Time for more transformational leadership?

As Martin Wolf stated at the beginning of the FT’s Future of Capitalism series, although "it is impossible at such a turning point to know where we are going, … the transformation will surely go deepest in the financial sector itself".

The following scenario from a wonderful book for people leading transformational change indicates how radically different financial services could be in the future:

• "In 2025, Philadelpia Quaker Health [PQH] is the most trusted and respected name in health care.
• [It] has close to one billion members globally.
• Once fully vested, members’ income and life care through death is guaranteed and at least half of their economic assets become more fully integrated into PQH’s Intergenerational Trust.
• [Stakeholders] are fully committed to personal, family and organisational initiatives to increase good health … and adult development.
• Senior peers choose their time of death.
• The Good Life 500 [including PQH] has continued to gain market share by comparison to the Fortune 500, the global governmental sector, and the traditional religious and educational not-for-profits".

An easy way for aspiring leaders to keep an eye on the trends that are shaping the context within which their evolving organisations and societies exist is to sign up to Outsight’s "21 Drivers for the 21st Century" e-mails.

These and similar resources help more people develop the "prospective mind" (one that’s ready to help create imaginative systemic change at times of crisis) called for by Thomas Homer-Dixon in the "The Upside of Down".

The Innovator’s Prescription for financial regulators?

The Turner Review criticises “financial innovation of little social value” as a key cause of the financial crisis.

Two newly published books may offer useful insights for financial regulators seeking to support innovation that delivers instead high social and environmental value.

The first is “The Future of Finance: Megatrends beyond the Crisis,” co-authored by futurologist Adjiedj Bakas.

It predicts that the future will be different from the past in ways that go well beyond the current debate.

One of its key megatrends brings together a revival of ethics, an emphasis on health and happiness and new missions for financial services in which “all money is green”. But it goes beyond this.

It thinks that “financial services are going to develop into a creative industry” and mission-critical skills will be those seen today at companies like Google and Apple. And the boundaries of financial services will expand. Banks, insurance companies and pension funds will need to prevent problems from arising and provide solutions rather than only paying out.

Looking at how these trends may interweave provokes intriguing questions. “Who will deliver the most planet-friendly pensions tomorrow – an incumbent or a new entrant?” and “How will the debate on financial regulation affect this?”

Some of the answers may come from the second book – even though it is not about financial services but another “problem industry” – American healthcare provision. The Innovator’s Prescription is by Harvard’s Clayton Christensen. The initial chapter is available online – it is worth a read.

Christensen believes that fundamental change comes from disruptive innovation. This consists of four things - a simplifying technology, a business model innovation, a disruptive value network and finally regulation and/or standards that facilitate change.

He says that regulation needs to facilitate business model innovation in particular. His research shows that, while simplifying technology may come from incumbents, business model innovation is almost always forged by new entrants to the industry.

This suggests to me that future opportunities to deliver financial services in ways that advance sustainable development will depend critically on what emerges from today’s debate on financial regulation.