Start Spreading the News: The Gar in NYC a Great Success

More than 1,100 Alumni and friends flocked to the Big Apple

Against  a dazzling city skyline, IESE alumni and friends from around the world gathered in New York City to celebrate the 48th Global Alumni Reunion in October. Never before had our premier annual gathering been held outside Europe, making the occasion even more memorable. At the same time, we had the opportunity to mark another important milestone: the upcoming inauguration of IESE’s New York Center in 2010.
Hosted by U.S.-based alumni and IESE faculty members and staff, we had the chance to visit the construction site of the new center,  as well as take in the sights and sounds of the Big Apple. We also had the opportunity to visit many of the city’s spectacular art museums guided by knowledgeable experts.
But first, the experience kicked off with the reunion’s traditional academic program, featuring a host of high-profile speakers. Over 1,100 alumni, faculty, guest speakers and friends took part in the reunion, which focused on the theme “Reframing the Future of Business.” IESE Profs. Pedro Videla and Paddy Miller were  academic directors of the program.
The famed Waldorf Astoria Hotel  hosted the reunion. Among the speakers were James D. Wolfensohn, former president of the World Bank, Dr. Valentin Fuster, director of cardiology at Mount Sinai Hospital in New York, Kathryn Wylde, president & CEO of Partnership for New York City, and Antonio Perez, CEO and chairman of Kodak.

In Search of New Values

More than ever, the economy is in need of “entrepreneurship, free markets and investment,” IESE’s Dean Jordi Canals said in his welcoming address. Dean Canals added  that the business world is experiencing “a crisis of ethical values.” 
IESE’s mission of developing leaders who can have a deep impact on people, firms and society through integrity and a sprit of service is particularly relevant today, he said. In addition, the school’s global character and strong links with business schools around the world offer the corporate world a highly informed perspective of globalization.

NYC: Gateway to the Global Economy

In a separate session, Matthew Bishop, American business editor and NY bureau chief at The Economist, interviewed Kathryn S. Wylde, president & CEO of Partnership for New York City, who offered insights on the city’s current economic situation and future. Wylde pointed out that both New York and London face the challenge of maintaining their status  as global financial capitals.
Because of its financial institutions, “New York is America’s gateway to the global economy,” Wylde said. When asked about a possible crisis of values in the New York business community, Wylde said in response that the world blames the city in large part for the current economic situation.  The city will pay a price for this perception, she said. The financial sector contributes a third of all the revenue generated in the New York metropolitan region.
In terms of its recovery, Wylde believe the city should “hold the line,” resisting pressure to raise taxes and spending. In addition, there should  be a greater focus on supporting the entrepreneurial side of the economy. “Up until now big has dominated,” Wylde said. The CEO of Partnership for NYC  added  that although the city is a center for raising venture capital, most of the money ends up  funding ventures in places such as California and Boston.
On a positive note, Wylde said that, contrary to popular belief, crime is not on the rise in New York City, due in part to the city’s state-of-the-art police system.  New York City’s future rests on its ability to provide services to international companies, especially those based in the developing world. She said that 15 percent of the city’s growth over the last five years  came from foreign direct investment.


Learning from Health care

In an interview with IESE Prof. Pedro Nueno, Dr. Valentin Fuster, director of cardiology at Mount Sinai Hospital,  emphasized the need to see health care as an economic priority. He drew analogies between the proper functioning of the human heart and the inner workings of a business, arguing that, like medicine, business cannot operate efficiently without the circulation of information. 
Similarly, Dr. Fuster drew analogies between his medical school teaching and the instruction encountered in many management schools today: “The most important thing is vertical communication, and... competence in leadership.” Further, Fuster suggested that the reasons people choose to enter medical school can be instructive for the business-minded. The “ideal of service” is at the heart of the medical vocation, Fuster noted, and businesspeople can look for inspiration from model physicians, who see their patients as their “father and brother,” rather than a collection of numbers and medical readouts.
On a practical note, Fuster drew attention to global healthcare crises, observing that good economics and good health care go hand in hand. Of particular note was Fuster’s emphasis on the education of health-care consumers about preventative lifestyle choices. The question and answer session with Dr. Fuster was lighthearted with questions about the health benefits of coffee and wine, and the importance of exercise. Dr. Fuster argued forcefully, however, that we ought to adopt the idea of “integrated health,” rather than a list of “do’s” and “don’ts.”

Technology is Key

Turning to technology, Kodak CEO and Chairman Antonio Perez shared his struggle and success in turning Kodak into a market leader in the digital sector. “We came with no digital business to speak of and now 70 percent of our business is digital,” he said, adding that Kodak has the largest market share of digital cameras. 
On his arrival at Kodak in 2003, Perez found that the company “was doing so well with film they were not thinking about doing anything else.” Paradoxically, Kodak first invented the digital camera in 1975 and the company has been working with digital imaging for 30 years. But as Perez said, it is extremely difficult for a company that has been making enormous returns quarter after quarter to suddenly divert its resources to a market with significantly lower margins.
One of his first actions as CEO was to carry out a thorough audit the company’s technological advances in the preceding years. It soon became clear that the company already had all the necessary technology to enter the commercial printing and digital photography sectors. Perez also restructured the company, reducing its international workforce from 70,000 to about 25,000. “You cannot change a culture without changing the people,” he said.
Perez offered a three-pronged approach to late-arrivers to a market sector. The first requirement is to have a breakthrough technology. The second is to have an advantage in the supply chain. He pointed out that this was easy if you are late to the game, since earlier competitors have most likely already paved the way. The last is to have a value proposition that attacks competitors’ weak spots. Perez’s strategy has proved successful for Kodak: the company enjoys 130 percent growth quarter over quarter, the CEO said.

Perspectives on the Downturn

Three experts presented their visions of the economic future in the session “Reframing the Economic and Financial Landscape” - James D. Wolfensohn, former president of the World Bank, Prof. Charles Calomiris of Columbia Business School and Prof. Jordi Gual of IESE and the major Spanish bank, “la Caixa”.
 Wolfensohn began by noting that a recent G-20 communiqué might mislead some into thinking that our economic situation is already beginning an upward swing. The communiqué notes, however, that the “process of recovery is incomplete.”
Plummeting global GDPs, the former World Bank chief said, do not merely represent a modest adjustment in growth. Rather, the scale of the current global shifts in wealth concentration is unprecedented in the modern era. Asian countries such as India and China may account for close to 50 percent of global GDP by 2050 if current trends continue. This, he said, is a “tectonic shift” in economic trends. China, for instance, has “taken us up on the things we used to do, and has in many cases improved upon our efforts.”
Next to take the stage was Prof. Charles Calomiris of Columbia Business School. Calomiris is part of a 15-member bi-partisan task force of academics charged with studying the crisis and putting forward remedies.
Calomiris argued that the principal problems facing economic recovery are essentially the result of government policy mistakes. On the one hand, the U.S. government’s macroeconomic policy created a loose credit environment. Given that housing subsidies are delivered via leverage, many consumers were encouraged by lenders to over-leverage their mortgage. Of great consequence, too, Calomiris said, is our lack of a reliable means to measure risk. Small businesses are also suffering: they are “dragging very far behind in investments, and do not have access to credit. They depend on banks, and banks aren’t lending.” 
Calomiris stressed the need for a long-term outlook and solution. Long-term planning will prevent what has thus far frustrated recovery efforts: the “misalignment of political will and economic necessity.”
Prof. Jordi Gual of IESE and “la Caixa” took the stage next, and emphasized the extent to which some European nations have fared worse than other developed economies during the crisis. He also noted their questionable fitness for recovery. As to the effectiveness of the European Union’s actions, Gual argued that trade and monetary policies have been well-coordinated and highly effective. Financial market policy, however, is by far the worst performer. Prof. Gual then questioned Europe’s readiness for economic recovery by observing that difficult balances must be dealt with, such as economic heterogeneity, timing, and the magnitude of reform.

Globetrotting

A session on reframing business would not be complete without a conversation on globalization. IESE Prof. Pankaj Ghemawat shared data and debunked the somewhat popular belief that globalization is an inevitable phenomenon in every sector of business.  Ghemawat pointed out that the long-term immigrants  only represent 3 percent of the total global population. He added that even international voice calls, a seemingly easy flow of international communication, still only account for 2.5 percent of total calls. Prof. Ghemawat advised companies looking to go global that “where you come from has a huge impact on where you should go,” and added that with large populations, like those of India or China, it is crucial to assess if you are well-positioned to compete in their markets.
The event’s final session focused on healthcare and infrastructure. Baldomero Falcones, president and CEO of FCC, one of the leading European services and construction groups, said that “investing in infrastructure is a sound economic policy,” and emphasized that investment in this area creates employment, increases aggregate demand and has a multiplying effect. 
Joaquín Duato, company group chairman of North America Pharmaceuticals, Johnson & Johnson, pointed out the misconception that the health-care industry is shielded from an economic downturn, and observed that health-care consumption in the U.S. is currently being affected, with a downturn in elective procedures and fewer physician visits. He argued that “health care is a pillar of the economic system” and spoke about the growing trend for universal healthcare both in China and the U.S., but pointed out that broader coverage must be balanced with concern for cost and quality.

Blazing The Trail
IESE Prepares to launch U.S. campus

IESE Business School is bringing to New York its long tradition of developing global leaders and executives that profoundly and positively impact society. At the same time, the school aims to strengthen awareness of its identity and activities in the United States.
“With the new building and the Global Alumni Reunion held in New York, IESE is steadily gaining visibility in the U.S.,” says Kip Meyer, assistant director of Executive Education in the United States.
As a tangible example of the school’s progress, Meyer notes that IESE has recently signed an agreement with Wal-Mart International for the center’s first custom program to begin in 2010.
“Being able to share information about the ‘Doing Good, Doing Well’ conference run by IESE MBA students or how IESE has helped to develop business schools in emerging countries impresses the companies we talk to here in the U.S.,” says Meyer.
And in terms of location, there was no better place than New York City for launching IESE’s U.S. venture, says Eric Weber, director of IESE in New York.
“The city’s adaptable nature makes it uniquely receptive to IESE’s business philosophy, which will add a new dimension to the business culture in North America,” Weber said. “As IESE has grown through the years, the U.S. has always been a reference point. Strengthening our connections with alumni and client companies in the region, as well as expanding our research initiatives from a base in New York was a logical step to take.”
In addition, IESE’s center in New York reflects an unprecedented move in the business school world. By becoming the first European business school to establish a permanent presence in the U.S., IESE is now set to share its distinct vision of global business with North American firms.

New World, New Aspirations

The New York center will also provide a base for IESE programs in other U.S. locations such as the Senior Executive Program Latin America, one of the numerous initiatives IESE is set to lead on U.S. soil. “People are amazed by the international scope that IESE has,” says Begoña de Ros, director of the program.
The program is targeted at experienced executives and run in collaboration with IAE and IPADE, leading Argentinean and Mexican business schools that form part of the school’s network of Associated Business Schools.
This network, which spans the globe, also distinguishes the school from others, de Ros said. It gives IESE faculty access to invaluable insights on doing business in emerging markets that few management schools have.
Though the center aims to serve U.S.-based executives, IESE’s focus remains entirely global in terms of program content, faculty and participants in its programs, de Ros emphasizes.
IESE has mastered the logistical art of leading programs in different geographic locations, having long offered the Global Executive MBA program with modules in Shanghai, Silicon Valley, Barcelona and Madrid, as well as the Executive MBA with modules in the U.S., Europe and China.
Regardless of location, however, the basic character of IESE programs remains the same, she said.

Breaking the Mold

The center also offers a chance to share IESE’s unique management approach with firms in the region.  “One of the primary strengths of IESE Business School has been, and continues to be, its focus on teaching that people-centric values should dictate the business environment; the notion at the core of an IESE education is that we need to be mindful of the ripple effect that one individual’s actions will produce for society”, said Hélène Sostarich-Barsamian, U.S. director of development.
“IESE’s reputation…for the excellence of its faculty and academic programs precedes our alumni wherever they are around the globe,” said Sostarich-Barsamian.
Lorraine Merghart (MBA, ’84) said she was “hopeful that IESE will be able to broaden the definition of ‘business’ as not simply an entity formed to make a profit and create shareholder value.” In particular, IESE stands to help develop “both the individual and the individual’s place within the broader society and thereby contribute to a better society,” she said.
IESE is breaking the mold of contemporary business, then, by insisting that business be at the service of society, not society at the service of business. The school is also going against the tide with its commitment to the New York center given the current economic environment. 
With the Herculean task of rebuilding the economy, one might question the timing of an international business school’s expansion to the United States. While the idea strikes many as counter-intuitive, IESE’s Dean Jordi Canals sees it as an opportunity, The Economist noted in a recent article about the New York Center.
The opportunity to launch new programs and carry out rigorous research directly with U.S companies will be among the key benefits of IESE’s new outpost, notes IESE Prof. Paddy Miller, who has been a part of the New York project from the outset.
“We now have the opportunity to make contact with U.S. managers and companies directly, and generate material that is highly relevant to our U.S. stakeholders,” Prof. Miller stresses.

IESE Quality on
New Terrain

IESE is already making its mark on the U.S. through the programs that have been carried out on the continent to date, both in New York and Miami.
Rose Mary Cosio, for example, recently embarked on the SEP for Latin America. Cosio serves as vice-president, investment manager, of Deutsche Bank Trust Company Americas. Based in New York, she is the investment manager responsible for South Latin America.
Cosio serves high-net-worth individuals, families and selected institutions with a fully-integrated management service in the International Division for Private Wealth Management at Deutsche Bank. Unlike many other banks, Deutsche Bank weathered the recent financial crisis well and did not avail of government funds.
“When I learned about IESE’s SEP in Miami, I thought: this is perfect. It has the curriculum I need and at the same time I will not need to be away from my work that much. And, of course, the fact that the program focuses on helping senior executives with specific interests in Latin America just made it all the more attractive to me. It fits my needs perfectly,” said Cosio.
The various components of the program allow her to sharpen skills in areas which she is not often directly involved in, such as accounting, she said. “That’s a skill I want to be much more familiar with because of financial decisions and the impact they have.”
Leadership is another area covered in the program that has a direct impact in her work environment, she said. “In this program, I am learning a new perspective and developing more creative ways of leading people.”

Manhattan’s media alley

An important ally in IESE’s activities in New York is the Institute for Media and Entertainment (IME), based at the New York Center. “New York has become the Mecca of the media universe not only because of its wealth of creative talent, but also because of its importance as a hub of advertising, TV and film production and international media distribution,” said IME Director Rich Sabreen. “In addition, downtown Manhattan’s Silicon Alley has become an incubator for many new media businesses.”
The center is within walking distance of the headquarters of some of the top media companies in the world, including Time Warner, Hearst, Viacom, News Corp, the New York Times and NBC Universal. And many non-U.S. media and entertainment companies maintain significant operations in the vicinity, he said.
The IME currently offers two Short Focused Programs for executives: “Advanced Digital Media Strategies” and “Branding in Media and -Entertainment.”
“IESE’s international framework promotes global thinking among program participants, enabling them to think beyond their own local issues, to broaden their outlooks, and potentially to expand their media and entertainment businesses and products into new markets and areas of operation around the world,” said Sabreen.
“We’re building IME as a ‘brand’ that stands for world-class executive learning and innovation in the media and entertainment industry. And we’re not only doing this by the programs we offer, but also by the content we create,” he said.

A Landmark Made Flexible

While some may have assumed that the new campus would amount to just a few rented offices, many are impressed that it will be launched as a fully-functioning academic enterprise, symbolic of IESE’s new role in American business.
“The building is a physical testimony to the extent of IESE’s commitment to the U.S. project,” said Paul Gallagher, U.S. director of finance and administration. “It’s amazing to see the shift in people’s understanding of what we are doing when they learn about it. They initially assume we will have just a few offices, and then they find we will have an academic center for teaching and research with faculty based here,” he added.
IESE’s new home is “designed for flexibility, as we know from our workplace practice that the business world is a dynamic one, and optimizing space is critical to increasing business efficiency,” said principal architect Ambrose Aliaga-Kelly of Gensler Architects, which is leading the center’s renovation.
“Rooms in the new building are reconfigurable, and have been designed to support seminars, meetings, presentations, dining and casual interaction. Two 70-person classrooms provide the largest learning spaces,” he explained.
“The existing building is a landmark structure, almost 90 years old, so much of the  fabric and all of its systems needed to be replaced. Working within older buildings, respecting history and enhancing it, while still working within a budget, is always a challenge,” said Aliaga-Kelly.
Gallagher notes that the building’s history is the principal reason the site was selected by IESE.
“Business school classrooms require a large column-free space for unobstructed views and need adequate ceiling height,” Gallagher said. “New York City’s tall buildings are all typically supported internally on forests of columns. This structure was built in 1916 as a school for Russian ballet dance and deliberately had large, open, high-ceilinged performance spaces which have returned to their original function as instruction (and in some sense, performance) spaces,” he said. 
Gallagher adds that “programs for management in the creative industries, offered by IESE with IME, the Institute for Media and Entertainment, will continue the building’s link with the arts and culture.”

Engaging New York

With the economy in dire need of recovery and consumer trust levels plumbing new depths, Andrea Takahira (SEP Miami ‘09) cites New York as a demonstration of business carried out well – and not so well. Some believe that New York City will have to reinvent itself to recover from the economic crisis. New York is a “very competitive and energy-driven environment. People feel a need to excel, compete, and challenge themselves and existing norms,” Takahira says.
IESE, in a sense, is reinventing itself in North America by bringing to America its own set of experiences and ideas. “Unless you have positive, successful examples in society, nothing will change,” says Takahira. IESE aims to be that positive, successful paradigm for New York by building a more holistic understanding of world business.
The school has already sought to reach out to the New York business community through special events such as the Viewpoints Executive Breakfast Series, with the Wall Street Journal and BCG.
Aimed at senior executives, these events feature live interviews with high-profile global business leaders. Participating speakers at the events have included hedge fund manager George Soros, Jeffrey Immelt of General Electric and Louis V. Gerstner, former CEO of IBM
Business leaders stand to benefit from IESE’s new venture, a singularly bold effort to push business ethics to the forefront, and to refocus the purpose of business toward the good of society. On top of that, its international scope is second-to-none.
IESE’s New York Center looks to have a lasting, positive impact on its students and management culture. In the words of one alumna, it aims to “teach business students to think.”