DeansTalk - business management education

Will it be you?

www.willitbeyou.com

Professor Raghuram Rajan, U. Chicago bschool, video, on Risks to the Global Economy

Wikipedia Raghuram Rajan

27 January 2012

YouTube: Project Syndicate contributor and former IMF chief economist discusses risks to the global economy, and steps industrial countries can take to spur long-term growth. Read the article discussed, "A Crisis in Two Narratives," at http://bit.ly/yf15RL.

Professor Mauro Guillen of Wharton bschool - The remaking of Europe needed

Faculty page

Op Eds

Korea Times | 9 January 2012 | On the remaking of Europe

...

The global economy needs a renewed commitment to free trade. It also needs the emerging economies to develop their domestic consumption markets faster, allowing their citizens to buy goods and services more freely.

Professor Thomas J. Sargent, of Economics, New York University - "United States then, Europe now"

Thomas J. Sargent delivered his Nobel Prize Lecture on 8 December 2011 at Aula Magna, Stockholm University. He was introduced by Professor Per Krusell, Chairman of the Economic Sciences Prize Committee. slides PDF.

 

YouTube, at 16mins30

The Institute for New Economic Thinking

@ineteconomics

ineteconomics.org

Wikipedia

Video 1 Dec 2010

e4e - Education for Employment, Realizing Arab Youth Potential

 www.e4earabyouth.com

Call to Action  (p92, The Report, PDF 108 pages)

The challenge is big, significant, and urgent – action is required now: Without all stakeholders – youth, employers, government, education providers, multilaterals, and civil society – coming together right now and embarking on ambitious plans to jointly address the e4e challenge the Arab World’s youth are facing, the potential short-, mid-, and long-term consequences are dire...

e4e is education that leads to improved employment prospects. Read our new report.

The Arab World is overwhelmingly young, with the highest youth unemployment in the world. Recent events across the region have amplified the social and economic disconnect between skills, jobs and opportunity. Education for Employment (e4e) is an initiative headed by IFC, a member of the World Bank Group and the Islamic Development Bank. 

Downloads PDF
Full Report, 108 pages 
Executive Summary
Executive Summary (Arabic)
Press Release

Can Italy Be Saved? - Michael Spence, Nobel laureate economics, Professor Economics, NYU Stern bschool

2011-11-21 Project Syndicate 

Via @ProSyn

Michael Spence, a Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, and Senior Fellow at the Hoover Institution, Stanford University.

Dean, Emeritus, at the Graduate School of Business, Stanford University

Professor Robert J. Shiller of Economics at Yale - Reuters TV: "new" "bigger" "balanced budget stimulus"

Robert J. Shiller (Wikipedia entry): currently serves as the Arthur M. Okun Professor of Economics at Yale University and is a Fellow at the Yale International Center for Finance, Yale School of Management

Yale's Shiller says new U.S. stimulus needed to create jobs, Thomson Reuters: Reuters Insider

Associate Professor Nicholas Bloom of Stanford on the economy

Stanford News, August 10, 2011.

"Nobody knows what is going to happen next," says Nicholas Bloom.  One thing is sure:  "When people are uncertain about the future they wait and do nothing" – and that will lead to recession.

voxeu.org - professor Daniel Gros - "August 2011: The euro crisis reaches the core"

VOX

Research-based policy analysis and commentary from leading economists

"Editors' choice" tab

Daniel Gros
11 August 2011

The euro crisis reaches the core

Investors are anticipating the unravelling of the 21 July 2011 “solution” and a breakdown of the interbank-market that would throw the economy into an “immediate recession” like the one experienced after the Lehman bankruptcy. This column argues that this will happen without quick and bold action...

...

What needs to be done

At this point the Eurozone needs a massive infusion of liquidity. Given that the cascade structure of the EFSF is part of the problem, the solution cannot be a massive increase in its size. However, the EFSF could simply be registered as a bank and could then have access to unlimited re-financing by the ECB, which is the only institution which can provide the required liquidity quickly and in convincing quantity.

This solution would have the advantage that it leaves the management of public debt problems in the hand of the finance ministries, but it provides them with the liquidity backstop that is needed when there is a generalised breakdown of confidence and liquidity. This is exactly when a lender of last resort is most needed.

It would of course be much better if the ECB did not have to ‘bail out’ the European rescue mechanism, but in this case one has to choose between two evils. Even a massive increase in the ECB’s balance sheet (which if the US experience is any guide will not lead to inflation) constitutes a lesser evil compared to a breakdown of the Eurozone financial system.

Editor’s Note: Daniel Gros expands on his thoughts in a companion audio piece, the Vox Talks The Eurozone crisis: only the unlimited firepower of the ECB will stop market panic

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Daniel Gros is the Director of the Centre for European Policy Studies (CEPS) in Brussels. Originally from Germany, he attended university in Italy, where he obtained a Laurea in Economia e Commercio. He also studied in the United States, where he earned his M.A. and PhD (University of Chicago, 1984). He worked at the International Monetary Fund, in the European and Research Departments (1983-1986), then as an Economic Advisor to the Directorate General II of the European Commission (1988-1990). He has taught at the European College (Natolin) as well as at various universities across Europe, including the Catholic University of Leuven, the University of Frankfurt, the University of Basel, Bocconi University, the Kiel Institute of World Studies and the Central European University in Prague.

Professor Christina Romer(Berkeley) and Assoc. Dean Mathew Slaughter(Tuck) - calming market jitters (PBS video+transcript)

PBS Newshour, August 10, 2011

JUDY WOODRUFF: Today's plunge marked the fourth time in just over a week where the Dow Jones industrials have dropped by triple digits. Market volatility is at again near record levels.

We look at this and the larger picture with two people who have worked closely on economic policy. Christina Romer was the chair of the Council of Economic Advisers for President Obama until September 2010. She's a professor of economics at the University of California at Berkeley. And Matthew Slaughter served on President George W. Bush's Council of Economic Advisers from 2005 to 2007. He's now associate dean of the Tuck School of Business at Dartmouth College. And we thank you both for being with us.

Christina Romer, to you first.

The scary roller-coaster ride on the stock market continued again today. How do you explain it?

CHRISTINA ROMER, University of California at Berkley: Well, I think, obviously, one of the things about the stock market is it's very hard to explain the ups and downs...

Dean Emeritus Stanford GSB Mike Spence - Job creation: easier said than done

San Francisco Chronicle, August 7, 2011 + (Article of Foreign Affairs, July/August 2011)

From the perspective of Michael Spence, a Nobel Prize-winning economist (2001) and Hoover Institution fellow, the president faces some tough sledding..

...It's a structural reality that Spence believes Washington hasn't fully grasped and doesn't have a plan in place to address. "It's a design challenge, and that's not what we're doing right now," he said..

"There is every reason to believe these trends will continue," according to Spence, also a professor of economics at New York University's Stern School of Business..

Distinguished Visiting Fellow at the Council on Foreign Relations and the author of The Next Convergence: The Future of Economic Growth in a Multispeed World (May 2011, www.thenextconvergence.com).

Professor Nouriel Roubini of Stern(NYU) business school proposes solutions in the Financial Times + Goldman Sachs forecast

Financial Times: Last three paragraphs, of an online article of this evening, which will appear tomorrow in print.

...misguided decision by Standard & Poor’s to downgrade the US...

...So can we avoid another severe recession? It might simply be mission impossible. The best bet is for those countries that have not lost market access – the US, UK, Japan, and Germany – to introduce new short-term fiscal stimulus while committing to medium-term fiscal austerity. The US downgrade will hasten demands for fiscal reduction, but America in particular should commit to look for significant cuts in the medium term, not an immediate fiscal drag that will worsen growth and deficits.

Most western central banks should also introduce further QE, even though its effect will be limited. The European Central Bank should not just stop rate hiking: it should cut rates to zero and make big purchases of government bonds to prevent Italy or Spain losing market access – the outcome of which would be a truly major crisis, requiring doubling (or tripling) of bail-out resources, or debt workouts and a eurozone break-up.

Finally, since this is a crisis of solvency as well as liquidity, orderly debt restructuring must begin. This means across the board reduction on the mortgage debt for the roughly half of America’s households that are underwater, and bail-ins for creditors of banks in distress. Greek-style coercive maturity extensions, at risk free rates, must also come for Portugal and Ireland, with Italy and Spain to follow if they lose market access. Another recession may not be preventable. But policy can stop a second depression. That is reason enough for swift and targeted action.

The writer is chairman of Roubini Global Economics, professor at the Stern School, NYU and co-author of Crisis Economics.

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Economics team at Goldman Sachs now say: "We now see a one-in-three risk of renewed recession".

Professor Raghuram Rajan of Finance at Chicago Booth GSB - "Washington and the Art of the Possible"

2011-08-04 www.project-syndicate.org

...In the meantime, US politicians might have done just about enough to convince debt markets that America’s credit is still good. For that, Americans – and others around the world – should stop pillorying them and give them their due credit.

Raghuram Rajan, a former chief economist of the IMF, is Professor of Finance at the University of Chicago’s Booth School of Business and author of Fault Lines: How Hidden Fractures Still Threaten the World Economy, the Financial Times Business Book of the Year.

(previously mentioned on DeansTalk: 5/2/2011, 15/2/2009)

Profesor Simon Johnson of Entrepreneurship at MIT's Sloan - "The stock market panic: Why now?"

CBS News, August 5, 2011  (also on the blog he set-up The Baseline Scenario)

...None of the current policy stances in the United States, Japan, or Europe is sustainable...

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MIT bio
Simon Johnson is the Ronald A. Kurtz (1954) Professor of Entrepreneurship at MIT's Sloan School of Management, a position he has held since 2004.

IMF bio
Economic Counsellor and Director, Research Department, IMF (March 2007-August 2008)

Simon Johnson was Economic Counsellor and Director of the Research Department (Chief Economist) at the IMF from March 2007-August 2008. Mr. Johnson was on leave from the Sloan School of Management at MIT, where he was the Ronald A. Kurtz Professor of Entrepreneurship. Mr. Johnson is an expert on the financial sector and economic crises. Over the past 20 years he has worked on crisis prevention and mitigation, as well as economic growth issues in advanced, emerging market, and developing countries. His work focuses on how policymakers can limit the impact of negative shocks and manage the risks faced by their countries. His PhD is in economics from MIT, while his MA is from the University of Manchester and his BA is from the University of Oxford.

Sir Ronald Cohen (HBS alum): capitalism has its consequences - The Telegraph

Article of The Telegraph, 26 Jun 2010    (Wikipedia Entry of Sir Ronald Cohen)

The man who started the private equity industry 40 years ago, is plotting to harness entrepreneurship to act as an agent for social change.

...has been back to Harvard and a clutch of other top universities to tell the students about the next big thing in the business world – social finance...

"We want to do the same thing for social entrepreneurship. We want to connect the capital markets to the social sector.

"I think it is going to be similarly powerful because the impact of the recent crisis on peoples consciousness has emphasised the importance of dealing with the social consequences of the [capitalist] system."

Sir Ronald is fervent in his belief that this is more than just the latest business fad, but a crunch-point moment for the entire Western market-based system.

"It is not enough to increase the standard of living at the high end. It is right at the same time to worry about those who are left behind," he says.

"I think societies everywhere will come to the conclusion that an important part of the capitalist system is having a powerful social sector to address social issues, because government doesn't have the resources."

...

Professor Jack M. Guttentag of Wharton (finance emeritus) - "Debt Default’s Game of Chicken"

Article of Wharton Today, July 29, 2011.

In a blog posted this week, Jack M. Guttentag, professor of finance emeritus at Wharton, warned of the consequences — both immediate and long-term — of a debt default by the federal government. Asked by Knowledge@Wharton what continues to be the single biggest obstacle to agreement on a plan to increase the debt ceiling, he responded — “an ideological gridlock between different political forces that may be playing a game of chicken to see which one is going to blink first to prevent a catastrophe. To put the country through this horror in the expectation that someone will blink and everything will come out all right is just unbelievably irresponsible.”...

“If a default had the horrendous consequences you describe, and these induce Congress and the Administration to agree finally on an increase in the debt ceiling, how long would it take financial markets to return to normal?”

Markets would never return to a state where U.S. Government obligations are viewed as riskless. We will pay for this loss of grace forever...

Professor Matt Slaughter of Tuck - "America is tempting a financial crisis of unknowable proportions"

Up Against the Debt Ceiling, July 2011.

If the United States defaults on the federal government’s debt, the consequences would be catastrophic. That was the central message in Tuck professor Matt Slaughter’s testimony before the House Democratic Steering and Policy Committee on July 7.

 

"A great divide holds back the relevance of economists" - The Great Debate (Reuters)

Reuters invited leading economists to reply to Mark Thoma’s Op-Ed (July 26, 2011) on the “great divide” in economics and will be publishing the responses. Here are responses from Ashwin Parameswaran, James Hamilton, Dean Baker, Lawrence Summers, and a recap of Paul Krugman’s.

"Economists Heal thyself", July 27, 2011, Response of Dean Roger Martin of Rotman business school (Toronto)

World Investment Report 2011 - United Nations Conference

United Nations Conference on Trade and Development, 26/07/11

Global foreign direct investment (FDI) has not yet bounced back to pre-crisis levels, though some regions show better recovery than others. The reason is not financing constraints, but perceived risks and regulatory uncertainty in a fragile world economy.

The World Investment Report 2011 (PDF, 251 pages) forecasts that, barring any economic shocks, FDI flows will recover to pre-crisis levels over the next two years. The challenge for the development community is to make this anticipated investment have greater impact on our efforts to achieve the Millennium Development Goals.

In 2010 – for the first time – developing economies absorbed close to half of global FDI inflows. They also generated record levels of FDI outflows, much of it directed to other countries in the South. This further demonstrates the growing importance of developing economies to the world economy, and of South-South cooperation and investment for sustainable development.

Increasingly, transnational corporations are engaging with developing and transition economies through a broadening array of production and investment models, such as contract manufacturing and farming, service outsourcing, franchising and licensing. These relatively new phenomena present opportunities for developing and transition economies to deepen their integration into the rapidly evolving global economy, to strengthen the potential of their home-grown productive capacity, and to improve their international competitiveness.

Unlocking the full potential of these new developments will depend on wise policymaking and institution building by governments and international organizations. Entrepreneurs and businesses in developing and transition economies need frameworks in which they can benefit fully from integrated international production and trade. I commend this report, with its wealth of research and analysis, to policymakers and businesses pursuing development success in a fast-changing world.

BAN Ki-moon
Secretary-General of the United Nations

Wharton Globalization TrendLab 2011: "Global Risk: New Perspectives and Opportunities"

Globalization TrendLab 2011: "Global Risk: New Perspectives and Opportunities, (PDF, 42 pages)" April 7-8, 2011.

From the Lauder Institute website Conference page

Page 37 and 38 have a list of the more than 30 scholars and policymakers from around the world who gathered in Philadelphia for a two-day conference.

Executive Summary

The financial and economic crisis has heightened everyone’s awareness of systemic risk. Confidence in the ability of decision-makers, policymakers and institutions to handle such risks has been shattered. Psychology, a culture of destructive self-interest, and social processes have also been invoked as part of a complex set of conditions that led to the debacle. In turn, the crisis has accelerated some prevailing demographic, economic, and social trends, including population aging, political tensions, geopolitical instability and environmental degradation, as the focus of attention has unavoidably shifted towards short-term, immediate concerns. The crisis has placed the issue of systemic risk at the top of the global agenda, forcing analysts and policymakers to make a stark distinction between what is important and what is actually urgent.

In this white paper we provide an overview of the causes, consequences, and potential solutions to the problem of risk, focusing on economic and financial aspects, while also paying attention to political, social and environmental risks associated with the crisis and its aftermath. The analysis represents the outcome of a collective, multi-disciplinary effort at understanding risk by a group of more than 30 scholars and policymakers from around the world who gathered in Philadelphia for a two-day conference.

The analysis begins with the conventional explanations of the crisis, further adding political considerations, institutional constraints, psychology, and social processes. This prepares the stage for the assessment of the effectiveness of policy interventions during the crisis which, while averting a massive meltdown, generated a number of additional problems, both short-term and long-term. Failures in global governance and in understanding complex ripple effects are also explored. Risks building up in emerging economies—from financial to political and demographic—are presented as a stark reminder that global instability is punctuated by a growing number of troubled hot spots.

The conference participants identified four action items. First, global governance needs to be enhanced, a task that is not easy as a changing of the guard takes place due to the ascendancy of the emerging economies. Second, regulation must both set parameters for self-regulation and establish a set of cushions, bells and whistles to ameliorate the possibility of further systemic crises. Third, policymakers and scholars ought to adopt a more humble attitude in terms of the extent to which they are able to understand and overcome the complexities posed by crises. And fourth, as people adopt shorter time horizons due to incentives, demographics, politics, and cognitive biases, it is important to remain on the alert for the weaknesses and faults in the global economic, political, and social architecture.

Professor Gayle Allard (IE Business School) - Will the US Congress react in time?

Post of IE Economy Blog, 21 July, 2011.

As the deadline approaches for the US Congress to either raise the debt ceiling or enter into technical default on the huge US public debt, what appears to characterize the debate is a lack of concern for what will happen if the deadline is missed.

Republicans, determined not to raise taxes, refuse to approve any compromise that would violate that objective. Democrats, reluctant to make deep reforms to social programs, want most adjustments to happen on the revenues side. The deadlock has held firm even under the time pressure of looming nonpayment on the debt.

Professor Javier Carrillo (IE Business School) ¿Cómo hemos llegado hasta aquí?

El 19 Julio 2011 por Javier Carrillo

Professor Joseph Stiglitz (Columbia U.) - Europe's Travails and Our Collective Fate - NYT

Article of The New York Times, July 19, 2011.

ATHENS — An emergency meeting of European leaders in Brussels on Thursday to discuss another Greek bailout will decide the future of the euro. If they do what they have done so often since the crisis first began in Greece some 18 months ago, they will simply have kicked the can down the road. Contagion is almost inevitable. A problem that began in the periphery has now moved to the center, and while Spain and Italy have been the most shaken, other nations will almost surely be affected in coming months.

What needs to be done is by now well-known: Issue European bonds, using the collective borrowing power of the European Union, and pass the low interest rates onto the countries in need, combined with a growth strategy that will engender needed revenues...

Kenan-Flager debate the US debt crisis - July 25, with Charlie Rose

www.kenaninstitute.unc.edu/DebtCrisis

Professor Aswath Damodaran (Stern) - Default and Bankruptcy: Black, white and shades of grey

Post of his blog Musing on Markets, July 14,  2011.

The talk of default is all around us, as we watch Greece and Italy struggle with impending disaster and the fight over debt limits in the United States fills the airwaves. But what is default? What are the consequences? And given a choice, when is default the best option?...

Professor Nouriel Roubini (Stern) - The Eurozone’s Last Stand

2011-07-18 Project Syndicate

...The answer is to emulate the response to sovereign-debt crises in Uruguay, Pakistan, Ukraine, and many other emerging-market economies, where orderly exchange of old debt for new debt had three features: an identical face value (so-called “par” bonds); a long maturity (20-30 years); and interest set well below the currently unsustainable market rates – and close to or below the original coupon...

...To revive growth, the ECB needs to stop raising interest rates and reverse course. The eurozone should also pursue a policy – partially via looser monetary policy – that weakens the value of the euro significantly and restores the periphery’s competitiveness. And Germany should delay its austerity plan, as the last thing that the eurozone needs is a massive fiscal drag...

"From 'Eco-luxury' to 'E-luxury': Redefining the Concept of Luxury after the Crisis" - Maria Eugenia Girón

June 01, 2011, Universia Knowledge@Wharton

To explain how things work inside the most exclusive, high-end consumer market, Universia Knowledge@Wharton interviewed Maria Eugenia Girón, a professor at the IE Business School and author of The Secrets of Luxury. Girón also manages the investment firm Megam Capital, which specializes in the high-end sector, and provides companies with advice about strategic planning and brand-building. 

Universia Knowledge@Wharton: What is eco-luxury, and what impact does it have on the development of a sustainable high-end market?

Girón: Eco-luxury is the favorite term for describing the initiatives that luxury brands are taking in order to integrate the value of sustainability into their business strategies. This term includes many different kinds of initiatives. Tiffany & Co. has eliminated coral from its line-up of products because it cannot be harvested in a sustainable way. Zegna and Loro Piana have repopulated the vicunas of the [Peruvian] Andes, which were on their way to extinction...

...Today’s consumers are interested in knowing where the products they consume are coming from, and understanding the impact of their design, production and development on the environment and on people. For reasons of health, as in the case of foods or cosmetics, or because of [greater] sensitivity to the problem of environmental deterioration, consumers today identify the “best” products as those integrate those values...

Dean Glenn Hubbard (Columbia) - "Forget the debt ceiling and focus on debt"

Article of the Financial Times, May 26 2011

On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furore. While budget debates are often more talk than action, this one needs more talk – but of a different kind...

Dean Roger L. Martin of Rotman (Toronto) - "Reducing the risk" - Ottawa Citizen + his new book "Fixing the game.."

June 1, 2011, Ottawa Citizen

In the wake of the spectacular 2008 financial markets crash, much has been made of the fact that no one has been held to account. Life has returned to near normal, and other than the failures of Lehman Brothers and Bear Stearns, little has changed in reaction to the mortgage meltdown...

...author of Fixing the Game: Bubbles, Crashes and What Capitalism Can Learn from the NFL, recently published (May 3, 2011) by Harvard Business Review Press.

Reuters, article on the book, May 12, 2011

(YouTube) Big Idea Series @Rotman: Fixing the Game

Michael Lewis discusses The Big Short: Inside the Doomsday Machine, at Haas School of Business

Haas Video Room  (the book was recommended for understanding the crisis (one of two), what a layman should read, by Mervyn King the Governor of the Bank of England)

Author Michael Lewis discusses his book The Big Short: Inside the Doomsday Machine, the future of finance as he sees it, and his thoughts on whether today’s business students have a chance at changing it. (Running Time: 01:09:55)

Warren Buffet receives Medal of Freedom + his interview with Financial Crisis Inquiry Committee

Buffet gets Medal of Freedom, Omaha.com, February 15, 2011.

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Warren Buffett Speaks Out About the Financial Crisis, The Motley Fool, February 14, 2011.

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Latest Berkshire Hathaway 13-F, February 15, 2011.

Book: "Fault Lines", Business Book of the Year 2010, Financial Times.

RAJHURAM G. Rajan, "Fault Lines, How Hidden Fractures Still Threaten the World Economy", Princeton University Press, 2010.

CHAPTER ONE: Let Them Eat Credit 21
CHAPTER TWO: Exporting to Grow 46

...

Raghuram Rajan is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. (Profile on Booth blog)

The Economist, "Economics' most influential people", February 1st 2011

...which economists have the most important ideas in a post-crisis world?...the leader here was Raghuram Rajan...

FT video Link

Oct 28 2010  One of the few economists to see the financial crisis coming has won the Financial Times and Goldman Sachs Business Book of the Year award.

Dean Garth Saloner of Stanford GSB emphasises the need to introduce change in the global management education system - India Times

India Times, Posted January 18, 2011 (Times Ascent, career & business).

1) How prepared are business schools today for unprecedented circumstances like the economic downturn? 
The financial crisis was an inflection point in the evolution of management education. Not only has MBA education matured over the past 30 years, but also the crisis provoked important questions about how management education should be taught. It is clear that future leaders will deal with incredible complexity: the globalisation of economies, sophisticated financial markets, greater sensitivity to environmental issues, increasing cultural diversity, etc.

2) Which are the areas in the global education system that need immediate attention?
The key challenge is to educate students to be innovative problem-solvers who understand the impact of their actions on the broader society, including employees, customers, investors, partners and the surrounding community. We cannot provide crystal ball solutions to tomorrow’s problems because we cannot foresee all of them. But we can give students the knowledge and leadership frameworks through which they can carefully examine and address new problems as they arise – and, even better, to head them off. New leaders will also have to understand the context for global business. To this end, we require a global experience for graduation. This can be fulfilled in a variety of ways - including by a study trip, service learning trip or internship in a country the student has not lived or worked in before.

3) How can academic experts introduce innovation and advancement in educational courses in order to groom students to be well-rounded professionals?...

Dean of the Darden School of Buiness (Virginia) - What 1907 Can Teach Us About 2007 + interview on American Entrepreneur Radio

http://bigthink.com/ideas/24910

The panic of 1907 can tell us a lot about the crisis of the sub-prime crisis of 2007-2009. Both were fundamentally psychological phenomena—driven by fear and greed, rather than rational decision-making...

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The American Entrepreneur Radio podcast, September 1, 2010.

The Noblest Profession on Earth - Santiago Iniguez de Onzono, Dean IE Business School

Management can be one of the noblest professions in the world. It creates growth, wealth and development in society, provides jobs, fosters innovation and improves living conditions. Good management is one of the best antidotes to most of the world’s illnesses since it promotes convergence and understanding among civilisations. In times of crisis what is needed is more entrepreneurs and better management. At the same time, the current circumstances provide the arena where true leadership is tested and where managers can identify new opportunities or reinvent their existing businesses: it is time for the survival of the fittest, in Darwinian terms, or for the birth of new species that better adapt to this new environment. Times of crisis provide the breeding ground for entrepreneurs and innovators and many major companies, like Google, were created in adverse circumstances.  

 Supposedly, every century brings a revolution and we are, more or less perceptibly, living ours: a major societal shift, where the economic crisis, along with other factors like developments in technologies, the changes in the profile and values of young generations and the conflicting forces of globalisation and local diversity, are shaping a new model of society. In the midst of this forceful maelstrom, many managers feel uneasy and anxious. Again paraphrasing Dickens, the worst of times provides the best of times too.

George Soros: Open Society, the Financial Crisis, and the Way Ahead - Central European University

The Lecture Series Open Society Institute chairman and founder George Soros shares his latest thinking on economics and politics in a five-part lecture series recorded at Central European University, October 26-30, 2009. The lectures are the culmination of a lifetime of practical and philosophical reflection. Soros discusses his general theory of reflexivity and its application to  financial markets, providing insights into the recent financial crisis. The third and fourth lectures examine the concept of open society, which has guided Soros’s global philanthropy, as well as the potential for conflict between capitalism and open society. The closing lecture focuses on the way ahead, examining the increasingly important economic and political role that China will play in the future.

Warren Buffett & Bill Gates at Columbia School of Business

This is the unofficial transcript of the CNBC Town Hall event Warren Buffett and Bill Gates: Keeping America Great, taped Thursday, November 12, 2009 at Columbia University in New York City. The transcript is also available for downloading PDF. 

The Economist : Deans debate: Santiago Iniguez & Paul Danos

 

Click here for the interview in The Economist, December 1, 2009.

 

How do business schools remain relevant in today’s changing world?

 AS THE clamour grows for more regulation to address the corporate failings that led the world into a two-year recession, business schools sense a chance to drive the agenda. By producing academic research that can inform the debates within Washington and Brussels, there is a chance to become relevant once again. But business is also changing its mind about it wants from MBA students. The super-confident, gung-ho leader, that was once their calling card, has fallen out of fashion. So can schools adapt to a changing world?

To find out, The Economist spoke to two prominent business deans from either side of the Atlantic: Santiago Iñiguez de Ozoño, dean of Spain’s IE Business school, and Paul Danos, dean of Dartmouth College’s Tuck School of Business in America.

 

 

Has the role of the business school changed as a result of the economic crisis? 

 

BBC World Service Podcast: Role of business schools in crisis. 25 mins

Click here for the page which hosts the podcast. September 13, 2009

What role did the business schools play in last year's financial crisis? In this week's edition of Assignment, Ed Butler investigates whether, as the chair of Harvard's MBA programme insists, the schools were guilty only of teaching a deficient assessment of risk in the business world, or whether there had been a more fundamental fault. Some inside the system tell Assignment that there had been a growing disconnect between the schools and society, with insufficient attention being paid to the ethics of the business world, and the sole focus of the programmes being on maximising shareholder value and personal enrichment.

The changing role of business schools in a global world . INSEAD Knowledge

Click here for the article of INSEAD "The changing role of business schools in a global world"

Globalisation is changing the way businesses operate and, in turn, is forcing business educators to evaluate the insights they’re imparting to MBA students and executives. Furthermore, the global recession has led to a re-think of the role of business schools in a global world, raising the curtain on a slew of new issues which need to be addressed.

“The crisis has created an opportunity to re-think the content of traditional MBA programmes,” says Julie Battilana (PhD 2006), Associate Professor of Business Administration at Harvard Business School. “And it’s highlighted the limits of financial logic that’s been dominating us for the last 10 years.”

Digital economy can lift Europe out of crisis, says Commission report today

Digital economy can lift Europe out of crisis, says Commission report, 4 August 2009

(04/08/2009) The European Commission's Digital Competitiveness report published today shows that Europe's digital sector has made strong progress since 2005: 56% of Europeans now regularly use the internet, 80% of them via a high-speed connection (compared to only one third in 2004), making Europe the world leader in broadband internet. Europe is the world's first truly mobile continent with more mobile subscribers than citizens (a take up rate of 119%). Europe can advance even further as a generation of "digitally savvy" young Europeans becomes a strong market driver for growth and innovation. Building on the potential of the digital economy is essential for Europe's sustainable recovery from the economic crisis. Today the Commission has asked the public what future strategy the EU should adopt to make the digital economy run at full speed.

• Full press release

educationtoday - OECD’s education lighthouse for the way out of the crisis

educationtoday
 
Bookmark this page:  www.oecd.org/edu/lighthouse 

We welcome you to register to join this collaborative space and help chart the way for the education sector to navigate through the current crisis and shape the post-crisis economy and society.

OECD’s education lighthouse offers you:

• Up-to-the-minute information, evidence and analysis on the impact of the crisis on education, with concrete examples of how governments and institutions in different countries are coping with the crisis.
• Information on high priority issues such as education budgets, education in stimulus packages, how unemployment affects motivation and learning attitudes … and much more.
• An opportunity for you to contribute to this information sharing platform with other members of the fast-growing OECD social network.

Register now by following these instructions

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2....

The HBR debate - How To Fix Business Schools - Jay O. Light is the Dean of Harvard Business School

Jay O. Light is the Dean of Harvard Business School

This following post is taken from the "How To Fix Business Schools" blog.

want to thank everyone who has contributed to this thoughtful and vigorous discussion in the finest traditions of the Harvard Business Review. The forum succeeded as promised in sparking an open and fresh dialogue among experts, practitioners, students and readers. It will undoubtedly influence thinking here at Harvard Business School and among all those who participated. I hope it will also be a precursor to many other forums of this type on pressing business and economic issues of our time.

As many contributors have noted, this has been a period of reflection and considerable introspection for business schools. Over the past two years, as we planned and then marked our Centennial in 2008, HBS considered important questions about the future of market capitalism and the future of management education. We never imagined they would come together in such dramatic fashion as we witnessed the financial crisis, a global recession as deep and painful as any since the early decades of the last century, with fundamental questions about the role and responsibility of business schools in the mix.

I recognize merits of both sides of the debate over the extent of business schools' culpability. Ultimately I share the view of Steve Kerr, Andrew Likierman and my colleague Carl Kester: business schools must share some of the blame, but there is plenty to go around. Yes, there are lessons to be learned and things we have to do differently. As I have argued before, there were imbalances both on campuses and in the economy during an extended period of growth, where people became less focused on systemic risks and more focused on the upside and on making money. I agree that we need to move that focus back toward the center.

But to suggest that business schools and the MBA are the root cause of the global financial crisis is simplistic nonsense that ignores the obvious reality of the many complex and interrelated factors that underlie the problem.

This debate, and others like it that have played out in the media and on campuses around the world, helps to illustrate the wide range of challenges and opportunities at hand for business schools. To truly make the most of the reflection we must move from dialogue to action. At HBS, we are making changes in the way we teach risk management (without stifling the focus on innovation and entrepreneurialism), reconsidering the oversight responsibilities of directors, and revisiting the kinds of incentives provided by executive compensation packages. We will respond to the expanding interests of our students who are planning careers not only in traditional business settings, but in healthcare and science-based enterprises as well as non-profit and other social enterprises. And as we have seen all too clearly in the past year, we will need to equip our graduates to operate at the increasingly connected interface of business and government on a global basis.

I believe that business schools can and will be part of the solution. We will need to adapt to meet new economic realities and the wide-ranging ambitions of our students. But we should also recognize that the core of our teaching here at HBS will be more important than ever before. We will help students see the big picture and anticipate the impact of their decisions as well as offer them a deeper understanding of the financial crisis through the daily classroom interactions that are the signature of the case method - with an emphasis on framing the issues and asking the right questions as opposed to simply giving the right answer. We will continue to do research that is close to practice to get to the heart of what caused the crisis. And we will recommit ourselves to teaching the principles of sound judgment, values and ethics, and leadership.

I am grateful for the positive discussion that has emerged from this forum; energized by the evident passion for leadership education; and committed, with you, to ensuring that business schools, and Harvard Business School in particular, play our role in shaping the future of management education to meet the needs of a new century.

B-Schools Rethink Curricula Amid Crisis - WSJ

Click here for the article of the Wall Street Journal, March 26, 2009

Faculty Emphasize Value of Skepticism; Building New Theories

The seismic shifts now remaking the financial world are sending tremors through the corridors of business schools.

The sectors at the heart of the crisis for years have been the most popular areas of study at many top B-schools, luring future M.B.A.s with the promise of high-paying careers. The schools are having to rethink their approaches to finance and investment banking, updating lesson plans on the fly while they overhaul curricula for the long term.

Adding to the pressure for change is a debate about whether business schools bear some responsibility for the crisis. Critics see an arrogance in the schools' culture, and accuse them of focusing too much on short-term gain and shareholder returns. They also cast blame on B-school researchers who helped design many of the models discredited by the financial meltdown.

 

Dean Robert Bruner of Darden - Growth is the only palatable way out of this economic crisis

As posted by Robert Bruner on his own blog March 22, 2009

buoy·an·cy \ˈbȯi-ən(t)-sē, noun1 a: the tendency of a body to float or to rise when submerged in a fluid …2: the ability to recover quickly from depression or discouragement: resilience; 3. the property of maintaining a satisfactorily high level (as of prices or economic activity)  -- Merriam-Webster Online Dictionary.

This is a dark hour for anyone who believes in the fundamental buoyancy of the private sector.  Demand is in free-fall. Government officials have arrived saying, “I’m here to help.”  In the ensuing melee, a lot of money is getting handed around, executive compensation slashed, employees laid off, debt paid off, and everyone is obsessing about costs.  Such is all well and good, and may get us through this phase of the global economic crisis.  But as usual, the conventional thinking is short-sighted and ignores a very important perspective: the top line (revenues) of a company’s profit and loss statement and what firms must do to induce customers to do business with them.  Growth is the only palatable way out of this economic crisis.  Who has a vision for growth?  Who will speak up for the art of doing new business?  Almost no one.   The following graph gives the count of articles by year that feature either the phrase, “business growth,” or “revenue growth.”  If 2009 goes the way of its first three months, our national conversation about growth will turn to a hoarse whisper.

Of course, we shouldn’t blame the media, for growth is yesterday’s news.  The story today is all about the contraction—we are having a whopper of a sales-based contraction.  But top-line growth is the much more common attribute of the U.S. economy than is contraction.  Thus, even here at the depths of a recession, business practitioners (and even government officials) should study the attributes of growing companies and markets—and especially the attributes of those leaders who take enterprises through exceptional periods of growth....(click above link for the full article)

Paul Danos yesterday on "Great Debate" of Reuters - A middle ground in the banking crisis

Click here for the article of Paul Danos on Reuters, March 11, 2009

"Paul Danos is the dean of the Tuck School of Business at Dartmouth College. The views expressed are his own" (Reuters Great Debate)

A major question in the government response to the banking crisis is choosing between the “evils” of nationalization of banks that would however provide stability, versus the “benefits” of saving of the private banks that would innovate and compete in a market system.

As the dean of the Tuck School of Business I’m privileged to speak with a wide range of economists, bankers, Wall Street executives and our own students, and what I’m interested in is finding an answer somewhere in the middle ground:

* First decide what major businesses absolutely need in banking services and then set up a ‘facility’ to assure that that those prime banking services will be available. This facility would initially be owned by the government but with an explicit goal of going to full private ownership as soon as feasible.

* Make that facility a separate legal entity from private banks.

* Let the private banks operate these “franchised” facility under close scrutiny.

* Have a process by which the private banks ultimately benefit from the operations of the ‘facility’ by having them acquire an increasing ownership in them.

* Though managed by private banks after absorption, the facilities would remain legally separate.

The trick is to be able to absorb the facility into the private banks after the crisis and not along the way destroy the private banking system as we know it, which means that the private banks must seen as benefiting from the scheme. To the extent that the facility does well, the banks would benefit in that they would have the ultimate ownership; and if the facility does poorly the government would have to absorb the losses, at least in the initial stages.

If the government did set up an initial $200 billion facility it could then be leveraged to say $2 trillion in loans. The “good” facility would be available to all companies for a limited list of transactions for the duration of the crisis, with say a minimum of five years. We could then let the markets settle the bad assets issues in the private banks. Some would fail and some would survive.

After the absorption of the facility the resulting private banks would have two parts, one highly regulated that would provide on-going assurances to the business community, and one relatively unregulated that would allow innovation and society would glean whatever benefits we are supposed to get from that kind of activity.

The government would over time get compensated by the investments made by the payment for the ownership of the facilities.

Ignacio de la Vega, Professor Entrepreneurship (IE Business School) Innovation ‘Out of Necessity’: Entrepreneurship - GEM report 43 countries

Click here for the article of Universia Knowledge Wharton, February 11, 2009

During a recession with fast growing unemployment, looking for ways to incentivize entrepreneurial activity and enhance corporate liquidity has become a strategic focal point for Spanish companies. Ignacio de la Vega, director of the IE Business School’s Center for Entrepreneurial Management and president of the Global Entrepreneurship Monitor (GEM), which analyzes entrepreneurial conditions in 43 countries, spoke with Universia-Knowledge@Wharton about the current economic crisis and its impact on  entrepreneurship. The GEM 2008 Global Report (2.7MB), which was recently released, is sponsored by the Ministry of Industry’s small and midsize business division and the Banesto Foundation for Society and Technology.

UK@W: Experts talk a lot about innovation and exports as two good tools for getting around the crisis. Do you believe that the right policies for addressing those subjects are getting off the ground today?

I.D.V: Innovation is not just about developing innovative R&D in technology. That is just one sort of innovation that is possible for a very specific sort of company. Many small companies don’t fit in that category. The sort of innovation within reach of small companies often involves some technology but, especially, it involves an innovative business model. For example,

Aswath Damodaran, Prof of Finance Stern (NYU) on the crisis

Aswath Damodaran's blog

Stern faculty page

Wikipedia profile

Professor Damodaran holds M.B.A. and Ph.D. degrees from the University of California, Los Angeles, as well as a B.Com. in Accounting from Madras University and a M.S. in Management from the Indian Institute of Management Bangalore.

Prior to joining NYU, he served as visiting lecturer at the University of California, Berkeley from 1984 to 1986. He was profiled in Business Week as one of the top 12 U.S. business school professors; he has also received awards for excellence in teaching from both universities.

He has written several books on equity valuation, as well on corporate finance, and is widely quoted on the subject of valuation.

Corporate Finance - post crisis, January 18, 2009

I just finished teaching my first corporate finance class in the post-crisis period (to an executive MBA class). Having taught this class for close to 25 years now, I was wondering how I would bring in the events of the last few months into the sessions and be able to draw out the implications for businesses. I must confess that it was a lot less trying than I thought it would be.

In broad terms, these are the corporate finance implications that I see for the near future and the long term:
a. In investment analysis: I see a shift away from expected value and base case valuations that have dominated financial analysis for the last few decades to more probabilistic approaches. Since both the data and the tools (Crystal Ball, @Risk etc.) are accessible and available now to most of us, I think this shift is long overdue.

b. In risk and hurdle rates: For the near term, I see a move towards higher risk premiums for both equity and debt...

The Crisis of 2008: Lessons learned, unlearned and reinforced, December 31st, 2008.

The one thing I can say about 2008 was this it was not boring. I know that there will be a flood of books coming out over the next few months telling us what happened, why it happened and most important of all, who to blame. I don't think that they will tell us much that we don't know already.  I have a different book in mind and this is what I want to do. I want to look inward and ask myself what I have learned from these last few weeks that I can incorporate into my "view of the world" looking forward. I The market collapse and investor reaction has been a humbling experience and has revealed how much I do not know or fully understand about finance.  Here is my initial list:

Things that I know now that I did not know on September 12....

1. Nominal interest rates can become negative.
2. There is no riskfree asset.
3. Equity risk premiums can change dramatically even in mature markets.

 

Things that I thought I knew on September 12, that I am not so sure about now...

1. Large companies in developed markets can always raise new capital.
2. Bank runs are things of the past, with the regulatory oversight, accounting rules (mark to market) and risk management tools that we have today.
3. Value investing (investing in low PE , high dividend yield and low PBV stocks) is less risky than growth investing.
4. Dividends are sticky.
5. Diversification across asset classes provides protection.

Things that I kind of knew on September 12 that have been reinforced since....

1. Debt is a double edged sword. (The costs and likelihood of distress can be much higher than I thought...)
2. A large cash balance is not just a wasting asset but protection against danger.
3. The line between hedging and speculation is a very fine one... and easy to cross...
4. Main Street and Wall Street are co-dependent. One cannot be healthy, if the other is not.
5. We are in a global economy.
6. Ignore illiquidity at your own peril.... Its cost can vary across time and across markets
7. Risk is not just a number.
8. Stocks don't always win in the long term.
9. Smart money is not that smart!!! 
10. Even great investors make mistakes! 

In fact, I have been collecting ammunition for each of these points, by scouring news stories from the the last three months. Sometime over the next year, I will sit down and start putting it down on paper. All I need is a good title!

Hardwired to deceive, December 23, 2008

As the Madoff story runs its course and investors express surprise and shock that they were taken to the cleaners, it may be worth noting that research in the social sciences suggests that this may be par for the course, given our genetic make-up. Here is the evidence:

3. We do feel guilty when we lie, but that does not stop us from lying again: The same study that uncovered the fact that students lie two times a day, on average, also found that while they felt guilt at doing it, the fact that they were able to get away with it reinforced the behavior. Put another way, if you get away with lying once, you will will try it again...

Bottom line for investing: All the ethics classes in the world and forcing everyone to attend religious services every week won't stop the next big fraud or even reduce its likelihood.

FT podcast - Paul Danos, dean of the Tuck School of Business, on levarage in a downturn

• Paul Danos, dean of the Tuck School of Business at Dartmouth College, talks about how companies need to adjust their attitude towards leverage