Thank you very much. I'm I'm really honoured and I am very touched.
Probably you for sure over evaluate me.
Uh, but it means that my guys from PR, they really did a good job.
Uh, you know what? Uh, actually, when I landed in Oxford, uh, like, 2 hours ago, I realise.
Something something amazing. Actually, it was almost 20 years ago, I don't remember.
It was 1992 and 1993.
I came to Oxford at the time for the language training.
At that time, I didn't speak any word in English.
When I graduated to Technical University in 1987 under the Communists at the time.
So we didn't learn English. Actually, I was very fluent in Russian, but after the transformation at the beginning,
it seemed not to be very helpful and useful, although right now actually I'm enjoying them being fluent in Russian.
But that time I came here. Hmm.
Just a poor guy from the not very wealthy family.
So everybody under the communist time and.
I really can't realise. I even can't dream of the time that 20 years later.
I'll be here opening the polished modern study at the Oxford University and giving a speech in English and.
Actually, this is a very great day for me, but also from Poland, because this is the best proof that something happened to Poland at the time.
So I believe that last 25 years after the run table in Poland, after the transformation were pursued,
the best time in Poland for the last couple of hundred years, and being here,
speaking to you, opening this Polish modern studies, the best proof for that.
So. Actually, I am very proud of Paul and what we did since then,
because right now I strongly believe that we are absolutely on the same page
as the rest of Western Europe and actually we are speaking the same voice.
For example, in the Ukraine case, we help them right now to deed to do their job.
So this is a very short introduction, but it's a really special moment.
But not only for me, I think also for other Polish people being here when we start thinking from this perspective.
So few words about my person will said already that just to clarify the.
Yeah. So the fact is that I published three books.
They are also available in English on Amazon are not very expensive.
I end by filling $29. As far as I remember, all of them.
The last one. Business nature to be published in.
January, as far as I know, and my speech be actually very much about this.
What they wrote in in this book and thinking.
How could the person who is very much from the exile world could say to.
To people, to audience who are very much money is from the word world.
How could they? Presents something interesting here on the economics.
Topic. Actually, surprisingly, I found it very easy.
Why so? Because. If we start.
Thinking about the recent economic Nobel Prize.
There were three guys awarded this year. Urban farmer Robert Shiller.
Peter House. What is a special about them? Obviously.
Every year giving a Nobel Prize is a very special moment.
But this year, especially in economics, was really special.
Why so? Because once again, fame was awarded for his story, which proves that every time the value of every asset in the market.
Is properly evaluated by this market. So every price.
Is the right one and he prove it, which means that the prize which we could see at the market,
already reflected the every information, every trends on the market, everything.
And after all the prices, as we could see, actually.
Robert Shiller and Peter Hanson, they were awarded at the same year for proving that most of the time the price means is absolutely wrong.
And actually, Peter Shiller sometimes is a cult as a king and the father of behaviour economics, which means that most of our decision,
investment decision that we do is done by emotion, is by our intuition, and most of the time we are wrong.
And actually, Peter Hansen did the statistic model which prove it and at the same time those two guys were awarded from economics.
How did it happen? That sounds ridiculous.
And actually, not really because.
Professor Fein proved that, although the price really reflected to the information and trends.
But the problem is that we can't interpret them, and that's why we can't predict the future trend of this price.
And then why do most of our decisions are wrong?
And now is very close to this two other guys, which means.
Which is the slight. Which means they're the. There is some link between the rational decision and irrational decision.
In all our. Investment process, investment decision.
Searching. How? It's possible and how it could happen at the time.
We have to go back 20 years ago, 20 years earlier, actually, that was the time when I started learning English in 1992.
The Harvard professor, Daniel Goleman, published a very famous book that I strongly recommend it to to read.
And maybe some of you have heard about this emotional intelligence.
And Professor Goldman find out that the.
It's not true that actually we have just one type of intelligence, IQ intelligence,
very well known, which is intelligence describing our talents of analytic way of thinking.
But actually, there is art.
Intelligence support intelligence musician intelligence that so many of them.
And actually, the most important out of the IQ is IQ intelligence, which is emotional intelligence.
Emotional intelligence is.
Located in the human brain in the small part of the brain,
which is called amygdala and which is linked by this serious pipe of nerve with trance like which works like an interface.
And what he noticed that the.
People were this interface interface from Magdala.
Part of the brain is broken or doesn't work properly.
They almost can't leave. They can't make any decision.
They barely could survive in the normal life.
Still having extremely high IQ result.
That was. That was amazing. Later on, about ten years later.
Mr. Yes, please. Daniel Kahneman published the result of his research, which he did together with Amanda Persky, who unfortunately passed away.
So in 2002, when Daniel Kahneman was awarded by Nobel Prize for his research, that was only him.
But actually research was done by those two scientists.
He published the book which called The Fuss and Slow Thinking and what?
Daniel Kahneman found out was that we as a human.
A thinking in two completely separated ways.
One is. Very fast way of thinking where we act emotionally immediately without any time for reflection and deeper analysis.
And this the second one, which is called the slow system or system number two, which is the way where we start to use our IQ.
But actually this slow system change with this slow system of thinking, use much more energy from us.
So. Almost every decision we do during our normal life.
Is decision done by the system? Number one, the fast thinking system.
Which came from our. Evolution.
Uh, because this way of thinking in many times in the past, but also right now, helps us to survive in the dangerous situation.
There are no time to analyse the situation, but immediately we have to make a decision is it a threat or not?
And if it's a threat, either we have to fight or run.
There are no time for the slow way of thinking and also slow way of thinking.
Consume a lot of our brain energy.
That's why, for example, it's so difficult to think about some difficult task where we are practising something in the gym.
It's almost impossible running very, very fast and thinking about something serious because there are not enough energy in our body.
But that. So fast way of thinking.
Although it works. Properly and very well in the natural environment.
Right now seems to be it not be enough.
In a little bit more complicated word that we created, because this is this way of using emotional intelligence.
When we start to use this system of thinking for the.
Management problem for the investment decision.
We do so many mistakes that.
It's creates a lot of problems. What? What kind of mistakes we could do.
For example, once we don't.
No. The answer for the problem. We tried to find some similar, simpler situation from our past,
and then we followed the solution we did in the past when we don't know the answer for the problem.
We intentionally followed the group. That's our, that's our behaviour.
When we we are so easy person to be framed.
Once we heard the solution or the price we so willing, even if we not realised to follow this this price what advice to us which is sometimes.
Probably irrational price, but that's how we how we work.
Uh. This.
This way of thinking. Could you? I do.
This came of thinking, as I said, is mostly related to some atavism.
The way how we as a life creature evaluated.
But it makes a lot of problems. This is the example described by Professor Kahneman, and he did the research a couple of times.
He repeated that a lot of medical doctors conferences.
So he asked them. For solving such a problem.
Let's say theoretically that in some neighbourhood.
Uh. Suddenly, uh.
We have the problem with unknown disease, which we could call Asian disease.
It's a very serious deadly disease.
But actually, we have two treatments against it.
Treatment A and treatment B, but according to the producers.
Treatment a. As the producer says, could save 200 people because in this neighbourhood there are 600 people and all of them could die.
But if we use treatment, a 200 people could be safe for sure.
But 400 people will die for sure. Treatment B according to producer of treatment, be you saying completely something different.
You're saying that we don't know how many people we could save, but according to our research.
One third. 33% of people could be.
With one third probability. So 33% of the probability we could save everybody.
From this 6600 people society all but two third, which is a 67% probability are.
We have to say that. Everybody will die.
So which kind of treatment? Do you prefer teachers and the medical doctors?
More than 90% of them decided to choose a treatment b.
Which is ridiculous because I the same sector the same. Uh, so.
The question is why they did this decision.
Also, it's related to the way how we think because based on the evolution, we prefer not to lose.
Then to win. So.
If we use treatment a for sure immediately.
We decided the two that 400 people will die.
So we don't want to lose for sure. Maybe. Maybe we we win.
Could we go further? So. This is this is the example of how we how we think and.
It's it's amazing because it's so many decision.
Adam in this way. And if so many decision might be wrong.
So it means that we have a serious problem because it's not only about the business, but it's also about the.
Regulators, politicians and the people who are ruling the country's.
But unfortunately this is the fact government. And for this point of part of this research for last.
Almost 20 years,
more than 50% of Nobel Prize awarded actually relate was related to to this kind of topics but and it's called the behaviour economist.
But. The lack of behavioural economy is that almost everything what was written about that was reflected to this single investment decision.
Just one person. So we have the level of the single investor.
On the other hand, we have the companies and we have the whole markets industry.
Once Industry investment theory investment system was linked to Darwin.
Evolution theory. For the last 50 years.
As far as I remember, once a liberal school of economics was created in Chicago by High-iq Friedman and the other guys.
They always proved that they're exactly the same principles, exactly the same rules,
which works in the life environment, picking up the best fitness for the environment.
It works exactly the same in the economy.
So which is nothing new right now.
The latest research show and prove that it's exactly the same and this single human,
uh, example, but it's still a big gap between the investor and the whole market.
What is in the gap that companies. So the question is what happened to the to the companies.
And actually,
I believe that the companies are following exactly the same principles and this is the part of the of the book will be just published how to.
How to run the future research about the companies in this in this context.
So if we see this simple diagram here, we have how it works in the camp on this we have a normal.
No rebuild Tory of economics.
We do everything rational. The market is always right.
Markets rational, but based on our sentiments, based on the our emotion, we do some decision.
Sometimes it's right, sometimes it's wrong. Later on we switch on our analysis, try to analyse the result of this decision.
If it's okay, it's fine. If not again change.
We switch our IQ, then we adjust it again by our IQ, by our emotion.
And then we go to this behaviour economics.
Other words. We could show it in this way that doing a rational decision and using our IQ.
We could predict every time where this ball be, it'll be for sure in the lowest point because of the gravity.
But the problem is that in most cases we not realise that this ball is a part of the bigger scheme.
It's a part of the platform. Its platform is moving, is accelerating.
Slowing down is stopping. Going back going forward and obviously in impact very much the ball.
So the ball is in a completely different place where we could expect that this is a more or less the dilemma right now in in the economy.
What is the ball cursor?
All economists are using.
They actually think the ball should be here. No, but the ball is here.
Okay. Here. So it takes us some time.
We could use this Newton to take some time to be here, but in the meantime, platform going forward.
So the ball is here. I could say that right now we face a very similar situation,
like a scientist being in the beginning of two centuries when they realised that Newton theory didn't work anymore as far as a high speed account.
So. And it's exactly the same in this case when the platform was moving slowly.
The ball was always here. Right now, the platform is moving in unpredictable direction, so it's almost impossible to predict where is the ball.
And now it's actually, uh.
It means that we have even more than any time before.
In business decision investment to use our emotions.
To use our intuition because it's almost impossible to predict and count.
Where is the ball? The company, as I said, in my opinion, follow exactly the same.
Low. And the same laws, the same principles like.
Single. Investor.
Like a market and. Speaking.
Bigger, like. Life animals in the life environment following Darwin evolution story.
But if so, it's raised the question. How is it happen in real?
How those companies are changed. How this evolution theory in practice will work in the company case.
I think all of us we heard so many times saw the very come and think about DNA of the company.
The company has to change its DNA.
All this company has a very strong DNA, but in most cases, its use like very much to this, in the context of the culture of the company.
Nobody really think about the real DNA.
But what if we try to create the real model of DNA with the real chains of DNA, very similar to DNA.
And this actually it tension of of this DNA model.
Once a single investor.
We? Use all the time IQ and IQ.
So I believe this is exactly the same. The company, all the companies consist from the intelligence.
Uh hmm. From the IQ and from the emotion.
Intelligence. And if we try to describe in this way that this is logical and analytical intelligence of the company,
which is all the hard data of the company, which the company has it not necessary mind must be the company.
It could be as well. Oxford. But here in the organisation.
So we have here this old knowledge in this company, in this university, all books, all properties,
all finance, household, the rules, everything which could be described and treated.
But this. Obviously it's not everything is very common saying that the most important in every organisation that people in this case fellows,
professors, doctors and that be the second chain which I called in the company emotional intelligence.
This is all set of people working or somehow related to the organisation, to the companies.
And then only the combination of two chains finally gives the proper picture of the company.
And inside the chain.
Chain. Both of them. We have some genes. Which could be financial strategy, technology, I.T., marketing, whatever you want,
but also every people related to the to the organisation, to the company, to this in this case, to to Oxford University.
Obviously, picking up one gene and putting different one in place of this completely might completely change the organisation,
especially that be the dean of CEO in the company or for example,
if we completely change the financial situation of the company because of some extraordinary event, there'd be not the same company anymore.
So having this model,
we could actually observe the how the company mutate being either a better fit to this environment or and then the company be growing,
the company developing or actually those mutation could go in the wrong direction and the company be weaker than than before.
So because of the emotional intelligence of the company.
It's actually very new concept. So I would like to, based on this graph, explain you what I mean here.
It's not only just in knowledge and emotion of the every employee in the company, but also extremely important relation among them,
the atmosphere, how they feel, uh, and all this things related to the ah, I could call emotional intelligence of the company.
And obviously if this level of the emotion is higher, the company is more competitive,
the same actual in the heart that data, when the company is more profitable, has a more equity.
Also, it means that this IQ is higher.
The company is more competitive. And actually using this model.
If we. Agree for this.
Parodic. What does it mean that the company DNA mutating this right direction, improve the fitness that could be used?
That could be the good opportunity to just to search if the company is developing properly.
I think in most cases people believe that the most important for the company is just net profit.
Either company is producing profit or not. It's almost right.
Although I believe it's even more important to answer if the company, after the mutation, is able to produce a more cash flow than before.
And the cash flow is much more important than than the profit then those guys who are more related to the business, they understand what they mean.
And I think they could agree with me, but we could say also that's right here, it's very similar.
I don't want to complicate could we go on there?
And the company, which is actually a good example, the company also follows exactly the same rules as a human as I said before, that we.
Uh, actually always following.
Strategy not to lose. Instead of the strategy to win.
Other words, the fear of the pain is bigger than the pleasure of the gain.
It's actually work the same in the company. Once those guys say, I don't know if you remember, probably this is a very famous here in Britain.
Nick Leeson, actually. He didn't steal this money.
He just played. He made the small losses at the beginning.
Only 2 million. But he was so afraid to show this losses, he was afraid to lose his job.
So he was always playing. He did always the new bat, believing that finally he would win.
So he was unable to accept his losses.
They are the example where exactly? Exactly the same.
Which means that this one of the gin in the company was actually wrong.
And the company finally bankrupt all those.
Those banks. Your father. There are so many.
Examples. In the life environment which confirm that actually life.
Word. Is acting exactly the same as the companies, which is.
Some prove that they believe that. Uh, my thinking about the company in the context of theory of evolution is probably, probably right.
I believe very few of you know that once birds.
Flying for the winter to North Africa.
They first of all, concentrated in the one big fleet then.
They split them on a couple of them.
And every part of this fleet using completely different direction to reach exactly the same point in the North Africa.
Why so?
Because they would like to share the risk that at least some part of Bird during this long journey arrive to Africa and be able to be back next.
Yea. And then have a.
Uh, they new generation and send the genes.
Come on. This is exactly the strategy we do in the business.
There's a very common saying that puts every exit into one box, which means that invests everything in one in one project is exactly the same case.
Completely irrational decision. From logic standpoint of is altruism.
It's raised by a single people, by the companies.
That's makes sense. Why are altruist? Actually, it makes sense.
It's actually a very common process also among animals in the life environment.
And finally, making a long story short, it helps us to replicate our our genes and why the companies are altruistic.
It's quite obvious, actually. This is a part of my being. We believe that after all, in this way or the other other one, it help us in the future.
Also there is. Very nice example with bees.
When the bee decided to.
Uh. Change the king.
For the new one. And they push. Away the old king to find a new house.
Surprisingly the most experienced bees.
We go with this old king. Because only the most experienced bees could help to create the new royal family.
And it gives the biggest channel, the biggest and the highest churn chance to success for this process.
Uh. I believe that all of you heard that so many mergers and acquisitions failed.
Why so? Especially one this is acquisition overseas, for example.
Believe me that. Most cases.
The reason is that once finally the transaction is done.
The company which Bolt and other one decided to do.
The branch is sending not the best people, the most experience, but the people that really they don't.
Have any idea what to do with those guys. So they sending experts?
It's not the case sometimes in the university. Never.
Okay. And then what happened? We send the managers who are not really the best ones in our own environment to the completely
different one are known and we believe that they be succeed there on one side and not succeed here.
No way. And be smart.
They send in the best of the best. We go further.
And. Also.
Similarly, uh, similarities are reflected to the whole industry for the stability of the whole industry.
Uh, actually right now there are so many programs and uh, also actually here in Oxford.
Which trying to find the similarities between.
Stability of ecosystem and stability of our financial systems.
And actually, there are so many of them.
If we look into the natural ecosystem.
Here we have microorganism at the very bottom and here predators.
And actually if this strangle. It's wider at the fundamental and there are so many of them at the lower level.
The ecosystem is more. Stabilised.
It's exactly the same. In the business.
So. It's a pure correlation, a very strong one between the number of micro and small companies.
In in any. Industry in any business environment and with the stability of this of the system.
But what doesn't mean. Being a micro.
Exactly the same as in life environment.
There are a lot of small animals, small colonies and a lot of them very soon that die or they food for this higher level.
Exactly the same in business.
We have a lot of micro companies and they accept the very high level of risk and only because of this that they are accepting the high level of risk.
So they could survive. But on the other hand, once they accept a so high level of risk, a lot of them be bankrupt.
And then we have the small medium size for lower risk.
And finally, we have a global corporation, the biggest predator, which actually in most cases cannot accept almost any risk.
We saying that all those big companies, big elephants, are so bureaucratic it's nothing impossible to deal with them.
But at the very end, it help them to survive.
This is exactly the same case in the life environment.
So that's be very much for today and the rest be in the book.
So I advise you to it. Thank you so much.
You.