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Head Or Heart? Both! Many Investors Make (Supposedly) Rational Decisions – and Repeat Past Mistakes

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Head Or Heart? Both! Many Investors Make (Supposedly) Rational Decisions – and Repeat Past Mistakes T.A. Cook Client Magazine Issue 05 Delivering Unique Expertise Head or heart? Both! Many investors make (supposedly) rational decisions – and repeat past mistakes. So it’s about time you don’t ignore your gut feel, but also remember trust, but verify. Role Model Norway’s state fund shows how to invest wisely Change How Bilfinger is adapting to industry service developments EDITORIAL Dear Reader, nvesting is one of the more sophisticated forms of gambling. Just as most gamblers only remember their wins, companies engaged in regular capital I expenditure like to focus on grand programs and big returns. Whether it is for external PR, the benefit of the Investment Community, or just for internal communication, few would choose to focus on their losses or highlight aspects of their capex program which might have produced a better return. Yet, if truth be told, for every A-grade successful project there are quite likely to be a number of investments which would only merit a D or maybe a C grade. For every exter- nal factor of chance governing success, there are at least as many internal aspects which can and should be controlled more closely. A surprising number of people and processes in large companies, especially, seem unfazed or even numb to the value of millions and even billions of dollars they handle. At the very least, they might not realize the power and duty they IMPRINT have to minimize risk and maximize returns. Playing with other people’s money Publisher T.A. Cook & Partner Consultants GmbH Leipziger Platz 1 und 2, 10117 Berlin is relatively risk-free, but in reality it’s very rarely other people’s money. It has been hard- Ute Csiser-Bernhardt (T.A. Cook) Editor in Chief earned and belongs to all the stakeholders. Editors Florian Flicke, Jens Rospek (planet c) Dirk Frame Authors Dirk Frame, Iris Quirin, Clemens Bomsdorf, The considerations and decision-making mechanisms are mostly no different to those Partner, Europe Roland Hensel Art Direction Katrin Bohlinger which would be used by honest folk looking after, say, their own household budget and Printer Zeitgeist Image Solutions GmbH, Düsseldorf managing a modest retirement portfolio. Of course there are sophisticated tools and even The information contained in this publication is of AI techniques which can be deployed, but even global industrial-scale capex management a general nature and in no way relates to the specific should be based on clarity of purpose, rigorous analysis of detail, and careful adherence situation of any individual or legal person. No liability will be accepted for the correctness of any information to tried-and-tested processes. now or in the future. No person or company should In this edition of INSITE we bring you stories of investment success and failure and take any action on the basis of this information without obtaining appropriate expert advice and/or carrying out try to learn from the experience. We indicate what we consider good investment practice a thorough prior analysis of the respective situation. The views and opinions expressed in this magazine are and also highlight how companies, organizations, and savvy investors in a number of those of the authors and interviewees and do not neces- different sectors deal with the challenges they face and go about their business in a con- sarily reflect those of T.A. Cook & Partner Consultants GmbH or any other legal forms of T.A. Cook. The T.A. sidered and careful manner. In this digital age it would still seem that “if it sounds too Cook name and logo as well as all associated names of good to be true, it probably is” and “if you watch the pennies, the pounds will look after Getty Images / products and services, figurative marks, and slogans are trademarks or service trademarks of T.A. Cook & Part- themselves.” ner Consultants GmbH. Unless otherwise stated, the copyright for all texts, photos, and images belongs to T.A. Cook & Partner Consultants GmbH. The detailed rules available at www.tacook.com/intellectual-prop- erty apply as do the General Terms and Conditions. All rights reserved. Stuart Kinlough Cover: Photo Cook T.A. Photo: INSITE | 5 12 CONTENTS Contents 34 8 3 Editorial 6 Update 46 Event Calendar 20 24 42 FOCUS: INVESTING SECTOR FOCUS BIGGER PICTURE • History Repeats Itself A CASE IN POINT • Learning from Norway EXPERT INTERVIEW • More Technology, Closer PROFILE • One Woman, Two Worlds 8 Investors have been making the same mistakes 24 Paragon of excellence: why the Norwegian sover- 30 Connection 42 How Katja Neuthe bridges the gap between for centuries. But what can you do to avoid your eign wealth fund is a prime example of a successful Gerhard Pilotto talks about the new requirements traditional science and modern consulting. predecessors’ mistakes? investment strategy. facing industry service providers and the effects of Universal History Archive/Getty Images Archive/Getty History Universal digitization on Bilfinger. ANYmal, private, ANYmal, COVER STORY • Big Investment, Low returns? INFOGRAPHIC • Megaprojects: Milestones or INDUSTRY FOCUS • Robot Revolution AWARDS • 20 Years of Maintenance Innovation 12 Many projects fall behind schedule and exceed 28 Bottomless Pit? 34 New robotic applications are driving predictive 44 T.A. Cook has been recognizing companies with their budgets. Dirk Frame shares nine principles A selection of infrastructure projects that planners maintenance. INSITE takes a look at five applica- innovative ideas since 1999. INSITE presents that can help make investments perform better. had seriously misjudged. tions with potential. current and past award winners. INTERVIEW • The Team Is More Important Than INTERVIEW • Investing in Expertise 20 the Business Idea 38 Maren Stieler discusses the retention and recruit- Florian Heinemann discusses the opportunities ing strategies employed by T.A. Cook to counteract and risks of venture capital investing in innovative a lack of specialists. start-ups. Photos: Tao van de Graaff/Getty Images, Stuart Kinlough/Getty Images, Images, Stuart Kinlough/Getty Images, de Graaff/Getty van Tao Photos: 6 | INSITE INSITE | 7 UPDATE UPDATE In a Nutshell Recommended Reading No One Is Perfect Daniel Kahneman: Thinking, Fast and Slow Karl Lagerfeld Fashion Designer Homo economicus was undisputed for quite some time. The theory’s 66% core statement: economic decisions of organizations You have to throw are made entirely rationally with intend to deploy the aim of ensuring maximum ben- Recommended Listening: Podcasts money out the window, efit. Nobel laureate in Economics 5G Daniel Kahneman is one of the Everyone’s listening to podcasts. Whether it’s sports, culture, politics, or business, the by 2020, according to a so it can come back in sharpest critics of the model, shar- selection is growing on a daily basis and covers just about every area of interest. INSITE Gartner study.* ing his opinion in his book Think- introduces a selection of podcasts that T.A. Cook partner Dirk Frame regularly listens to on through the front door. ing, Fast and Slow. Investment his smartphone. decisions made without opinions or feelings, as if by robots? For him, The Economist BBC Radio 4 Once a week, employees of the renowned If you’re interested in background stories on When Karl Lagerfeld said this in a 2008 interview with pure fantasy. Organizations expect 5G DIE ZEIT, the conversation had nothing to do with his The psychologist examines hu- weekly newspaper The Economist discuss a whole host of topics, BBC Radio 4 is the right networks to be used extravagant lifestyle. Instead, Lagerfeld was talking man behavior very carefully. How politics and business, generally examining choice for you. From Brexit to business anal- primarily for Internet of about the financial crisis that had unfolded a few months do we make decisions? What goes entirely rationally. Bad decisions background information on especially relevant ysis in “The Bottom Line,” there’s a back- Things (IoT) communica- prior, and its impact on his work. He believed that on in the brain? How do things and are a part of everyday (business) and current topics and thus providing addi- ground story inspired by current events for tion as well as for video – money needs to circulate, which doesn’t exactly work people influence our thinking? life. For him, that’s no reason to tional information and perspectives. Unlike just about every area of interest. An insider operational efficiency is in a crisis, and that’s what worried him. Lagerfeld was Kahneman analyzes these questions despair: Kahneman provides plen- the other formats already introduced, The tip: the nine-part series “Letter from Ameri- the key driver. Getty Images quite possibly the most famous fashion designer, but using practical examples and veri- ty of examples of how we can im- Economist podcast requires a paid subscrip- ca” by former BBC correspondent Alistair / had also proven himself to be an exceptional, opinion- fies his ideas with experiments and prove our judgment with small tion. https://www.economist.com/blogs/ Cook takes a closer look at social develop- ated businessman. While his statement might initially statistics. tricks. After all, the more experi- podcast ments during the terms of office of past US seem to be a superficial truism, on closer inspection it Kahneman ultimately comes to a ence you have, the less likely in- presidents. https://www.bbc.co.uk/pod- offers food for thought in the context of investment. clear conclusion: no one behaves vestments will fail. Robohub casts/radio4 Getty Images, MicroStockHub Getty Images, / Robohub offers plenty of material for amateur and professional technophiles alike. In this National Public Radio (NPR): Planet Money nonprofit podcast, experts from the fields of “The economy explained” – that’s the princi- science, research, industry, and finance share ple of the Planet Money podcast.
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