Winning Logo

The logo, including the winner’s name as in the figure above, will be used in the cha lounge (which we will start building from October on for some 10 weeks), and on products and other items that can be bought in the cha lounge: virtual and real.

Amazing, the efforts inside a virtual contest consumed and enjoyed in the real world. It’s a small world after all …

David Garceran Nieuwenburg