124 ALUMNI MAGAZINE
January-March 2012 www.iese.edu
Antonio Dávila Pascual Berrone Guido Stein Michel Camdessus Hans Ulrich Maerki The Drivers Stepping Off the Politics of Why Europe Must Wanted: Bold New of Progress Money-Go-Round The Revolving Door Return to Basics Breed of Leaders
Smarter computing builds a Smarter Planet: 1 in a Series Smarter comes to computing.
Today, everything computes. Intelligence has been infused into Tuned to the task: Generic computing stacks are no longer up things no one would recognize as computers: appliances, cars, to the job – because today there are fewer and fewer generic roadways, clothes, even rivers and cornfi elds. This is the daily reality jobs. Transaction processing, with thousands of online users, is of an instrumented, interconnected and intelligent world – a Smarter different from business analytics, with multiple data types and Planet – which IBM began chronicling nearly three years ago. complex queries, which is different from the need to integrate content, people and work flows in a company’s processes. Realizing its promise, however, will require more than infusing That’s why leaders are looking for more than high-performance computation into the world. We also have to make computing technology. They are moving to architectures optimized for itself smarter. specific purposes, and built around their own deep domain Wait, isn’t computing smart, by definition? Without question, knowledge – in healthcare, retail, energy, science and more. remarkable levels of computer intelligence are being invented This workload-specific approach integrates uniquely tuned – such as Watson, the IBM system that defeated the two all-time software and hardware – everything from the applications to champions on the TV quiz show, Jeopardy! But organizations’ the chips themselves. computing infrastructures – consisting of mainframes, servers, PCs, Managed in the cloud: The need to manage these large data- enterprise applications, websites and more – was simply not built for driven workloads is driving broad adoption of cloud computing. zettabytes of data, global connectivity and advanced analytics. But that means something different for business than for individual So, as our planet gets smarter, our computing systems must do so, consumers. By infusing clouds with security and manageability too. They must become far more automated, robust and adaptive we can make them smarter in order to provide companies – that is, industrialized. Thankfully, a new, smarter computing model with the agility required to move quickly in highly competitive is emerging. It is designed for data. It is tuned to the task. And it is environments; to activate and retire resources as needed; to managed in the cloud. manage infrastructure elements in a dynamic way; and to move workloads for more efficiency – while seamlessly integrating Designed for data: Organizations of all kinds need to manage not with their traditional computing environment. just information, but vast, global information supply chains. Not only the ones and zeros that traditional computers love, but streams of Major computing models don’t change very often – but when they do, they unleash enormous productivity, innovation and text, images, sounds, sensor-generated impulses and more. They economic growth. So the good news is that smarter computing need to apply sophisticated analytics to the real languages of is now shifting from theory to reality. Look for more reports in commerce, processes and natural systems – and to conversations coming weeks on how smarter computing is meeting the Roads from the growing universe of tweets, blogs and social media. demands of a smarter planet. Decisions based on structured data alone are no longer adequate. Today’s leading companies are building new systems and Let’s build a smarter planet. processes that locate, recognize and interrogate “big data.” Join us at ibm.com/smartercomputing to Innovation 50TH GLOBAL ALUMNI REUNION
IBM, the IBM logo, ibm.com, Smarter Planet and the planet icon are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. A current list of IBM trademarks is available on the Web at www.ibm.com/legal/copytrade.shtml. © International Business Machines Corporation 2011.
IESE Inglés 210x297.indd 1 14/04/11 18:37
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ideas PEOPLE ‘Above all I put my faith in my team’ Pedro Larena (MBA ’85) 68
Early-Stage Companies The Drivers of Progress Antonio Dávila 22
Compensation Systems Stepping off the Money-go-round Pascual Berrone 26
CEO Turnover Politics of the Revolving Door Guido Stein 30 reviving the european union Why Europe Must Return to Basics Michel Camdessus 34 the global enterprise Wanted: Bold New Breed of Leaders Hans Ulrich Maerki 40
crossroads People
Global CEO Program Global An Eye on Emerging Markets 50 Entrepreneurship
Week
Entrepreneurs
Turn Campus Into
26th Meeting of the a Hotbed of Ideas Automotive Industry The Keys to The Highway 52 2nd International Colloquium Thais Ivern (MBA ’01), on Christian Humanism Javier Lluch (MBA ’99) and in Economics and Business Rafa Martín-Alós (MBA ’00) Creating Good Impactmedia: Only by and not just Goods 56 Doing Things Differently can brasil, munich and ny-miami we Arrive at Something New 72 New Executive Programs 58 The Thinkers50 IESE Publishing Ghemawat Awarded New IESEP Website 60 Prize for World 3.0 74 Agenda 66 44 Authors 76
2 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Cover story
50TH GLOBAL ALUMNI REUNION ROADS To INNOVATION 8
LIFE Life
WSJ Breakfast Series BRUSsels Kreuzweingarten
london munich paris Sir Howard new york vienna tokyo zurich shanghai monterrey oporto Stringer 78 hong kong
Chapter News 80
santiago de chile You’re in the news 82 buenos aires IESE & You Website Means You Never Need to Miss a Meeting 86
final word juan carlos vázquez-dodero Time to Slow Down and Pause for Thought 88
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 3 www.facebook.com/IESEmagazine www.twitter.com/IESEmagazine 124 General Circulation 36.047 International Circulation Alumni Magazine January-March 31,000 (Spanish Edition) 2012 5.650 (English Edition) www.iese.edu/alumni Editor Antonio Argandoña Executive Editor Aïda Rueda Managing Editor Index of Companies Olga Boluda Senior Editor, English Edition ABB...... 8, 86 eBay...... 22 MPG...... 74 Stephen Burgen Art Director AEG Power EDAP2007...... 44 Neoko Capital...... 44 Alberto Anda Solution...... 84 Egon Zehnder Net-a-Porter...... 22 ([email protected]) Aegon...... 8, 86 International...... 82 Nissan...... 52 Contributors AHK...... 62 El Bulli...... 8 Padeinvest...... 44 Cristina Aced Allied Enterprises...... 50 EyeOS...... 44 Renault...... 52 Marisa Bombardó Mercedes Castelló Alta Colleges...... 44 Ford...... 52 Roche...... 50 Clara Castillejo Altimeter Group...... 74 Galvao Engenharia...... 50 Sanitas...... 84 Tomás Crespo Alberto de Olano Apple...... 78 General Electric...... 8, 86 Seat...... 52 Álvaro Lucas Augere...... 44 General Motors...... 52 Siemens...... 56, 84 Javier Pampliega AVAG Holdings...... 52 Google...... 22 Skype...... 22 Larisa Tatge Miquel Utset Baidu...... 22 Grohe...... 56 Sony...... 42, 78 Mª del Mar Valls Barilla...... 82 Harvard Business Tailor & Co...... 44 Cover concept BBVA...... 8, 30, 84, 86 School...... 66, 74 Telefónica...... 8, 44 Luis S. Ruiz Bertelsmann...... 62 Housatonic Tesla Motors...... 22 Editing Secretary BlackRock...... 82 Partners...... 44 Toyota...... 52 Alejandra Arrocha BMW...... 56 IBM...... 8, 40 Tuck School of Photography BNP Paribas Fortis...... 82 Impactmedia...... 72 Business ...... 74 Jordi Estruch Borgers...... 52, 56 Insead...... 74 Universidad de Miquel Llonch Brammer...... 84 Interchina...... 64 Navarra...... 8, 56 Pili Martínez Roger Rovira British Telecom...... 84 IPADE...... 50 Universidad Pontificia Fotomobil.com BYD...... 52 ISE...... 50, 56, 82 de la Santa Cruz...... 56 Design and Layout Caixabank...... 8 “la Caixa”...... 8 Università Roma-Tre...... 56 Belén Sanz Carestream...... 84 Le Cool Publishing...... 44 University of California, Javier Martínez Meanings Catholic University Leroy Merlin...... 84 Los Angeles...... 74 of Louvain...... 56 London Business University of Oxford...... 74 Illustrations CEIBS...... 50, 66, 64 School...... 50, 74 Vinus & Brindis...... 44 Luciano Lozano (www.ilustracionesposibles.blogspot.com) Chevrolet...... 52 McGill University...... 42 Visibility Branding...... 82 Chrysler...... 52 McKinsey...... 64 Volkswagen-Audi...... 52 Advertising M&N Consulting -Antonio Moré CNN...... 8 Monte Paschi...... 56 The Wharton School...... 50 Tel.: 93 544 12 34 Daimler...... 56 Mount Sinai School of Workmeter...... 44 Printing Deutsche Bank...... 68 Medicine...... 8, 86 WPP...... 22 mccgraphics
Published by Estudios y Ediciones IESE, S.L. Index of Alumni Depósito legal B.23.746-1963 ISSN 1138/2333 Commike, Myles Ivern, Thais Nicolás, Álvaro de (MBA ’12)...... 86 (MBA ’01)...... 72 (G-EMBA ’05)...... 84 The opinions expressed in the articles published in this magazine are solely those Ferrari, Massimo Larena, Pedro Puig, Evelio of the authors. Articles may be reproduced, (AMP ’10)...... 82 (MBA ’85)...... 68 (MBA ’83)...... 86 provided that the original source is indicated. Fiestas, Rafael Lluch, Javier Rica, Ignacio de la (EMBA ’93)...... 84 (MBA ’99)...... 72 (MBA ’83)...... 86 Frowein, Manuel López, Luis (PDG ’88)...... 86 Sahai, Devesh (MBA ’95)...... 84 Martín-Alós, Rafa (MBA ’12)...... 86 Haegemans, Luc (MBA ’00)...... 72 Sánchez-Ramos, IESE/University of Navarra (AMP ’11)...... 82 Martínez, Jesús José Luis (PDD ’11)...... 86 Alumni Magazine Iriberri, Mikel (EMBA ’08)...... 84 Schwartz, Markus Avda. Pearson, 21. 08034 Barcelona Tel.: 93 253 42 00 • Fax: 93 253 43 43 (MBA ’04)...... 84 Masana, José (PDD ’75)...... 86 (MBA ’96)...... 82 Cno. del Cerro del Águila, 3 Ctra. de Castilla, km 5, 180. 28023 Madrid Tel: 91 211 30 00 • Fax: 91 357 29 13 Numbers refer to the first page of the article in which the alumnus appears. www.ee-iese.com
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antonio argandoña hat is IESE? What are its distinctive characteristics? We can try Editor of to explain but it’s difficult. Whenever I try it always sounds like the Alumni Magazine the official version, like something I’ve memorized. Come and [email protected] see for yourself. This is the best advice we can give. What is an IESE program like? Come and see for yourself. IESE is what we economistsW call an “experience good”, something good that you won’t under- stand until you’ve tried it, and which you “buy” because you have tried it and you say to yourself: yes, this is what I was looking for.
Why am I saying this? Because this edition of the Alumni Magazine forms part of this “come and see for yourself.” International: take a glance at the cover story, the Global Alumni Reunion and you’ll see. Research: in Ideas you’ll find a couple spoonfuls of what’s been cooking in the IESE kitchen. Entrepreneurship: there are a couple of articles about the Global Entrepreneurship Week which give you a taste of the discussions that took place then. Challenge: there is some serious discussion about the future of the sector at the Automotive Industry meeting. Humanism, a colloquium to refocus business from the humanist point of view. And much more.
We particularly recommend the interviews with Pedro Larena of Deutsche Bank and Sir Howard Stringer of Sony, as well as the articles by our professors in the Ideas section. Antonio Dávila describes the strategies, key moments and challenges for startups; Pascual Berrone puts the much vaunted, criticized and not always well understood subject of incentives in its place, and Guido Stein discusses a taboo subject with which every senior executive should be very fa- miliar with: why are so many CEOs sacked.
In this edition we also publish the speeches given at the Global Alumni Reunion by Michel Camdessus, Honorary Governor of the Banque de France and for- mer Managing Director of the IMF and Hans Ulrich Maerki, Board member of ABB, Ex-president of IBM and member of IESE’s International Advisory Board. del IESE because we feel everyone should have the opportunity to hear them.
6 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE PUBLIcidad 7 C o v e r s T O R Y
50th global alumni reunion ROADS To innovation
8 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE STEPHEN BURGEN LARISA TATGE
Some 2,800 alumni attended the 50th Global Alumni Reunion in Madrid in November. Speakers at the meeting focused their attention on the challenge of how to achieve sustained and sustainable growth based on ethics, knowledge and innovation.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 9 C o v e r s T O R Y
Antonio González-Aladid.
If people don’t trust you as a leader they will never follow you. It’s about trust and truth.” isidro fainé president, “la caixa”
Prof. Santiago Álvarez de Mon and Isidro Fainé.
ESE’s 50th Global Annual Reunion opened with Fainé said that he looks for the following three charac- some telling words from Michel Camdessus, teristics in employees: a driving force, being able to relate former head of the International Monetary to people on all levels and the ability to acquire technical Fund and now honorary governor of the Banque knowledge. “The most important thing is the attitude, de France, who told the assembled alumni in their personality and ambition,” he said. “If people don’t the Museu Thyssen Bornemisza in Madrid that trust you as a leader they will never follow you. It’s about utilitarianism had corroded the social values of trust and truth. I always start out with 100 percent trust the market (the speech is on page 34). We need a and then subtract if need be.” citizens’ Europe, not one of technocrats, he said, accompa- Asked about the future of Spain in view of the country’s Inied by IESE Dean Jordi Canals and Antonio González- current economic difficulties, Fainé said that “if we don’t Adalid, head of the alumni association. believe in ourselves, nobody will.” He said he is optimis- The following day more than 2,800 alumni from 42 tic because of his own life experience, which has led him countries gathered at the Palacio de Congresos in Madrid to believe that anything is possible. “Spain has enough for a day of stimulating debate on a wide range of issues critical mass and talent. Ultimately, it’s a question of initiated by a series of top-flight speakers. character,” he said. It was then the turn of Dean Jordi Canals, who talked about the previous reunions that over the years have ex- THE RISE OF LATIN AMERICA panded beyond Spain to be held in Amsterdam, London, The next session highlighted the continued ascent Munich and New York. The 2012 meeting is to be staged in lof Latin American economies, which are steadily São Paulo. Prof. Canals then went on to talk about IESE’s boosting their trade with China. Analyzing the global mission and its future, including the proposed expan- economic landscape during the session were mod- sion of the Madrid campus and the launch of some of the erator IESE Prof. Juan J. Toribio, along with José M. school’s programs in São Paulo. González-Páramo, a member of the executive board Santiago Álvarez de Mon then introduced Isidro of the European Central Bank, Susan Segal, CEO & Fainé, president of “la Caixa” and Caixabank. Fainé de- President of the Americas Society and Council of the scribed how he began his career in the banking sector, Americas and IESE Prof. Pedro Videla. despite initially being interested in physics as a young “The impression of Latin America is changing,” said Se- student. His first supervisor predicted that he would be gal, which is proven by growing foreign direct investment. president of the bank in 20 years. The important challenge for Latin America is how to move
10 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Prof. Javier Quintanilla.
Prof. Julián Villanueva. Prof. Pedro Videla, Susan Segal, Prof. Juan José Toribio andJosé Manuel González-Páramo.
to value-added products and shift away from exportation In India, meanwhile, consumption is the main factor in of raw materials. “Chile is the only Latin American coun- growth, and it is developing with significant exports and try that has a rainy day fund for the day commodity prices a service sector that is growing. India’s economy remains fall,” she said. Political, crime and security issues also limited, however, by underdeveloped infrastructure. In- continue to plague many Latin American nations. There dia’s economy remains centered on services, while China’s is a great opportunity to reduce poverty and expand the is on exports. India needs to expand its industrial sector in middle classes today in Latin America, she said. order to grow, Videla said. In his remarks, Prof. Videla described emerging coun- González-Páramo said financial risks are greater to- tries that are experiencing particularly good times, such as day than they were a few months ago and inflation rates India, despite the overall drop of GDP last year. are higher than the ECB would like. But he stressed that central banks are highly focused on inflation at all times CHINA’S GROWTH AXIS in order to maintain price stability. Over the past two years, economic recovery is be- The central bank can only fulfill responsibilities within ling driven by the “growth axis” of China, Africa and its institutional scope, he said. The sovereign debt crisis is Latin America. In recent years, China has been contribut- a problem for governments. They share a currency but not ing more to global growth than the United States and in much else, he said. “Now is the time for European leaders 2020, China will be larger in total terms in GDP than the to find the broadest area of agreement among themselves.” U.S. He said that in the past four years China’s GDP has The bank’s main goal is to make sure channels for trans- grown by 42 percent while the U.S. grew by 4 percent in lating monetary policy remain open. He described actions the same period. the ECB is taking to confront the crisis, such as limiting Huge financial investments made in China, which liquidity risks, extending the fixed income rate through constitute 50 percent of its growth, have triggered next July and taking measures that will encourage banks inflation and raise questions about the long-term vi- to make loans. ability of infrastructure projects. Bad loans have also Today’s crisis will be just “a boring footnote” in a his- become a key concern in China. The one-child policy tory book, since the big change that is occurring is that also means that the country will get old before it gets millions of people in emerging countries are becoming rich, which will incite families to become increasingly more prosperous, said Videla. The world is witnessing austere. China is entering a situation much like Japan a “fundamental turning point” as historically poor na - in the 1980s, he said. tions gain economic traction. “What is really happening
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 11 C o v e r s T O R Y
Bruno di Leo.
Adriana Hauser and Prof. Pankaj Ghemawat. Mireia Rius.
is that about 3.5 billion people are coming out of pov- “You must be relevant to your clients. At IBM, the only erty,” he said. thing that is constant is change. A multinational model Leaving the euro would not make sense and no coun- worked well in the second half of 20th century, but we try would gain from going it alone, said González- have moved to become a globally integrated enterprise. Páramo. If a country has been fiscally undisciplined, This is about where you concentrate decision making, the solution is to solve the problem for the long term. which is not at headquarters but where the client is. We “Europe will only survive if it stands united,” he said. think emerging markets go far beyond the BRICs and “Imagine the credibility loss for a country that left the we are in 150 countries. But you have to be there to be euro. What international funding would be available to relevant.” such a country?” The next session featured Jay Ireland, CEO of GE Af- rica and Kees Storm, retired chairman of Aegon and a OPPORTUNITIES IN member of IESE’s International Advisory Board, and was EMERGING MARKETS moderated by IESE’s Eric Weber. Ireland talked about This was followed by a session on business opportuni- what GE is doing in Africa. GE has had an office in Johan- lties in developing economies, with IESE’s Prof. Pan- nesburg since 1888 but has really only started operations kaj Ghemawat and Bruno di Leo of IBM Growth Markets, in Africa over the past 10 years. “We now have about 1,100 based in Shanghai, and moderated by Adriana Hauser, a employees in Africa, but probably fewer than 20 of them journalist and anchor at CNN. are part of our leadership,” he said. “For Africa to develop, Prof. Ghemawat said that what is happening is that it has to do something about its electrical infrastructure, parts of the world are trading places in terms of GDP. By as well as other basic factors such as clean drinking water 2030 Asia will account for 45 percent of world GDP. To which is a major health problem.” operate in new markets, you must go beyond market size, “We are also focusing on job creation,” he said. “The recognize differences, expand the competitive set, adjust best thing you can do as a company coming into a country how you do business and transform your organization, is employ people and to build a supply chain.” he said. He added that you will have to compete in these Kees Storm talked about innovation and creating a markets with local companies, pointing out that China is better world. “It is amazing the amount of innovation Brazil’s biggest trading partner, as it is India’s. that has gone into making fuel-efficient cars and planes, as “At IBM we have learned that entering a market is not well as electric bicycles,” he said. While innovation leads the same thing as creating a market,” said Bruno di Leo. to products and therefore profits, it also makes the world
12 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE PUBLIcidad 13 C o v e r s T O R Y
FURTHER information
e-conferences of all sessions are available on the IESE Alumni Association website, www.iese. edu/alumni
several of the prestigious speakers, such as Luis Abril, Ferran Adrià, Jay Ireland, Carlos Cordón- Cardó, Susan Segal, Bruni di Leo, Hans Ulrich Maerki and Kees Storm gave interviews which can be viewed at www.iese.edu/videos
More than 35 media organizations were accredited to cover the meeting, among them: Financial Times, Wall Street Journal, The New York Times, Reuters, The Times, Bloomberg Businessweek, Handelsblatt, Süddeutsche Zeitung, Les Echos, El País, El Mundo, ABC, La Razon, La Vanguardia, El Periódico de Catalunya, Expansión, Cinco Días, El Economista, TVE, Antena 3 TV, EFE and Europa Press.
at its peak, the Global Alumni Reunion reached 54,000 people via Twitter at #IESEGAR Michel Camdessus.
a better place, he said. “We have to produce sustainably if brave. I worked with multinationals on 35 occasions and in we are to save the planet for future generations.” 15 years I never made ends meet at El Bulli. Eighty percent “I am worried that our society is developing in the wrong of innovation in cooking took place at El Bulli but we had direction. In the United States 1 percent of the population an R&D budget of only €200,000.” His advice: “Always give earns 19 percent of the total income. This is unsustainable more than they ask you for.” when 15 percent of Americans are poor. The developed “Working with Ferran Adrià means you have to forget world is in a mess, our systems don’t seem to work any- about being shy or uncomfortable or having inhibitions,” more and our leaders are paralyzed. In the past, this has Abril said. “Everything that is generated is positive and led to wars. Another threat is anarcho-capitalism. It’s like easy. This is a partnership and I hope it’s good for both playing Monopoly, it’s great at the beginning when you’re parties. It’s certainly good for Telefónica.” all playing, but not at the end when one player has all the property and the money. I urge you to give something back NEW HORIZONS IN to society and to do something innovative.” MOLECULAR RESEARCH Next, it was the turn of Carlos Cordón-Cardó, head CALLING ON HAUTE CUISINE lof pathology at Mount Sinai School of Medicine in New The first afternoon session moderated by Prof.Julián York and Jesús M. Prieto, Director, Division of Hepathol- lVillanueva brought together chef Ferran Adrià and ogy and Gene Therapy, CIMA, University of Navarra. In Luis Abril, secretary-general of Telefónica. Adriá, the the session, moderated by IESE Prof. Beatriz Muñoz- most innovative chef of his generation who has led a revo- Seca, a new healthcare model was highlighted, as well as lution in cuisine, began by saying “when you talk about the growing importance of molecular research. innovation you have to understand that we all have differ- Muñoz-Seca said that “in an environment such as ent problems. A bar faces different challenges from haute healthcare, which is undergoing a crisis, the concept of cuisine.” After screening a video of the last two minutes in translational research is important because it offers an the life of El Bulli, he said that “chefs who worked with me opportunity for entrepreneurship.” were offered salaries three or four times what they were Prieto defined translational research as “observing getting but they didn’t go because they believed what we problems presented by the patient in the hospital, trans- were doing was for the greater good.” lating them to the research laboratory to find solutions “Innovation is not a nine to five job, it’s passion. You that will then be taken back to the patient with new diag- don’t need a lot of money, you need ideas, you need to be noses and treatments.”
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Juan A. Castellanos and Prof. Franz Heukamp.
While we think that globalization is making the world flatter, at the same time it is creating tensions among us.” Patricia francis international trade center Ferran Adrià.
Prieto explained the process of molecular development for international companies. The session was chaired by of pharmaceuticals and said “the discovery phase is car- Francisco Iniesta. ried out at research centers, but the following phases “More than 50 percent of our profits come from emerg- require a biotechnology firm and if the product works, ing countries,” Cano said. “We are changing from an in- a pharmaceutical company.” ternational group to being a global one. We are working The involvement of companies in this dynamic is essen- to become more transversal. We need to invest in training tial, he said, since the business world is able to realize the to produce the best people. We need tools, policies and potential of research. “If what is discovered in the labora- procedures that can be used around the world, and that tory doesn’t make it to the company, it doesn’t work. To represent our principles of integrity and transparency.” make a product available to patients, you need companies. Francis reminded us that 10 years ago China was the On one hand, to get financing for the research centers, and sixth largest economy in the world, now it’s the second. on the other hand, to create technology companies linked “But what has happened is there is a huge lack of trust with research centers to reach the clinical stage, and, then, between various players and this has led to many misun- clinical use,” he said. derstandings. While we think globalization is making the Cordón-Cardó presented an overview of the sec- world flatter, it’s creating tensions among us,” she said. tor, stressing that “in the United States and the world in “We need to promote what I call active listening, for general, we are seeing a decline in large pharmaceutical people not to come to the table with “already listening,” companies, which have become significant elements in that is, with their minds made up.” She talked about the implementation, but not in innovation. However, there need to bring women, whom she said could be regarded as is strong growth in the field of biotechnology, which rep- an “under-performing asset,” into playing a more active resents innovation in our sector. And there are important role in the economy. We need to be networked and work differences. You get results if you invest. But large invest- in a joined-up manner. ments are not what is necessary; instead, good ideas and Maerki then said that “a globally integrated enterprise is good executors are needed.” one that produces and allows to be produced goods and ser- Ángel Cano, president and COO, BBVA, Spain’s second vices wherever they are, and if buyers aren’t there they create largest bank, Patricia Francis, executive director of the their markets. It reinvents itself and fosters innovation.”How International Trade Center and Hans Ulrich Maerki, ABB can CEOs capitalize on complexity? Maerki said they can do board member and who, with Francis, is a member of IESE’s it through courageous and visionary leadership, through re- International Advisory Board, then discussed the next steps inventing the client relationship and understanding that the
16 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Prof. Beatriz Muñoz-Seca. Prof. Francisco Iniesta, Hans Ulrich Maerki and his wife, and Patricia Francis.
Prof. Eric Weber and Jay Ireland. Kees J. Storm.
business exists to make the clients successful and through building operational dexterity. The key to operational dex- terity is to simplify. “Given today’s challenges it becomes clear that creating success in tomorrow’s world will take leaders who are cou- rageous and visionary enough to make decisions to alter the status quo, in other words leaders who can take very bold decisions,” Maerki said. “These are people who can live with or embrace ambiguity, people who reach beyond the silos in their companies, who proactively exchange knowledge and cooperate with internal and external stakeholders, in order to improve the ability to handle the unknown.” after the academic sessions “Creative leaders act despite uncertainty, they take calcu- The day before the Global, The following day was lated risks, they rely on deeply felt values and a well-defined alumni were treated dedicated to cultural vision to provide the confidence and conviction and to exploit to a private visit to the activities, among them a Thyssen-Bornemisza visit to the Palacio Real, windows of opportunity,” he said. “Be global where possible, museum. The museum, Madrid’s Descalzas Reales, local where necessary, don’t assume one size fits all, under- in the famous Paseo del a golf tournament and a stand cultural differences in local markets but realize all the Prado, houses almost visit to the headquarters benefits globalization offers. Remember what IBM’s Sam 1,000 works of art from of Telemadrid. All of Palmisano said: in a global world, work moves to where work the 13th to the late 20th these activities gave century. The meeting on alumni an opportunity to is done best.” (The speech is on page 40). the 18th began with a well- renew acquaintances and The meeting wound up with a few words of thanks from attended Pentecostal Mass friendships and to do some Antonio González-Adalid, Jordi Canals and Mireia Rius. in the Palacio de Congresos. networking. Prof. Canals said the ideas shared during the day were practi- photos of cultural activities: cal and not just theoretical. He thanked all the speakers, the www.iese.edu/alumni professors and the organizers and sponsors of the meeting. “The human capacity to overcome obstacles even in these Homily: difficult times is cause for optimism,” he said. www.iese.edu/Aplicaciones/upload/HomilaGAR.pdf See you all next year in São Paulo.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 17 C o v e r s T O R Y
18 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 19 C o v e r s T O R Y
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antonio dávila ntrepreneurs are New product in an existing Professor of Entrepreneurship important drivers category and Accounting, IESE of social and eco- Redesign of business value chain nomic progress Research or discovery of and, increasingly, knowledge Start-ups increasingly play a successful early- Rollup (aggregation) of existing stage companies players key role in transforming the are changing so- Governmental, regulatory or way we live and in driving ciety as they launch products and political change Eideas that transform the way people Idea transfer or transplant the overall economy, but live, work and play. Interestingly, starting a company from in our study Global Entrepreneur- Riding the Wave scratch is not for the faint- ship and the Successful Strategies of When it comes to waves, few Early-Stage Companies”we found l companies manage to pull off hearted or impatient. that the similarities in early-stage the “triple play” in which they help companies around the globe are to create a new business wave, play far greater than their differences. a major role in building the wave The people behind these new ven- and continue to ride it. One such tures also have much in common. firm is Microsoft. Its founder Bill Viewing the world through the per- Gates says that they had a “focus spective of proactive opportunity is on helping to build an entire indus- part of the DNA of many successful try around personal computing. We entrepreneurs. Starting and build- worked with a lot of software and ing a new venture typically requires PC companies to help them get off an enormous amount of optimism, the ground. Building this ecosys- stamina and ability to survive some tem was critical to our success.” very rocky seas. The distinction between a new product in a new category and a Eight Growth Strategies new product in an existing cat - for New Ventures egory is one of degree. Almost all We succeeded in pinpointing products labeled as belonging in a leight growth strategies for new new category will have some fea- ventures, each of which has asso- tures that are in existing products. ciated opportunity / risk factors. We New product companies can differ also asked a range of executives to greatly in their ongoing product highlight what they believed were the strategies. Some keep their first key growth accelerators and growth successful new product as a core challenges. We also asked them about and add ongoing features to it. their darkest hours of self-doubt, Others build an ongoing new prod- early-stage companies • entrepreneurs some of which are highlighted here. uct pipeline where the aim is to de- start-ups • growth strategies • Wave velop a sequence of new products. opportunity and risk factors New product in a new category New products can exploit short -
22 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 23 i d e a s
comings in existing markets, as the ever, a subset of new ventures (or starting and China Lodging Group did in regard restarted ventures) explicitly make to economy hotels. acquisitions a core and major engine building a of their growth strategy, involving Value Chain the rollup (aggregation) of existing new venture Opportunities players. The key risks in rollup ven- requires an Value chain restructuring can tures are overpaying for the company l take many forms and may be and the assets acquired and a heavy enormous based around outsourcing of pro- reliance on debt financing. cesses or research, IT expertise or amount of restructuring to reduce activities Government Incentives that add no value. In the case of The global telecommunica- optimism, Net-a-Porter, its founder Natalie l tions industry has seen many Massenet saw in the nascent Inter- start-ups that have benefited from stamina and net an opportunity to sell high fash- government incentives or changes ion directly to customers. “I wasn’t in regulatory systems. Suntech the ability trying to transform the store, I was Power, which makes photovoltaic trying to transform the magazine. cells, took advantage of govern- to survive I thought it would be amazing if ment incentives in Spain and Ger- you could tell readers what to buy many in order to grow the compa- some very and also to give it to them with one ny. However, a change in Spanish click,” Massenet says. In 10 years, government policy in 2008 dented rocky seas. Net-a-Porter’s revenues have its profitability. grown to over $100 million. There are many ways that govern- Discovery and research knowl- ments can promote new ventures in edge ventures tend to be in the green technologies and other envi- field of life sciences or the extrac- ronmental causes. Tesla Motors, a tive industries. Companies that United States start-up, was founded seek to discover major product in 2003 by Silicon Valley entrepre- breakthroughs for medical condi- neurs to explore the potential of tions such as cancer or diabetes electric cars. The U.S. Department face daunting risks of success. New of Energy has provided Tesla with ventures that start at the very early $45 million in advanced technology stages of the discovery process loans to help the U.S. to be competi- face a long period before revenues tive in battery technology. come in. However, there can be a Great ideas can arise anywhere very large payoff if a successful new and often do so simultaneously, but product is created. alert entrepreneurs who use an idea In the extractive industries sector, transfer approach can be early mov- in the early exploration stage com- ers in taking already proven ideas to panies face a very low probability of other parts of the world. For exam- finding significant reserves for any ple, Robin Li observed the early suc- one company but very high payoffs if cess of Google and then replicated it that discovery is made. Commodity in China in the form of Baidu. “We price fluctuation is a significant risk recognized that Internet search factor in this sector. For example, in Chinese was an under-served from 1990 to 2002 the price of ura- market,” says Li. “During my time nium was below $10 per pound, but on Wall Street and in Silicon Val- between 2007-2009 the price ranged ley I had thought deeply about how from $40 to $90 per pound. searches could be vastly improved for the Chinese.” Rollup of Niklas Zennström, who co- Existing Ventures founded Skype in 2003 set out to Acquisitions, mergers and joint solve a market pain point – the lventures are an important ele- monthly phone bill, by creating a ment in the growth strategies of both free telecommunications network. existing and new companies. How- “Hundreds of millions of people
24 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE HIERARCHY OF VALUES
would be interested in this idea,” he said. “My belief was that if you could successfully address this ba- sic idea, you could probably create a Robin Li good business out of it.” Two years chief executive of Baidu later, eBay (a 1995 start-up) paid $3 China’s leading search engine billion for Skype. After the Internet bubble burst, mainstream websites valley of destruction no longer wanted to invest in search technology. Early-stage companies are In the summer of 2001, we decided that it was time for HIERARCHY Baidu to undergo a major transformation. I recall being in l rightfullyOF VALUESheralded as a vibrant and important source of growth. a conference room in Shenzhen taking calls from members Statistics on the revenue or jobs of the board of directors. I knew right then that consensus would not be achieved through logical reasoning but through created are often quoted. What is a demonstration of the founder’s fierce determination. Later given much less publicity is the si- on, one of the directors told me that the board was not multaneous and sizeable amount moved by my theories or reasoning, but by my attitude.” of revenues and jobs destroyed in the early-stage sector of the eco- nomy. We characterize these as the “mountain of creation” and the “va- lley of destruction,” two concepts Martin Sorrell that highlight how the net revenue WPP, marketing communications company and net job creation that we report for this early-stage sector mask the The period from 1990 to 1992 presented the biggest larger gross creation by some com- challenge when people would say we nearly went panies and simultaneous large des- bankrupt, we were over-leveraged. The market always truction by other companies (who goes one way and another and in dark moments, it always goes too far one way or the other. But the darkest moment were the creatorsHIERARC in priorHY years). Our research also shows that in was then. On the other hand, intellectually, whilst it was OF VALUES a challenging time, it was a very interesting time. The the first five years, an early-stage biggest test of companies, people, individuals, families and business will almost certainly ex- countries is in their darkest moments, in their toughest perience one year of losses. For moments. It’s not the easy times that are the true test, it’s example, 42 percent of companies the difficult times. In those dark moments in 1991 and have a pattern of two positive rev- 1992 I never ever thought that we were going to go down. enue growth years and one negative Not even for one second.” growth year in their Year 2 to Year 5. These are among the “dark mo- ments” that put the firm’s strategy to the test as well as testing the nerve of those running the firm. Start-ups Pierre Omidyar are not for the faint-hearted. It takes founder of eBay imagination and vision, but also Recreated PMS In the early days of eBay, my view was that as long plenty of grit and a tough-minded as it was legal, we could sell it on eBay. One of the entrepreneurial spirit of the sort few times we made a decision to limit legal items was when http://www.ebay.com/ embodied by Martin Sorrell, CEO a member of our board became very upset about Nazi of the communications company paraphernalia being sold on the site. It was a tense time WPP, who said that when everyone and there were lots of discussions – you could argue that claimed the business was bankrupt some of these items hold significant historical value despite and over-leveraged, “even in those the fact that they offend many of us (myself included). The dark moments I never ever thought community had key input in these discussions and helped that we were going to go down. Not us to figure out how to proceed. In the end I think we made even for one second.” the right decision to prohibit those items from being sold on eBay. Since then, we’ve also limited other items that promote MORE information: hate and racism.” Global Entrepreneurship and the Successful Strategies of Early-Stage Companies. Foster, George; Dávila, Antonio; Haemmig, Martin; Xiaobin He; Ning Jia; von Bismarck, Max; Wellman, Kerry. World Economic Forum. 2011
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 25 i d e a s compensation systems stepping off the money-go-round
pascual berrone ompensation’s incentives, such as managerial bo- Assistant Professor of central variable of nuses linked to revenue growth, Strategic Management, IESE Business School interest – money have been a major force in these – represents the debacles, not only for the organi- most generalized zations involved but for the global Much of what is medium of ex- economy. Incentive systems, there- change known to fore, are a double-edged sword. accepted as fact humankind, mak- Our research was carried out about the relationship ing it an integral part of practically all from the standpoint that a new ap- Ctransactions within and across orga- proach is needed if compensation between compensation nizational boundaries. Money is the is to transcend the traditional para- systems and overall quintessence of business language digms grounded in industrial / social firm performance are and compensation dollars have a di- psychology and labor economics and rect impact (and in most firms, the incorporate such notions as the de- merely assumptions. most important one) on the cost side velopment of systems for monitor- Compensation is a of all financial statements and few ing and incentive alignment, coping doubt the importance of its impact with environmental uncertainty and pivotal mechanism that on the bottom line. balancing the needs and demands of deserves to be analyzed However, many of the accepted multiple constituencies. Compensa- “truths” about the relationship be- tion is a pivotal, organization-wide in its entirety and not in a tween compensation systems and control and incentive mechanism piecemeal fashion. overall firm performance are in fact that should be analyzed in toto rather little more than assumptions. The than in a compartmentalized, piece- traditional compensation model meal fashion. based on job evaluation and market Organizational members from surveys, while popular, has provoked the highest to the lowest levels in criticism over the years and has led to the pyramid respond to how they the search for more complex models are rewarded and hence the design that enables a strategic analysis of of the compensation system influ- how pay resources may be used that ences strategic choices made by go beyond the “attraction, retention top executives as well as how those and motivation” mantra. choices are eventually implemented Furthermore, the ethical prob- throughout the entire firm. lems arising out of the cases of En - Organizations face an array of ron and Wall Street, among others, compensation policy choices that have called into question the link are more or less elitist or egalitarian. compensation • stock options • between incentives and decision The number of management levels incentives • motivation making where so-called perverse included in executive compensation
26 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 27 i d e a s rewarding programs affects the firm’s decision tions. In fact, executives are not re- to develop a hierarchical or more quired to hold stocks for more than corporate egalitarian culture. The number of one day. Raising a company’s stock levels also affects the extent to which price for a single day clearly is not a social the interests of lower-level managers real advance for the business. Rather, are aligned with those of top manage- this stimulates balance sheet misrep- performance ment. The extent to which the incen- resentation, tax evasion and other tive system covers different manage- corporate malfeasances. may promote ment groups, and not just the CEO CEO compensation has been the and his or her immediate lieutenants, subject of intense public debate as actions that sends powerful signals to the rest of executive pay has risen dramati- the organization as to what is valued cally as compared to the pay of the are good for and important. It can also promote a average worker and to the actual more participative image of the au- growth of companies. Other aspects both the firm thority structure. of CEO employment contracts that Pay disparity remains highest in outrage the public are the use of ex- and society. the United States. One survey of orbitant perks, golden parachutes 365 of the largest publicly traded for ousted executives, large sign- U.S. companies showed that CEOs on packages for their replacements earned 531 times what the typical and very weak to non-existent pay- hourly employee took home, while for-performance relationships. All the ratio of CEO pay to the average of these have created the impres - employee’s pay for the same sized sion that there is something deeply British, German or French compa- wrong, perhaps even “immoral” (in nies is less than 5 percent that of the the words of U.S. President Obama) United States. At the other end of about these corporate practices. the spectrum, Japan has the small- A troubling fact is that corporate est gap between CEO and average malfeasance not only affects inves- worker pay. tors and pension holders but also While risk bearing and risk taking has had important social costs. This have increasingly been discussed brings to the forefront the relevance in the aftermath of the financial of corporations to society and their meltdown, uniform metrics of risks role within it. In this context, it has and how to apply such metrics in been widely urged that CEO con- determining executive compensa- tracts should incorporate non-fi- tion remains unclear. What is clear, nancial social performance ratings however, is that in most (if not all) as part of the CEO evaluation and of failed companies in the 2008- reward process. 2010 financial crisis, the majority The argument is that reward- of executive compensation pack- ing corporate social performance ages were provided in the form of would promote actions that are variable, performance-based in- good for both the firm and society, centives delivered in both cash and enhance organizational legitimacy equity awards. and reputation, the infusion of One potential problem of stock moral values at the top and a more options and similar instruments is humanistic management style. This that the executives rewarded with implies a shift from the neoclassical stock options benefit when the approach and its shareholder maxi- stock price rises but experience no mization point of view to a stake- reduction in real wealth when the holder oriented perspective. price falls. Managers may respond Corporate social performance to these instruments with excessive (CSP) evaluates how well a compa- risk-taking actions since they would ny performs in its efforts to develop not see their wealth damaged if stock practices to deal with and create prices drop. Moreover, executives relationships with its numerous need only short-term improvements stakeholders. CSP is thus seen as in share value to exercise their op- a source of competitive advantage
28 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE because when the firm meets the Much has been said about the mo- maximizing needs of a wide variety of stake- tivational properties of money but holders, it enhances its corporate performance-contingent pay can a sole set of reputation, improves trusting and be such a powerful motivator that it cooperative relationships, provides may induce individuals to develop criteria is one access to superior resources, low- a very narrow focus to accomplish ers liability exposure and enhances whatever will trigger the reward and of the biggest social legitimacy, all of which is ul- neglect other important components timately expected to contribute to or dimensions of the job. One of the dangers the bottom line. ironies about the use of pay as an in- Studies show that maximizing a centive mechanism is that the greater in poorly sole set of criteria is one of the big - the strength of the outcome-reward gest dangers in poorly designed in- connection and the magnitude of designed centive programs. For example, pay the reward, the more design flaws schemes that only reward financial become apparent and the greater the incentive performance may deter managers potential harm to the firm. from engaging in corporate social While linking pay to productivity programs. initiatives since the link between may be conducive to greater individ- social actions and financial perfor- ual and unit performance, it does not mance is not straightforward and necessarily follow that the perfor- could actually hinder more immedi- mance of the entire organization will ate results. Stakeholder theory sug- improve, because this performance gests, however, that over-emphasis derives from a complex, synergistic on financial performance and ig- interrelation of all its component noring stakeholders’ expectations parts. Performance-contingent pay can seriously damage the normal plans may improve the performance functioning of firms, for example, if of a firm’s constituent parts yet have the firm is associated with causing dysfunctional consequences for the environmental damage. organization as a whole. The reason This implies the adoption of a for this paradox is that each unit is stakeholder approach, which focus- bound by its own local rationality. es on the firm’s long-term survival Thus, linking rewards to the achieve- by balancing interests of multiple ment of each unit or individual’s stakeholders. As a consequence, objective may exacerbate a natural criteria that capture these interests tendency toward parochialism and a should be included in executive disregard for overriding goals and or- compensation schemes. ganizational interdependence. However, three concerns cast In conclusion, executive pay is doubt on these arguments. First, it perhaps the most crucial strategic is not clear whether social initia- factor at an organization’s disposal. tives have a positive impact on fi- It can be used to direct managerial nancial performance. The second decisions and indirectly channel the problem is “stakeholder mismatch,” behavior of subordinates. Because that is, it can’t be assumed that all most organizations follow a pyrami- stakeholders favor responsible ac- dal structure, whatever is rewarded tions or have a preference for social at the top is likely to have a multiplier initiatives. A third aspect is that so- effect throughout the business. cial initiatives are mainly driven by Unfortunately, there is no simple intrinsic motivation. Indeed, many model for understanding executive people and firms invest their time pay. Many judgment calls must be and money in improving the envi- made and prescriptive statements ronment and supporting charities are of little value. However, the without economic returns. How- decisions made are more likely to ever, another intrinsic motivation produce desired results if they are MORE information: is “impure altruism” that is, people based on an informed consensus of Compensation and Organizational Performance. (or firms) may try to improve their all the key stakeholders involved in Luis R. Gómez-Mejia, Pascual Berrone, Monica image by carrying out social works. the process. Franco-Santos. Publisher: M.E. Sharpe, 2010
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 29 i d e a s ceo turnover politics of the revolving door
Guido Stein ontrary to popu- parture? This study maps the causes Associate Professor lar wisdom, bad of CEO turnover in Spanish listed of Managing People in Organizations, IESE results are not companies. The reasons may be en- the main reason dogenous, in which case the executive that the manag- may exercise a certain influence, if he CEOs who are sacked ing directors of or she has a capital investment, or is large companies involved in recruitment of directors because of their poor lose their jobs. Al- or compensation. If the reasons are performance may make though poor performance makes exogenous such as, for example, age, Cthem more vulnerable to being the type of industry or the size of the the headlines but bad sacked, other factors have to be con- company, these are factors over which results are a minor factor sidered in order to understand the the executive will have less influence. behind the turnover of dismissal of CEOs, such as the power they wield within the organization, fluctuating turnover top executives. the availability of alternative candi- After studying the changes in 184 dates and the board’s expectations lcompanies over a 10-year period and loyalty. (2001-2010), we discovered that more In fact, CEOs most frequently lose than half (53 percent) of companies their jobs as a result of mergers and kept their managing director in the job acquisitions, through planned suc- during the entire period and almost a cession or because they retire, as is third (33 percent) only changed the shown in the “Study of CEO Turnover top executive once during this period. in Spain’s Major Listed Companies Only 10 percent changed their CEO (2001-2010),” that I carried out along twice and just under 4 percent had with the researchers Salvador Plaza three or more CEOs during this peri- and Lourdes Susaeta. od. This means that barely 14 percent According to this research, 47 per- of companies account for the majority cent of Spain’s listed companies have of the 123 dismissals recorded during changed their CEO once or more than that decade. once during the period covered by the Curiously, the trend was reversed study, above all in 2009 and 2010, and during the last few years studied. in particular in the real estate, finance While 2009 was the most active of and energy sectors. However, there the decade, with 15 percent of dis- has been hardly any turnover in the missals, 2010 was much quieter and leisure and hotel sector. only produced 6 percent of the total What leads a board of directors to CEO turnover. dismiss their top executive? What are Understanding the circumstances staff turnover • retirement • mergers the factors underlying a CEO’s de- that have led large Spanish compa-
30 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 31 i d e a s
nies to dismiss the top executive is of that turnover through retirement when the interest not only to academics inter- should be high given that a CEO is ested in corporate governance, but at the summit of his or her profes- reputation of also to politicians, business people, sional life, having arrived at a point consultants and anyone who wants where they are able to put their the company to understand the workings of Spain’s experience to use after a long and power structure. fruitful career. or individuals This study is based on reasons By planned succession we mean is at stake, the given for dismissal as published in the process through which the CEO, the media and other complemen- along with the company’s board of real reason tary sources of information such as directors, plans their departure in corporate governance reports from advance and chooses a successor for dismissal each of the companies studied. This, with the potential and skills necessary however, has its limitations. On the to take on the job. This can be done is often not one hand, because there may be more through adopting a relay succession than one reason for the dismissal, strategy, seeking an heir apparent or given. and on the other, because companies through staging a “horse race.” don’t always make public the real rea- It is interesting to note that in al- son for dismissing someone. most two out of every 10 cases, CEO For example, when the reputation departure has occurred through of the company or people involved in planned succession. This may be a the dismissal is at stake, they usually positive result of improved manage- offer “generic” explanations, such ment and the reforms introduced as personal based on recommendations in the reasons or code on good governance. some type On the other hand, 23 percent of of ill- dismissals are directly related to the ness. At managing director’s successful or other poor performance. In 9 percent of times, cases, a job well done translates into part of taking on a more prestigious position the CEO’s at another company, while 7 percent severance have been fired on the grounds of terms may poor results, the same percentage as include main- those leaving because of disagree- taining the appear- ments about management policy. ance that he or she In other cases, personal or health has resigned for per- reasons are given for the CEO’s de- sonal reasons rather parture (8 percent) and to a lesser than attribute it to the extent, death (3 percent) and scan- board of directors. dal (3 percent). Finally, it should be pointed out that only 2 percent of Reasons companies offer no public explana- for Dismissal tion for the dismissal. The principal lcause of CEO Is Age an Issue? turnover is mergers and acquisitions Age itself need not be grounds for (29 percent), especially those that ldismissal, always assuming the result from hostile takeovers. When CEO maintains his or her abilities and a company is bought or absorbed by is capable of carrying out their work another, the stronger of the two al- normally. However, some companies ways imposes its management team. include contract clauses that set an Then there is natural turnover, upper age limit for executives. For which represents almost a third example, the BBVA bank has estab- of the total. This includes planned lished an age limit of 70 for executives. successions (19 percent) and retire- Clearly this has strategic implications ment (11 percent). It makes sense that have not yet been studied.
32 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE According to our study, the av- than two years. The reason for this erage age of a CEO on departing is the same as for the turnover of ex- the average their post is 62 but there is a varia- ecutives in general: mergers and ac- tion of 11 years on this figure, in that quisitions, planned successions and retirement we have found directors who have moving on to more prestigious jobs. stayed on till the age of 90 and oth- It should be highlighted that some of age is 62 but we ers who have left at barely 40. these brief mandates relate to CEOs On the other hand, data on the age of in transition, that is to say, executives have found incoming CEOs is more homogenous. who are bridging the gap between directors who Around 30 percent take up the position a CEO who is departing through aged between 50 and 55, although the planned succession and the new ap- have stayed average age of an incoming managing pointment, while the company seeks director is slightly higher (56). the ideal candidate. on UNtil the In sectors such as consumer goods, Banking and basic materials, industry and con- age of 90 and the Real Estate Sector struction or financial services and The sectors that have seen the real estate, the managing director’s others who lhighest turnover are financial ser- mandate is on average usually longer vices and real estate, with 23 percent, than nine years. On the other hand, in quit at 40. followed by consumer goods (19 per- more dynamic sectors, such as tech- cent), the basic materials sector, indus- nology and telecommunications, oil try and construction (18 percent). The and energy and consumer services, service industry is in fourth position at CEOs usually have shorter mandates 16 percent. The sectors with the lowest of between five and eight years. turnover are energy (13 percent) and Finally, it’s worth noting that CEOs technology and telecommunications who have managed to stay in the job (around 9 percent). the longest, leave their positions It’s noticeable that in the real through death, for personal reasons estate sector dismissals peaked in or illness, or through retirement. 2006, coinciding with a significant As we have pointed out, poor re- surge in mergers and acquisitions sults are a relatively minor cause of the which shows how the impact of buy- dismissal of CEOs in Spanish listed ing and selling real estate agencies companies, rep- played a significant role a year before resenting only the crisis hit. 7 percent of cases. How- Shorter Mandates for CEOs ever, these The study reveals that CEOs face dismissals lshorter and more intense man- often attract dates. It remains to be seen whether a lot of media this phenomenon represents a pass- attention, as do ing fashion or a more fundamental those concerning change and whether this increased scandal, creating the turnover has been triggered by a impression that these higher degree of activism on the part are much more fre- of shareholders. quent motives for dis- In Spain, managing directors missal than they really spend an average of nine years in the are when, as this study job. However, there are significant shows, the most com- variations, depending on the sector mon reasons are merg- in which the company is operating. ers and acquisitions, There are CEOs who have stayed on a planned succes- for 43 years and others whose pres- sion, retirement ence in the organization has been or moving on little more than the blink of an eye. to a more It is surprising that 26 percent of prestigious CEOs have been in the job for less position.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 33 i d e a s reviving the european union why europe must return to basics
MICHEL CAMDESSUS hese are times of cri- commitment, or rather, a return to Honorary Governor sis and uncertainty. these fundamentals, to consolidate of the Banque de France and former Managing Never! Never, that our relevance in the world. This is Director of the IMF is to say, not since what I propose to Europeans and to 9 May 1950, when the rest of the world to help us on the Utilitarianism has had the world heard the uphill journey that we face. prophetic message a corrosive effect on from the humble What Happened to the fundamental values Robert Schuman, has Europe been Our Fundamental Beliefs? inT such a bad state. The answer is obvious: to a lar- of liberty, justice and Europe is humiliated, without a lge extent, we’ve forgotten them. solidarity that underpin clear vision of its future and in dan- It’s therefore worth remembering the European Union. ger of falling apart, something that just what they are and how we have was predicted during the boom years abandoned them. To help me in this What follows is the text and yet, what, little hope remains lie endeavour, I shall look back at the of the speech given by like embers under black ashes. This is work I carried out in 2007 with some the Europe that we described barely European friends, among them people Michel Camdessus at the six years ago, in the preamble to the of the stature of Marcelino Oreja, at Global Alumni Reunion on Constitution, as “a special place for the request of European bishops at a human hope.” This is the Europe that time when Europe already seemed to November 17, 2011. today many see as the world’s sick be wobbling on its foundations. continent just as our grandparents What are the values that unite us? described Turkey at the end of the Clearly, the first is peace and liberty. Ottoman Empire as the “sick man of Sixty years of peace is a tremendous Europe.” Here we are friends, con- achievement for the European proj- fronted by a dying Europe. Is this the ect, extending across Central and beginning of the end? Eastern Europe and the entire con- This cannot be. We have to ur - tinent. gently ask ourselves how this could To this we should add “the closest be the beginning of the end, how to possible union between peoples,” change course and how to reestablish culminating in the idea of Europe- Europe’s confidence in itself and its an citizenship and the pursuit of a future. We have to do this together. communitarian method of finding In the midst of this drama, it seems the common good. This has made to me that we should look at the fun- an original and effective contribu- damentals of the Union and see what tion to international life and mul- european union • financial crisis • g20 we have done with them. This im- tilateralism, for which reason the subsidiarity • solidarity • IMF plies a double imperative: a concrete Union has been described as “one
34 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE of the outstanding examples.” On leaders, some for convenience and these foundations, Europe has es- others out of bad faith, denounced we have tablished itself as a great “monetary policies for which they themselves and economic power,” allowing it to were responsible.” abandoned be recognized and to carry out its re- We can’t continue like this. Euro- sponsibilities at a global level much pean democracy, in spite of the work europe to more efficiently than through the carried out in the European Parlia - specialists actions of its individual members. ment, is still to be built, beginning What emerges from this is a global with greater participation on the and responsibility that we have an obli- part of its citizens by giving them gation to exercise. the means to understand European institutions Much more profound is the democracy and to take action within Union’s fundamental respect for hu- it. But there’s still more. and treated man dignity which informs all of its other values, including respect for the corrosive effects brussels as a human rights. Among these we should of utilitarianism add diversity, subsidiarity and the By allowing utilitarianism to limitless pot possibility of integration progressing l corrode the social economy, we at different speeds. These are accom- have allowed neoliberal and utilitar- of gold. panied by tolerance and, most impor- ian ideology to also corrode bit by tant, solidarity within the Union, re- bit the basic ideas about the social flecting the idea of “a shared destiny” market economy. and solidarity with the world, which Conceived in the 1950s by poli- is demonstrated by the fact that the ticians who were mainly Christian Union has the biggest humanitarian Democrats or Social Democrats, budget in the world. solidarity has always been a central idea of the community, reflecting putting technocracy our “shared destiny.” Its philoso- before democracy phy has been, and continues to be Taken together, these values that of the social market economy l make up the common wealth in which, given the variations bet- and basis of the Union. But to make ween countries, social and econo- them real, two fundamental prin - mic issues are closely linked. Mere ciples must infuse the life of the utilitarianism has gradually substi- Union: political democracy and the tuted this philosophy. social market economy. Having al- I now want to talk about the ethi- lowed both to grow weak, we have cal shortcomings that lie at the root put our values and our common fu- of the crisis and have had such an ture at risk. enormous impact, especially on Of late we have put technocracy developed countries, a process before democracy. Having lost the in which technical mistakes have enthusiasm that marked the first combined with ethical weaknesses few years after enlargement, we in the management of economies have abandoned Europe to special- and where both public and private ists and their institutions, behaving debt have been used as a means to as though development would hap- “earn more to consume more” and pen of itself and treating Brussels as to squander budgets. a limitless pot of gold. To put it bluntly, Europe’s finan- In 2007 we said: “in a society that cial crisis, in common with other is anxious about globalization and parts of the world, has been above environmental questions, faced all an ethical disaster and, in one with structural unemployment way or another, we have all par - and an aging population, there is ticipated in it. We are not going to a tendency to lay the difficulties overcome this without introducing that have arisen at the door of Eu- profound changes in our collective rope’s formal structure. This led to behavior and without going back to a situation in which several national basics.
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Faced with the ruins left by an dimension into their teaching. Peo- we have to economic system and culture that ple in cultural life should also work viewed human beings as nothing across frontiers and increase the ex- remember more than producers, consumers change between nations. The media and / or savers, by a business cul- should also write about the Europe- what we ture whose goal was to make the an reality, helping people better to should most money in the shortest time, understand the different countries the only sustainable way out is to and diverse cultures as well as the never have create a new culture based on a new nature and function of European humanism, orienting our societies institutions. Furthermore, it is vi- forgotten, in a clear and shared idea of behav- tal that we develop a real “ethics of ior that is in keeping with our val- European governance,” renewing that the ues. Is this Utopia? An economist’s the dynamic coexistence between dream? That’s what some people European institutions and national european will say. For my part, I see it as a mat- governments in order to avoid an ter of survival. outbreak of nationalism. We need project is to work in the spirit of subsidiarity Getting Back which assumes that everyone ac- based on to Basics cepts their responsibilities, espe- If we are to face up to people’s cially at the regional and local and values. ldoubts and discontent and level, as well as in civil society. bring Europe closer to its citizens, That said, I think it is unavoid- we have to get back to basics. We able that in the coming months and have to remember what we should years there will be a huge debate on never have forgotten, that beyond what lessons can be learned from its policies and institutions, the Eu- recent events. Will it be possible to ropean project is based primarily on continue with the single currency values, on an ethical idea of social shared by 17 members without an life which means we have to substi- equal level of federalism in the bud- tute a worn-out technocracy with a getary framework? And if it’s not, citizens Europe, and creeping utili- will it form part of a new treaty or be tarianism with a fresh approach to decided outside the treaty, and will the basic ideas of the social market it be for a few, the 17 countries or economy. This is the only way that for everyone? What we are looking we can make a new beginning and at is the need to reinvent the social have new relevance in the world. market economy in the context of the difficult circumstances created Towards a by the crisis. Citizens’ Europe The European Union cannot Towards a New Model of lbe constructed without its citi- the Social Market Economy zens. For this reason it is essential To quote the IXE2 Group once to expand the scope for citizen in- lagain, “people continue to seek volvement. A new consciousness a sense of coexistence. Fifty years in Europe requires political change ago, global conflicts and the threats and the involvement of everyone of totalitarianism made the rec- can communicate positively and onciliation and unification of the clearly in a way that will bring Eu - continent imperative. Nowadays rope closer to its citizens and raise Europeans are richer but they seem people’s consciousness of their to have less of a sense of solidarity, European identity. This change in as individualism and utilitarianism mentality depends not just on po- has undermined social links. Faced litical leaders but on everyone in with new challenges, here at the civil society taking the initiative. I beginning of the 21st century, only am thinking particularly of people common values and the project of who work in education, who should advancing civilization will allow for without delay introduce a European a deepening sense of community
36 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE and the ability of face up to global and norms that, within the diverse responsibilities.” This requires a traditions of the member states, con- europe faces reorientation of the social market stitute a common heritage. Europe economy. The values that we hold must maintain its social mission the threat of dear –respect for the individual, because it is an essential part of its freedom, solidarity, democracy, identity and is a model of civilization being divided justice – mean that we must put that we want to reinforce. To achieve between those people at the heart of the European this we need budgetary policies that economic and political project. So- reduce debt and prepare us for the who live well cieties must seek strong and sus- future and for our children’s future. tainable economic growth in order and others, to guarantee human development. Towards a More This must be based on knowledge Relevant Europe ever more and innovation and with respect With the sort of audacity of to our fragile environment and our lwhich only the most hum- numerous, limited natural resources. ble people are capable, Robert European economic growth is Schuman said: “A united Europe who face necessary to guarantee a high level of will be the model for universal employment and social protection. solidarity.” At this moment, as glo- poverty and To achieve this growth we urgently balization accelerates change, it is need concrete advances, above all important to ask ourselves if this exclusion. the establishment of a European prediction still holds true and how a area of research and innovation with Europe based on its core values can an adequate budget. We also need to make itself relevant to the world. adopt an energy policy that will guar- antee supplies at the best price. achieving sustainable Too many citizens are excluded development from the benefits of economic One of these conditions is obvi- growth. We need to rethink our lous. It consists in setting an ex- individualistic approach to a life ample by meeting its obligations of that is dominated by consumption. achieving sustainable development, Guaranteeing the dignity of individ- justice and peace. We must recognize ual human beings and the struggle that there is a long way to go, for us as against every form of exclusion lies Europeans as well as for others, if we at the heart of our heritage. are to set such an example. Yes, there is a long way to go, and facing up to the threat of a our friends in the international growing poverty gap community frequently remind us Today, under pressure from in- that many of them have been wait - l ternational competition and ing for Europe to set this example technological advances, and with the by moving towards “the universal spread of the consumer model of so- solidarity of the future.” They have ciety, Europe faces the threat of being sketched out for us an agenda whose divided between those who live well gist can be clearly read in the lines and the others, ever more numerous, – and between the lines - of the re- who face poverty and no opportunity cent G20 communiqué in Cannes. for social integration. Along with this, Putting it bluntly, they said to us: social justice demands that member “Europeans, please put your house states ensure that the liberalization in order.” of the market is accompanied by a I believe this message has been strengthening of social norms in or- clearly received and that Europe der to eliminate “social dumping.” and its governments, whatever their Given that solidarity is one of the sensibilities, are adopting policies founding values of the Union, the that to some people appear heroic, introduction of basic agreements re- two others suicidal, and to still garding the social dimension is over- others – including myself – simply due, agreements that enshrine values indispensable, although unfortu-
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nately more difficult to introduce wherever they are under threat, es- we must because they have been delayed. The pecially by fundamentalist ideolo- necessity for these policies is obvi - gies and terrorism. We must share, develop ous, given that Europe must put its but also propose. house in order as quickly as possible We must imagine and support diplomatic so that it can fulfill its true vocation. the establishment of a world gov- and military We all know that growth is neces- ernment that works towards lasting sary to strengthen social cohesion development. Only in this manner, policies within Europe, but with Europe the with a deep respect for the principle way it is, this is not enough. Europe of subsidiarity, will it be possible to towards a faces formidable challenges and to effectively face up to problems on a meet them it must have internation- world scale. In these turbulent times, global role al ambitions, which means nothing Europe can be a model, both for its less than making a coherent con- monetary and constitutional achieve- of defending tribution to the new international ments, and for it communitarian poli- order that the humanization of cies. Europe’s citizens need to under- human rights globalization requires and which so stand that the world is accelerating many other countries expect of us: and that we urgently need to take our wherever to share and to propose. rightful place and assume our conti- nent’s responsibilities. they are Promoting International Europe must take the initiative in Solidarity moves to establish a world govern- under threat. In spite of the crisis, and its ment. In this regard, it has a unique lcosts and its calamities, Europe and extensive experience to share, continues to be a group of privileged bearing in mind the recent problems countries, which means that it has in its institutional life which have three fundamental responsibilities. demonstrated, paradoxically, the It must promote international solidity of the framework when ex- solidarity and encourage develop- posed to extreme conditions. This ment. It must be as good as its word suggests that there are two essential when it comes to the world’s poor- tasks to share with other countries. est countries and must take an ex- Firstly, to set out a framework for emplary role in trying to achieve the an effective global government in millennium goals, concentrating which everyone can have influence its efforts on a reduction of poverty and take responsibility. And sec- and an intensified effort to reach as ondly, and possibly more pressing, soon as possible the long-standing to set out the basic elements of a commitment to set aside 0.7% of profoundly reformed international GDP for development. monetary and financial system. It has to develop a common im- migration policy, taking into account Towards Better World new developments in migration. It Governance must make closer links between more Based on its unique experi- humane policies concerning the arriv- lence, Europe can and must of- al and integration of immigrants with fer a project to the world and show common policies of development that that at least it is capable of speaking must be more vigorously pursued in with a single voice in world forums. the countries of emigration, in par- In common with European nations, ticular Africa and Latin America. all of the emerging countries rec- With the clear understanding that ognize the need to orient the rapid “peace is another word for develop- and complex process of globaliza- ment,” it must develop its military tion towards the common good and and diplomatic policies away from that to do this requires a world body the normal defensive functions and that can be recognized as legitimate towards a global role of preventing by all countries, that is able to adopt and resolving conflicts, maintaining the necessary global strategies and peace and defending human rights has the necessary authority over
38 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE international institutions to ensure This work has begun and will al- that these strategies are effectively most certainly take several more we have all implemented. years to complete. The significant The crisis has created the oppor- thing is that they’re looking for suffered a tunity to shift the responsibility for deep reform and not just some trite moving the world economy toward phrases to trot out in official com- grave crisis sustainable development from the muniqués. among whose G8 to the G20. A de facto world gov- To contribute to the process, ernance group is being established given the importance of the topic, causes has which includes the main emerging some key figures, some of them countries and which can have much very prestigious such as Paul Volc- been the more credibility, legitimacy and in- ker, Horst Koehler and others, fluence than that enjoyed by the G8. have met in recent months to pro- lack of an However, there is an essential prob- pose, informally, but based on their lem that has not been resolved: the experience of occasional success international legitimacy of the positions adopted and frequent failure, some concre- and the decisions taken by the G20, te elements of this reform. monetary as with the G8, given that both only As I had the privilege, though committed to the countries of which without having the same prestige, to system they are comprised (20 or 25 but not take part in this effort I would like to the more than 119 members of the be able to give you a summary of the worthy of the United Nations). proposals contained in the so-called The best way to get around this “Palais-Royal initiative” which are name. problem would be to decide that the now on the table at G20. composition of the world governance group should include the IMF and we must not despair World Bank between whom, thanks of europe to a system of regional constituencies, To those of you here from other all countries are represented. l continents on which Europe has Of course this will involve ardu- left its mark during past centuries, ous negotiations, but no different a mark that some regret but which from those that confront us in trying many recognize as sowing the seeds to work out a deal for world institu- of a humanism born of Europe’s tional reform. This would create op- Christian roots, I would like to say: timum link between Bretton Woods don’t despair of Europe. If, as I hope, and the new G20 which would allow it maintains its unity and consolidates for responses of a universal reach its values and its economy, Europe, in to problems that have always been a multipolar world where all coun- more or less of global importance. tries will have their own role to play, will be present and taking an active Reform of the International role in humane, ineffective and sus- Monetary System tainable development. Another equally urgent topic is As for you, my fellow Europeans, lthe reform of the international I can’t suggest anything better than monetary system. It seems to me that which those admirable Spanish that the interests of emerging coun- mountaineers know very well: that tries and those of Europe coincide in difficult circumstances, some- on this topic. We have all suffered times the only way out is up. a grave crisis which has multiple This requires strength, energy causes, among which is the lack of and courage. Everyone needs to an international monetary system be involved in the project. Only in worthy of the name, that is to say, this manner will the European ideal one that is capable of infusing the once again represent for its citizens system with a minimum discipline. that which it should never have Conscious of this, the G20 has de- ceased to be: a lasting and legitimate cided to make reform of the system source of security, a cause for pride a priority. and for hope.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 39 i d e a s the global enterprise wanted: bold new breed of leaders
Hans Ulrich Maerki n 2006, Sam Palmisano, the IBM is probably ahead of the game Board member of ABB, CEO and Chairman of IBM, here in many ways but, from what I can Ex-president of IBM and member of wrote a remarkable paper see, many large and medium and even IESE’s International about the history of interna- smaller companies are focusing on be- Advisory Board tional and later multinational coming really global. Doing business in an companies and he introduced The key question is how leaders the notion of a new breed of in business and the public sector re- international context calls companies, the so called glob- spond to an increasingly competitive for boldness, flexibility ally integrated enterprise. Palmisano and economically volatile environ- describesI the new model, the oppor- ment, a market unlike anything seen and dexterity. Be global tunities and the challenges of the new before. In a 2010 survey of more than where possible, local model and the next steps that interna- 1,500 CEOs, general managers and where necessary and tional companies need to take. public sector leaders carried out by If I were to summarize his thoughts, IBM through personal interviews don’t assume that one it would go something like this. A glob- worldwide, the company came to the size fits all. This is the text ally integrated enterprise produces or following conclusions: allows the production of goods and . Complexity is expected to in- of the speech given by services wherever it finds the skills that crease, and more than half of the CEOs Hans Ulrich Maerki at the are required at a competitive cost, and doubt their own ability to cope with it. it sells wherever buyers happen to be. . Creativity is the most important Global Alumni Reunion on It creates markets wherever it makes leadership quality, according to the November 18, 2011. sense to do so, it freely moves all re- CEOs. sources to where they can best be lev- . The most successful organizations eraged, it constantly re-invents itself, co-produce products and services with it fosters innovation and seeks growth customers and integrate customers while at the same time focusing on ever into core processes. increasing productivity. . The best performers manage Sam once said, “work moves to where complexity on behalf of their organi- work is done best,” which might explain zations, customers and partners. why over 100,000 of the 450,000 IBM Thus the key question becomes, employees are working in India today. how can CEOs capitalize on complex- So my first piece of advice is that, should ity? The conclusions and recommen- you be leading an international com- dations made by the researchers were pany, your first next step might be to as follows: understand the significant differences . By embodying creative leadership between your company and a globally . By reinventing customer relation- leadership • international companies integrated enterprise and then quickly ships dexterity • client relationships • begin to move in that direction. . By building operational dexterity
40 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE I think that, given today’s chal- interpretation of this value statement lenges, it becomes clear that creating has changed IBM enormously, not only simplify, success in tomorrow’s world will take internally but also in its relationship leaders who are courageous and vision- with clients over the past few years. simplify, ary enough to make decisions that alter The third and last requirement I simplify - the status quo, in other words, leaders want to put forward is the need to build who can make very bold decisions. operational dexterity. Operational dex- whenever These are people who can live with or terity enables CEOs to pursue growth embrace ambiguity, people who reach opportunities and to address challenges and wherever beyond the silos in their companies, with speed. With fast and flexible opera- who proactively exchange knowledge tions, they can also become experts at possible. make and cooperate with internal and exter- finding advantages in complexity, for nal stakeholders, in order to improve both their customers and themselves. it ultra-easy the ability to handle the unknown. So what is key in order to build op- These are people who can do break- erational dexterity? Simplify, simplify, for your through thinking. simplify - whenever and wherever pos- Creative leaders act despite uncer- sible. Simplify interactions with cus- customers to tainty, they take calculated risks, they tomers, be ultra-easy for customers to rely on deeply felt values and a well- do business with. Policies, procedures, do business defined vision to provide confidence access to products and services should and conviction and to exploit windows be effortless for customers around the with you. of opportunity. They pilot radical inno- world. You also want to simplify for vations, they ask why, even after they your organization and for your part- feel they have found the answer, they ners. Be clear in your communication continually tweak their models and and expectations, eliminate bureau- promote a mindset of never being sat- cracy and implement lean and stan- isfied with “good enough.” dardized business processes. They look for new management Operational dexterity also requires styles, they strengthen their ability to you to promote a mindset of being fast persuade and influence because a hier- and flexible. Acting quickly demands archical management style with com- different decision-making, you need to mand and control will no longer work make decisions when you know enough in this environment. And of course and resist the urge to wait until you they use a wide range of communica- know it all. You need to push execution tion approaches, capitalizing on new speed, remove procedural roadblocks technologies, accepting that blogs, so- and enable and empower employees to cial networks and instant messaging are make decisions and to act. tools that are widely used today by cus- Operational dexterity also means to tomers and employees alike and which be “glocal.” Be global where possible, often can play a much bigger role than local where necessary, don’t assume traditional top-down communication. one size fits all, understand cultural What follows from this is rethink- differences in local markets but at the ing or re-inventing the customer re- same time realize all the benefits glo- lationship, which means reaching the balization offers. simple and obvious conclusion that Remember what Palmisano said: in the customer or client comes first. a global world, work moves to where When IBM’s employees determined work is done best. That is true for most the company’s core values in 2006 by industries today. using collaborative tools over a few There is no doubt that we are oper- hours, involving more than 100,000 ating in very challenging times now- employees and clients, they came up adays. But companies who do some with three value statements, one of or most of what I have just described which was: “dedication to every cli- will certainly come out of this crisis ent’s success.” They realized that cli- in a much stronger position and they ents were not there to make IBM suc- will be much better equipped to cope cessful but that IBM’s mission was to with economic volatility and com- make its clients successful. The correct petitive challenges.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 41 i d e a s Highlights
IESE Insight Into Flower Market While we can’t predict the future or know for certain what is around the corner, we can at least see which way the wind is blowing. The forthcoming issue of Insight, to be published in March, takes an in-depth look at global social and economic trends because what we can’t foresee for certain Investments That we can at least anticipate. To this end, the online case Make an Impact forum examines the case of the Kenyan flower industry ULI GRABENWARTER AND HEINRICH LIECHTENSTEIN which in April 2010 was hit by a so-called “black In their report “In Search of Gamma: An swan” event when ash from the Icelandic volcano Unconventional Perspective on Impact Eyjafjallajökul grounded Investing,” produced with support from the flights out of Nairobi for five days, severely disrupting Family Office Circle Foundation, IESE’sUli the supply chain. The floriculture industry is a Grabenwarter and Heinrich Liechtenstein blooming business and debunk the myths surrounding this type of Kenya supplies over a third of the European market. In investment and say that true impact investing 2010, it accounted for 20 has five defining characteristics: profit is a key percent of Kenya’s exports, worth some €400 million. objective; an intended social impact objective; The cloud of volcanic ash a measurable impact; a positive correlation was costing the industry €2 million a day. The case study between the intended social impact and examines how the industry responded to the crisis. financial return and a resulting net positive The case study “The Flower change to society. The authors propose the and the Volcano: How Eyjafjallajökull Disrupted gamma factor to measure impact investment Kenya’s Flower Industry” by performance. They suggest using the gamma IESE’s Aadhaar Chaturvedi and Víctor Martínez de factor as a multiplier for deriving the return of Albéniz is available from IESE Publishing . an investment, and they call the outcome the “impact-adjusted return.” to participate go to: www.ieseinsight.com/review/CaseForum more information: IESE Insight/Finance
42 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE An Analagous When in Rome Initiative cARLOS SÁNCHEZ-RUNDE, LUCIARA NARDON FABRIZIO FERRARO AND DROR ETZION and RICHARD M. STEERS Not so long ago, the reporting of non-financial “You can’t go through a Japanese company with issues was a practice few companies bothered a sledgehammer,” said the Welsh-born American with. Over the past decade, however, the businessman Howard Stringer on his appointment sustainability report has become as much a part as CEO of Tokyo-based Sony. If he was going to of the corporate environment as the annual make things work at the Japanese company, Stringer financial report. Much of the credit for this realized he would have to respect local business change must go to the Global Reporting Initiative practices. Or does the fact that Sony had deliberately (GRI), a non-profit organization founded in hired a Western CEO signal that maybe the Japanese 1997. Its guidelines for “triple bottom line” firm wanted a bit of shaking up? reporting of financial, environmental and social Therein lies the quandary facing today’s global concerns have since become the de facto industry managers: how to adapt their leadership styles to standard. In their article, “The Role of Analogy fit local circumstances, while achieving corporate in the Institutionalization of Sustainability objectives and expectations at the same time. In Reporting,” published in Organization Science, their article, “Looking Beyond Western Leadership IESE’s Fabrizio Ferraro and Dror Etzion, Models: Implications for Global Managers,” Carlos of McGill University, explore how the GRI Sánchez-Runde, Luciara Nardon and Richard M. used an analogy with financial reporting to Steers contrast Asian versus American leadership establish widespread corporate commitment to styles to illustrate that leadership is culturally sustainability reporting. However, the authors sensitive, and why. While foreign business leaders caution against regarding the GRI’s success as a need to understand the on-the-ground realities guarantee of the analogical approach. They also of the country they’re working in, they should warn that continued corporate commitment to ultimately try to strike a fine balance between sustainability should not be taken for granted, local business customs and their own particular as new economic cycles present companies with leadership qualities, the authors say. new challenges and opportunities. more information: more information: IESE Insight / Leadership and People Management IESE Insight / Strategy the world of GLOBAL TRANSACTIONS
JORGE SOLEY, SERGI CUTILLAS and LEONARDO TARIFFI is to provide banking products and competitive range of personalized, services that can help companies complementary services that Global transaction banking has and private individuals manage their provide greater added value and lexperienced a spectacular boom assets and their associated risks. help to retain a client’s loyalty. over the past 10 years, a boom that Global transaction banking clients’ more information: has been driven primarily by the main goal is to optimize their cash IESE Insight / Finance ever-growing complexity of global flow stemming from receipts and banking customers’ needs. To address payments for sales and these needs, banks have introduced purchases. Put simply, it a broad selection of sophisticated helps clients to address banking products and services. In their daily financing problems their paper “Global Transaction and ensures a greater volume Banking,” IESE Prof. Jorge Soley, of receipts and payments in along with Leonardo Tariffi and their accounts. However, the Sergi Cutillas, explain that the basic real money-making business premise of global transaction banking for banks comes from offering a
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 43 c r o s os r oi a d s entrepreneurs turn campus into a hotbed of ideas With some 300 events and 75 partners, in November Global Entrepreneurship Week attracted investors and innovators from around the world to IESE.
etween November 14-20, IESE hosted and “This year we had more than 75 partners, including organized the Spanish contribution to Global universities, business schools, entrepreneurial associa- Entrepreneurship Week (GEW). An initia- tions – basically the whole ecosystem that is involved in tive of the Kauffman Foundation, the world’s entrepreneurship,” said Mathieu Carenzo, executive largest foundation dedicated to entrepreneur- director of IESE’s Entrepreneurship and Innovation ship, GEW connects people through activities Center. “We had eight sponsors so we broke even, and thatB create a platform to foster an entrepreneurial ecosystem. in terms of activities, our goal was to go over last year’s In 2011 it was celebrated in 123 countries where more than number of 300. This year we got close to 350. Activities 25,000 partner organizations hosted some 40,000 events. range from breakfast with an entrepreneur for a group of
44 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE when i started out entrepreneur was still a bit of a dirty word in the u.k.” Simon Webster Chairman, European Search Fund Association
years ago when he was just 17 years old. Now eyeOS is the leading Cloud desktop worldwide and is in a global partnership with IBM.”
search fund conference Entrepreneurs and would-be entrepreneurs crowd- l ed into the auditorium on IESE’s South Campus to attend the Search Fund conference organized by the Simon Webster, Rob Johnson, Will Thorndike and Kirk Riedinger. school’s Center for Entrepreneurship as part of Global Entrepreneurship Week. Contributions from the panel of four pioneers in the field of search funds, Simon Web- ster, chairman of the European Search Fund Association, 8 to 10 students to conferences on specific issues attend- Kirk Riedinger, chairman of Alta Colleges, Will Thorn- ed by as many as 400 people. In the four years that we’ve dike, general partner of Housatonic Partners and Rob been doing this, we’ve had more than 100,000 people Johnson, a member of the IESE faculty, were then fol- joining our activities. So it has a real impact.” lowed by a lively Q&A session. However, hitherto the GEW has lacked media impact. The discussion on investor and entrepreneur’s views “What we have done is each year we choose an ambas- on search funds centered on deciding to do a search, sador of the year, a young entrepreneur, and that helps raising search capital and challenges unique to Europe. us get media attention,” Carenzo said. “This year we Simon Webster said that when he began trying to raise chose Pau García-Milà, who co-founded eyeOS six funds the word entrepreneur was still “a bit of a dirty
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Simon Webster, Robert Stephens, Marc Bartomeus, Ian Nieboer, Rob Johnson, Will Thorndike, Kirk Riedinger, Matieu Carenzo and Antonio Dávila.
word in the U.K.” He said that had changed but there was still a stigma attached to failure that there wasn’t in the United States. Kirk Riedinger commented that “people who have ex- you need to be well- perienced failure can be very valuable in business. The fear of failure isn’t as well founded as people think. You learn rounded to be a good a lot from it.” Rob Johnson pointed out that search funds are a risky entrepreneur. you’re business. “This is the ultimate venture capital investment because you’re backing the person without knowing what doing a little bit of the business is. The real risk is, can this person run a busi- everything.” ness. A number of people have raised search funds and not found companies. You get very close on deals that fall through. It’s not a simple process or a part-time job.” Kirk Riedinger Chairman, Alta Colleges a dose of humility You need to be well-rounded to be a good entrepre- lneur, Riedinger said. “You’re doing a little bit of ev- erything. What do you need most? Hunger and persistence would be at the top of the list.” Thorndike added that, “as well as drive, you need humility during the search phase and humility isn’t always associated with MBAs.”
46 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Asked how a young MBA can generate deal flow, ARiedinger said “you can generate it by going out to bankers and lawyers and they will show you opportuni- ties, but we found that the best way was to focus on an industry or a set of industries.” Once a company has been acquired, Webster said, “you have to make sure you listen hard in the early days and don’t make too many changes.” He added that a lot of the best investments are the ones made in difficult times, but that it’s not clear whether that will be true of the times we’re living through. Johnson said the difference between doing this sort of business in the United States and Europe is that if the deal is in California it doesn’t matter if the investors are all in New York. “In Europe there are cultural differences between each country so you have to present things dif- ferently,” he said. “If you invest in a European country, you have to have some investors from that country on board in order to attract others.” The 57th Forum of the IESE Network of Private Inves- tors and Family Offices met under the auspices of Prof. Juan Roure during Global Entrepreneurship Week. Some 180 people took part, 100 in Barcelona and 80 in Madrid, connected via videoconferencing. Seven proj- ects were presented. There was a teaching session on co- investment at which the speakers were Alberto Zoilo Álvarez of Padeinvest, Josep María Casas of Neoko Capital and Miquel Costa of EDAP2007. During the week Telefónica presented, in collabo- ration with IESE Career Services, the Wayra project which is designed to seek out and help entrepreneurs. “Wayra is a program established by Telefónica to seek out talent and innovative technological projects,” said Gonzalo Martín-Villa, who is in charge of the program. “We receive a series of proposals for projects, we assess them and choose 10 projects for each of the countries where we have launched the initiative: Colombia, Mexi- in europe there are co, Spain, Peru, Argentina, Brazil, Venezuela and Chile. Generally we are offered projects that are technologi- cultural differences cally strong but which tend to be weak as a business pro- between countries so posal. In business schools such as IESE we know we will find projects that are both technologically strong and you have to present well developed from a business point of view and that have a good business plan. things differently.” “Of course we are looking for talent as well as ideas. We want to discover and develop the next Facebook or Twitter and, like all entrepreneurs, we want to change Rob Johnson the world. In launching a project such as this within a IESE faculty large company such as Telefónica, we are also acting as entrepreneurs.” Anyone who wants to submit a project or wants fur - ther information should go to the website www.wayra. org where there is a simple form to fill in and send it to us along with the project. more information: www.iese.edu/eic
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 47 c r o s os r oi a d s lessons from entrepreneurs IESE’s Entrepreneurship and Innovation Center, in collaboration with the Entrepreneurs Organization, held five breakfasts during the GEW where entrepreneurs shared their experiences with MBA students.
t’s often the case that commitment, a serious at- this objective that he set up Augere in 2001, a consultancy titude and hard work turn out to be more useful specializing in corporate services and open programs in than individual technique,” believes Jordi Vall- coaching and leadership. “Why be an entrepreneur?” he verdú, managing director of Tailor & Co., the asked. “Because it’s about transformation and doing things clothing repair and adjustment franchise that differently and taking control of your life. It’s about mak- he established when he felt the time had come to ing a difference.” He reminded his audience that, although moveI his career forward. people sometimes forget it, executives can also “promote Jordi was speaking during one of the breakfasts for entrepreneurial initiatives within the company.” entrepreneurs held on IESE’s Barcelona campus during Santiago Peribáñez, managing director general of Vinus Global Entrepreneurship Week from Novemebr 14 to 18. & Brindis, is above all a wine-lover. “Love of the project” is, “Passion, ambition, optimism and energy” are the in his view, a defining characteristic of an entrepreneur. Af- funadmental qualities of a successful entrepreneur, ter establishing a laundry business, he decided that he want- according to René Lönngren, founder of Le Cool Pub- ed to make his mark in the world of wine and that’s when he lishing, the publishing company that emerged from Le got the idea for Vinus & Brindis, Spain’s first urban chain of Cool, a free, independent weekly online bulletin that is wine outlets. Santiago says the key to success is “passion published every Thursday. The bulletin publishes a se- for the product, a coherent idea and a good team.” lection of cultural events and leisure activities taking “You have to give the client value, but the most impor- palce in the subscriber’s area. tant thing is that the client understands that’s what you It is also important to be sharp and on the ball and to see are doing,” said Joan Pons, CEO of Workmeter. It’s vital opportunities. A key thing is to get “traction” in order to to present the product in a way that the client sees its value demonstrate with good results that the idea has a future. from their point of view, and not from yours, he said, add- Francisco Giménez (PDD ‘99) had a romantic dream: set ing that you need to be aware of your weakenesses and sur- up a business that would make a social impact. It was with round yourself with a good team. there’s no such thing as failure. it’s merely an opportunity to start afresh.”
René Lönngren, Le Cool Publishing
48 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Entrepreneurship is about transformation and doing things differently and taking control.” Francisco Giménez - PDD ’99, Augere the key is passion for the product, coherent ideas and surrounding yourself with a good team.” Santiago Peribáñez, Vinus & Brindis
you’ve got to be sharp and on the ball to spot the opportunities. if you don’t seek, you won’t find.”
Jordi Vallverdú, Tailor & Co the most important thing is that the client recognizes that YOU DELIVER VALUE.”
Joan Pons, CEO of Workmeter
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 49 c r o s os r oi a d s global CEO program With each module held in a different country, the Global CEO program helps executives keep up to date with emerging markets.
chose the Global CEO program be- “The professors are experts and leaders in research cause I was looking for a program in their field,” said Sanjay Sharma, CEO of Tata Inter- that offered a detailed vision of the active Systems. “They help us to find practical solutions multitude of disciplines that the for some of the cases that we studied during the course.” modern business world comprises The academic directors of the program are Prof. Julia as well as a global vision of the fu- Prats of IESE, Jerry Wind of Wharton and Juan Antonio “ture,” said MonsourI Hajjar, CEO of Allied Enterprises Fernández of CEIBS. The remaining professors belong to and the UAE Chalhoub Group, who was one of the par - these three schools and work in various fields and specialties. ticipants in the Global CEO Program: A Transforma- Among the IESE professors involved in the program tional Journey (GCP). are: Adrian A. Done, Pankaj Ghemawat, José L. Nueno, It is a program designed by IESE and the Wharton and Pedro Nueno and Pedro Videla, while Carlos P. Horn- CEIBS business schools that aims to keep you up to date stein is co-director. with the fast growth in emerging markets. Its main ob- The interaction between the participants is another jective is to help those taking part by giving them the fundamental element of the program. “The people on tools to take advantage of the opportunities in these the course are very interesting and have a wide range of new areas of economic growth. experience and there is a lot you can learn from them,” The GCP is an intensive and revolutionary learning ex- added Sharma. “It’s a good course for senior executives perience which puts the responsibilities of the participants who want to become CEOs. It is very intelligently de- in perspective on a daily basis, while at the same time ex- signed. The fact that it is held in Brazil, China and the tending their knowledge of the dynamics of global business, United States helps us to understand these markets in particular those related to the more complex emerging better, to have a more global vision and, furthermore, markets. It is aimed in particular at CEOs, owners, manag- it gives it a touch of adventure.” ing directors, board members and senior executives with The first module was held between November 6-11 in more than 10 years of management experience. São Paulo. Participants took part in the panel “Opportu-
50 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE nities and Risks in Brazil and Latin America: Company 55 percent of them come from emerging countries Growth and the Experience of their CEOs” which included and 45 percent from mature markets, the exchange of speakers such as Dario Galvão, the founder of Galvão En- experience and knowledge is a particularly valuable genharia, who told those taking part that “we have to get component of the program. rid of corruption, companies have to be more transparent in order to make the economy more transparent.” Pedro A POWERFUL ALLIANCE Gonçalves, the managing director of Roche Diagnóstica IESE, Wharton and CEIBS provide executives Brasil Ltd, said that “a multinational working in Brazil has l with a highly productive and balanced learning to make a commitment to the country, not just to sell but to experience. IESE has wide experience in emerging invest, and in that way it will receive the same treatment as markets thanks to its long-standing relationship Brazilian companies.” with various business schools in Latin America, Asia and Africa, notably with institutions such as ISE in A WIDE-RANGING PROGRAM Brazil, IPADE in Mexico and LBS in Nigeria. During the Global CEO, participants do not only At the same time, the Wharton School at the Uni- l get information of immediate use in their work but versity of Pennsylvania, founded in 1881 as the first also learn about the most advanced business models business school in the United States, enjoys an ex- and frameworks to help them understand various busi- cellent international reputation for its intellectual ness problems. It is a wide-ranging program that allows and innovative leadership in the main disciplines of the various participants to focus on topics relevant to business management. On the other hand, CEIBS is their companies. the leading business school in China and its MBA, The participants come from a wide range of countries. EMBA and executive education programs are among Some 42 percent work in Europe, 26 percent in Central the best in Asia. The Global CEO is, therefore, the re- and South America, 13 percent come from North Amer - sult of the long-standing relationship between IESE ica and 18 percent from other countries. And given that and these schools.
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the road to opportunity While the premium manufacturers are benefitting from record sales in China and the U.S., volume car-makers face a more challenging environment.
he 26th annual Automotive Industry said that Europe faces two challenges: first, dealing with meeting was held on IESE’s Barcelona competition from the East while at the same time trying campus in November under the heading to enter their markets, and second, the electric car. “Megatrends in the Automotive Indus- He was optimistic about the potential of electric try.” The two-day conference, organized cars and believes they present “a unique opportunity” by professors Pedro Nueno and Marc for Europe which should aim to become a leader in the SachonT, with the support of Joan Llorens, brought to- sector. In order to do that, what is needed is an infra- gether industry experts from Europe, the United States structure so that there will be enough users to bring and China to discuss the future of the industry. down costs. This implies optimum policies and a legal Themes ranged from the outlook for the European and framework to help the sector develop. “We are capable U.S. industries, through electric cars, financing, retail and of leading the renaissance of the car,” he said. the Internet and changing patterns of mobility. Antonio For his part, José Manuel Machado, the president Cobo, the chief executive of General Motors in Spain, of Ford in Spain, said his company was backing not just
52 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Prof. Pedro Nueno.
Prof. Marc Sachon.
José Vicente de los Mozos. here in europe we are in a position to lead the renaissance of the automobile.” Antonio Cobo CEO General Motors, Spain Ivan Hodac.
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the electric car, but the electronic one. Using new tech- nologies, the car would be capable of learning the user’s habits and will be connected to the cloud so that it can be operated from a mobile phone or a computer. “The car will be your friend,” he said. Ivan Hodac, the secretary-general of ACEA, an as- sociation of 17 European manufacturers, addressed the theme of the “European comeback” which he said four years ago had been predicted to begin in 2012 but is still a few years off. 1 “The comeback is not complete. We are still down al- most 30 percent against 2007, the last year of positive figures,” Hodac said. “Not everyone is doing badly. The premium brands are doing well but the volume manu - facturers are not. Meanwhile, Brussels continues to legislate as if nothing has happened and it’s business as usual.” The free trade agreements encourage imports but not exports, he said, making it is easier to import into Europe than to export out of it. “Global markets present us with opportunities, but they are also a threat,” he added. “We are leaders in e-mobility but the Chinese and Ko- reans are just as smart as we are, so we can’t be compla- cent,” he said, adding that it is very difficult to compete with countries where there is no social security, low 2 labor costs and no trade unions.
SELLING MOBILITY “We need to harmonize policies within the Euro - l pean Union to have a real internal market and we have to make the industry more attractive to young peo- ple,” Hodac said. “We need to create a new model; we will not be selling cars in the future, we will be selling mobility. The car isn’t the status symbol it was for young people; it’s been replaced by IT gadgets.” The news from the United States was more positive, as there retail sales are expected to recover gradually over the next few years. As an indication of the size of the mar- ket, Phillip D. Brady, president of the National Automo- bile Dealers Association, told the audience that retail car 3 sales represent 14 percent of the total retail sales of all products in the U.S., adding that a few years ago this was 20 percent. Sales are running at about 5 million fewer than in 2000, although up on 2009, and are anticipated to rise to close to 17 million in 2015. Cross-over utility vehicles represent nearly 25 percent of sales, he said.
HYBRID SALES SLUMP The “Detroit three” – General Motors, Chrysler and l Ford – continue to dominate but Toyota, Hyundai, VW and Kia have a growing share of the U.S. market. Reflecting the disappointingly poor sales of electric vehicles, sales of hybrids are also down from 350,000 in 2007 to 200,000 this year, and overall make up a tiny part of the market. 4 Brady said that online search and promotion are be- coming paramount. He also pointed out that for dealers
54 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE more profit now comes from selling used cars and services than from selling new ones. Dealers have had to enter into deals with banks to help buyers raise finance, as 84 percent of car sales involve some kind of financing and customers have problems raising this directly from banks. José Vicente de los Mozos, a vice president of manufacturing assembly parts at Renault Group, said the French company wants to grow at an international level and generate free cash flow. In order to achieve this, he said, what is needed is innovation, new facto- ries, developing the brand, client satisfaction, reducing 5 investment and the overall cost of production. The issue of franchises was addressed by Antonio Romero-Haupold, president of AVAG Holdings, after which Thomas Anliker, director of sales and independent concessions for Chevrolet Europe, and Ludger Fretzen, chief executive of Volkswagen-Audi in Spain, talked about retail sales. Anliker said that “the Internet is the most im- portant factor in the vehicle buying process.” Fretzen em- phasized the importance of reaching agreements between manufacturers, franchisees and politicians in order to in- crease structural demand. He also commented on the im- portance of the client and their loyalty to the brand. “More than 60 percent of our business comes from after-sales,” he said. He added that it was important to reduce the com- plexity of after-sales service and recommended setting up 6 low-cost service areas so that clients didn’t simply go to the cheapest mechanic. “Losing a sale is not as important as losing a client,” he said.
CHINA IS A DIFFERENT STORY Brady was followed by Yongping Chen, the busi- l ness director of BYD Europe BV, who talked about the Chinese market. Although BYD was founded as re- cently as 1995 and has only been making cars since 2003, it has 180,000 employees and was ranked No. 8 among the 50 most innovative companies. It has seen an aston- ishing annual average growth of 70 percent. BYD – which stands for Build Your Dreams – special- izes in electric and hybrid vehicles and sold 520,000 cars in 2010. Chen said the Chinese market has not 7 been so vulnerable to the world financial crisis. Sales are expected to grow by 8 percent by 2015. He said that 1999 private car ownership in China stood at 5 million, while last year it had risen to 65 million. who said that the emerging markets were the future of There was then a discussion about the evolution of the the industry. He said that SEAT had made the mistake of various forms of electric and hybrid vehicles, changing relying to heavily on the domestic market in the run-up modes of ownership and the growing used car market. to the crisis, and then talked about the firm’s expansion Other sessions included one given by Francisco Javier plans in China. He said that SEAT is a popular brand in García Sanz, the president of ANFAC, on the place of the China, as are Spanish-made cars in general. Muir said the car in the 21st century, a panel of SME automotive suppli- company wanted to take advantage of this to strengthen ers, including Franz Borgers of Borgers GmbH and Veit the brand and sales in China and in this manner improve Schmid-Schmidsfelden, general manager of Fertinger the company’s position in Europe and internationally. GmbH, Austria, discussing the pressure to innovate, and Frank Torres, chief executive of Nissan Spain, on 1. Franz Borgers. 2. Juan Llorens. car manufacturing in Spain. The conference concluded 3. José Manuel Machado. 4. Thomas Alinker. with a session led by James Muir, president of SEAT, 5. Ludger Fretzen. 6. Philip D. Brady. 7. James Muir.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 55 c r o s os r oi a d s creating good and not just goods Colloquium on Christian humanism examines the ethical dimensions of economics and the role of business in increasing the social good.
he 2nd International Colloquium on Chris- ra, posed the question “does Christian humanism make tian Humanism in Economics and Business sense in economics?” and concluded that we must not was held on IESE’s Barcelona campus in fall into the trap of believing in “the supposed anthropo- October. It was chaired by Domènec Melé logical neutrality” of the economy. “It is a waste of time and Martin Schlag, who also organized the to have pretensions of ethics of the economy or of com- meeting, and took as its theme “Christian merce which approaches the economic phenomena with THumanism at the Service of Development.” the lamentable and baseless prejudice that there exists a The opening session was moderated by Monsignor neutral humanism which supposedly gives foundation to Luis Romera, professor of philosophy and rector of economic theories.” the Universidad Pontificia de la Santa Cruz in Rome, Melè, professor of business ethics at IESE, talked reviewing Christian humanism in the current context, about what Christian humanism can contribute to de- said that “recovering humanism means developing a velopment, such as the wisdom, values and principles vision of society and existence in which ethics are not that ensure development is at the service of people, mo- seen as a code imposed by the entrepreneur or politi- tivation and the fomenting of virtues such as solidarity, cian but rather as something intrinsic.” justice, truth and individual responsibility. Miguel Alfonso Martínez-Echevarría, professor of Maria De Benedetto, professor of administative law the philosophy of economics at the University of Navar- of economics at the Università Rome-Tre, said, “econom-
56 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Domènec Melé and Martin Schlag.
Maria de Benedetto. ics should be judged by the light of the values they want to A panel of three business people then talked about achieve. This implies a redefinition of profit, a strong regula- their vision of Christian humanism. Kim Tan, trustee of tion of financial markets and a moral and legal evaluation of the Transformational Business Network, talked about consumer priorities.” She added that a leader must be the his experiences of investing in projects designed to architect of the collective conscience, and that a real leader boost development. Jon Gallostra, managing director is one capable of reintroducing ethics into the raison d’être of JG Engineering, discussed the challenges of applying of business. humanism in a medium-size business. The view of Philippe de Woot, Emeritus Professor at In the colloquium’s concluding session on “Fra- the Catholic University of Louvain in Belgium, rejected ternity in a Global Economy,” Stefano Malferrari, the narrow definition of the raison d’être of business director-general of Monte Paschi Monaco SAM, com- as being the production and distribution of services. In pared the Western world “to a wealthy family where the his view, the role of the firm is to create and innovate and to financial success of a generation has had an unwanted harness science and technology in order to transform it into consequence on the following generation: the loss of material development and social well-being. initiative and dependency on the parents’ investment, The entrepreneur is the essential figure, he said, someone assets and revenues because the family leader has not with vision, a taste for risk and the ability to convince others supported the growth of the human and intellectual to back them. capital of the family.”
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 57 c r o s os r oi a d s new programs in brazil, munich and new york-miami IESE extends its range of executive programs in strategic markets.
ESE has consolidated its international profile mic outlook,” said Alex Pschera, the program’s director. with a range of new executive programs in Ger - The Munich PMD (Program for Management Develop- many, Brazil and the United States especially ment) provides a high-level and personalized learning designed for managers who want to advance experience aimed at executives from small, medium- professionally and take on greater responsibili- size and large companies who are specialists in their ties, and in particular for senior executives who sector and have 8 to 10 years experience managing in- Iare working in strategic markets. ternational companies. IESE Prof. Heinrich Liechtenstein is the program’s THE GERMAN EXPERIENCE academic director. The course is taught by IESE’s in- “After seven years of the AMP Munich (Advanced ternational faculty and has been specifically designed l Management Program) IESE in Germany has stra- for executives working in Germany and Central Europe tegically extended its portfolio with the PMD Munich. who want to extend their abilities and knowledge in or - This program is the fruit of the desire of executives to der to maximize their professional and personal effec- deepen their understanding of general management. tiveness. They have a lot of technical knowledge but they are also The program’s format has been designed to be adapt- conscious of what they lack in soft topics such as marke- ed as much as possible to working hours and to inter - ting and sales, as well as needing a global macroecono- fere as little as possible in the professional and personal
58 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE The PMD has emerged from the long-running suc - cess enjoyed by the AMP, a program that has attracted many of the main companies in the region, such as Sie- mens, BMW, Daimler and Grohe. The creation of the PMD is a clear demonstration of the fact that there are more and more executives in Germany who believe that these courses help them to achieve their business objectives and implement the necessary changes.
EXTENDING FRONTIERS IN BRAZIL In collaboration with ISE, its associate school in Brazil, lIESE is also consolidating its presence in Latin Ameri- ca with the launch of the new Executive MBA Brazil, which is expected to start in August, 2012 in São Paulo. The Brazil EMBA is a program aimed at Brazilian ex- ecutives who want to develop a global perspective and is one of the first courses of its type in the country. It is a part-time, trilingual program that will be held over the course of 19 months. Classes will be given in English, Portuguese and Spanish. It will follow the for - mat of its predecessors held in Madrid and Barcelona, with modules held on both Spanish campuses. Brazil is an emerging economy with growing impor- tance in the global economy, which means that there is an increasing demand for skilled executives with new abili- ties. This is precisely the moment to “go for IESE’s sought- after MBA,” commented course director Érica Rolin.
MOVING AHEAD IN THE UNITED STATES Staying on the other side of the Atlantic, IESE has l also programmed for 2013 the Program for Lead- ership Development, led by Luis Casas. The course is aimed at developing the leadership abilities of execu- tives and specialists in various sectors. It is designed for executives with 8 to 10 years experience managing inter- national companies who want to advance their careers. Munich, São Paolo and IESE’s New York center. The participants in the PLD will focus their attention on areas such as finance, marketing, operations and hu- man resources, always viewed from the perspective of a managing director who seeks to integrate the orga - lives of those taking part. The first module will be held nization’s resources and lead others through personal in May, 2012 on IESE’s Barcelona campus, the second example. will be held between May and June in Munich and the New York and Miami, two of the world’s business final module will be held in July, once again on IESE’s capitals, will host this program, which is expected to Barcelona campus. begin in March 2013. The PMD Munich analyzes real scenarios with senior These are three examples of the global outlook inher- executives from a range of industries. This helps par - ent in IESE’s programs, as well as the school’s willing- ticipants to hone their analytical skills and to improve ness to provide all the keys to leadership in their execu- their decision-making and thus enable them to act more tive education courses, to help for executives who want quickly and effectively when it comes to implementing to become better professionals and business leaders, al- changes in their companies. ways bearing in mind the idea of service to society and The course covers, among other areas, competitive professionalism that IESE teaches in all of its courses. strategies, financial accounting and leadership skills. And to further personalize the learning experience, MORE INFORMATION: participants also take part in one of the Short Focused www.iese.edu/PMDMunich programs that IESE organizes on their European cam- www.iese.org.br/emba www.iese.edu/en/usa puses or in New York.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 59 c r o s os r oi a d s
complete collection iese Only at www.iesep.es will you find all of the titles available from publishing IESE Business School. in a single click latin america Ten years since search key With the label LATAM it was first established, you easily identify IESE Publishing presents Latin American content. its new, fast and easy to use website. ENHANCED PERFORMANCE
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t the new website www.iesep.es users easier to use can quickly and safely choose from The new design has shortened the process so that it is among 26,000 titles. IESE Publishing is leasier to access or buy documents. The user can make the world’s largest distributor of busi- the most of these improvements in the space “my account” ness cases in Spanish. A large number of and can consult their favorite documents without having titles are also available in English, and to search for them each time and can share their list with someA in Portuguese. all their contacts. The principal clients are business schools and consul- Furthermore, the user can use “My account” to man- tancies, “but individuals also use them to contemplate age regular payments, to receive newsletters and also to different business scenarios,” says Christine Ecker, ex- recieve newsletters according to their particular areas of ecutive head of research at IESE. interest. It is a more functional site, with three home pages in Using the search facility, the user can quickly find the Spanish, English and, specifically for Latin America, the material they’re looking for, whether case studies, book page IESEP LATAM, which has local case studies and ma- chapters, technical notes, instructor’s notes, books, articles, terial produced by schools in the region. There is also a dossiers, exercises or Short Focus Cases in a variety of areas. function that allows the user to identify content that derives The new website has three search levels: general, for from Latin America by searching for the label LATAM. the entire website; specific, (using the left-hand column)
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to make broad searches filtered according to areas of in- up-to-date information and at LinkedIn the user will find a terest, language or specific documents; and a much more community in which they can discuss learning experiences detailed one, with more search fields and lists of results. and business in general. We have also enhanced the portal by offering you detailed product information about the cases. Not only have we im- Case Method Experts proved the quality of information that we provide – which IESE has used the case method almost since the school’s makes it easier to search – but we now provide the user with lbeginning and has developed high standards in this form a wide range of complementary information, including: cas- of study. It also helps to spread quality teaching through the es that have featured in IESE Insight Review, news pieces International Faculty Program which seeks to disseminate related to cases that have been published on the portal and this method and improve its use on a global scale. videos relating to cases. IESE Publishing is the distribution point for business administration and management teaching materials. more participative Its extensive collection includes titles from Darden Social media has an important function in the new portal. Business Publishing (U.S.), ESE Escuela de Negocios lThe Twitter account, @iesep keeps you up to date with (Chile), Harvard Business Publishing (U.S.), IAE Uni- any developments, and also keeps you abreast of what case versidad Austral (Argentina), IPADE (Mexico), Ivey method professors are up to (on Twitter). Facebook provides (Canada) and Stanford (U.S.).
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 61 c r o s os r oi a d s spanish-german summit Clouds on Germany’s Economic Horizon
Despite its rapid recovery and growth expected to fall from 3 percent to 1 percent next year. “Ev- after the shocks of 2009, eryone is anxious about what the not everything is rosy in euro crisis will mean for the German economy,” he said. Europe’s powerhouse. Andreas Richter, director of the Stuttgart Chamber of Commerce & Is the German economy pull- Industry, said that in his area of Baden- ling the European growth train Württemburg in southern Germany, and what measures can be taken where there is full employment, the to increase collaboration between real challenge is finding quality per- Germany and Spain? These were sonnel, especially engineers. some of the questions addressed Monika Varnhagen, director of by experts at the Spanish-German the German Office of International summit titled “The German Econ- Heinrich Liechtenstein. Exchange, which looks for skilled omy Moving Ahead” held on IESE’s labor all over the world, said Ger - Barcelona campus. many lacks skilled workers. The IESE Prof. Heinrich Liechten- Walter von Plettenberg, director obstacles for Spanish immigrants stein said the purpose of the meet- of the German Chamber of Com- is their poor language skills and the ing, which was sponsored by Bertels- merce, said that Germany had ex- fact that most young people who mann, AHK and the Goethe Institute, perienced a huge downturn in 2009 want to move to Germany want to was to look at Germany’s new role in but that in 2010 it had rapidly picked move to big cities, but many jobs are relation to the euro crisis and also at up. Companies did what they could concentrated in rural regions and what opportunities exist for Spain in to keep workers on for when the up- small towns. “In general,” she said, Germany. The panels were moder- turn came. But there are some clouds “the low birth rate means we haven’t ated by Prof. Antonio Argandoña. on the horizon, with falling demand enough young people.”
IESE Opens Center for Public Leadership IESE unveiled its newly-created The presentation, “Making It Hap- tize activities and resources, and re- lCenter for Public Leadership and pen: A Delivery Unit Method for organize to achieve greater efficiency Government at a special presentation Implementing Complex Programs in and savings. The way to do this is to on the school’s Madrid campus. The the Public Sector,” was led by Alastair create appropriate pressures that will new center’s mission will be “to pro- Levy, member of the London office optimize management and give gov- mote the training of senior members of McKinsey. Levy explained that the ernment the capacity to lead reforms. of public institutions from across the current economic crisis provides an He pointed to Sweden, which was globe in order to achieve a lasting im- opportunity to improve fundamental able to reduce its operating budget pact on people and society,” said its ex- government activities, a challenge that by 11 percent in the mid-90s with- ecutive director, Antonio Núñez. IESE is both urgent and large-scale. out a negative impact on activities Prof. José R. Pin outlined 10 “essen- Making such reforms depends on and while achieving lasting cost- tial” points for public sector reform. government leaders’ ability to priori- control measures.
62 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE PUBLIcidad 63 c r o s os r oi a d s contiNUOUS education program China Puts Money on Green Technology
Leading official says her country is committed to sustainable development and will do more to protect intellectual property.
The focus of the 16th five-year lplan of the People’s Republic of China is on green technology and sustainable development, Yan Junqi told a Continuous Education session entitled “The Evolution of China” in Barcelona in late November. Yan Junqi is vice chairwoman of the Standing Committee of the 11th National People’s Congress, and is a board member of CEIBS, the busi- ness school in Shanghai with which Xu Dingbo, Pedro Nueno, Yan Junqi, Zhang Weijiong and Jan Borgonjon. IESE has a close association. She was accompanied on stage by Prof. Pedro Nueno and Jan Borgonjon, She said that China would will contribute to making the world president of Interchina and also a strengthen protection of intellectu- financial system fairer and more board member of CEIBS. Yan Junqi al property and overall would move transparent. The transformation of said that since the 1970s China had towards being a more open country, the Chinese economy is not some- followed the path of peaceful devel- but also a more in- thing bad or evil for opment but that it has learned from novative one, with the Western world.” its mistakes and understands that de- greater emphasis Jan Boronjon velopment also has to be sustainable. on technological “China cannot base then presented the “China cannot base its economy innovation rather its economy on report “The Busi- on sacrificing natural resources,” than just produc- sacrificing natural ness Environment she said, adding that the emphasis on tion. To do this resources.” in China in the green technology opens up new op- China needs to im- Year 2012.” He con- portunities for inward investment. prove the quality of firmed that con- “Chinese integration into the world its management but sumption is rising. economy has been very positive. We also of its education system, which However, so are salaries, he said, have all come out winners and for- needs to be more flexible in order to and although it won’t be as cheap eign investors have done very well.” encourage imagination. as before, it will still be a long time She added that although China’s “We are going to reduce govern- for other countries can compete GDP is second in the world, it is still ment interference and promote with China on price. There then fol- a developing country. Per capita in- small business,” she said. “We are lowed a Q&A session with the other come is 100th in the world ranking. going to reform the market for raw panellists, Zhang Weijiong, vice However, as wages rise, so does con- materials. We are moving to elimi- president and co-dean of CEIBS, sumerism, which increased by 30 per nate monopoly. We want to open up and Xu Dingbo, director of CEIBS cent in 2010. even more to foreign companies. We Beijing campus.
64 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE PUBLIcidad 65 c r o s os r oi a d s agenda
Sector Meetings
9th DISTRIBUTION BUSINESS MEETING Madrid, February 29 Professors José Luis Nueno and Julián Villanueva Doing Good Doing are coordinating this meeting which will discuss developments and trends in Well Social Investment the sector. Competition 3rd INSURANCE SECTOR MEETING Barcelona February 25 Madrid, April 24 Calling all Alumni! The DGDW Social Professor Jorge Soley brings together executives and Investment Competition is currently other business people recruiting socially minded entrepre- to discuss the latest developments in the sector. neurs and social investors. The first- annual DGDW Social Investment 14th PRESTIGE BRANDS MEETING Competition will take place on Feb- Barcelona, ruary 25, 2012 during DGDW and will april 25 Once again representatives bring together top MBA students, so- of some of the world’s most cially minded entrepreneurs and so- illustrious brands meet in Barcelona to discuss trends cial investors in which MBA students in the industry. The meeting will be coordinated by and entrepreneurs go through the Professor Fabrizio Ferraro. entire investment process in an ex- tremely condensed time period while being judged and moderated by the MANAGEMENT investors. Please contact us at dgdw. PROGRAM [email protected] if you are interested in PLD Barcelona The first of three modules begins participating. on March 5
66 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE Healthcare Management Program Madrid April 16 An intensive management program for the healthcare sector. The program is divided into three, one-week modules that are held on the Madrid and Barcelona campuses. The program covers a wide range of topics, including the economic environment, healthcare models, team decision-making and leadership management.
Arts and Cultural Management: Short focused From Service Design to Success programs New York, April 24 & 26 Global CEO Revolutionize Your Business Develop Your Communication With Social Media and Program for Skills: It´s How You Tell Them! Collaboration Barcelona, March 6-8 New York, May 15 & 16 China
Create Effective Virtual Teams Getting Things Done three venues Barcelona, March 21 & 22 Barcelona, May 15-18 The first module begins Management by Projects The European Healthcare Market on March 25 at CEIBS in Barcelona, March 24-26 Barcelona, May 21-23 Shanghai, the second at IESE in Barcelona on May 20 and the third begins on July 15 at Harvard Business School. The task of building strong companies and Public Management effectively integrating them into the global Programs marketplace is a difficult and complex undertaking for top corporate executives. Strategic Management Recognizing that companies for Leaders of Non-Governmental succeed through individual Organizations initiatives and organizational excellence, the program Madrid, March 26-30 is designed especially for Chinese CEOs who are in a Driving Government Performance position to review, reflect on and make breakthroughs in Madrid, June 18-21 both of these areas.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 67 P E O P L E ALUMNI
Pedro Larena (MBA ‘85)
‘Above All I Put My Trust In My People’
ÁLVARO LUCAS
His German colleagues are not quite sure portrait of a girl by Manuel Valdés guards the entrance to Pedro Larena’s what to make of him and Pedro Larena (MBA ’85) office. When he opens the (MBA ’85) jokes that they see him as a door he fills the entire doorway, as he is around 6ft 1in tall. It is surprising to see sort of Jiminy Cricket. He is in charge of art like this in a bank and Larena com- Deutsche Bank’s international operations Aments that Deutsche Bank’s collection of paintings is worth more than all the money in its vaults. and is responsible for 10,000 people As this is a bank, and furthermore, a German one, I working in around 1,000 branches, but was expecting to meet someone who’d escaped from the Larena insists he is just an ordinary family pages of Buddenbrooks, but Larena is more like some- body from the Buendía family in One Hundred Years of man who likes to go sailing. Solitude. He says he is not fanatical about anything but is passionate about everything, including sailing, which led him to cross the Atlantic in a sailing boat, crewed by himself and two good friends.
Pedro Larena dismantles the stereotype of the banker. I’m just an ordinary person. What I really care about is my family. I think it’s the most important thing there is. I have four wonderful children, three boys and a girl. And then, of course, there is my wife María, who
68 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE I don’t deserve and without whom nothing would be possible. But I’d describe myself as somebody who is if you want to permanently dissatisfied. I’m very restless. I used to do a lot of sports but now I don’t have time to do as much 7work in markets as I’d like to. such as china and One of the reasons you don’t have time is because Deutsche Bank hired you to make its international india you have to commercial arm profitable. You could say that, given that I am the person in charge start out humble and of the area outside Germany. I am responsible for 10,000 people and around 1,000 branches, which altogether be prepared to learn.” make up a large part of the business. It’s not just that we work in eight different countries but we have differ- ent types of businesses in some of them. For example, we have five distinct businesses in Italy, with different brands. What we have managed to achieve in all these countries is turn a profit. And my team’s great achievement is that in two years they have multiplied six-fold the profits of our Europe- an Franchise (5 countries), something not many people could say.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 69 P E O P L E
China, India and Vietnam are among the countries you operate in. Compared to Europe, is there a big difference in the way you do business? They’re completely different, in every respect, both social and financial. If you want to work in these markets you have to start out humble and be prepared to learn. From a finan- cial point of view of a European bank, these are developing countries. But they are experiencing vertiginous growth and are an opportunity not to be missed. We’re talking about an economy that’s on the boil. They’re very different but they’re also very regulated, which isn’t the case here in Europe except in regard to consumer protection. There, on the other hand, they tell you whom you can lend to, in which sectors and whether you can or cannot open an office.
Are these countries untouched by the global crisis? Much less than us in Europe, they live in a different world. If you come across a bank branch in India you can be sure it has many employees. There are few branches of foreign Banks be- cause the government hands out few licenses, with the result that the branches are enormous and very inefficient from a practical point of view compared to the offices we have here. Banking there is like it was in Europe 25 years ago. We have the advantage of knowing what’s going to happen because we’ve already been through it. One way or another, a much more efficient bank will emerge. What took us 30 years to change, they are doing in 10.
How do you establish yourself there? It’s not easy. In India, for example, we broke even this year for the first time and next year will begin to make a profit. In China, quite apart from its size, language is a big issue. Very few Chinese people speak English and those that do are much sought after. If you want to set up a network there you need to hire people who speak English in order to make yourself un- derstood. But it’s amazing what’s happening. We are experi- encing a lot of new things and we also face the huge challenge of establishing something good and efficient in a new market.
What is the key to your success as a manager? I trust my people, which is just as well because when you’re managing 10,000 people you need to know how to delegate and be able to trust your team. In fact, I think that’s one of the keys to success in any job. When I came here I changed everything. My then boss gave me plenty of freedom and sup- port because the alternative was either to close or sell off this part of the business. We managed to turn things around in a few months and within two years we were making quite good money in all countries.
Do they think well of you in Germany? We’ve managed to clean up all the businesses that were making a loss, we have focused on strategy and made sure that they all make a profit. It’s not been easy. The Germans are frankly surprised because they didn’t think it was pos- sible. They still look at me a bit strangely because for them I’m a sort of Jiminy Cricket.
70 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE diversification is dangerous. to start with 7you need all sorts of resources, human resources in particular, in order to deal with the different sorts of businesses you have.”
Wasn’t it because big banks diversified and got in- econometrics or financial mathematics because they hardly volved in international business that they lost con- talk about these things. Most of the time at IESE you are dis- trol over some investments which ended up being cussing topics that you’ve never seen nor experienced be- “contaminated”? cause it is pure business and pure market. Diversification is dangerous. To start with, you need all sorts of resources, human resources in particular, in or- But you studied law… der to deal with the different sorts of businesses you have. Yes I did and it was hard for me to keep up with everything If you can’t give them the right sort of attention they are to do with numbers, although I was good at understand- almost certainly going to fail. Anything that you acquire or ing and synthesizing case studies most closely related to any sort of organic growth that you can’t make your own is the commercial aspect of the business, which were also going to end up out of your control. Deutsche Bank’s ad- those that were the toughest to prepare. One thing made vantage is that we compete in a very defined area and our up for another and in the end I did well in spite of the fact value proposal is very strong. The few times we stepped that all of us had this sword of Damocles hanging over us outside of this area it hasn’t turned out well. in the form of the threat of being expelled if we weren’t up to scratch, which was something that the professors What can banks do to solve the crisis, bearing in mind liked to remind us of permanently. that their image has been severely damaged? In this respect, the idea of sustainability is more impor- What do you recall about that epoch? tant than ever, but saying it doesn’t make it so and we I have many fond memories of Prof. Pereira. He was an run the risk of it becoming merely a fine word that has institution in himself, and as a person he was kindness lost its real meaning. It’s a simple matter of ensuring itself. He taught accounting. He had a book with all the that both business and society are sustainable. faces and names of the students and it was my bad luck Of course, sustainability involves creating jobs and this that early on he marked my page and every morning involves financing businesses. But what has happened is when he opened the book he saw my name, with the re- nobody is lending money to anyone who can’t pay it back. sult that I was the first one to be asked a question. Right now, banks are getting rid of the deadwood because Knowing that I would never escape, I had to spend the main objective is to stay afloat. every night preparing up for the class the following day. As a result I learned a lot about something about which You did an MBA at IESE in 1985. How did it impact on your at the beginning I knew very little. I also have very good education and career path? friends that I made at IESE with whom, in spite of the IESE represents a before and after in my life. Until then I time that has passed, I am in close contact. didn’t have a clear idea of where my career was going. At IESE they teach you what you don’t learn at university. What is special about IESE? One of my children asked me why I want him to do an MBA What’s special about IESE is it teaches you how to generate when he has already done business studies and I replied be- wealth and how to be an honorable worker, whether you’re cause at IESE you don’t learn accounting or new things about the boss or an employee.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 71 P E O P L E
Thais Ivern (MBA ’01), Javier Lluch (MBA ’99) AND Rafa Martín-Alós (MBA ’00) impactmedia Only by Doing Things Differently Can We Arrive at Something New
Sometimes the best ideas arise lout of everyday situations. A small lapse in concentration gave rise to an innovative company that is now Spain’s leading digital adver- tiser. “Rafa’s wife Cristina was at a large shopping center and couldn’t remember where she’d parked the car,” said Javier Lluch (MBA ’99) who founded Impactmedia with Rafa Martín-Alós (MBA’00) and Thais Ivern (MBA’01). “It occurred to her that it would be easier to re- member if the parking sectors were associated with a brand rather than with a color, an animal or some other symbol. Rafa mentioned the idea to Thais and me and, as all three of us were ready for adven- ture, we saw it as a good idea. It Javier Lluch, Thais Ivern and Rafa Martin-Alós. would be a “win-win” for everyone, as the customer would find it easier to find their car and the shopping center would have a new income effect of the message,” Lluch said. ping centers. “When we installed stream from a normally unproduc- “Firstly in parking areas associated our first digital advertisement we tive area. Above all, people would with brands and now with digital already had an agreement with be obliged to remember the adver- screens in the shopping centers.” more than 40 shopping centers,” tiser’s message in order to find their Both factors allowed them to work said Lluch. Now they are in more car. So, after an in-depth analy- against the tide in a sector that had than 60 and in spite of the crisis sis, we launched Impactmedia.” barely developed in 50 years. and the shrinking of the advertising “We’ve had a lot of problems market during 2011, Impactmedia new opportunity working in a very traditional sector is going to grow by 80 percent this Impactmedia was founded in with enormous competitors with year, and from 20 to 40 employees. l2003 at a time when big shop- a big presence in the mass media FINAVES took the role of “lead ping centers were a relatively new where changing the status quo is investor” in the last capital injec- phenomenon in Spain but had a difficult.” At Impactmedia they put tion, said Javier. “It was funda- lot of potential. Given the large their money on innovation, however mental when it came to attracting numbers of people visiting these unorthodox, because they are con- other investors. Having them as an centers to shop or for leisure, they vinced it will pay off in the long term. investor meant that we had strong presented a clear advertising op- Right from the start, before they commercial funds that helped us portunity, as was the case in coun- put up a single advertisement, they sign long-term agreements with tries where shopping centers have decided the business would only shopping centers. It also brought us existed for some time. “Our main make sense if they had exclusive intellectual capital which was vital objective has been to maximize the rights in the main Spanish shop - in use making strategic decisions.”
72 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE PUBLIcidad 73 P E O P L E
Charlene Li talks about business and social networks Listen Carefully and Please Don’t Shout
l It’s not about technologies, it’s about the relationships you can form with them, Charlene Li told a packed auditorium on IESE’s campus in Novem- ber, giving a modern twist to 1960s communications theorist Marshal McLuhan’s famous dictum that “the medium is the message.” Li, an authority on The Thinkers50 social networks and founder of the Altimeter Group, told her audience, “It’s all happening out World 3.0 Wins Best there on social media. The only choice you have is whether to engage in the dialogue or not.” Book of 2010-2011 Award In the opening session of the meeting organized by HSM and IESE Prof. Pankaj Ghemawat has been awarded IESE and sponsored by MPG, the best book of 2010-2o11 prize by The Thinkers50 she said that companies are not only slow to wake up to the for his book World 3.0: Global Prosperity and How advantages of social media, but to Achieve It. The global ranking of management many of them actively avoid it. Li advised company directors to thinkers is published every two years in recognition go to social sites and do a simple of original economic thinking around the world. search to see what people are saying about their company. “It’s Prof. Ghemawat received the prize at a special event not just about listening, it’s about held on November 14 at Lancaster House in London, learning and changing,” she said. “To consumers marketing often which was attended by 500 nominees and guests. feels like someone shouting at The nominees came from a range of leading business them. That is not a dialogue.” schools that included Harvard Business School, Tuck, UCLA, Oxford, Insead and LBS. The candidates for The Thinkers50 list received more than 10,000 votes between them. Candidates are assessed on the basis of 10 criteria: originality, practicality of their ideas, style of presentation, written communications, loyalty to their followers, business sense, impact of the ideas, international perspective, the rigor of the research and the elusive guru factor.
74 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE GCEO_ASIA_USA_BCN_A4.pdf 1 24/11/11 11:40
NEW IDEAS FOR NEW MARKETS PUBLIcidad
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DEVELOPING LEADERS YOU CAN TRUST For more information about the Global CEO Program, visit: www.iese.edu/gcp www.iese.edu/gcp P E O P L E Authors business and human values The Ethical Foundations of Good Management
hurt other people. Thus, ethics is not provides material support to human Domènec an artificial add-on to business, but an life and makes economic goods more Melé intrinsic aspect of good management. widely accessible.
Ethics and Good Management The Firm and the Common Good Management Ethics: Placing Ethics are embedded in manage- While business managers al- Ethics at the lment, first through decision mak- lways face a trade-off between Core of Good ing, second, through the ideas that generating profits and being re- Management ___ drive the practice of management sponsible to their firm’s many Palgrave Macmillan and, third, through the moral charac- stakeholders, making a profit is 2012 ter of the manager. not the sole purpose of business. Acting on ethical decisions contrib- The firm contributes to the com - In essence, being a good utes to good management by helping mon good and to sustainable de- manager means being to humanize business, generating velopment. It does this by creating trust, fostering loyalty, encouraging wealth and knowledge, by perform- ethical because it is about responsibility and helping to develop ing as a responsible stakeholder dealing with people. a strong moral culture. and being a good corporate citi- Melé avoids complex philosophical zen. This means seeking not only In the first decade of the 21st cen- discussions to present a way of think- economic results, but also positive ltury, many businesses learned ing about ethics on very basic princi- impacts on society and the environ- firsthand the moral and financial ples, such as the Golden Rule, which ment. Sustainability should be inte- risks of focusing exclusively on short- states that one should treat others as grated into all processes, products term financial gain. Lehman Broth- one would like to be treated oneself, and activities. ers, which, after 158 years in business, and Natural Moral Law, which holds While ethics may not be a cure for went bankrupt over the space of just that certain rights or values are inher- all the ills affecting the economy, one weekend. The cause: horrific ent in human nature and recognizable they are absolutely vital if we are mismanagement and a reckless dis- by human reason. one day to move beyond the current regard for moral hazard. The results: Three basic values, and their cor- crisis to a sustainable recovery. the worst global recession in decades. responding virtues, are upheld as In his book, Management Ethics: critical to ethical management: jus- Placing Ethics at the Core of Good Man- tice, truthfulness and intelligent agement, IESE’s Domènec Melé seeks love. Justice renders to each what is the fundamentals to shift our gaze from short-term gains rightfully theirs. Truthfulness refers at any cost, to a deeper, longer-term to the observance of truth in speech 1. Justice: to render to each what is rightfully theirs. view of management. Melé argues that and behavior, and a disposition to good management should take ethics search for the truth. Intelligent love 2. Truthfulness: both in into account because management is – understood as love driven by true speech and behavior. about people, and dealing with people knowledge of the real needs of the 3. Intelligent love: care requires ethics. other – goes beyond justice and en- and benevolence. A business is first and foremost tails care and benevolence. a human construct run by free indi- Having an ethical sense pushes 4. The business contributes viduals who cooperate within an or- one to act in the best way for the pur- to the common good. ganization with common goals, and pose of efficiency. In turn, firm effi- 5. The business promotes the decisions and actions a manager ciency contributes to the common sustainable development. takes have the potential to benefit or good. An efficient use of resources
76 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE ISSUE 11 OUT
NOW! www.ieseinsight.com/review Plus... Moving from physical stores Choosing a to an online world Building a creative culture for innovation Better Bridging Eastern vs. Western thinking PUBLIcidadOncologist Josep Baselga gives his prescription for Path healthy working • Helping Employees Realize Their Dreams • Brakes and Drivers 77 Along Your Career Path • Flexicurity: The New Frontier • Rebounding After a Career Disaster Getting inside the minds 1-year subscription, 4 issues for €30 of Chinese 3-year subscription, 12 issues for €70 (save 22%) consumers If you are a member of IESE’s Alumni Association, you don’t need to subscribe, as you can Kathy Xu already access all of this premium material as part of your membership. Capital Today
GIOVANNI COLUCCI I congratulate IESE Insight on its excellent articles with nice, sticky Marketing Portfolio Manager, quotes, and healthy balance of business research and journalism. The BNP Paribas Fortis lessons come in very handy, and I make sure to share them with my team.”
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Avance Insight 11_Eng Alumni.indd 1 17/01/12 13:10 l i f e Sony’s Synergies Sir Howard Stringer Speaks in NYC
The Wall Street Journal Viewpoints Executive Breakfast Series, organized by IESE and BCG.
ony is focusing on developing strong synergies between all of the company’s products, which in- clude content – such as movies and video games – as well as electronics, said Sir Howard String- erS, CEO of Sony. Sir Howard was the special invited speaker at WSJ View- points Executive Breakfast Series, co- sponsored by IESE Business School and BCG, in November. In an interview held in New York with WSJ’s Alan Murray, Stringer discussed how Sony plans to reach more consumers around the globe by ramping up device connection and digital content.
78 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE “The theory of having content is Because Sony’s activities are so di- that I don’t have to negotiate with verse, the company is currently per- anybody,” he said, noting that Sony ceived differently around the globe, will have 350 million connected de- We have to find a he said. “In India, we’re a content vices by the end of next year. way to compete company. In Russia, they think we’re “What the public around the against Apple an electronics company.” world really wants is movies, tele- that has two new Sir Howard also discussed the vision, video games and music, products a year, fundamental changes ahead for and we have all four of those lined when we have 50.” television, an area where many up. Once all those devices are con- companies are investing significant nected and seamlessly, as good as amounts of R&D. As a result of the iTunes is, the Sony Entertainment push to innovate, a new type of tele- Network will deliver content glob- It also faces formidable competi- vision set will emerge, but it will ally in a way that no other company tion from Apple, he said. One of the take time for the general population can,” he said. differences between the two com- to make a widespread transition to Discussing Sony’s key challenges, panies is the number of products the new format, he said. he said that it faces losses of more they have to market. He also affirmed that he is not than $1 billion in the current fiscal “We have to find a way to compete planning to step down from his post year, due to restructuring costs, against Apple that has two new prod- at Sony any time soon: “I’m up for this natural disasters and hacking. ucts a year, when we have 50.” fight,” he said.
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DUBlIN BRUSsels londres munich new york paris vienna miami zurich
SINGAPORE São Paulo
buenos aires
The Latest on IESE’s Alumni Chapters chapter news
terized by the desire to make both São Paulo Miami a social and an economic impact. November 3 November 9 The conference was titled “Impact Investing – the power of financial Prof. Javier Estrada visited alum- Alumni attended a meeting return and positive social impact.” lni at ISE in São Paulo where he gave lgiven by IESE professors Ja- the talk “Blinded by Growth” in which vier Estrada and Evgeny Káganer he discussed how growth is linked to titled “Disruptions in Technology New York profitability from an investor’s point and Finance: Opportunities and November 14 of view. The evidence suggests that it is Dangers,” on the opportunities and perfectly possible to obtain low profit- challenges that social networks IESE’s New York campus played ability while enjoying high growth, and present to the banking sector lhost to a Continuous Education high profitability where growth is low. and other financial institutions. session given by Anne Weisberg, Although clients are not opposed director of diversity at BlackRock, to the incorporation of social who was accompanied by Prof. Brussels networks into their banking experi- Nuria Chinchilla. The confer- November 8 ence, the banks have been slow to ence, titled “Balancing Profes- take advantage of new media. sional, Family and Personal Life,” Alumni met in Brussels for a con- discussed conciliation, based on lference led by Peter de Keyzer, the ideas expressed in Chinchilla’s chief economist of BNP Paribas For- Zurich book Masters of Our Destiny. tis. The executive reviewed the cur- November 9 rent economic situation in Europe in December 7 a talk titled “The Economic Outlook The Switzerland Chapter orga- for the Eurozone.” The Chapter lnized a meeting with professors Prof. Paddy Miller addressed thanks BNP Paribas Fortis and Luc Heinrich Liechtenstein and Uli lalumni in New York in a session Haegemans (AMP ’11) for their help Grabenwarter who talked about titled “A new challenge for leader- in organizing the event. impact investing, which is charac- ship. A changing skillset.”
80 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE www.facebook.com/alumni.iese www.twitter.com/iesealumni
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Dublin November 24
The Ireland Chapter met in lDublin for a Continuous Educa- tion session given by Prof. Antonio Argandoña on the challenges facing the global economy. He discussed how Ireland has improved its mac- roeconomic situation but said it was up to business to aid the recovery through innovation and by cooperat- ing with the government and society as a whole. 2 London December 1
Prof. Xavier Oliver visited alumni lin London where he gave a session titled “Marketing 3.0. Straight to the Soul. Are Agencies Helping Brands as They Were Before?” He talked about the declining role of advertising agencies, many of which have lost the confidence of their clients. Paris December 5
The France Chapter met at lthe headquarters of Barilla 3 Harry’s France where Bernadette Martin, founder of Visibility 1. Brussels. 2 . Miami. 3 . London. 4 . Singapur.
IESE Alumni Magazine JANUARY-MARCH 2012 / no. 124 81 www.facebook.com/alumni.iese www.twitter.com/iesealumni l i f e
YOU’RE IN THE NEWS ARE YOU IN THE NEWS? We are interested in all your latest news. Send your comments to [email protected]
EMBA ‘93 Rafael Fiestas is the new 5 managing director of Siemens Spain. For the past three years he has managed Osram, a subsidiary if Siemens. ______5. y 6. París. EMBA-S-08 Jesús Martínez Planas has been named as managing director of Brammer Iberia. ______G-EMBA ‘05 Álvaro de Nicolás has joined British Telecom as chief technology officer in the BT 6 Vision division. ______MBA ‘95 Carestream has named Manuel Frowein as sales manager for Branding, gave a talk titled “Personal as a means of communicating and Spain and Portugal. Branding” about how to tell a story in motivating. The Chapter thanks ______order to strengthen a brand across all Markus Scwhartz (MBA ’96) for MBA ‘04 platforms. The Chapter thanks Barilla help in organizing the event. Seur has named Mikel Iriberri and Massimo Ferrari (AMP ’10) for as its new corporate finance helping to organize the event. director. Munich ______Singapore December 8 December 6 The Germany Chapter met for lconference given by Prof. Marc The Singapore Chapter organized Sachon titled “e-Mobility: Hype la meeting between MBA students and Reality.” The session discussed and the local companies taking part in the issues such as innovations to cut Singapore Trek. carbon dioxide emissions and the role of hybrid cars. Vienna Buenos Aires December 6 December 16 The Austrian capital hosted a lContinuing Education ses- The Argentina Chapter met G-EMBA sion given jointly by Prof. Brian lin the offices of Seeliger and Some 80 alumni attended the Leggett and a representative of Conde for a session titled “Man- traditional annual Global EMBA Egon Zehnder International which aging Oneself and Managing dinner which was held in was titled “Walking the Leadership Others: How can Psychology and the Madrid restaurant La Tightrope – Balancing Hard Power Neuroscience Help Executives?” Capilla de la Bolsa. and Soft Power.” The conference given by the scientist Laureano explored the concept of soft power Berasategui.
82 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE A 360º VIEW OF THE PUBLIC SECTOR PUBLIcidad 83
MAKING DECISIONS IN THE PUBLIC SECTOR REQUIRES AN INCREASINGLY BROAD FOCUS. DO YOU WANT TO EXPAND YOUR VIEW?
IESE Business School’s vast experience in developing leaders, now applied to the public sector, with Public Management Programs at the new Center for Public Leadership and Government (CPLG) - a close working partner of the Harvard Kennedy School of Government.
Created in collaboration especially for public sector executives, our programs offer tools for making better, more economically efficient decisions that have maximum social impact.
Next Public NEWLY ELECTED HIGH LEVEL PUBLIC STRATEGIC COMMUNICATION FOR Management EXECUTIVES MANAGEMENT PROGRAM PUBLIC MANAGEMENT Programs · Madrid, February 28-29 and March 1, 2012 · Madrid, April 2012 EVALUATION OF PUBLIC POLICY AND DRIVING GOVERNMENT PERFORMANCE SOCIAL PROGRAMS · Madrid, June 18 - 21, 2012 · Madrid, March 13 - 14, 2012 STRATEGIC MANAGEMENT FOR LEADERS OF NON-GOVERNMENTAL ORGANIZATIONS · Madrid, March 26 - 30, 2012
Join one of IESE’s Public Management Programs and maximize the potential of DEVELOPING LEADERS YOU CAN TRUST your ideas to make an even bigger difference. Now is the moment. www.iese.edu Visit our Web www.iese.edu/CPLG and request more information at [email protected] l i f e Closing ceremony EXECUTIVE EDUCATION
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1.____ PMD-Brasil-2011 P: Alexandre Costa • S: Érica Pimentel Dias. 2. AMP-Brasil-2011 P: Wady José Mourâo • S: Danilo Silveira.
84 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE DO YOU HAVE THE POWER TO ENGAGE PEOPLE? NOW YOU CAN PUBLIcLEARN HOW idad 85
If you are ready to take a step forward in your professional career and maximize your effectiveness, our newly designed Program for Leadership Development is just the right program for you.
The program features an innovative format, with three intensive modules focusing on BUSINESS SCHOOL general management decision making. #1 IN THE WORLD Complement it with an IESE Short Focused for Executive Education Program of your choice to tailor the learning (Open Enrollment Programs). experience to your own interests. Financial Times, May 2011
Program for Leadership Development Barcelona
Spring Edition Fall Edition Anticipate: Building the Foundation Anticipate: Building the Foundation March 5 – 10, 2012 October 15 – 20, 2012 Prepare: Getting Ready for What Lies Ahead Prepare: Getting Ready for What Lies Ahead April 23 – 27, 2012 November 26 – 30, 2012 Shape: Transforming Business Leaders Shape: Transforming Business Leaders June 11 – 15, 2012 February 11 – 15, 2013 Short Focused Program (SFP) Short Focused Program (SFP) Barcelona or New York Barcelona or New York See program portfolio www.iese.edu/sfp See program portfolio www.iese.edu/sfp
DEVELOPING LEADERS YOU CAN TRUST Advance in your career. Make a positive impact on your company. Become www.iese.edu the leader you want to be. For more information, visit www.iese.edu/pld or send an e-mail to [email protected] i e s e & you
Lucky iPad website means Winners you never need Announced In May we raffled 10 iPad to miss a meeting 2s among the entire alumni community whose members only had to update their details before October 30 in order to ESE organizes so many events Other GAR speakers interviewed be eligible. More than 12,000 and conferences it is impos- include Kees Storm, the retired alumni from all around the sible to attend them all but chairman of Aegon, José Manuel world took part. The winners you can always catch up via González-Páramo who, as a mem- of the second round and who theI e-conferences and podcasts ber of the executive board of the Eu- are already enjoying their available on the IESE website. ropean Central Bank, has some clear new iPads are: José Masana Numerous speakers at November’s views about the euro crisis. (PDD’75), Ignacio de la Rica Global Alumni Reunion (GAR) in Meanwhile, Carlos Cordón- (MBA’83), Evelio Puig (MBA’83), Madrid gave interviews, among Cardó, head of pathology at Mount José Luis Sánchez-Ramos them Ferran Adrià, the most inno- Sinai School of Medicine in New York, (PDD’11) and Luis vative chef of his generation, who talks about revolutionary approaches López (PDG’88). talks about what it takes to break to treating disease and the growing To update your details: the mould. Jay Ireland, president synergy between research institutes [email protected] and CEO of GE, Africa, discusses and biotechnology companies. how General Electric plans to tack- le climate change. EyeOnIESE Podcast Ángel Cano, CEO of the Span- There are also dozens of pho- ish bank BBVA, explains the ways ltographs of the Global Alum - in which leaders must adapt to ni Reunion on the same site. And changing environments. ABB Board make sure you don’t miss the member Hans Ulrich Maerki says monthly EyeOnIESE podcast that that with so much uncertainty, keeps you up to date on IESE activi- businesses need to draw up a road ties on the campuses in Barcelona, map for the next three to five years Madrid and New York. and that this needs to include a val- ue system that will help them reach MORE INFORMATION: good decisions. www.bit.ly/rz6YBv the iesexperience We can now announce the winners of the in photos Global Alumni Photo competition. They are Devesh Sahai (MBA ‘12), who won the open prize and Myles Commike (MBA ‘12) who was awarded the jury prize for technique, quality and content.
86 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE_GlobalMBA_leader-boss_A4.pdf 1 22/12/11 11:06
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WE BELIEVE IT’S TIME FOR A NEW KIND OF LEADERSHIP. DON’T YOU AGREE?
Full-time MBA Executive MBA Global Executive MBA Designed to prepare students to become For professionals and entrepreneurs who are For high-potential managers who are creative and successful leaders in a global ready to take on new career challenges preparing to take on roles of greater business context. A 19-month program that without having to interrupt their work. Offered responsibility. This program for working offers an unparalleled international learning on IESE’s campuses in Barcelona and professionals - with modules held in Europe, experience with students from more than 60 Madrid, this transformational program Asia and the Americas - offers a close-up countries. You will also have the opportunity includes two intensive weeks in Shanghai view of contrasting companies, markets and to complete the program with sessions in and New York City. business cultures, while transforming Brazil, the United States or in an Asian executives' management perspectives. country.
DEVELOPING LEADERS YOU CAN TRUST www.iese.edu l a s t o wr oi r d Time to Slow Down and Pause for Thought
Juan Carlos Vázquez-Dodero Professor of Accounting and Control and Business Ethics
ne of the good things that A few years ago a lifestyle known as “slow may come out at the present down” emerged, a reminder of what we used to chaos is that we might regain call payments “all in good time” and “dress me a sense of time which, to my slowly, I’m in a hurry,” which reflect a culture way of thinking, we have lost. in which it is important to think before you act. Everything right away, there’s no time to lose, it’s Supporters of this philosophy, among whom urgent; that’s how we live. We have spent too long there are many medical professionals, say that adaptingO our lives to the speed of new technology. this approach is good for the entire organism, Everything has accelerated in a few decades and especially for the nervous and vascular systems we have adapted to this pseudo social urgency, as it avoids an excess of adrenaline getting in with unfortunate consequences. the blood. And they tell exemplary tales, such Life and nature have their own speeds. But as the Scandinavian worker who arrived early the culture of efficiency – more things in less at work and left his car in the furthest reaches time – has driven us to a way of living that could of the empty car park, which he then traversed be described as “too much, too soon.” There are on foot, in order to leave space for those who many illustrations of this, from a child who hasn’t arrived late and with less time to park. This is not a minute to play, that is to say, to figure out what it just courtesy but a mark of social consciousness wants to do, because its timetable is packed with and commonality which deserves to be praised. extra-curricular activities, not chosen by the child Anyone who is capable of doing this not only helps but by it’s efficient progenitors who want the child others and contributes to social coexistence, but to be able to ski at two, swim at three, play tennis at also demonstrates a rare inner equilibrium. four and so on until the poor creature, whose life is The new situation in which we find ourselves and already distorted, has no time to read or chat nor in particular the part that we call the West demands the time or the place needed in order to think. a complete rethink of our goals and methods. As for adults, it’s absurd. It’s not just that Perhaps the new shortages which demand austerity we want to arrive quickly, but we can’t bear a and taking better care of resources will help us 15-minute delay on the AVE; queuing for a few to relearn how to do something that is natural to minutes drives us to distraction; even a small delay human beings: waiting, waiting patiently. Might we in delivery annoys us; a leisurely lunch or dinner is not return the situation where people wait patiently not acceptable and prolonged after-dinner chats until somebody arrives to serve them? People say, are a thing of the past; relaxing and just switching guess what? I renewed my identity card and got off, without heading off on some journey, is not a new passport, including the photos, in just one accepted, while waiting for the computer to load an hour. Terrific. The question is, so what? In order application or program makes us anxious. What’s to do what? To spend more time watching the TV, considered good is fast food, fast fashion and a film something that a large number of people dedicate a made up of scenes that only last a few seconds. surprising amount of time to every day of the year?
88 JANUARY-MARCH 2012 / no. 124 Alumni Magazine IESE IESE 210X297 INGLES.pdf 1 24/11/11 09:15 Smarter computing builds a Smarter Planet: 1 in a Series Smarter comes to computing.
Today, everything computes. Intelligence has been infused into Tuned to the task: Generic computing stacks are no longer up things no one would recognize as computers: appliances, cars, to the job – because today there are fewer and fewer generic roadways, clothes, even rivers and cornfi elds. This is the daily reality jobs. Transaction processing, with thousands of online users, is of an instrumented, interconnected and intelligent world – a Smarter different from business analytics, with multiple data types and Planet – which IBM began chronicling nearly three years ago. complex queries, which is different from the need to integrate content, people and work flows in a company’s processes. Realizing its promise, however, will require more than infusing That’s why leaders are looking for more than high-performance computation into the world. We also have to make computing technology. They are moving to architectures optimized for itself smarter. specific purposes, and built around their own deep domain Wait, isn’t computing smart, by definition? Without question, knowledge – in healthcare, retail, energy, science and more. remarkable levels of computer intelligence are being invented This workload-specific approach integrates uniquely tuned – such as Watson, the IBM system that defeated the two all-time software and hardware – everything from the applications to champions on the TV quiz show, Jeopardy! But organizations’ the chips themselves. computing infrastructures – consisting of mainframes, servers, PCs, Managed in the cloud: The need to manage these large data- enterprise applications, websites and more – was simply not built for driven workloads is driving broad adoption of cloud computing. zettabytes of data, global connectivity and advanced analytics. But that means something different for business than for individual So, as our planet gets smarter, our computing systems must do so, consumers. By infusing clouds with security and manageability too. They must become far more automated, robust and adaptive we can make them smarter in order to provide companies – that is, industrialized. Thankfully, a new, smarter computing model with the agility required to move quickly in highly competitive is emerging. It is designed for data. It is tuned to the task. And it is environments; to activate and retire resources as needed; to managed in the cloud. manage infrastructure elements in a dynamic way; and to move workloads for more efficiency – while seamlessly integrating Designed for data: Organizations of all kinds need to manage not with their traditional computing environment. just information, but vast, global information supply chains. Not only the ones and zeros that traditional computers love, but streams of Major computing models don’t change very often – but when they do, they unleash enormous productivity, innovation and text, images, sounds, sensor-generated impulses and more. They economic growth. So the good news is that smarter computing need to apply sophisticated analytics to the real languages of is now shifting from theory to reality. Look for more reports in commerce, processes and natural systems – and to conversations coming weeks on how smarter computing is meeting the from the growing universe of tweets, blogs and social media. demands of a smarter planet. Decisions based on structured data alone are no longer adequate. Today’s leading companies are building new systems and Let’s build a smarter planet. processes that locate, recognize and interrogate “big data.” Join us at ibm.com/smartercomputing
IBM, the IBM logo, ibm.com, Smarter Planet and the planet icon are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. A current list of IBM trademarks is available on the Web at www.ibm.com/legal/copytrade.shtml. © International Business Machines Corporation 2011.
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