DEAN of CBA, ZAGREB / EU Expert Brussels. 1 Sofia, March 30, 2007 WHAT IS THIS NEW ECONOMY? WHAT DOES IT MEAN FOR BULGARIA?

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.2 ДОБРЕ ДОШЛИ Аз бих искал да говоря на български, но за жалост не мога да говоря вашият език. Аз бих искал да говоря на български, но за жалост не мога да говоря вашият език. Надявам се догодина да мога да говоря повече. Надявам се догодина да мога да говоря повече.

DEAN of CBA, ZAGREB / EU Expert Brussels. 3 Sofia, March 30, 2007 CHAPTER 1: A SHARP TRANSFORMATION… (Peter DRUCKER)

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.4 P. Drucker: Transformation Every few hundred years in Western History there occurs a sharp transformation. Within a few short decades, society rearranges itself : its worldview (paradigm), its basic values, its social and political structures, its arts, its key institutions. Fifty years later there is a new world.” Peter DRUCKER: “Post Capitalist Society”. p.1.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.5 Transition to Transmodern Death ?

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.6 One of the most fundamental shifts “We are living through one of the most fundamental shifts in History: “We are living through one of the most fundamental shifts in History: a change in the actual belief structure of Western Society. a change in the actual belief structure of Western Society. No economics, political or military power can compare with the power of a change of mind. No economics, political or military power can compare with the power of a change of mind. By deliberately changing their images of reality, people are changing the world.” Willis HARMAN Stanford Research Institute, Founder of the “World Business By deliberately changing their images of reality, people are changing the world.” Willis HARMAN Stanford Research Institute, Founder of the “World Business Academy” (+1997)

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.7 FIVE LEVELS OF CHANGE 1. Humanity is in danger of collective death although we have money and technology 2. End of the Patriarchal values (Command, control) 3. End of “Modernity”. “Transmodernity” = the best of premodern and modern. post secular, flat, tolerant, new level of resp. & consciousness. 4. Knowledge society as a turbo of change 5. Crisis of all institutions.

DEAN of CBA, ZAGREB / EU Expert Brussels. 8 Sofia, March 30, 2007 CHAPTER 2 : WHAT IS KNOWLEDGE ECONOMICS? Level 4!

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.9 DEFINITIONS Data: what is on the web, unorganised Data: what is on the web, unorganised Information: is already sorted by google. Overabundance. Information: is already sorted by google. Overabundance. Knowledge: is digested by human brain. Knowledge: is digested by human brain. Human brain and networks are the NEW TOOLS of PRODUCTION Human brain and networks are the NEW TOOLS of PRODUCTION Wisdom, Knowledge are rare. Not enough. Wisdom, Knowledge are rare. Not enough.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.10 A new world New tool of production : human brain 2. New CEO: Enabling creativity and sharing, Caring for humans = new human-centered management 3. New value creation process : adding K to K. 4. New Trade: from Free Trade to Free Sharing 5. New measurements = qualitative “intangibles” 6. New strategy: beyond war: win-win not win-loose 7. New definition of Progress = qualitative 8. Beyond patenting towards “Open Source” 9. Beyond pyramids towards networks 10. Capitalizing on cultural capital + gender capital

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels NEW TOOL OF PRODUCTION  The tool of production is not anymore machine + technol.+ €  It is human brain = Networks sharing knowledge in order to create new K.  This new tool of production is more important than capital and technol.  Hence Post capitalist society!

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.12 2 NEW CEO FUNCTION Old CEO: command, control, capture Old CEO: command, control, capture New CEO: New CEO: –enable the creativity of his “human capital”= tool of Production –Enable and creator of networks around his team. Cannot control networks! –Care for the intangible assets= brand

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels CEO AND NEW MANAGEMENT Human capital is central because it is caring for the tool of production: Please come back! Human capital is central because it is caring for the tool of production: Please come back! Thus Management : shifts 180° towards human centeredness = more creativity- centred, gender & culture – centred. Thus Management : shifts 180° towards human centeredness = more creativity- centred, gender & culture – centred.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels NEW VALUE CREATION PROCES INDUSTRIAL SOC. INDUSTRIAL SOC. Add value to object Add value to object From steel to car ! From steel to car ! Tool is Machine Tool is Machine Humans are cost Humans are cost Management is machine-centered Management is machine-centered Machine is central Machine is central KNOWLEDGE SOC. KNOWLEDGE SOC. Create new K Create new K From data, info to K From data, info to K Tool is Human brain in Networks Tool is Human brain in Networks Humans are capital Humans are capital Management is Human-centered Management is Human-centered Machine is at service Machine is at service

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels BEYOND TRADE (I) If I exchange an object against money, I loose the object. This is “trade”: I win and I loose. “Win-Loose” logic If I exchange an object against money, I loose the object. This is “trade”: I win and I loose. “Win-Loose” logic If I exchange knowledge, I do not loose my knowledge. I win and you win. I am not trading anymore. I share. This is a “win-win logic” of sharing. If I exchange knowledge, I do not loose my knowledge. I win and you win. I am not trading anymore. I share. This is a “win-win logic” of sharing.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels BEYOND TRADE (II) INDUSTRIAL SOC. INDUSTRIAL SOC. Free trade of objects Free trade of objects Industrial structure Industrial structure Pyramids Pyramids Unemployment Unemployment Pollution Pollution Quantitative growth Quantitative growth KNOWLEDGE SOC. KNOWLEDGE SOC. Free sharing of knowl. Free sharing of knowl. Post-industrial-capitalist. Post-industrial-capitalist. Network =value creation Network =value creation Self-creation of my job Self-creation of my job Immetrialization of prod. Immetrialization of prod. Qualitaitve growth Qualitaitve growth

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels A NEW SYSTEM OF MEASUREMENTS « Intangible assets » is a new concept invented by Karl Erik SVEIBY (Sweden) « Intangible assets » is a new concept invented by Karl Erik SVEIBY (Sweden) They are becoming more and more important in the knowledge society They are becoming more and more important in the knowledge society Because the knowledge society is about knowledge which is immaterial, intangible and qualitative. Because the knowledge society is about knowledge which is immaterial, intangible and qualitative.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels A NEW SYSTEM OF MEASURE. INTANGIBLE ASSETS Intangibles assets = Intangibles assets = –Know how, –Reputation, –Trust in the company, –Structure of the company, –Strategy (balanced scorecards) –Relations with personnel, –Relations with clients,

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels A NEW SYSTEM OF MEASURE. INTANGIBLE ASSETS (II) Relation with civil society Relation with civil society Relation to environment Relation to environment Relation to our collective Future and sustainability Relation to our collective Future and sustainability But also quality of the Networks But also quality of the Networks

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels MEASURING INTANGIBLE ASSETS ? Stock exchange measurements are still looking at financial “tangible” assets (quantitative) but they increasingly look at “intangible” assets (qualitative). Stock exchange measurements are still looking at financial “tangible” assets (quantitative) but they increasingly look at “intangible” assets (qualitative). Today a company is measured more and more by its intangible assets. Today a company is measured more and more by its intangible assets. Example: “Men’s Wear” USA. & “World Business Academy”, “Spirit in Business”. Example: “Men’s Wear” USA. & “World Business Academy”, “Spirit in Business”. See also Neskey: See also Neskey:

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels Intangible indicators grow Transparency ICT Proliferation Financial indicators remain important Non-financial indicators grow in importance Potential for greater participation and wider accountability

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels GROWING IMPORTANCE OF INTANGIBLE ASSETS (II)

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels NEW BUSINESS STRATEGY/ WIN-WIN Old business strategy is warlike. Battlefield images are frequent. Patriarchal values dominate: “win-loose” Old business strategy is warlike. Battlefield images are frequent. Patriarchal values dominate: “win-loose” New business strategy: much less violent, “competition through collaboration” is the new motto. New business strategy: much less violent, “competition through collaboration” is the new motto. Knowledge behaves like love! Knowledge behaves like love!

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels NEW DEFINTION OF PROGRESS The industrial & modern defintion of progress is quantitative. More is better. The industrial & modern defintion of progress is quantitative. More is better. This defintion is UNSUSTAINABLE This defintion is UNSUSTAINABLE The knowledge society implies a qualitative defintion of progress. The knowledge society implies a qualitative defintion of progress. Good new this allows a reorientation of our societies towards sustainability!! Good new this allows a reorientation of our societies towards sustainability!!

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels BEYOND PATENTING The whole of the industrial production system is based on secrecy and patenting. I have this technology and you have not. So I win! The whole of the industrial production system is based on secrecy and patenting. I have this technology and you have not. So I win! “Information and knowledge always leak” “Information and knowledge always leak” In the knowledge economy we will NOT be able to maintain secrecy, neither patenting. In the knowledge economy we will NOT be able to maintain secrecy, neither patenting. See generic medecines, I-Pod music etc,. See generic medecines, I-Pod music etc,.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels BEYOND PYRAMIDS TOWARDS NETWORKS  Pyramids are the « normal » structure of all (industrial) organizations.  But knowledge is created only in networks. This is the form that could prevail in the XXIst century.  Pyramids are all in crisis everywhere. In Govenrments, Military, Churches, NGO etc.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels CAPITALIZING ON CULTURAL AND GENDER CAPITAL Paradoxically culture and gender diversity becomes important as they feed creativity Paradoxically culture and gender diversity becomes important as they feed creativity The knowledge management is thus potentially socially inclusive and sustainable The knowledge management is thus potentially socially inclusive and sustainable The Lisbon strategy wsa thus excellent and forward looking. The Lisbon strategy wsa thus excellent and forward looking.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.28 CONCLUSION : NEW VALUES… Underlying values needed in the industrial capitalist society are freedom, initiative, ceativity… Underlying values needed in the industrial capitalist society are freedom, initiative, ceativity… NEW Values are needed: NEW Values are needed: –Freedom (of sharing) –Solidarity, Caring, Respect –Transparency –Concern for the Common Good

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.29 Consequences for the Business (II) IN US, only the « Knowledge society » business (10%) have survived the dot.com crash: Example: CISCO IN US, only the « Knowledge society » business (10%) have survived the dot.com crash: Example: CISCO Because they have changed : Because they have changed : –The tools (ICT) –The structure of their enterprise –The underlying vision of their scope and values (Verna ALLEE)

DEAN of CBA, ZAGREB / EU Expert Brussels. 30 Sofia, March 30, 2007 CHAPTER 3: THE LISBON STRATEGIES AND THE FUTURE OF EU

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.31 LISBON STRATEGY The European Council of Heads of State decided in March 2000 in Lisbon that EU should become the most competitive in the Knowledge economy before The European Council of Heads of State decided in March 2000 in Lisbon that EU should become the most competitive in the Knowledge economy before And this must happen And this must happen –in a socially inclusive and –In a sustainable way.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.32 LISBON STRATEGIES LISBON I LISBON I FREE SHARE FREE SHARE Post industrial Post industrial Post capitalist Post capitalist NOT EXPLAINED NOT EXPLAINED …FAILURE …FAILURE LISBON II LISBON II FREE TRADE FREE TRADE Old Industrial Old Industrial Capitalist Capitalist Business as usual Business as usual Easier Easier

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.33 LISBON STRATEGIES CONCLUSION: CONCLUSION: –Lisbon strategy (I) had thus done the right choices: KS+ sustainability + inclusion! BUT it failed to explain the new vision and the new economic frame: FREE SHARE BUT it failed to explain the new vision and the new economic frame: FREE SHARE Lisbon (II) strategy weakens EU’s competitive position in the long term. Lisbon (II) strategy weakens EU’s competitive position in the long term. BUT it is easier to apply in short term. BUT it is easier to apply in short term.

DEAN of CBA, ZAGREB / EU Expert Brussels. 34 Sofia, March 30, 2007 CHAPTER 4: BULGARIA 2010 IN THE KNWOLEDGE ECONOMY Towards a win win strategy?

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.35 BULGARIA 2010: When society changes, the new winners are rarely the same. Innovation comes from the periphery, or from new actors. When society changes, the new winners are rarely the same. Innovation comes from the periphery, or from new actors. Bulgaria is a new actor, perhaps more able to LEAPFROG towards the knowledge society than France and Germany? Bulgaria is a new actor, perhaps more able to LEAPFROG towards the knowledge society than France and Germany?

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.36 BULGARIA 2010: Will Bulgaria understand the change of economy BEFORE others? Will Bulgaria understand the change of economy BEFORE others? Will Bulgaria become a leader in this Free Share, post-industrial approach? Will Bulgaria become a leader in this Free Share, post-industrial approach? Will Bulgaria become a hub of societal innovation towards this new economy? Will Bulgaria become a hub of societal innovation towards this new economy?

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.37 BULGARIA 2010: If Bulgaria is leapfrogging towards the “knowledge econmy” If Bulgaria is leapfrogging towards the “knowledge econmy” Bulgaria could become a competitive advantage for the EU ! Bulgaria could become a competitive advantage for the EU ! This could be a win-win for the whole of the EU. This could be a win-win for the whole of the EU.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.38 Some good Books… Peter DRUCKER: “Post capitalist society”, Harper Business, New York, Peter DRUCKER: “Post capitalist society”, Harper Business, New York, Verna ALLEE: “The future of knowledge” Elsevier Science, 2003, USA. Verna ALLEE: “The future of knowledge” Elsevier Science, 2003, USA. Rob CROSS: “Networks in the Knowledge economy” Rob CROSS: “Networks in the Knowledge economy” LEIBOLD and al. : “Strategic Management in the Knwoledge economy” LEIBOLD and al. : “Strategic Management in the Knwoledge economy” David ROONEY (Australia): “Handbook on the Knowledge economy” David ROONEY (Australia): “Handbook on the Knowledge economy” 2005.

Sofia, March 30, 2007 DEAN of CBA, ZAGREB / EU Expert Brussels.39 BOOKS II Jeremy RIFKIN: “The European Dream: when Europe’s vision of the future is silently eclipsing the American dream” Penguin Jeremy RIFKIN: “The European Dream: when Europe’s vision of the future is silently eclipsing the American dream” Penguin Ray ANDERSON: “Mid Course correction” (Interface) Ray ANDERSON: “Mid Course correction” (Interface) World Business Academy: World Business Academy: “Neskey” on intangible measurements : “Neskey” on intangible measurements :