USD President's Report 1999

H E

N E W

ECONOMY

~• Professor Dan Rivett, School ofBusiness Administrat,on

Finance will converge with other disciplines in the future. The Chief Knowledge Officer will replace the Chief Financial Officer, and today's Chieflnformation Officer or controller has a head start in pursuing this CKO osition. U nib nism is about to urch 7 ead-;'and gover ment will pay a larger role in the economy. Both of these institutionJ have been coul ted out okhe new economy, but still have a lot of punch left. Finance will continue to have a serious ro le in every persop'r1l_e I° s9rious that every human wants to play , drivr g out t~ e eed for "professional " finan e specialiJ s. T e ~ keting mangers of the future will not need to rely on "finance " fo r_approval. The marketing person will run the umbers themselves , get together with pr duction and submit their shared

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F inance used to be considered a place where folks JUSt counted beanbags. The bean counters, now referred to as accountants, dut ifully prepared th e bags for counting. All that has changed. Financiers , bankers, investment bankers and financial mangers have created a new "Hollywood" role for themselves. They ' ve become the gatekeepers of capital and makers of kings , or idols . They are the angels who provide the financial blessings for ~ s that otherwise would be unrecognized notions , and the have unleashed the subversive power of finance~ We are in an electronic period , the effect of which will ~q ~ l the st am en 9 ?1e 's imp~ upon 0 u.· society. Similarly, the power of\ 'is shift rests in a ~ w hands . The unexpected upside to this subversion is that workers wi ll truly begin to control the means of production , because the means of production now reside between their ears. The toil and self-enslavement practices that have been cast upon them since the Industrial Revolution may finally be just a "click" away. Finance was concerned about orderly systems of acquiring and disbursing capital. The science of managing capital has been shattered by the realization that we are constantly in a state of flux .

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opinions to a group of seasoned decision makers for approval or denial. The finance genie is out of the bottle and the economy is about to spin so fast that the blur wil l create a new convergence of thought with money. We professors, however , are not going to resign our finance professor- ships! Rather we are going to train our students to make dynamic financial decisions that balance the needs of all stakeho lders . Business

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students at USD, for example , are being trained to make financial decisions utilizing

Noble laureates have lost billions of dollars cybergeeks rule legions of bankers. The old formulas are seemingly worthless , and no one can explain the soaring stock prices of Internet-based companies . We live in a world where the simplest changes , rumors or nuances can weigh heavily in the pocketbooks of millions of ordinary investors.

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new systems such as Real Option Theory, goes beyond finance by the value of

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