The New Year has started with a bang for the media industry. Sony Pictures Entertainment found itself hacked in November and decided to release its controversial new movie, The Interview, online instead. Wearable digital devices and the Internet of Things continue to change the playing field, driving an urgent need for reinvention in jobs and business models as technology requires new skill sets - a sea change shift from bricks to brain. Meanwhile, we are seeing a rise in nationalism that is driving a focus on local contents and concerns. Pundits predict these will be the hallmarks not just of 2015, but of the decade to come.

Media and entertainment executives operating in this climate are facing some big challenges ahead. To top it off, "apart from the fact that the business has changed and is continuing to change dramatically, this change is accelerating," said Frank A. Bennack, Jr., the former CEO of Hearst Corporation, during one of his annual visits to IESE.

"You remember when people used to say to you, ‘That’s going to take years? It’s not happening today, because the pace of change is so rapid. So what does this mean from a strategic point of view? What does this mean for what you have to do as someone employed to change the strategy of your company?"

It’s a good question, and one that confronts the media and entertainment industry now more than ever. Businesses are finding it harder and harder to squeeze their costs any more, while consumers do not seem willing to pay any more for things they have come to expect to get for free.

Different Industries, Same Storm

"Traditional media businesses are dying," says IESE’s Mike Rosenberg, academic director of the Advanced Management Program in Media and Entertainment (Media AMP), "and the new ones aren’t making the money necessary to sustain themselves."

Though the media and entertainment industry represents a diverse range of businesses - from news networks and publishers to movie studios and Broadway producers - they all face similar problems.

Consumer behavior is changing, as Rosenberg explains. Take the classic example of the music business. Consumers don’t buy music per se; they buy devices on which to download and listen to music. This changes the entire way that the business relates to the consumer: their strategy, their operations, their marketing, their financial base. Should music companies, for instance, be moving into device making?

Legacy Models Keeping Things Afloat - for Now

While the jury is still out, legacy models, rather than new sources of revenue, are keeping the industry afloat, says Rosenberg. Television networks in the United States still rely on cable fees for buoyancy. Advertisers continue to fund traditional media, only because they are short of viable alternatives to reach the public - and this, he says, in spite of flat or falling audience figures.

"Cinema attendance is at an all-time low. And the quality press, which has relied on its reputation to fend off online competition, is now seeing the impact of falling revenue affect its ability to produce that same quality content. The reality is that change is happening so fast that no one knows how the future will resolve over the next five to 10 years."

One means of surviving these "times of turmoil and change" is to equip media executives with the business fundamentals to negotiate the waves of change.

Fundamental Business Tools to Navigate the Storm

"What we see on the Media AMP program in New York and Los Angeles is that, in many instances, C-suite media executives come from specialist backgrounds: they’re producers, editors, directors or content creators who now find themselves in the position of running their companies."

"We aim to help these leaders get their heads around the challenges facing their industries. We take their specialism and provide the business fundamentals to round it out into fuller, more constructive leadership."

"Participants come together from different segments of the industry and regions of the world, each experiencing different facets of this transformation, with a rich variety of perspectives to share. As such, the program opens a window on strategy, operations, marketing, finance and other essential general management functions, and reveals how these are playing out globally in each of their respective fields."

In addition to the professional peer-level interactions, participants benefit from Leadership Forums - a series of conversations with top movers and shakers from the media and entertainment industry who offer the inside track on the issues everyone is facing.

Media AMP sessions begin on IESE’s New York campus in February 2015.

"Change is always difficult," says Rosenberg, "but having the tools to navigate in new terrain can turn turmoil into opportunity."

In Humanistic Perspectives on International Business and Management, IESE professors Carlos Rodríguez-Lluesma and Marta Elvira together with Anabella Dávila, look at how business leaders and stakeholders can flourish by learning about each other's values.

In their chapter on humanistic leadership, the co-authors define humanistic management as people-centered and working to protect human dignity. Amid increasing levels of globalization, they argue, today's humanistic leaders must be global citizens, engaged with local and international concerns.

Why Humanistic Leadership?

Humanistic leadership aims to reach a common good that benefits all.

If humanistic leaders see themselves as global citizens bound to their stakeholders by the more imperative of respecting one another as fellow human beings, say the co-authors, they treat people as an end rather than a means.

In other words, they negotiate with stakeholders, without commoditizing them, to reach a common good.

Connecting Global and Local

In today's context of transnationalization and globalization there is no simple relationship between the local and the global. Naturally, this has implications for management.

Cosmopolitanism implies dialogue between cultures that questions economic and cultural assumptions and requires openness to "the other." But what does this really entail? How are differences in cultures and norms managed?

This is where "value generalization" comes in.

Value generalization aims to understand shared characteristics without negating specific cultural experiences or traditions. The co-authors quote the words of Mexican film director, Guillermo del Toro: "we need roots, but not borders."

Global Citizens and Stakeholders

Humanistic leaders serve as a bridge across cultures, say the co-authors, by opening up a dialogue of mutual learning between themselves and their local stakeholders.

Both through rehearsing their responses to situations in which their values are challenged and through actual conversations, leaders can redefine what matters in business.

"We propose humanism in leadership as a learning lens that allows global leaders and local stakeholders to enhance mutual growth by understanding each other's values," the co-authors conclude.

More information in IESE Insight

Back when John Antioco, CEO of the video club Blockbuster, had the opportunity to acquire Netflix, he turned down the offer. Today, not a trace remains of Blockbuster, whereas Netflix’s market valuation is more than $20 billion.

Examples like this underscore the importance of senior managers’ decisions. There can be no understating the potential impact of the decisions and actions of senior management on a company’s performance. However, we still know comparatively little about how to strengthen their contributions.

To single out the CEO’s main priorities, Rafael Andreu, professor of Information Systems and Strategic Management at IESE, and Joan E. Ricart, director of the Strategic Management Department at IESE and holder of the Carl Schroeder Chair of Strategic Management, conducted hundreds of interviews with senior executives. Their article "The Genuine Responsibilities of the CEO" identifies four main priorities for general management, corresponding with four primary tasks.

These key areas include: focusing on the future; developing the business model; supporting the personal growth of members of the organization; and guaranteeing the consistency and fulfillment of the institutional strategy, which encompasses the company’s organizational principles, values and operational philosophy.

The authors stress that executives must understand and manage all these aspects as an inseparable whole of interdependent, highly dynamic elements.

They also emphasize that CEOs need to be disciplined in their decision-making, innovative in their work and responsible for their people. Ethics must be understood as an integral part of managerial duty and not as a last-minute add-on, as so many companies do with their corporate social responsibility programs.

Members of the Alumni Association and subscribers to IESE Insight-- a quarterly research-based magazine, published in separate English and Spanish editions -- can read this and other articles using their membership credentials.

Those who are neither Alumni nor subscribers can access the premium content either by subscribing to the magazine or buying the article here.

Preview the article "The Genuine Responsibilities of the CEO."

Africa’s 56 countries are home to 100 million people. But it’s probably the continent that business executives know least about.

And yet estimates suggest that more than one million new African business managers will be needed over the next decade to match the project growth facing the continent.

Within this context, more than 30 IESE MBA students have chosen to take a close look at the business, social and cultural worlds in the heart of Africa via an intensive module in Nairobi, Kenya, that will continue until January 23.

Hands-on Experience

"Doing business in Africa is a real challenge, but it’s also very satisfying," says Russian student Rouzanna Yesayan, who enjoyed "the sessions with business people from various industries as well as living with the local population. It’s very enriching and gives us a better understanding of potential African clients."

During the first week of the module, participants take two courses at Strathmore Business School: "Doing business in Africa" and "Social innovation and Entrepreneurial Initiative". Sessions focus on African business case studies, which are debated by students and faculty.

During the second week, the students form smaller groups to work on a consultancy project with local business leaders. The module includes networking forums and company visits, among other activities.

Structured as a multidisciplinary experience, enriched by a broad diversity of professors and local leaders, the program aims to give a real picture of African business people and personalities from various fields.

Potential for Growth

"Africa is the continent that’s always been seen as at the back of the line of economic development" says IESE Prof. Alejandro Lago, who leads the course "Doing business in Africa." "But it has significant potential for growth. The knowledge and experience acquired there are, by their very scarcity, of great value in an executive’s curriculum."

German student, Raphael Thelen, agrees and says he has traveled to Nairobi in search of "something you don’t find in books: A better understanding of the commercial dynamic at the base of the pyramid".

IESE Prof. Carlos García-Pont says that the course gives students "the opportunity to analyze how to develop a sustainable value chain in an emerging country and is also an opportunity to discuss what we mean by a successful social business."

“Society needs more leaders dedicated to public service and thinking about future generations. We have too many politicians who have locked themselves into short-term thinking and only worry about winning elections.”

“Politics is about serving citizens, and we should recover that essence. That’s the only way politics is going to regain its legitimacy.”

These were amongst the messages shared by Steve Jarding at the fifth IESE Communication, Leadership and Campaign Management Program, celebrated in Madrid in January.

Lecturer in Public Policy at Harvard Kennedy School of Government, Jarding is a leading voice in international political strategy and electoral campaigns.

Jarding lamented the growing skepticism and lack of confidence in the political class felt across many Western democracies; something he attributes to the fact that politicians have “forgotten the central tenet of public service.”

“Politicians should always have the well-being of the people who elected them front of mind. They should know how to represent citizens, impart justice and be conscious of the responsibility that their posts carry. Today I don’t believe that this is what they are doing, which is why people don’t trust politicians and no longer believe in government. And if citizens don’t support the government, then we have a big problem,” he warned.

Believing in Politics

The solution, says Jarding, is to train leaders who “believe in politics and are capable of turning the situation around.” Politics should not be focused on public servants, he stressed, but rather on the people it serves; especially those who “fall through the cracks.”

“Politicians should be leaders who use their position to try to improve the lives of others. They should be capable of promoting social change.”

Sounding a note of optimism about the future, Jarding said that he believes society can still deliver a road map to “return to legitimacy in politics.”

“The human being is powerful. If we join forces, we will see a return on our enormous investment. Great leaders share the idea that together we can change the world, and that’s where we should invest our efforts. Because despite the fragility of our democratic system, I firmly believe in it.”

Governments have enormous impact on societal change, but citizens should become the agents of that change, he said. “If citizens don’t get involved, it’s very difficult to change the system.”

The Communication, Leadership and Campaign Management Program took place at IESE Madrid earlier this month. Addressed to campaign managers, candidates and election officials, the program covered a broad spectrum of topics from strategic planning, budgeting, team and time management, through to political communication and the use of new technologies.

Opportunities in real estate are moving. As the US and Europe come to terms with the bursting of huge housing bubbles, property markets in Latin America, Africa and Asia are booming. The International Real Estate Focused Program for property firms, service providers and global investors will reveal the best practices to take advantage of these shifting trends.

It’s not about "location, location, location" anymore – it’s about "location, location … and timing," according to IESE professors Carles Vergara, Jaume Ribera, José Luis Suárez and Pedro Videla. They emphasize that it is crucial in the cyclical real estate market to fully understand and analyze opportunities in order to avoid bubbles and boost profitability.

Program participants will learn how to implement a complete, long-term real estate strategy. Over three days they will discover which macro and microeconomic factors to consider, how to manage projects and how to choose the right financial management tools to hedge risks.

The International Real Estate Focused Program will be held in Barcelona from February 3-5, 2015.

Click here to register or find out more.

The IESE MBA has cemented its international reputation by ranking among the world's top 10 in the Financial Times for the fifth consecutive year. The British newspaper placed IESE Business School seventh in the world and third in Europe in the ranking of MBA programs it published today.

Seven of the top 10 schools are American, while three are European. Number one is Harvard Business School, followed by London Business School and Wharton School of Business.

The FT ranking looks at the professional progress and wage increases of MBA program graduates in 2011. It also takes into consideration aspects such as international diversity and student satisfaction in terms of meeting expectations and fulfilling objectives while completing the MBA.

With regard to wage increases, the ranking shows that students graduating from IESE three years ago have increased their average wage by 121 percent compared to their previous salary, the highest increase among the Top 10 schools.

IESE also ranks first in the category of International Course Experience, which measures students’ off-campus educational experiences. Contributing factors in this category were the modules in Shanghai, New York, Nairobi and Brazil, as well as week-long visits to various Silicon Valley companies, and exchange programs with 30 schools in Europe, Asia, United States, Latin America and the Middle East.

The IESE MBA also stands out in the Aims Achieved category, which measures the extent to which alumni fulfilled the goals they had when starting the MBA, including career change, wage increase, international experience, education and professional development.

IESE's full-time MBA, which is celebrating its 50th anniversary, was launched in 1964 and was the first two-year MBA program offered in Europe.

From the beginning, the MBA has had an international focus and the guidance of the Harvard-IESE Committee. In 1980, it became the first bilingual MBA program in the world. There are currently 84 percent non-Spanish students enrolled and a total of 57 nationalities.

In addition to the full-time MBA, based in Barcelona, IESE also offers the Executive MBA in Barcelona, Madrid and São Paulo, and the Global Executive MBA in Barcelona and New York.

Review the full 2015 Financial Times MBA ranking

A company started fewer than five years ago in San Francisco in has put taxi drivers in half the world on the defensive. We’re talking about Uber, a company that connects passengers with the drivers of private vehicles through a mobile application.

The rise of Uber has led to conflict in the industry because it is seen as unfair competition. It has even been banned in some countries such as Spain, although the company says its application is legal and intends to go on offering its services.

This is an example of how new digital business models are shaking up traditional sectors of the economy. It was one of the cases discussed during the presentation of the Indra Chair of Digital Strategy in Madrid yesterday. The Chair has been established to help information technology expand from being a single, functional department in companies into an element that crosses the entire organizational structure.

Josep Valor, IESE professor of information systems and holder of the new Chair, was in no doubt that the digital revolution is “a tsunami that will reach all economic sectors, including those least linked to the technological environment.”

He believes that the increase in digital density around the world produced by “the rise of interactions, connections and information in the digital era” is capable of producing “new business models at almost zero cost”. This is a revolution that is radically changing the rules of the game for business.

At the opposite end of the spectrum is the story of the once emblematic Kodak, which was unable to adapt to the new digital paradigm. As a result, the company went bankrupt and its 135,000 employees lost their jobs.

New Strategies for New Realities

All aspects of society – including everyday actions such as visiting the doctor, shopping in the supermarket or delivering parcels – are succumbing to an inevitable digital transformation. That is why IESE dean Jordi Canals insisted on the need to develop new digital strategies “in order to guarantee that companies and future generations can advance.”

“The change is only just beginning because the process of digitization is going to double in the next few years,” said Indra CEO Javier de Andrés. He believes that countries that can develop technology create more value, wealth and employment than those that merely adopt it.

Andrés said he was convinced that one of the influencing factors that will grow fastest in future digital society is cyber security, with the development of “highly innovative processes that will allow us to cope with the challenges that come with the widespread adoption of new technologies.”

Knowledge as a Basis of Action

To begin with, the Indra Chair of Digital Strategy will focus its research on sectoral changes centered around two areas:

• how intelligent infrastructures will affect the business models of companies that provide services for them, and how this will affect the development of their activities
• the use of social networks as a source of big data so that companies can adapt their business model to 21st-century clients.

Later on, research will extend to encompass the following topics:

• digital transformation,
• mobility and 24/7 connectivity
• the transformation of the digital sector with the aim of creating a model for sectoral change
• relationships with clients and digital marketing

The crisis of 2008 is the "greatest disintegration of the world’s core financial system that has ever happened." And a crisis of similar magnitude is "almost certain to happen again."

This was the warning shared by Martin Wolf, Chief Economics Commentator at the Financial Times. Considered to be one of the world’s foremost economics journalists and writers, he joined an audience with Professor Pedro Videla at IESE this month, to discuss the findings of his book The Shifts and The Shocks: What We've Learned – and Still Have to Learn – From the Financial Crisis.

How Did We Get Into "This Mess?"

The 2008 meltdown took many economists, Wolf included, by surprise. And while he describes the magnitude of the crash as "in some ways unforeseeable," he criticized the "gross failure" of economic institutions that had previously dismissed this kind of crisis as inconceivable.

Citing the "comprehensive failure of the old, pre-crisis economic orthodoxy," Wolf argued that regulatory institutions and central banks had failed to understand the interconnection between macroeconomic forces and the financial system.

In his book Wolf talks about the probable causes or "shifts" that led to the crisis.

Globalization, he says, was the key factor.

"Globalization helped bring about global savings imbalances, had large effects on income distribution, drove the behaviour of companies in crucial ways, and changed where they invest. It also played a role in rising inequality, reinforced by technological change."

Wolf pointed to the Asian crisis of 1997-98, which had shifted the global balance of demand and supply of savings and investments, shrinking investment demand in many countries and leading to policies that generated huge excess savings in emerging economies.

"It is insane to run the world economic system on the assumption that it is desirable for poor countries with good investment opportunities to export capital to rich countries with bad investment opportunities," he said. "It should be the other way around, but rich countries are nervous about running large current account deficits."

Strong Response, Weak Recovery

Describing the monetary response to the crisis as "unlike anything ever seen in the history of the world economy," - with the effective interest rates of most major economies slashed to or near to zero percent - Wolf conceded that central banks had worked hard to re-inflate economies. The strategy had, however, so far failed to bear the necessary fruit: "Inflation should be exploding as a consequence, but it isn’t."

The US recovery, though slow, is real. But the picture in Europe is very different he said, with domestic demand remaining five percent below the pre-crisis peak, and a "very, very weak" recent upturn unlikely to reverse fortunes any time soon.

Good News for Spain …

Although he attributes the eurozone slump to mismanagement of the crisis on the part of the ECB, Wolf does concede that effective action has been taken to deal with the liquidity problem in public debt markets. The Outright Monetary Transaction system in August 2012 was, he said, a "decisive event" for Spain and Italy.

As a result, Wolf believes that Spain has justifiably become a source of (limited) optimism in the larger global economy.

… But Bad News for Europe?

The European recovery is likely to remain disappointing, said Wolf. The next four years, he believes, will see a catalog of debt write-offs with the Greek situation being a sort of "canary in the coalmine" in terms of public debt.

Wolf described the "chronic demand deficiency syndrome" facing Europe as difficult to resolve, with quantitative easing only practicable as a temporary solution. An increasing external surplus, he said, was not tenable without counterparties to facilitate it.

The worst prospect for Europe, said Wolf, was the "zero-sum game" of a persisting slump in which one country’s success would come at the expense of the rest.

"When things go wrong on this scale, somebody has to bear the losses."

Are We Sowing the Seeds of a Future Crisis?

The pursuit of monetary policy to compensate for weak demand growth by manipulating asset markets, says Wolf, could be creating serious new financial fragilities.

"I’m not convinced we’ve created the conditions for another crisis on this scale in the developed world – though I’m not confident we haven’t – but perhaps we will create a serious, though not catastrophic, one in the emerging world," he warned.

To head off future crises would require reform of the IMF leading to the creation of macroeconomic insurance and radical changes in banking. With a true leverage ratio of around 25:1 in major banks, he warned that the sector is now significantly more concentrated than before the crisis.

"Banks are still unambiguously too big to fail, and it is hard to stop them taking risks if they know they will always be bailed out."

In his FT column, Wolf has endorsed the idea of states being given complete control over money creation, as outlined in the 2012 IMF paper "The Chicago Plan Revisited." Under this system, banks would become mere account managers, restricted to lending only as much as they held in their reserves.

"The transition to a system in which money creation is separated from financial intermediation … would bring huge advantages," says Wolf. "It would end ‘too big to fail’ banking."

February marks a special stage for MBA students with the start of the elective course: The Project in Social Innovation and Social Entrepreneurship. The course gives students a chance to take a deep dive into a different sphere of business, where the aim is to improve the lives of the least fortunate.

The best way to learn how to set up and manage a social business is first-hand experience and advice from experts. So while the program is structured around sessions based on the case method and talks by invited speakers, some 60 percent of the learning happens outside of the classroom. Led by course director, Prof. Antonino Vaccaro, the students work in small groups to develop their own social projects.

“Each year there are more and students interested in giving back by starting their own social business,” says Prof. Vaccaro, who is co-director of IESE’s Social Entrepreneurship and Innovation Platform. “They want to work on professional projects that tackle issues like malnutrition, access to healthcare, education and professional training. And the course prepares them and helps them begin.”

The Project in Social Innovation and Social Entrepreneurship has three main objectives: to give students the opportunity to develop their own social business; to introduce them to high-level professionals in the not-for-profit sector; and to empower them to drive debate about the functions of business in society.

Talks with Sector Leaders

Academic sessions are structured around analysis of social business fundamentals and the exchange of ideas and debate. A series of special sessions gives students a chance to hear from leading business people and executives in social organizations such as Ariel Kestens, head of training and research at the International Federation of the Red Cross and Red Crescent; Alejandro Chafuen, president of Atlas Network; and Vincent Fauvet, president and co-founder of Investir&plus.

The special sessions map to the teaching plan, and look at different aspects of social entrepreneurial leadership.

Xavier Pont, cofounder and managing director of Ship2b, looks at the role company incubators can play for social entrepreneurs. The session with Daniel Turiel, managing director of the NGO ACTEC, focuses on how to effectively support entrepreneurial initiatives in developing countries, while Montserrat Blanco, director of the Fundació La Caixa, will discuss her experience of alliances between social and traditional businesses. Other sessions will look at the social bank and the collaborative economy.

With its combination of academic curriculum, input from experienced professionals and hands-on project work, the course has proved to be very popular with MBA students – and an experience has been described as having a profound and lasting personal impact.

TheSocial Entrepreneurship and Innovation Platform

IESE’s Social Entrepreneurship and Innovation Platform was established by the Center for Business in Society to publicize social entrepreneurial opportunities and projects. The key main objectives of the platform are:

• to develop new teaching and scientific initiatives in the field of the social economy
• to facilitate contact between IESE alumni and social entrepreneurs
• and to offer direct help to those interested in launching new social businesses

Find out more about the Social Entrepreneurship and Innovation Platform.

Philip Whittaker is Associate Director of the world-renowned Boston Consulting Group, whose focus is on predicting oil prices. At the IESE Barcelona 5th Global Energy Day conference this week, he made it clear that doing so with certainty is nearly impossible. There are a range of future scenarios, and serious consequences of the current collapse in the price of oil.

His advice is: be highly critical of any predictions, examine assumptions, and look into the success rate of the predictors; and never discount the possibility of disruptive change.

A Less Predictable Keynote

Whitaker explained why he didn’t want to simply repeat the usual banalities about the oil market. "You can find the usual stuff with Google," he quipped.

"Never believe someone who tells you they’re sure what the price of oil will be," he warned. And yet despite the difficulties in predicting the price of oil, it’s never been more important to get it right.

Oil’s Wild Ride – And Fall

After a relentless rollercoaster ride from 2007 to 2014, where prices oscillated widely between $20 and $200 a barrel, the current depressed price of around $40 is having profound global effects. It is also the longest price decline in 30 years.

Oil companies are shedding jobs and slashing budgets by 15-20 percent, in line with the decline in their market capitalization. Shell – Whittaker’s former employer – has seen its own market cap plummet by $15 billion since mid-2014.

Industries that support the oil companies are in an even deeper crisis, with service companies seeing share prices falling some 35 percent. Those involved in exploration have been hardest hit – Whittaker described their current situation as "a bloodbath".

Far-Reaching Consequences

Exporting countries such as the Gulf States are facing difficult decisions too. Having grown used to $100 oil, they have been spending accordingly – and are now looking at severe budgetary cutbacks.

Longer-term, cheap oil today may also mean much more expensive oil in the future. Known as the ‘Bullwhip Effect’, cheap oil – at below $70-80 a barrel – and the resultant low profits mean oil companies cut back on exploration, throttling supply further down the road.

Making Sense of It All

Whittaker likened planning for the future in such conditions as: "trying to make rational decisions under extreme uncertainty". Questions managers should be asking themselves when facing such a situation are: whether or not it poses an existential threat to their business, how long the situation is likely to last and what are the opportunities to be had.

These days, you don’t have long to make such decisions, said Whittaker. In addition to foot-dragging, another tendency to avoid is simplification. "Embrace complexity," he said. "Small, seemingly insignificant factors can have big repercussions."

Three Rules of Predicting

Predicting scenarios for the next 36-48 months alone involves around 20 variables – from Chinese demand to European policy on fracking. Whittaker painted three different possibilities for oil prices in the short-term: a ‘Deep V’ of rapid recovery; a slower, cyclical recovery; or, more worryingly, the sustained pain scenario, where the world has to get used to lower oil prices. Whittaker believes the most likely scenario is a slow recovery. But how trustworthy are any predictions, when uncertainty is so rife?

The industry insider had three pieces of advice for managers in assessing any prediction – oil related or not.

Firstly, don’t confuse scenarios with forecasts or predictions. Remember too that none of these are strategies. Secondly, always understand the predictive model being used – and be prepared to be critical of its assumptions. Also, check the track record of whoever is making the prediction – how successful have they been in the past and under what circumstances?

Finally, bear in mind that predictions almost never entertain the possibility of disruptive events. This is an area where Whittaker thinks more work could – and should – be done. As managers, he advised the audience, we need to assess how likely our business is to face disruptive risk – a message that today's managers are getting very used to hearing.

Cutting edge research and innovation in teaching have been recognized by IESE this month.

Professors Víctor Martínez, Gaizka Ormazabal, Heinrich Liechtenstein and Rob Johnson have received the Research Excellence Awards 2014, which will be presented by the IESE Members Association in February.

The awards were made for two academic articles published in journals of operations and control respectively; and for an original MBA course in finance for entrepreneurs delivered over 2013-2014:

• Víctor Martínez, for his article "Split-Award Auctions for Supplier Retention" published in Strategic Management Science. Prof. Martinez proposes a model of shared auctions where – unlike a single winner-takes-all scenario – parts of a business are awarded to suppliers based on prices offered. 

• Gaizka Ormazabal, for his article "Proxy Advisory Firms and Stock Option Repricing" published in the Journal of Accounting & Economics. The study finds that using proxy advisors to make decisions specific to a particular company may not always yield the best results for that company. 

• Professors Heinrich Liechtenstein and Rob Johnson, for the MBA course “ENFI Financing Entrepreneurial Opportunities” which examines the financial dimension of the entrepreneurial process.

Research With International Prestige and Social Impact

The jury, comprising professors and members of the Association’s executive committee, selected the two articles on the basis of their international prestige.

The winning course met with a broad range of criteria: an established course, taught over successive years; its usefulness in terms of research and consulting; its social impact; and the use of original and specific material.

The Research Excellence Awards were established in 2001 and are presented annually, with a bursary of €10,000 for each winner.

This year’s awards will be presented on February 9 at the Members Association Governing Council on IESE’s Barcelona campus, and celebrated simultaneously at the Madrid campus via video-conferencing.

Despite important progress in the incorporation of women into the labor market, women are still underrepresented in management and on boards of directors – a situation with potentially negative consequences.

“Women make 80 percent of buying decisions, so a smart company should pay attention to female managers,” said professor of Managing People in Organizations Nuria Chinchilla at the 5th Focused Program: Women on the Board of Directors event in Madrid.

The seminar was geared towards female managers who want to make an impact and create positive synergies on boards of directors. Chinchilla noted that women can make a difference across the financial, social and human aspects of companies. “By nature, women have a broad capacity to understand both business and the human condition,” she noted.

“Women have a lot to contribute to a board of directors. They can facilitate communication among members, favor consensus and contribute to a more complex vision of the business,” noted Rosa Piñol, manager of Abertis Telecom.

Good at listening, bad at being heard

Irma Jiménez, Hewlett Packard Director of Government and Corporate Affairs, agreed. She emphasized female board members’ listening skills: “They tend to be mediators who look for agreements. They work through collaboration rather than competition. Feminine intuition is a key asset for business,” she stated.

Sonia Chiva, CFO of the multinational Roland DG, noted that as well as being underrepresented on boards of directors, women were also frequently under-utilized: “Since we’re a minority, it’s hard to get other board members to trust us and give us a chance.” Chiva also claimed that women sometimes limited themselves from reaching the upper levels of an organization.

Quotas: a solution or a source of problems?

All three managers came out against legislated quota systems that would guarantee the presence of women on boards of directors. “I think that quotas can limit the development of both male and female talent. Quotas don’t actually fix the problem; instead they create bigger ones,” said Jiménez. “A woman should join a board because of her professionalism and because of what she can contribute to the business,” added Piñol.

According to professor Chinchilla, quotas are not good for companies. She noted that gender isn’t a valid reason for determining the role of a woman in the management of a business. “Quotas tie you to an indicator. And trying to improve things without looking at the causes of this indicator is not what we want. It can actually distort our vision of reality and worsen the problem,” she explained.

Participants in the seminar agreed that, beyond questions of gender, each board member should know his or her own strengths. “It’s a question of meritocracy. Women who sit on a board should get there because of their competence, not because they fulfill a legal requirement,” stated Sonia Chiva.

But changing the gatekeepers of senior management was flagged as a necessity: “It’s important for there to be at least one woman on selection committees for boards or managers, which is something that doesn’t happen now,” said Chinchilla.

IESE events for women executives

There will be three IESE activities in February addressed to female managers:

• Women in Leadership, Madrid, February 11. Four women executives and entrepreneurs will explain what they gained from the MBA and talk about the challenges they face at work and in daily life.
• Executive MBA Open Day, Barcelona, February 12. With special emphasis on the role that women play in management.
• Women Leadership Panel, New York, February 19. Seven women, all senior managers, will describe their professional experiences. Issues addressed will include personnel management, the importance of networking, advice for standing out in a company and how to lead change successfully.

Spending the night in a castle or a five-star apartment with views were once exclusive luxuries that are now within the reach of people on a budget. This is the promise of Airbnb – a notable success story of the collaborative economy.

General Manager, Jeroen Merchiers, who runs operations in Northern, Southern and Eastern Europe and Russia, met with EMBA alumni in Barcelona this week to share the inside track on Airbnb’s success.

A graduate of the IESE EMBA, Merchier’s online career began in Groupalia before he made the leap to Airbnb. The company was founded in 2008 by Brian Chesky and Joe Gebbia. A popular conference in San Francisco meant that the city’s hotels were fully booked. Chesky and Gebbia posted an online offered their apartment to attendees seeking somewhere to stay. The positive response they received led them to create a online community geared toward putting people from around the world in contact with each other. The key to their success, said Merchier, was the "variety of accommodation available and the convenience of online booking."

A New Model of Consumption

The business model of Airbnb is based on collaborative consumption. "We moved from the philosophy of ownership to the philosophy of ‘I don’t need my own car.’ We want to be active participants in this kind of consumption," explained Merchiers. The Airbnb user is someone who embraces this lifestyle and seeks unique experiences through specific kinds of accommodation. "Airbnb connects people who have something in common." This makes it more comfortable for users to cross the ‘red line’ of opening their homes to strangers.

Building Trust Through Transparency

The Airbnb website doesn’t host advertising but instead takes a commission on each transaction. "We earn three percent from the host and between six and 12 percent from the guest. We don’t charge for trying the application or for posting ads." To guarantee both the transparency and the security of payments, all transactions are carried out online. Airbnb has so far carried out more than 25 million transactions and has become an important new source of income for people who open their homes to travelers.

The popularity of the company, says Merchiers, stems from a combination of the human touch – because the site’s users are also connected in real life – and safe, reliable technology.

A Self-Regulating Community

Another strength of Airbnb is its community of users who collaborate to maintain security and control quality. This kind of cooperation, says Merchiers, makes it possible to detect abuses and eliminate them. "Our starting premise is that people are good. But we are proactive in eliminating the occasional bad apple."

In order to become part of the Airbnb community, members have to give their names and link their account to a social networking site, which makes it easier to to identify them and avoid "irregularities," says Merchiers.

"Personal opinion is very important when it comes to evaluating accommodation." Airbnb has, however, resisted calls to establish a fixed set of standards because it considers that the user experience would "lose its charm."

Dialog with Government

But it’s not all plain sailing. Like other collaborative businesses, Airbnb has had adapt to regulations that could threaten its sustainability. The Uber example, which has made headlines recently, illustrates the need to balance services against the different laws in distinct countries.

Uber, which connects drivers of private vehicles with passengers seeking transport, has been met with fierce opposition from the taxi industry.

In Spain, Airbnb has had to navigate 17 different sets of regulations, one per autonomous community, since coming to the country in 2012. "It’s important to establish a dialog. We don’t ask for permission, but we do announce our presence," said Merchiers. Airbnb is confident that regulations won’t be a problem for its expansion, since its business model still isn’t covered by the current legal system.

For more on the sharing economy, read IESE Prof. Pedro Videla’s blog post on collaborative consumption, The Sharing Economy: An Ocean of Unconscious Cooperation.

The IESE Alumni Association has re-elected Jorge Sendagorta (PADE ’90) as its president for the next three years.

Jorge Sendagorta, who first took up the position in 2012, is also president and CEO of the engineering company SENER. As head of the Alumni Association he has played an important role in developing new services, such as the entrepreneurship platform, and in internationalizing the association’s activities.

The election took place during the annual meeting of the Alumni Association’s Governing Board, held on February 9 on the video-linked Barcelona and Madrid campuses. The meeting brought together class presidents and secretaries from around the world, as well as Alumni Regional Chapter representatives. The Association presented its projects for 2015, as well as the results of its Annual Report 2013-2014.

The Alumni Association is an international community of more than 40,000 alumni. It promotes continuous education for executives who have participated in a basic IESE program and encourages collaboration between them.

Awards for Exceptional Research

The event also included the presentation of the Alumni Association’s Research Excellence Awards for outstanding work carried out by IESE professors. This year the awards went to two journal articles written by Víctor Martínez de Albéniz and Gaizka Ormazabal, and a finance course for entrepreneurs devised by Heinrich Liechtenstein and Rob Johnson.

Job creation, social change, and support for entrepreneurship ... These are some of the themes of the IESE Annual Report 2013-2014, which details all of the school’s activities and includes an extensive chapter on social impact.

Throughout the last school year, IESE organized multiple activities related to social responsibility, with topics ranging from scientific research to daily business practices.


Five activities with social impact

1. 18th International Symposium on Ethics, Business and Society (June 2014). At this event, 200 professors analyzed ethics in banking, accounting, and finance. "Dangerous companies are those that in theory are attractive to everyone but don’t manage to secure a commitment from anyone. These businesses lose their way and create serious problems. A business you can trust is one that has long-term investors," noted symposium participant Colin Mayer, professor at Saïd Business School at Oxford University. (Read news)

2. Global Leadership Conference on Innovation and Entrepreneurship (April 2014). Participants analyzed key factors for business growth and strategies for educating the next generation of business leaders. Participant Denise Kingsmill, IAG board member, recommended diversity on boards of directors: "Homogeneous governing boards and ‘groupthink’ have wreaked havoc on a lot of businesses. Board members should have lots of different points of view: different ways of thinking, of analyzing problems and of looking for solutions." (Read news)

3. Doing Good and Doing Well Conference (February 2014). 500 participants from around the world came to the Barcelona campus for this event on international corporate social responsibility organized by IESE Business School students. "Change happens because a few people decide to act," said guest speaker Jo Confino, executive editor of The Guardian newspaper. (Read news)

4. Speech by Unilever CEO Paul Polman (November 2013). "Businesses need to grow and create jobs, but they need to do it in a sustainable way. We should be part of the solution," asserted Unilever CEO Paul Polman in a speech titled "Leadership in a Turbulent and Global World." Polman also noted that, although public confidence in business and government is low, people expect business to be part of the solution: "Companies should take the initiative and stop waiting for government to take the first step." (Read news)

5. New research chairs. The Jaime Grego Chair of Healthcare Management and the Indra Chair of Digital Strategy, held by professors Núria Mas and Josep Valor, respectively, are two examples of IESE’s investment in research in the last year.

The year’s achievements

In addition to its extensive chapter on social responsibility, the annual report also notes the 50th anniversary of the Harvard-IESE Committee. This partnership has dedicated half a century to analyzing trends in business and business education. "Integrity and commitment to social change are the values that unite Harvard Business School and IESE," stated Nitin Nohria, Dean of Harvard Business School during his visit to IESE Barcelona.

Other milestones included the opening of a new campus in Munich and the launching of a New York option for the Global Executive MBA. In 2013-2014, 560 students from 60 countries enrolled on the Full-Time MBA. 80 percent of students hailed from outside of Spain. More than 10,000 people participated in Executive Education programs.

IESE professors published 108 new business cases. 247 continuing education classes were held in 46 cities in 30 countries, with 29,406 participants.

Click here to see the IESE Annual Report 2013-2014

The debate over the price of crude, the rise of new players, the challenge of lowering emissions, and the role of renewables ... These were just some of the topics covered during the 12^th Energy Industry Meeting, organized by IESE in collaboration with Deloitte. Under the theme, The Future of Energy: Who Calls the Shots?, the meeting focused on the main trends that will shape the development of the sector in both the short and medium term.

Towards Decarbonization?

In December, Paris will host the 2015 United Nations Climate Change Conference. The event will outline important new projects and commitments for the reduction of greenhouse gas emissions. Teresa Ribera, director of the Institute for Sustainable Development and International Relations (IDDRI), insisted that it was essential to reduce CO2 emissions in order to develop the global economy and improve the quality of life of everyone on Earth.

Until now, Europe has led the fight against climate change almost single-handedly. But the situation has changed in recent years, thanks to the involvement of China and the US. "The transition to low-carbon energy means deep changes across the board. These two countries, for different reasons, have committed themselves to the path of decarbonization," noted Ribera. The US’s goal is to reduce CO2 emissions by 86 percent by 2050. China’s estimated reduction will be 34 percent. The Paris 2015 UN conference will lay the essential legal groundwork for a new era in global energy management.

The Second Petroleum and Gas Revolution

Hydraulic fracking and horizontal drilling have revolutionized the energy world order. The US’s investment in these methods of crude and gas extraction, in part generated by high petroleum prices, has brought about rapid strategic change around the globe.

Changes in technology, mineral rights, infrastructure, workforce mobility and regulatory models have contributed to this second energy revolution. For the first time in recent years, the US is a net exporter of combustibles (gas and distillates), with half of its production going to Latin American countries.

Jorge Piñón, director of the Center for International Energy and Environmental Policy of the University of Texas, predicted that the price of crude would range between $38 and $52 a barrel this year and that the average price for the next three to five years would be $77. Luis Travesedo, E&P Director of Cepsa agreed: "For 2015 the conditions are such that prices will continue to stay low."

According to Luis Aires, chairman of BP Spain and Portugal, the price "is going to depend on what OPEC does, especially Saudi Arabia." In any case, "a price of $50 a barrel is not sustainable; at that price everyone loses," especially countries like Russia, Venezuela or Saudi Arabia. Aires dismissed the idea that Europe would undergo a revolution similar to the one underway in the US, except for some possible "niches." He alluded to the importance of education in "the question of whether hydrocarbons are a blessing or a curse."

31 Percent Clean Energy by 2035

Renewable energies (wind, solar and hydroelectric) play a key role in the decarbonization process, as their weight in the energy mix increases. Estimates suggest that clean energy will account for 31 percent of the sector in 2035. Rafael Mateo, CEO of Acciona Energía, said: "Renewables are the future; they are the only forms of energy that return large dividends to investors." He pointed out that the technology behind renewable energy is the cheapest on the market. Mateo noted that private capital and large private investment funds are now investing in green energy and not in fossil fuels.

Meanwhile, José Miguel Villarig, president of the Association of Producers of Renewable Energies (APPA in Spanish), emphasized the contribution of wind and solar power to the Spanish economy: "Spain is a model for the market penetration of renewables," he stated.

For Union, Against Dependence

The plans for European Energy Union, one of the most important projects of the current term of the European Commission, are scheduled to be presented in Brussels in the coming days. The present situation of energy dependence, high supply costs and a lack of EU consensus on sensitive topics such as defense and energy, places the continent in a very delicate position.

Gonzalo Escribano, professor of the Real Instituto Elcano, sees European Energy Union as a "window of opportunity" for the EU. He made clear that European countries must reach a level of energy interconnection well above 15 percent by 2030 if they want to create a true single energy market.

Meanwhile, Red Eléctrica (which operates the Spain’s electric grid) and Enagás (which operates its gas system) welcomed the accelerated construction of interconnections between Spain and the rest of the continent. These links have become a high priority on the EC agenda, according to Enagás CEO Marcelino Oreja. "We believe that Spain can be the alternative to Russian gas. We can become the gateway for the gas that arrives from North Africa," he argued.

Spain’s Minister of Industry, José Manuel Soria, noted that electrical grid interconnection with France will begin next week. It will involve projects studied by the EU for the Gulf of Biscay plus three lines through the Pyrenees.

A New Kind of Consumer

"A well-informed consumer is essential for the market to run smoothly," said José María Marín Quemada, president of the National Committee on Markets and Competition (CNMC in Spanish). "The consumer is an agent of change in the sector. Consumers are taking a leading role; they are acting simultaneously as energy generators and consumers."

David Robinson, a researcher at the Oxford Institute for Energy Studies, reflected on the advantages that new technologies offer to customers. He noted that consumers are becoming the center of gravity for utility companies. "Today’s consumers have the right to change suppliers, produce their own solar power on the roofs of their homes, manage their electricity consumption and store electricity," he explained.

The Role of the US and China

The US and China are the two big emerging players on this new global energy field, at the expense of Russia and the Middle East. Where does this leave Europe? "The EU is in limbo. It has to find its place and give new direction to its energy policies if it doesn’t want to get left behind," warned Gonzalo Escribano. He noted the growing role of North Africa and the dangers this entails due to conflicts in areas such as Libya, the Sahel zone and Nigeria, which is Spain’s main supplier of crude.

Uncertainty about Greece’s future within the European Union began the moment that Syriza’s election victory and the new Greek constitution were confirmed. The main point of conflict is over the public debt which represents 175 percent of GDP. But beyond the "Greek problem" there are questions about the future of the euro and the relationships between EU member states. Profs. A. Argandoña, A. Pastor and E. Martínez Abascal give their views and on these issues and discuss the negotiations between the troika and Alexis Tsipras’ government.

"Greece: A Quick Summary," by Eduardo Martnez Abascal

"Unfortunately for Syriza,a default of the Greek Government is not a big deal. Greece's public debt is not that much compared with the financial power of the EU, the ECB and the IMF combined. After all Greece makes up less than 2% of the EU GDP. The consequences would have been totally different five years ago in 2010. I wonder if Syriza is aware of this different scenario, because it certainly changes its power to negotiate." (Read More)

"Citizens and Debt," by Alfredo Pastor

"The negotiation should be based on mutual interest and not legitimacy or justice: We must not forget that the Greek public debt was freely entered into. As such, it is surprising that, simply because the debt is so huge, many consider it unfair or illegitimate and view not repaying it as something perfectly natural." (Read more)

"We Don't Understand the Greeks," by Antonio Argandoña

"Syriza doesn't want to pay his debt (well, that was part of his campaign platform). The eurozone rejects the idea of releasing Greece from its obligation (of course, what you expect!). Thus begins the negotiation. And although I wouldn' t say that anything goes in a negotiation,certainly intentions should not be openly revealed from the outset. As such, it is logical that Greece (now the country as a whole, not just a political party) would ask for as much as possible, and that the eurozone would deny everything it can." (Read more)

Barcelona is to become a "Lighthouse City," spotlighting the ways that European metropolises can develop more sustainably – and IESE will play an integral role. The city was selected alongside Cologne and Stockholm to participate in the €25 million GrowSmarter project, which was launched in the Swedish capital on February 10. IESE’s Joan Enric Ricart, Pascual Berrone and Lluís Torrens will provide much of the expertise needed for this vast, five-year project that involves both public and private sector partners.

Achieving Goals, Creating Jobs

GrowSmarter is part of a European Union-wide move to fulfill a number of tough but achievable goals, each of which is related to at least one of the three pillars of sustainability: social, environmental and economic.

One of its objectives is to cut EU transport emissions at project level by 60 percent. Another is to reduce energy usage by 60 percent. In addition to these aims, GrowSmarter should create the equivalent of 1,500 jobs across Europe.

Developing Districts, Infrastructures and Mobility

In order to meet its overall goal of sustainable urban development, Barcelona will need to address three key areas. The first is the development of low-energy districts, which will involve not just smart energy solutions and local energy production, but also alternative-fuelled vehicles.

The second area is the creation of integrated infrastructures that include smart lighting, improved ways to utilize waste heat and collect waste products, and big data protocols for saving energy and improving quality of life.

The third group of objectives – under the umbrella of sustainable urban mobility – includes sustainable delivery and smart traffic management, as well as the commitment to smarter mobility solutions.

Private and Public Sectors in Partnership

Conceived as a pluralistic and inclusive project, GrowSmarter allows public bodies to work in partnership with private organizations across Europe. This facilitates market growth at a local level while reducing environmental impact, thus improving citizens’ quality of life.

Gustaf Landahl, project coordinator for Stockholm, said at the launch: "The GrowSmarter project aims to show the benefits of public and private sector partners working together to stimulate the smart-city economy." He added: "The idea behind GrowSmarter is to create jobs and provide a boost for a smarter, more sustainable Europe by showcasing innovative, intelligent practices and technology in real-life scenarios, so that other cities can learn from our experiences and think: Yes, this is something we can do too."

"A modern economy is not built on relationships between companies and financial institutions; it’s built on its community of people."

This was the message shared by Iceland’s President Ólafur Ragnar Grímsson with a packed auditorium on IESE’s Barcelona campus this week.

"Because our policies are focused on giving people more confidence, our people have found a way to move forward. Democracy is a powerful economic force in itself. And a successful economy is about people."

Grímsson has held the presidency since 1996. He oversaw the privatization of Iceland’s financial sector at the start of the 21st century; and its sudden collapse in 2008. At that time, Iceland was the first nation to succumb to the crisis; a meltdown that wiped out 50,000 people’s savings, plunging Icelanders into debt and putting 25 percent of homeowners into mortgage default.

Following the crisis, Grímsson’s government eschewed the prevailing economic orthodoxies of Brussels, Washington and the IMF. Instead, Iceland became what he calls an "experiment" in doing things differently.


Response to the Crisis

Refusing to pump money into its ailing financial sector, Grímsson’s administration opted to let three giant banks fail – a decision seen as controversial at the time. His government also introduced currency controls and pursued a vigorous policy of employment creation, bringing together educational institutions and the private sector with backing from the state. This, together with sustained investment in green energy and environmentally sustainable development has, says Grímsson, provided the impetus for Iceland’s showcase economic recovery.

While the crisis continues to make headlines around Europe, Iceland’s fortunes have been dramatically reversed. Though the road to recovery has not been without its "unpleasant challenges."


The Long Road to Recovery

Iceland has long enjoyed a reputation for security and democracy, said Grímsson. With a thousand-year-old parliament, no armed forces and an unarmed police force, the country suddenly found itself grappling with civil disobedience and rioting in the streets. "What I feared most in 2008 was whether we would survive as a democracy. My generation faced a conflict we never thought we’d have to solve – between free capital and the financial markets and the democratic foundations of our society," Grimsson said.

"The first lesson we learned from the crisis was that the ideology that prosperity was linked to giving financial institutions the greatest freedom possible – that this was flawed. And that these institutions and the market, far from carrying no democratic or social responsibility, actually carried a great deal."

Iceland found itself isolated, with the European Union unanimously against the decision to let its banks fail. "There were powerful forces in Iceland and Europe that thought my decision was absolutely crazy. But why can’t banks be allowed to fail when other big companies critical to the economy are allowed to go bankrupt? I have never understood the argument – why is the financial sector somehow better for the well-being and future of an economy than the industrial, creative, or manufacturing sectors?"


Rejecting Austerity

Grímsson also explained why the country had refused to adopt austerity measures and opted instead to bring educational institutions and employers together to avoid mass unemployment.

"You can’t make an economy recover by making people suffer – I believe it is intellectually, economically and politically wrong," he said.

Iceland today is not without its problems: Taxes and living costs are high, wages remain low and many Icelanders remain trapped in negative equity, or owing more than they originally borrowed in index-linked mortgages.
But the country is in the midst of a tourism boom, with visitor numbers rising between 15 and 20 percent every year. Its tech industry is thriving; the result, according to Grímsson, of math and engineering talent released by the banking industry finding a new outlet. Rio Tinto chose the country to make its first major post-crisis investment, a $487-million bet on the benefits of Iceland’s ability to generate cheap, green energy from hydroelectric plants and thermal springs. Unemployment is under 5 percent and many educated young Icelanders who left the country when the crisis hit are now coming home.

"When you trust democracy and allow people to make decisions about the future, they feel invested in that future," said Grímsson.