High-level Lessons from Experience

Members of the U.S. Advisory Council meet on IESE’s campus



IESE Business School’s U.S. Advisory Council, which comprises a diverse group of senior business and civic leaders, held its annual meeting this week on the school’s Barcelona campus.

The primary role of the council is to provide guidance to the school for its activities in the United States, which are led from its New York Center in Manhattan. In addition to its annual meeting, various members of the council met with MBA students in special sessions to share their views on topics relevant to the U.S. business and economic context.

Prof. Eric Weber introduced the session titled "Global Business Outlook: How Global Companies Look at the World" in which the panel was made up of Bill Baker from Channel Thirteen, Sir Howard Stringer, Chairman of the Board of Directors of Sony Corporation, and Chris Vollmer, head of global media at Booz & Co.

Much of the discussion focused on the global media industry. Bill Baker said that "for a long time you couldn’t lose in media even if you were a bad manager, but those days are gone." Sir Howard Stringer said that Sony’s overseas movie revenue is growing in relation to U.S. income with the latest Bond film Skyfall being the biggest box office success in Sony’s history. The content business is still a good one, he said, adding that Hollywood is resistant to change and "we’re still playing by the old Hollywood rules of paying actors and agents too much."

Stringer also said that new technologies are disruptive in many ways. "Our smartphone business is destroying our camera business and our tablets are destroying our DVD player business," he said. Chris Vollmer added that research shows that countries that are taking a holistic approach to digitization are benefiting in terms of GDP and social well-being.

Stringer joked that "running a big company is like running a graveyard. You’ve got thousands of people under you but no one’s listening" and advised his audience of first-year MBA students to avoid large companies and start up their own businesses. "It’s going to be hard to follow a traditional career," he said. "You have to look to each other and use social networks, but you have more control over your destiny than my generation did." Speaking about his experience in Japan, he advised his listeners to learn the language if they plan to be a manager in another country.

U.S. Politics Impact Business

In a parallel session, titled "U.S. Economic Policies with the New Obama Administration," council members reflected on how the president’s second-term policies are affecting companies in the United States and then fielded questions from MBA students.

The panel, which included council members Ed Reilly, president of the American Management Association; Carmen Di Rienzo, V-Me Network; and John Sturm of the University of Notre Dame, was introduced by IESE Prof. Carlos García Pont.

The current administration has placed more emphasis on social policy than creating an environment in which businesses can thrive, said panel members. Addressing the U.S. budget sequestration, council members agreed that the inability to compromise and take effective action by lawmakers in Washington has fueled uncertainty that is having an impact on investors, companies and consumers.

Reilly said that a changing regulatory environment and new tax conditions have led to a situation in which "American companies have become too risk-averse."

New regulations have burdened companies with new costs, hindering their ability to compete in a global context. The situation has become particularly acute since, over the last 20 years, a significant number of countries have embraced capitalism and become new players in the global marketplace. Given this important shift, U.S. companies face new challenges, particularly in the manufacturing industry, he said.

Money that firms currently spend on meeting new regulations would be better spent on activities such as product development, expansion and hiring new employees, said Reilly, whose organization, the AMA, is dedicated to the development of human capital in the U.S. and around the world.

Di Rienzo said her two main concerns were the impact of economic uncertainty. and rising regulatory costs. Uncertainty "quashes" entrepreneurial momentum in two ways, she said. "One the one hand, investors lack the confidence to place their bets in a big way," while heavy regulation leads companies to hire fewer workers, particularly those with benefits.

Sturm discussed the impact of various actions taken by the Obama administration since the president was elected, stressing that much more needs to be done in areas such as job creation.

"Unfortunately, our growth rate does not appear to be robust enough at the present time to sustain the creation of enough private sector jobs" that would reduce the unemployment rate in the long term, said Sturm. He argued that the U.S. government seems to lack a long-term vision for the domestic or global economy.

Nevertheless, the panelists pointed to several reasons for optimism in the U.S., most importantly, the slowly expanding economy.

"The fact is we went through the most difficult financial crisis in 80 years and 92 percent of the people are still working. GDP has been consistently growing, capital structure of business is stronger, and productivity measures are at record highs over the last 14 quarters," Reilly said. Energy is also a "success story," with U.S. energy independence expected to be achieved in the coming years, which will have both geopolitical and military implications.

Reilly said that the U.S. business community has not been given enough credit for navigating rocky terrain since the financial collapse of 2008. "There is a strong and competent business community in the United States, which is in some ways succeeding in spite of some difficulties that I don’t think need to be there."

In another session, members of the council discussed the topic of technology and new media. Members taking part were Gerry Byrne, Penske Media Corporation; Alan Glazen, Glazen Creative; Tom Kane, CBS Corporation and Kate O'Sullivan, Microsoft Corporation.