Integration and Reform Needed for European Recovery
IESE’s 53rd Global Annual Reunion got underway yesterday in Madrid. A record-breaking 3,000 alumni convened to hear experts debate sessions under the banner of "Changing Tack: Shaping Europe as a Global Reference." IESE Dean Jordi Canals welcomed participants by reaffirming IESE’s mission to nurture responsibility as well as excellence in leadership. He linked this to Europe’s heritage as "continent of ideals and values" – concepts that are germane, he said, to continued efforts to exit the financial crisis.
Speakers included Nobel Laureate and former President of Poland Lech Walesa and Kenneth Rogoff, former Chief Economist at the International Monetary Fund (IMF).
Lessons from the Past and a Vision of the Future
The opening keynote speech was delivered by Lech Walesa who spoke of his hope to see an "integrated yet diverse Europe, fully emerged from its turbulent history with lessons for the future."
Walesa made an impassioned plea for new structures and platforms: a new framework to accommodate a new reality. "We have the opportunity to enjoy peace, progress and wellbeing like never before. We have made leaps of progress in our respective States, and now we need to do so with our continents and also globally."
Asked to comment on the potential for instability in relations with Russia, Walesa urged European countries to be governed by a spirit of solidarity, and to "propose solutions on how Russia can reform." Trade and competition with China, he said, would require Europe to pursue deeper integration. We also need to explore "some kind of federation with the United States if we want to be taken seriously by China."
Structural Reform to Ignite Growth
Europe’s position within the global economy was next up for debate in a session chaired by IESE Professor Núria Mas. Luminaries Kenneth Rogoff, Harvard Professor of Economics and Thomas D. Cabot Professor of Public Policy, José Viñals, director of the monetary and capital markets department of the IMF, and IESE Professor of Economics, Juan José Toribio, discussed the need for structural reform to expedite recovery and restore Europe to growth.
Professor Rogoff said that the U.S., Canada, the U.K. and Mexico represented "bright spots of growth" because their systems were better structured to withstand crisis. Europe, he said, can recover from recession, but this is contingent on aggregate demand balanced by aggregate supply.
José Viñals highlighted the "global disconnect between too little economic risk-taking and too much financial risk-taking by markets which were overly optimistic." Economic reality, he warned, needed to "catch up with these markets."
The role of banks in economic recovery was a prominent talking point. Viñals insisted that while banks are safer than a few years ago, their lending capacity is still not high enough to fuel growth. "Only 60 percent of banks worldwide are vigorous enough to lend, and the situation is worse in Europe." He said the solution lay in economic risk-taking and financial policies designed to make the banking system safer and stronger.
Rogoff was skeptical about the latest European Central Bank tests, suggesting they had been over scored in order to restore confidence. A new structural framework, he insisted, remains crucial for European economic recovery, and he called for a break with cronyism and political uncertainties.
Digitization: A Third Industrial Revolution
The digital revolution is changing the playing field for all. Ferdinando "Nani" Beccalli-Falco, president and CEO of General Electric Europe, Steve Capus, Executive Editor at CBS News and Chairman and CEO of Bertelsmann, Thomas Rabe, took to the stage in a session chaired by IESE Professor Philip Moscoso. The panelists shed some light on how their respective organizations were facing the challenge of digital transformation.
Kicking off the discussion, Thomas Rabe welcomed advances in software and technology that provide major opportunities across the company’s spectrum of business lines, from television, to books and music. The challenge, he said, lay in understanding the full potential of the new technologies and leveraging them intelligently. Bertelsmann has invested in venture capitalist funds to support this effort.
We are experiencing a third industrial revolution, Ferdinando Beccalli-Falco told delegates – one in which machines and the digital world would converge to transform the business landscape. He warned that Europe would miss out on this revolution to its detriment, and called for the European Commission to redouble its efforts to embrace all the opportunities available.
Steve Capus rejected the idea that the digital revolution is harming the broadcasting industry, and urged media companies to resist resting on the laurels of their legacy and to instead embrace the opportunities that disruption brings. While the fundamentals of good business – company-wide communication and strong leadership – are as important as ever, digital is delivering unprecedented reach across customer bases. The big challenge, he said, is to remain "relevant to your end-user." Rabe agreed: the consumption of media has never been greater, he said. Our success depends on how we monetize this new reach, and share profits."
The morning sessions were enthusiastically received by alumni, many of whom travelled from very far afield to participate in the Global Alumni Reunion which will next year be held in Munich. Academic sessions and activities will continue over the course of the afternoon and evening.