More than ever, the economy is in need of "entrepreneurship, free markets and investment," said IESE's Dean Jordi Canals, at the school's 48th annual Global Alumni Reunion, held in New York City on Oct. 10. The event marked the first time IESE has held the GAR in the United States, where it recently established a center.
The reunion was held at the Waldorf Astoria Hotel, with approximately 1,100 alumni, faculty and guest speakers in attendance. This year's reunion, centered around the theme "Reframing the Future of Business," brought together IESE alumni from across the globe who heard from prominent speakers including James D. Wolfensohn, former President of the World Bank, Dr. Valentin Fuster, Director of Cardiology at Mount Sinai Hospital in New York, Kathryn Wylde, President & CEO for the Partnership for NYC, and Antonio Perez, CEO and Chairman of Kodak.
In his welcome address, Dean Canals said the business world is experiencing "a crisis of ethical values." IESE's mission of developing leaders who can have a deep impact on people, firms and society through integrity and a sprit of service is particularly relevant today, he said. In addition, the school's global character and strong links with business schools around the world offer the corporate world a highly informed perspective of globalization.
NYC: Gateway to Global Economy
In a separate session, Matthew Bishop, American Business Editor and NY Bureau Chief at The Economist, interviewed Kathryn Wylde, President & CEO of the Partnership for New York City, who offered insights on the city's current economic situation and future. Wylde pointed out that both New York and London face the challenge of remaining financial capitals, as they engage in power struggles with their respective governmental capitals, Washington, D.C. and Brussels.
"New York is America's gateway to the global economy," Wylde said, due to its financial institutions. Yet when asked about a possible crisis of values in the New York business community, Wylde responded by noting that the world blames New York in large part for the current economic situation. The city will pay a price for this perception, she said. On a positive note, Wylde said that - contrary to popular belief - crime is not on the rise in New York City, due in part to the city's state-of-the-art police system.
New York City's future rests on its ability to provide services to international companies, especially those based in the developing world. Fifteen percent of the city's growth over the last five years has come from direct foreign investment through jobs and business, she said.
Healthcare's Lessons for Business
Dr. Valentin Fuster, Director of Cardiology at Mount Sinai Hospital, in an interview with IESE Professor Pedro Nueno, emphasized the need to see health care as an economic priority. He drew analogies between the proper functioning of a human heart and the inner workings of a business, arguing that like medicine, business cannot operate efficiently without the circulation of information. And like cardiovascular health, business finds its success when problems are foreseen and prevented before symptoms arise.
Similarly, Dr. Fuster drew analogies between his medical school teaching and the pedagogy encountered in many business schools today: "The most important thing is vertical communication, and... competence in leadership." Further, Fuster suggested that the reasons people choose to enter medical school can be instructive for the business-minded. The "ideal of service" is at the heart of the medical vocation, Fuster noted, and businesspeople can look for inspiration to the model physician, who sees his patients as his "father and brother," rather than a collection of numbers and medical readouts.
On a more practical note, Fuster drew attention to global healthcare crises, observing that good economics and good healthcare go hand-in-hand. Of particular note was Fuster's emphasis on the education of healthcare consumers in preventative lifestyle choices. The question and answer session with Dr. Fuster was decidedly lighthearted, from questions about the health benefits of coffee and wine to the importance of exercise. Dr. Fuster argued forcefully, however, that we ought to adopt the idea of "integrated health," rather than a list of "do's" and "don'ts." For the economic health of our healthcare system and for our own wellbeing, Dr. Fuster emphasized the enormous potential in consistent relationships with our physicians and attentiveness to the ways we can prevent illness.
The Importance of Technology
Turning to technology, Kodak CEO and Chairman Antonio Perez shared his struggle and success story of bringing Kodak from a minor contender to a leader in the digital space. "We came with no digital business to speak of and now 70 percent of our business is digital," he said, adding that Kodak has the largest market share of digital cameras.
Perez offered a three-pronged approach to companies coming to compete late in the game. The first requirement is to have a break-through technology. The second is to have an advantage in the supply chain, which he pointed out was easy if you are late to the game, since earlier competitors have likely already paved the way. The last is to have a value proposition that attacks the weak spots of the competitors. Perez's strategy has proved successful for Kodak as according to the CEO the company is seeing 130 percent growth quarter over quarter.
Three Perspectives on Business and the Economic Downturn
In perhaps the most distinguished panel of the day, three economics experts presented their visions of the economic future in a session entitled "Reframing the Economic and Financial Landscape." James D. Wolfensohn, former President of the World Bank, began by noting that a recent G-20 communiqué might mislead some to think that our economic situation is already beginning an upward swing. It notes, however, that the "process of recovery is incomplete." The media, Wolfensohn noted, have their own take on the situation, often claiming that the economic erosion so strikingly observed over the past year has diminished. But plummeting global GDPs, he said, do not merely represent a modest adjustment in growth. Rather, the scale of current global shifts in wealth concentration has not previously been observed in the modern era. Asian countries such as India and China, for example, may approach 50 percent of the global GDP by 2050 if current trends continue. This, he said, is a "tectonic shift" in economic trends. China, for instance, has "taken us up on the things we used to do, and has in many cases improved upon our efforts."
Next to take the stage was Professor Charles Calomiris of Columbia Business School. Professor Calomiris began by arguing that the principal problems facing economic recovery are, at their heart, government policy mistakes. On the one hand, the government's macroeconomic policy has created a loose credit environment and produced a flat yield curve. Given that housing subsidies are delivered via leverage, many consumers have been encouraged by lenders to over-leverage their mortgage risk. Further, Calomiris saw enormous buy-side problems, along with a lack of prudence in the growth of personal portfolios. Of great consequence, too, Calomiris said, is our lack of a means to measure risk reliably. Small businesses, too, are suffering: they are "dragging very far behind in investments, and don't have access to credit growth?they depend on banks, and banks aren't lending." Calomiris stressed, above all, the need for a long-term outlook and solution. While many short-term solutions will be of little use, long-term planning will prevent what has thus far frustrated recovery efforts: the "misalignment of political will and economic necessity."
Prof. Jordi Gual of IESE and La Caixa, took the stage next, emphasizing the extent to which European nations have fared worse than other developed economies throughout the economic crisis, and their questionable fitness for recovery. Prof. Gual cited the "high degree of openness" in the European economy as a primary factor in its weakened reaction to the crisis, as well as difficulties in transmitting liquidity through European banks and slow-moving interest rates. As to the effectiveness EU policies, Gual argued that trade and monetary policies have been well-coordinated and highly effective. Though less effective, fiscal policy remains moderately salutary to the economy. Financial markets policy, however, is by far the worst performer. Prof. Gual then moved to the question of Europe's readiness for economic recovery, observing that difficult balances must be dealt with, such as economic heterogeneity, timing, and magnitude of reform. "Policies," he said, "need to be coordinated to limit free riding, bolster public confidence, and facilitate dialogue with the U.S. and the emerging economies."
Crossing Borders
A session on reframing business would not be complete without a conversation on globalization. IESE Prof. Pankaj Ghemawat shared data, debunking the somewhat popular belief that globalization is an inevitable phenomenon in every sector of business. Ghemawat pointed out that the first generation of U.S. immigrants only represent 3 percent of the total population, and in the first quarter of 2009 there were more Mexicans crossing the border back to Mexico than emigrating to the United States. He added that even international voice calls, a seemingly easy flow of international communication, still only account for 2.5 percent of total calls. Prof. Ghemawat advised companies looking to go global that "where you come from has a huge impact on where you should go," and added that with large populations, like those of India or China, it is crucial to assess if you are well-positioned to compete in their markets.
The event's final session focused on healthcare and infrastructure. Baldomero Falcones, President and CEO of FCC, one of the leading European services and construction groups, said that "investing in infrastructure is a sound economic policy" and emphasized that investment in this area creates employment, increases aggregate demand and has a multiplying effect. He stressed that while the worst of the economic crisis may be over, a framework needs to be created that will lead to a sustainable future. Part of this framework is an investment in renewable energy, including wind, solar and waste energy, which he says can be a driver of innovation and energy independence.
Joaquín Duato, Company Group Chairman of North America Pharmaceuticals, Johnson & Johnson, pointed out the misconception that the healthcare industry is shielded in an economic downturn, and observed that healthcare consumption in the U.S. is currently being affected, with a downturn in elective procedures and fewer physician visits. He argued that "healthcare is a pillar of the economic system" and spoke about the growing trend for universal healthcare both in China and the U.S., but pointed out that broader coverage must balance with concerns for cost and quality. Duato offered three suggestions for increasing healthcare coverage and demand without cost. The first is to make lifestyle choices that reduce health risks and costs. Second, focus on personalized medicine and customized diagnoses that can help to identify diseases earlier and better target the appropriate treatments for individual patients. Finally, through healthcare information technology and convergence, ensure that patient information and records are aggregated in order to shift more power to consumers and enable patients to make better decisions.
