Tough at the Top: CEOs in a Volatile World

IAB meeting takes the pulse of the world economy

19/04/2013

he annual meeting of IESE’s International Advisory Board ended today with a conference titled "How International CEOs See the Global Economy" which was introduced by Dean Jordi Canals. The conference was divided into two panel discussions, the first of which, "The World Economic Outlook," was moderated by Prof. Franz Heukamp.

Patricia Francis, of the International Trade Center, said that although we have a fairly predictable political landscape for the next couple of years, this has not been translated into confidence. "Any slowdown in China will affect countries selling into China, especially Australia and parts of Latin America," she added. She was followed by Toyoo Ghyoten of the Institute for International Monetary Affairs who discussed the bold steps the new Japanese government is taking to pull the country out of two decades of stagnation. "The stock market has gone up and business confidence has risen," he said. "The prime minister has changed a mind-set of defeatism into optimism, although there is no room for complacency."

Asked whether a similar approach could pull the eurozone out of its slump Ghyoten said: "Applying monetary easing is one option for the eurozone but the ECB is doing that. If you argue that it has to be more aggressive, you have ask in what way?"

Narayana Murthy, founder of Infosys Technologies, said "we can only solve the problem of poverty by creating good jobs with good incomes and entrepreneurship is the only tool we have. This requires good ideas that are easy to communicate, a ready market and the willingness to make sacrifices today for a better tomorrow. The problem is not money, the problem is good ideas. Government needs to create an ecosystem so that entrepreneurship can thrive."

For his part, Stanley Motta of Motta International said he was concerned at how much money was being printed but added that "there is a common agenda in Latin America. We haven’t solved all our problems but we have a common outlook."

Andrea Christenson of the doll manufacturer Käthe Kruse Puppen said it was hard for small companies to survive. "We are too small to make mistakes and the question is how to find the right partners to expand into the Asian market," she said. "We have now found a German-Asian company that is also in the toy industry."

The second session, moderated by Prof. Eric Weber, was titled "Corporate Strategy in a Volatile World: The Role of the CEO." Hans-Jacob Bonnier of Bonnier AB talked about the digital revolution in the media before adding that "the role of the CEO is to guide managers through change. The CEO is the team coach who has to keep everyone happy because happy managers love to go to work."

He was followed by Franz Haniel of Franz Haniel & Co, who reminded the audience that the values that define the culture of a company are vital. With global teams it’s more vital than ever for CEOs to understand what makes each individual tick. "The single most important characteristic in a CEO is empathy," Haniel said.

Denise Kingsmill of IAG commented that CEO pay has shot up in recent years and shareholders are very concerned about this and are starting to flex their muscles. "The era of the CEO as super hero is ending," she said. Hans Ulrich Maerki, ABB, pointed out that under a new Swiss law shareholders will decide salaries of CEOs. "When we talk about corporate strategy it should be for the next four or five years, not reacting to every event. What a CEO needs to do is look from the outside in to judge the company’s capabilities."

The last contribution came from Kees Storm of Aegon who said "volatility means you need to be flexible." He added that many CEOs just want the board to agree with their proposals but believes the board needs to be more involved in strategy.