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Welcome to Food 2.0

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"Over the next two years, startups will use disruptive technology to transform how consumers choose, buy, eat and share their food – not only at home, but also in restaurants and at the supermarket. Welcome to Food 2.0."

Màrius Robles, co-founder and CEO of Reimagine Food, made this prediction at the first Food&Tech Investment Forum to be held in Europe. The event was organized by IESE’s Business Angels Network and Reimagine Food, and was hosted simultaneously on IESEs’ Barcelona and Madrid campuses

Eight projects were presented at the forum, chosen because of their use of disruptive innovation related to agriculture, food distribution, gastronomy or the restaurant industry.

Before a large audience of private investors, venture capital fund managers and executives, the chosen startups – some worth more than $7 million - presented projects such as:

  • An app that uses big data to generate powerful insights for food companies about the moment of consumption;
  • A platform with 1.2 million recipes adapted to different tastes and nutritional preferences;
  • A supermarket that adapts to the genome of the customer

As well as Big Data, other technologies used by these startups include artificial intelligence, deep learning and nutrigenetics, which seem set to play integral roles in the food industry in the coming years.


MBA 2014: Mobile, Adaptable and In-Demand

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IESE MBA graduates continue to be in high demand from leading international companies, who value their ability to adapt to new industries, roles and cultures. That is the message from a new employment report released this week by IESE Career Services, which reveals the post-MBA destinations of the class of 2014.

The report confirms that the IESE MBA continues to be an effective vehicle for career mobility, whether in terms of industry, function or country. A significant 90 percent of MBA graduates received an offer of work within three months of graduating. A further 61 percent of grads found employment in a new industry, 63 percent assumed a new function and 33 percent changed their country of residence after graduation. Many students in the class of 2014 did all three, taking on new roles in a new industry away from their home country.


Who’s Hiring?

Consulting firms were the biggest recruiters, picking up 24 percent of the class of 2014. Meanwhile, 17 percent of graduates accepted offers in financial services.

The greatest trend change this year was in e-commerce, which recruited 12 percent of graduates, eight percent more than in 2013. Other top industries were technology and media (taking 13 percent), consumer goods (11 percent), and healthcare and chemical (nine percent). The remainder of graduates accepted offers in manufacturing, other services and energy. The average global starting salary was €89,898.


Linking Students and Employers

Every year IESE links dozens of companies with emerging talent. In 2014, 90 companies – including Eli Lilly, McKinsey & Company, Infosys, Uber, BASF, Bain & Company, American Express and Audi – extended four or more offers to students in this graduating class. Globally, placements are concentrated in Europe (excluding Spain) with 43 percent of graduates taking jobs there. Meanwhile, 23 percent of MBA 2014 is now working in Spain, 12 percent in North America, 12 percent in Asia, nine percent in Latin America and one percent in the Middle East and Africa.

The 17-member Career Services Department, working out of Barcelona, New York, Sao Paulo, Singapore, Tokyo and Shanghai, helped 61 percent of graduates to land their post-MBA job. One of the main tools for eventual job placement was IESE’s Career Forum, which took place this academic year on February 16 and 17. 19 companies came to the Barcelona campus to recruit promising talent, including BBVA, GlobalPraxis, Delta Partners and Google.

“Pursue the Opportunities That Thrill You”

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The traditionally male-dominated corporate world is becoming increasingly heterogeneous but women still face specific challenges in the pursuit of leadership roles. This was the finding of top female executives who came to IESE NY in February to share their experiences, and advice for women building a career in business.

The panelists are business leaders who have sought to optimize their competencies at IESE’s Madrid, Barcelona, New York, Brazil and Munich campuses, creating an international legacy of female leadership.

To reflect on the lessons learned at IESE and in the corporate world, the panel members laid out some fundamental principles for any woman striving for a leadership role.


Adaptability

While it is prudent to think about career plans early on, over-planning can be an impediment to personal and professional growth, according to Michelle Naggar Reichenbach (MBA ‘05). She advocated an open-minded approach to any career plans. "Pursue the opportunities that thrill you," she said. "Do not feel trapped into following any predetermined career plan."

Yasmin Namini, senior vice president and chief consumer officer at The New York Times, agreed, saying that passion will build any career. In her opinion, it is certainly important to have a dream and to have drive but "the details can and should fluctuate."

The panelists noted that approaching career planning loosely allows women to adapt to changing roles and changing industries – a particularly salient skill in today’s progressive technological age.


Balancing Act

Radha Subramanyam, president of Insights Research and Data Analytics at iheartMedia Women, said that women, more than men, were subject to a "do-it-all" expectation with regard to balancing motherhood and a career. As a successful executive and mother, she warned that this doesn’t come without sacrifices.

"You can be a mom, a partner, and an executive, but you have to be able to forgive yourself. The bottom line is that you live a fulfilling life," she added.


Team Management

Managing people is a balancing act in itself. Weighing the wishes and expectations of others is, according to the panelists, the most challenging part of any position.

Dr. Paloma Duran, director of Sustainable Development Goals Fund at the United Nations Development Program, condensed team management into three key steps: First, look for the best in every individual; second, be honest – give recognition when it is due, but speak up about what needs improvement; third, promote and empower every team member.

According to Subramanyam, as people grow in their careers their responsibilities shift and they have to adapt their management style. Namini added that there is a fine line between the roles of leader and manager and that it is imperative that women understand their roles and communicate appropriately.


Reaching Out

Networking has become a sort of "dirty word", moderator Noelle Sadler Delory (MBA ‘07) said. But networking is not about using people to promote success in your own career; rather, a network is a web of relationships, she said. As such, they must be two-way streets.


Standing Out

Cultivating a strong network of relationships requires making yourself memorable. Although it can be tempting to speak up just to be heard, said Reichenbach, just "saying things to say things" is not the way to go or grow.

There are two simple ways to be remembered, the panelists agreed. One is to deliver great results, said Namini; do great work and give credit where it’s due. The second is to be able to communicate who you are and be excited about your story, said Delory; be true to yourself and be confident in your professional narrative.


Empower Yourself, Empower Others

Each of the panelists agreed that, particularly as women, it is important to lead confidently. However, empowering others is as important as empowering yourself.

They advised that it is crucial to show team members that you are invested in growing their careers. A manager who always has all the answers leaves no room for others to grow. An employee who doesn’t make it a priority to support their manager is perceived as disloyal.

In this way, leadership is one large balancing act: be true to yourself, embrace change, do your best work and foster the people around you. Because, as Namini said: "What goes around comes around."

Mobilizing the Travel Industry

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First it was the Internet. Then came changing consumer behaviour. Now it seems that mobile is set to shake up the travel industry.

Globalization, collaborative consumerism and digital disruption are already driving headwinds of change and forcing the travel – and other – sectors to rethink business models and devise strategies to negotiate uncertainty. On top of this, travel executives are now having to grapple with a transition from online to mobile that is set to revolutionize the industry.

With smartphones, tablets and handheld devices ubiquitous – in the home, the workplace and the travel space – corporations and suppliers will need to determine the most effective ways to react to and optimize the mobile revolution.


Mobile Thinking Days

IESE has teamed up with Mobile World Capital and digital consultancy RocaSalvatella to examine the challenges and opportunities that digital technologies represent for tourism. In the run up to the Mobile World Congress, a sequence of Mobile Thinking Days will bring together more than 30 specialists in innovation, e-business and marketing. Meeting them will be representatives from major players in the tourist industry.


Transforming Tomorrow’s Tourist Experience

The series will examine how the industry can foster the implementation of smart solutions that use mobile technologies to transform the tourist experience of the future. They will also call on their collective expertise to analyze the potential of digital technology to drive business development and industry growth.

Heads of working sessions include Oscar Pallarols, director of the Smart Living Program at Mobile World Capital Barcelona; Javier Zamora, IESE professor and academic director of Mobile Thinking Days; and IESE Professors of Information Systems Sandra Sieber and Josep Valor, who holds the Indra Chair of Digital Strategy, will also participate.

Together with Nuria Oliver, scientific director of Telefónica R&D, and Javier Creus, founder of Ideas for Change, they will analyze business cases and look for lessons from new paradigms already in trial in smart cities such as Barcelona, Stockholm and Boston.


Mobile World Congress Forum Finale

Two Mobile Thinking Days have been held so far at IESE and at the Mobile World Centre in Barcelona. And another workshop will take place on February 26 before the forum series concludes on March 2, with a double session at the GSMA Mobile World Congress and 4Years From Now.

“Internal Communication Needs a Big Dose of Courage”

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According to María Cortina, head of communications at Siemens, internal communication is often left out of companies’ communication strategies, despite its significance. "Employees have a great power that many managers aren’t even aware of. They are key to the reputation, image and prosperity of the organization," she said during a session organized by IESE’s Institute for Media and Entertainment (IME). In Cortina’s opinion, open communication with workers facilitates competiveness, participation and productivity, but secrecy can cost companies credibility or even result in talent loss.

She noted that it is important for employees to feel that "what is best for the company is best for them," and vice versa. "If we can achieve this goal, our employees become our best spokespersons."


Be Brave Enough to Listen

Manuel Tessi, professor of communication at the Universidad Austral (Argentina) and global specialist in the field, said: "In internal communication, you need a big dose of courage. It is clear that listening to workers makes money for companies."

Tessi noted that if managers take the time to listen to employees, employees realize that they are truly important to the company. "Studying behavior is essential in internal communication. You have to understand the interests of workers. Not only what they say they want, but also what they want but don’t say, and even what they don’t even realize they want," he said. Tessi insisted that the key is to ask questions that demonstrate true interest in employees, and then to listen and follow through. He highlighted the importance of measuring results to know if internal communication has been successful.


The Pillars of Internal Communication

José Antonio Carazo, editor of Capital Humano magazine, pointed out that 40 percent of Spanish companies have not included internal communication in their strategic plans. Nor have they adapted their organizational structures to the digital era.

José María Palomares, head of communications at ING Bank, listed the three pillars that he used to develop his organization’s internal communication strategy:

  • Compromise to improve employee loyalty that impacts positively on business
  • Dialog with employees to clarify their true needs
  • Leadership-driven collaboration between management and workers

IESE and CEIBS Launch the World Executive MBA

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IESE Business School and China Europe International Business School (CEIBS) will launch a new joint program in January 2016: The World Executive MBA. The program is designed for senior business leaders (with an average age of 40) who have responsibilities across international borders. It aims to develop participants both in terms of their leadership potential and by delivering a keen understanding of the forces that shape management in different parts of the world.

The World Executive MBA will be taught on CEIBS and IESE campuses across five continents. Modules are set to be delivered in Shanghai, Shenzhen, Barcelona, New York, Munich, Silicon Valley, Sao Paulo and in strategic locations in India and Africa. To maximize the global scope of the program, participants will be strategically selected to represent a broad diversity of geographies, backgrounds, roles and sectors.

To ensure it is easily accessible for executives from a variety of regions, the program format is blended, balancing residential modules run at CEIBS and IESE campuses around the world, alongside innovative online modules. Participants will learn through the case study method and a very intense personalized development program delivered by expert faculty from both schools across all locations.

According to Franz Heukamp, IESE’s Associate Dean for MBA Programs, “together we have designed a truly joint program designed for executives with cross-border responsibilities, be they East/West, North/South, or both. Our aim is to provide these executives with an exceptional MBA learning experience that is highly accessible for them.”

“The World Executive MBA is a high intensity, truly international program that will bring together senior business executives for an entirely new learning experience,” says Professor Nikos Tsikriktsis, Associate Dean for the CEIBS GEMBA Programs. “It will blend the in-class learning experience with online learning; and with courses offered across five continents our participants, who may join us from anywhere in the world, will benefit from strengthening their global networks.”

The new World Executive MBA marks another step in CEIBS and IESE’s partnership of 20 years, adding to the list of programs that the two business schools already offer jointly: the Global CEO Program, the Global CEO Program for China and the joint PhD. This track record of delivering programs together can ensure a more cohesive experience for participants where there is true collaboration and sharing of expertise between the schools.

Both CEIBS’ (Beijing, Ghana, Shanghai and Shenzhen) and IESE's (Barcelona, Madrid, Munich, New York and Sao Paulo) established global presence means they can accordingly offer in-depth insight from the different regions in the world in which the executives conduct business.

Jill Dumain: “It is time to reimagine a sustainable world”

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What is responsible business? This was the question asked by the 2015 Doing Good and Doing Well Conference, celebrated on IESE’s Barcelona campus this month. It was also the subject of the keynote address given by Jill Dumain, director of environmental strategy at high-end outdoor clothing manufacturer Patagonia.

Dumain, who has spent her entire career at family-owned Patagonia, shared the inside track on what responsible business means to her and to her company. Patagonia’s mission, she said, could be summarised into three key elements: make the best product possible, cause no unnecessary harm and inspire and implement solutions to environmental problems.


Clothes for Life

Patagonia claims its clothing is guaranteed for life – something Dumain describes as “a de facto way of caring for the environment.”

“Looking into the life cycle of products and making things that last longer is good for the environment. Although some might see it as counter-intuitive – after all, most businesses aim to sell more, not fewer products.”

Patagonia has, in fact, been actively involved in a number campaigns against consumerism; most recently they took part in the ‘Don’t’ Buy This Jacket’ campaign launched in the New York Times on Black Friday, the biggest shopping day in the United States.

What we’re doing is trying to get people to think of the supply chain behind a product,” Dumain said. “We can make the biggest impact in the countries that make our products.”

It was this sort of thinking that inspired Patagonia’s ‘Common Threads’ initiative in which customers are invited to become part of the effort to reduce the company’s environmental footprint. Customers are asked to buy less, send worn products back to Patagonia for repair, reuse them and above all, to reimagine a sustainable world, says Dumain.


Giving Back and Taking Back

Back in 1994 the company took the decision to only use organically grown cotton. “This was an important step for us,” said Dumain “but not without its challenges: organic cotton represents only one percent of all the cotton grown in the world and it’s more expensive.”

The company also backs a wool project in Patagonia itself, working on the restoration of grasslands in areas where over-grazing is a factor in desertification.

In 2011 the company committed to taking back all of their worn products, and try to repurpose them. While some garments were recycled, others were repaired and sold second-hand as part of the ‘Worn Wear’ program.

More recently, Patagonia has launched an investment arm, ‘$20 Million and Change’, which invests in startups. “The main criteria is that the startups are trying to do something responsible and disruptive,” Dumain said. “For example, there is a project in Chile to make skateboards out of discarded fishing nets.”

Innovative and engaging maybe, but not, she says, without its challenges.

The main problem with being a responsible company is scaling up. Responsibility is rarely the cheaper option in the short term.”


Working at the Bottom of the Pyramid

The Doing Good and Doing Well Conference also heard from Olivier Kayser of scalable business consultants, Hystra. Kayser talked about working at the “bottom of the pyramid” and said that companies that wish to operate here need to rethink their business model. “You need to look holistically at what your customers need,” Kayser said. “These are people who don’t own property, don’t have access to credit and don’t have bank accounts and savings.”

Before working with people in this situation, he said, you have to ask yourself a question: “are you willing to reinvent your business model, are you ready to learn from others or is your ego too big? Are you prepared to be transformed by collaboration and invest your best people?”


Doing Good and Doing Well Going Strong

Other keynote speeches included IBM’s Angel Pes Guixa on “Smart cities, smart business;” BMW’s Diego Martínez Normand on electric cars; and ExxonMobil’s Todd W. Onderdonk on the “The Outlook for Energy 2015.”

There were also panel discussions and workshops on banking, smart grids and global business ethics, as well as special sessions, including “Supply chain transformations for positive impact,” and “Beyond CSR – how partnerships are creating new models of responsibility.”

Now in its 14th year, Doing Good and Doing Well has covered many aspects of responsible business, impact investing and social entrepreneurship, and remains the largest student-run conference of its kind in Europe.

New Loan for International MBA and GEMBA Students

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The UK company Prodigy Finance and IESE have reached an agreement to offer a new loan to international MBA and Global Executive MBA (GEMBA) students to help them finance their studies.

The deal sees IESE expand the existing range of financial aid services, which include loans and scholarships, to support students with tuition fees and living costs.

International MBA and GEMBA students will be eligible for this financial support once they have been admitted into their IESE program; letters of admission are sufficient in terms of guarantee. Prodigy Finance’s team will study the potential future income of each applicant, and prepare customized loan terms based on individual profiles.

The company finances up to 100 percent of the program's tuition and offers competitive repayment terms, interest rates and other conditions.

Among other advantages, the Prodigy loan enables students to:

  • Access funding without a co-signer. 

  • Repay the loan over a period of ten years and have the option of early repayment, with the term or specific time chosen by the borrower. 

  • Not have to pay any installments during the program or the first six months afterward. 

  • Make payments to Prodigy Finance in more than 30 countries without any costs arising from international wire transfers, eliminating the potential problem of international mobility.

The funding for the program is made available by Prodigy Finance’s network of investors in the global business-school community, who receive a financial return on their investment, while also supporting the business-leaders of tomorrow.


Prodigy Finance: An Institution Created by MBA Alumni

Prodigy Finance serves students at the world’s leading management schools, providing special financing solutions.

The company was founded in London in 2007 by three MBA students to provide funding to other people in similar circumstances. Since then, the company has funded study programs at the major international management schools, with a total of 1,866 students from 92 countries, and $78 million already granted in loans.

The company aims to support international students in terms of financing their studies by understanding their individual needs.

This agreement allows Prodigy Finance to leverage their platform associated with top-ranked business-school programs.

For further information, participants on the MBA and GEMBA programs should have a look at all options provided on the Financial Aid website.


More information in the MBA Blog


Managing People: New MOOC Announced

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Performance reviews, competence management, 360 degree feedback: employee development is no longer the exclusive ambit of human resources. In today’s workplace, staff development needs to be an essential component of any director or manager’s professional toolkit.

To help you acquire the right tools to manage your people and develop their talent, IESE is launching a new Massive Open Online Course (MOOC). The course, which will be delivered in Spanish (with English subtitles), begins on April 27 and is free to join.

One of the principal aims of the new MOOC is to demonstrate that in managing people there can be no neutral ground; employees are either managed well, or they are managed badly.

The course will be divided into five sessions – one session per week – and will cover a broad range of topics, including recruitment and selection, employee appraisals and competence management.

Sessions will feature short videos in which hiring managers share their experience and expertise, and the case method will be used to promote debate and exchange. Participants will also have access to an online discussion forum.

The final element of the course requires participants to make an analysis of the HR policies of a company of their choice, deploying the ideas and concepts they have learnt.

The course will be taught by Professor Guido Stein, Associate Professor of Managing People in Organizations and Analysis of Business Problems at IESE.


Register here (in Spanish with English subtitles)

More information

Managing to Make a Difference

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"If you want to have purpose in your life you have to dedicate yourself to something bigger than you."

So says sustainability consultant, Randall Krantz, who spoke to MBAs on the eve of this year’s Doing Good and Doing Well Conference (DGDW). Krantz, who completed his MBA in 2002, was joined by social entrepreneurs and fellow MBA graduates Matthew Farmer and Jaime Briz, to talk about how the skills they learnt at IESE have helped them make a difference. And the growing opportunities facing MBAs keen to make a difference, while making a living.


Which Are You: Astronomer or Astronaut?

Krantz believes that key to making a real difference is in knowing how best to deploy your skills to the maximum benefit of the most people. And size isn’t everything.

He challenged MBAs to think about where they could apply their management skills to do the most good: at a grass roots or an institutional level.

"Are you an astronomer or an astronaut?" he asked. "Are you seeing the stars from afar or close up?"

Krantz has done both. He worked with the World Economic Forum’s environmental team on climate change policy for around seven years, and then joined Druk Holding and Investments, an investment arm of the Bhutan government, as adviser to the CEO. He now works as an independent consultant, partnering with businesses to build strategies for sustainability.

Wherever you are, whatever the size or sector, says Krantz, it all boils down to finding and cleaving to your purpose: "It can be climate change, an orphanage, anything … if the problem is bigger than you, it doesn’t make you feel small and insignificant. On the contrary, you feel but useful and purposeful."


The Road Less Traveled

Like many MBA graduates, Matthew Farmer considered pursuing a high-paying job in banking or management consulting. But after some soul-searching, he knew that working to improve the lives of others was more aligned to his personal values.

"I wanted to do something that was worthwhile with the skills that I had. The MBA gave me the confidence to take these ideas and build a financially successful business."

In 2003 he founded Emerging World, an organization that creates programs for organizations to help them integrate business strategy and social responsibility in emerging markets. "As I developed the business, I realized how the work I do can make a difference," says Farmer, "especially in how our programs help to change mindsets."

Emerging World is starting to see major results with a client roster that now includes the likes of IBM: "It can really start to change the way companies and organizations behave. That can make a difference in how all of us live … that is my value proposition and what gets me fired up," he says.


What Will You Be Remembered for?

Jaime Briz’s career choices have been driven by a single question. "I was obsessed about the impact of my work. I used to ask myself continuously: If I die tomorrow, what will I be remembered for?"

On completing his MBA in 2004, Briz he took the decision to switch his focus from the for-profit to the nonprofit sector. For nine years following his MBA he worked around the world on missions for the International Committee of the Red Cross, and most recently he has taken on the role of financial specialist with the Bill Gates Global Fund.

"I am seeing the impact of using the same skills I learned at IESE and that I used in the private sector before," he says. "There is a world out there waiting for you to make an impact."

Social entrepreneurship has been steadily growing, says Briz; and MBA graduates can find more opportunities than ever before to make a living while making a difference. "Look into sectors where you already have expertise. For example, if you worked in the construction industry, why not consider social housing?"

Today’s businesses should be aiming to incorporate the "triple bottom line" of profit, social and environmental goals, he says.

"You can be part of the generation that makes a change."


IESE and Social Entrepreneurship

The student-organized Doing Good and Doing Well Conference aims to promote debate and discussion around social entrepreneurship. The IESE MBA also features an elective in social entrepreneurship, taught by Professor Antonino Vaccaro. Professor Vaccaro has also recently created the Social Entrepreneurship Network to connect the IESE community with social enterprises.

IESE and UNECE to Launch Strategic Smart City Center

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IESE has signed an agreement with the United Nations Economic Commission for Europe (UNECE) to launch a new Specialist Centre for Public-Private Partnerships in Smart and Sustainable Cities (PPP for Cities).

The center will have two principal objectives: to become an international benchmark and to promote Barcelona, Catalonia and Spain as examples of the effective deployment of public-private partnerships in the development of smart cities. The project has the support of the government of Catalonia and the Barcelona City Council.

The center’s main activities will include:

  • Identifying and disseminating best practices internationally

  • Creating work standards for the management of PPP projects

  • Advising governments in the development of city planning projects through public-private partnerships

  • Designing smart-city training strategies for state and regional governments, with special emphasis on helping countries new to the sector, and on exchanging information between more - and less - experienced countries

  • Providing specialized training in PPPs

The new center will be attached to the International Centre of Excellence on PPPs (ICoE) of the UNECE, a network that helps governments develop efficient, sustainable PPP projects.

IESE Professor of Strategic Management, Joan Enric Ricart will be the academic director of the new center. The center will operate as part of IESE’s Public-Private Sector Research Center (PPSRC), led by Xavier Vives, Professor of Economics and Financial Management.

Internationally, IESE has developed a line of research and action around public-private partnerships. This includes its participation in GrowSmarter (read news) project funded through Europe’s Horizon 2020 program. The school also delivers the IESE Cities in Motion Strategies initiative led by IESE professors Joan Enric Ricart and Pascual Berrone.

1.7M Volunteers to Train? No Problem, Says Red Cross GEMBA

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There are few more globally recognized brands than the Red Cross. For more than 150 years its flag has been a universal symbol of neutrality and relief from war, disaster and disease.

Managing the Red Cross’s humanitarian mission is no easy undertaking. A globe-spanning behemoth, its operations bridge two international bodies, 189 separate societies, 165,000 local branches and a staggering 1.7 million volunteers.

Ariel Kestens is the Global Head of Learning and Development at the International Federation of the Red Cross and the Red Crescent Societies. As challenging jobs go, there are few more exacting than his.

A graduate of the Global Executive MBA (GEMBA ‘09), Kestens came to IESE’s Barcelona campus this month to speak to MBA students taking part in Professor Antonino Vaccaro’s Social Innovation and Social Entrepreneurship Project – a laboratory which designs ventures that combine social impact and economic success.

Kestens gave students the inside track on the challenges he faces heading up a complex, cross-border division; and the ways in which he has been able to leverage his own GEMBA training to rethink and overcome problems.


The Scale of the Challenge

Front-line volunteers working with the Red Cross across the world face an enormous challenge. There are currently 85 million people in need of immediate disaster response; and a further 97 million needing longer-term support. Training these volunteers for the tasks ahead on a tight budget and across linguistic, cultural and political boundaries means negotiating a broad spectrum of highly complex challenges.

"The effective allocation of resources is obviously highly important," says Kestens. "But just as important is transparency." Because although Red Cross donors understand that training is useful, most prefer to see money go to the "ultimate cause of helping people."

"I have a target of teaching our 1.7 million volunteers seven key competencies by 2020 to help them discharge their tasks efficiently," he added.


Finding the Right Business Tools

Kestens quickly understood the scale of the challenge before him, and turned to the IESE GEMBA.

"I realized that I needed to boost my managerial and leadership skills. I had 1,000 employees, 40 nursing schools and a good 10,000 volunteers under my charge at that point – I knew there was much more I could, and needed to do."

Humanitarian organizations may traditionally have been hesitant to embrace business concepts, but "in the end, it’s all about management."

"The Red Cross is an organization that is very close to my own value system. This is the reason I came to IESE. I felt that the school’s values were very close both to the Red Cross’s and to mine."


Learning to Innovate

Change is never easy. Less so when you have been with an organization for a while: "By the time you reach a point in the organization when you can do it, you are so into the organizational thinking – the same way of doing things and looking at problems – that you become less innovative."

His GEMBA experience helped him shake off this fixed mindset, step out and gain fresh perspectives that he could convert into initiatives with impact in the Red Cross.

"The experience of having discussed hundreds of business problems with people from all over the world and from different sectors helps you to incorporate other ways of doing things," he says.

The tools he acquired during his IESE experience helped him approach the Red Cross’s training challenge from new and innovative perspectives.

In 2011 he introduced an online learning platform with an initial reach of 11,000 volunteers. Today it reaches some 149,000 people around the world.

As the platform continues to expand to more and more volunteers, Kestens and his team will need to develop techniques to bridge the digital divide. Limited connectivity, for instance, is a big problem in some remote regions. But problems are something Kestens has the experience, tools and mindset to embrace. "After all," he says, "necessity is the mother of invention."

Outlook for Northeast Asia Still “Hard to Predict”

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Although growth headwinds are projected to blow across Asia in 2015, specific prospects for the Northeastern region remain much harder to predict.

In the wake of the Cold War, the geopolitical panorama is still prone to high levels of instability. And the outlook for the region depends on resolving ongoing tensions and disputes between North Korea and its neighbors.

This was the picture painted by Teresuke Terada, who visited IESE’s Barcelona campus last week. Former ambassador to Korea and currently president of Japan’s Press Centre, Terada was invited to share an overview of the geopolitical context and the future for business in Northeast Asia with IESE MBAs – some 25 percent of whom are of Asian origin.

Although the end of the Cold War brought about significant changes in diplomacy and a gradual emergence of democracy, past disputes grounded in unwavering ideologies are proving almost impossible to resolve, says Terada. He highlighted some of the defining historical events that form the basis of the current situation.


Post-Cold War Disarmament: The North Korean Issue

With the end of the Cold War in 1990, world powers sought to normalize international relations, a primary objective being the winding down of nuclear weapons. Some 190 states signed the Non-Proliferation Treaty (NPT), an agreement created to prevent the proliferation of nuclear weapons and move towards complete disarmament.

Although North Korea signed the treaty in 1985, the country announced in 1994 that it would withdraw from the NPT within three months.


The Agreed Framework

U.S. President Jimmy Carter negotiated a new deal with North Korea in 1994. Pyongyang agreed to "freeze" its nuclear weapons program and resume bilateral talks with the United States.

In October of that year, the U.S. and the Democratic People’s Republic of Korea (DPRK) signed the Agreed Framework. The DPRK agreed to freeze its graphite-moderated reactors in exchange for light-water reactors.

The framework collapsed, however, and North Korea definitively withdrew from the NPT, vowing to renew operations across its nuclear facilities.


Diplomatic Efforts With Other Leaders

Between 1994 and 2000, attempts continued to tried to negotiate stability. In 2001, North Korean President Kim Jong-il made an unannounced visit to China to meet President Jiang Zemin and discuss a broad range of international issues. Kim Jong-il went on to invite Jiang to Pyongyang to further consolidate friendly relations.

Japanese President Junichiro Koizumi convened with Kim Jong-il at a summit meeting In September 2002, where they signed an agreement aimed at improving diplomatic relations. Also on the table were the issues of Korea’s colonial past and North Korea’s abduction of Japanese citizens. Two years later, another talk took place between the two leaders at a summit in Pyongyang, where President Koizumi attempted to repatriate these Japanese nationals.

Terada points to a high-level negotiation between the States and North Korea in the same year that marked the beginning of a second nuclear crisis. In October 2002, U.S. Assistant Secretary of State James Kelly visited Pyongyang. The aim of this visit was to freeze North Korea’s nuclear power plant program and normalize diplomatic relations. The agreement broke down in 2003, with the U.S. announcement that North Korea had admitted to having received uranium for nuclear weapons. North Korea denied the claim.


The Six-Party Talks

Multilateral negotiations continued in 2003 with the establishment of the Six-Party Talks, aimed at finding a peaceful resolution toward denuclearization. China, Japan, North Korea, Russia, South Korea, and the United States met in a first round of talks aimed at shutting down North Korea’s nuclear weapons program. While some issues were agreed, progress was hampered by North Korea’s decision to test fire ballistic missiles in 2006 in its first nuclear test. The talks broke down in December 2008.


The Future Outlook for Northeast Asia

With the death of Kim Jong-il in 2011 and the ascendancy of his son Kim Jong-un to power, signs of a wholesale North Korean denuclearization remain hard to see, says Terada. A situation he describes as "threatening, in terms of global security."

Many uncertainties remain and it’s hard to predict the outlook based on historical patterns, he says.

As Northeast Asia struggles with post-Cold War power realignments, Terada sees four possible scenarios for North Korea: An attempt at reforms under the new leadership of Kim Jong-un; the eruption of factional infighting within the North Korean government; a spontaneous outbreak of popular revolt; or a contagion of unrest coming from China.

All four scenarios present serious challenges for Northeast Asia in terms of its economic growth and its political stability.

"We can’t say with certainty that any of these scenarios will play out for sure, but it remains prudent to prepare for potential breakdown in the future," said Terada.

Planting Trees and Making Profits in Africa

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MBA students from top business schools in Asia, Europe and North America explored the challenge of "making money with sustainability" in the IESE Roland Berger International Case Competition, held in Barcelona on February 26-28.

Teams worked through the real-life dilemma of Green Resources, a private Norwegian company that works in forest plantation, forest products and renewable energy in Africa.

Their goal was to determine the best way for the company to find investors and become profitable.

Green Resource’s Industrial Director, Aadu Polli (Global Executive MBA ‘13), praised all the competing teams for their insights, and for grasping the depth of his business challenge so quickly.

The teams identified and worked through the key problems of the case and presented before a panel of judges, made up of Polli plus three experienced partners from Roland Berger Strategy Consultants.

The winning team members, from London Business School, each took home an iPad as a prize.


Consulting Future Leaders

Launched in 1995 and sponsored by IESE and Roland Berger Strategy Consultants, the case competition has become renowned for its relevance to real-life business.

The 20th edition gathered future business leaders from China Europe International Business School; Chicago Booth School of Business; IESE Business School; INSEAD; Hong Kong University of Science and Technology; Kellogg School of Management; London Business School; MIT Sloan School of Management; Ross School of Business; and Tuck School of Business.

Is It Time for Leaders at All Levels?

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In organizations like UNICEF, the quality of one’s leadership can literally mean the difference between life and death.

So says human resources specialist, Mariam Kakkar. Manager of the UNICEF Leadership Academy, it is Kakkar’s job to develop the management and leadership skills of UNICEF staff in support of strategic goals. One of the speakers at this month’s Leadership Development Think Tank at IESE New York, Kakkar shared thoughts on partnerships, and on building leadership competencies across the entirety of an organization – key to the likes of UNICEF, where “the stakes are universally and permanently high.”

Joining Kakkar were IESE experts and faculty members, including Professor Evgeny Káganer, professor of information systems. Prof. Káganer called for new learning models and a “seamless” approach to leadership development in a landscape prone to “increasing digital density.”


Leadership Development at UNICEF

In the face of increasing geopolitical uncertainty and crises, competition from other organizations for funding and pressure from governments to deliver more efficient, innovative strategies, UNICEF found that there were pan-organizational challenges that needed to be addressed.

Kakkar said that they noticed skills gaps and a deficiency in leadership skills across the organization not limited to specific groups of levels. These gaps touched diverse areas from change management to strategic planning.

The solution for UNICEF, she says, has been to shift the focus from the development of individual leaders, to a broader definition of leadership development. This has meant implementing systemic leadership development opportunities for every member of the organization: an enterprise-wide approach that touches the entirety of its employee base.

“Developing leadership skills universally is key,” she said. “At UNICEF, we now prioritize the optimization of skills of every single employee – from our technical and support staff, right up to our senior executives.”

She also highlighted a need for organizational coherence and consistency in leadership development – something that many organizations, including UNICEF, have “only recently begun to understand.”

“Comprehensive and effective leadership development should not be based on a series of independent events or distinct actions. It needs to be a cohesive program that takes individuals on a journey towards developing their own leadership competencies.”


The Leadership Academy

To meet these strategic needs, UNICEF developed its Leadership Academy: an innovative approach that has sought to redefine “leadership” in terms of a range of competencies and aptitudes that can be systematically developed across the breadth of its employee base.

The Academy delivers a broad spectrum of leadership programs, in partnership with leading business schools including IESE, Cambridge Judge and Harvard Business Publishing.

“Partnering with leaders in the education space has been key to the success of the Academy,” says Kakkar. “In this process we were guided by our business needs. So our choices reflect the best fit in terms of compatibility with the strategic goals of the Academy – and on how well our partners complement each other.”

“Everybody can strive to acquire and develop leadership skills,” says Kakkar. “And everybody has a place within the Academy.”


Leadership Development in the Digital Era

How do you develop leaders in the information age, asked Evgeny Káganer. Drawing on his research into the use of social and mobile technologies in business and education, Prof. Káganer’s talk touched on the “disappearing line between the digital realm and the real world.”

This blurred boundary results from what Káganer calls increasing digital density: the ‘density’ of connections, context, and communications flowing across digital technologies. As more and more interactions are realized through digital technologies, said Káganer, we need to re-evaluate the effectiveness of traditional models of education and leadership development.


Re-Defining the Learning Framework

The so-called blended learning model, which combines face-to-face contact with online activities, is an approach that is gaining traction in the corporate world. But it is not without its challenges – or its limitations, said Káganer.

“The problem with the blended approach is that it doesn’t meet executives’ needs for networking and personal interactions.”

This calls for a “redefinition of the learning framework,” he said.

“We should be looking to create a kind of omni-learning’ framework wherelearning happens seamlessly and simultaneously across multiple contexts.” The goal, he said, is to create “integrative experiences that converge in a coherent program design.”

Bridging the boundaries between digital and physical spaces effectively hinges on leveraging the specific attributes or “local phenomena” of both, said Káganer. And this means a comprehensive rethink of how learning programs are designed.

Traditional program design is built on a vertical integration model, says Káganer, with distinct activities and outcomes forming part of a sequential process. But evolving times, call for evolving solutions.

We need to move away from vertical integration and towards a horizontal integration design that leverages the capabilities, knowledge and attitudes – as well as the interpersonal skills – of all participants to construct a new learning dynamic.”


Five Drivers Behind BMW’s Success

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“Innovation leadership at all times. This is our goal. And it means turning challenges into opportunities, and creating successful business models along the way.”

Hubert Schurkus is Head of Corporate Human Resources, Strategy and Targets at automobile behemoth, BMW. Innovation, he says, keeps the company at the forefront in a competitive market that changes at breakneck speed. And as BMW prepares to celebrate 100 years in the car industry, the evidence would suggest the company remains on the right track.

Schurkus joined students of the IESE MBA program on campus in Barcelona this week to talk about the “uncompromising commitment to high quality and boundless curiosity” that underpins innovation at BMW. He highlighted five key factors or drivers for growth.


Keeping Pace With Shorter Strategy Cycles

Strategy cycles are getting shorter and shorter, says Schurkus. So staying ahead of the field means being very clear about goals, and taking an integrative, flexible and comprehensive approach to strategizing.

“For BMW, the goal is to be a leading provider of premium products and premium services for individual mobility,” he says. “We are very clear about what we want to achieve. What’s exceptional about the way we strategize is that it’s not an isolated process. It’s not about getting 10 people together and making a proposal.”

BMW takes a 360 degree approach, he say, that: “personally involves our board members and numerous executives, who provide significant iterative input. We analyze trends, deploy our resources to the full and dig deep in terms of customer analysis.”


Keeping up With Customers … And Trends

Innovation is built on timing, says Schurkus. That means having a clear understanding of customer behavior and recognizing trends. He points to the case of Blackberry and Kodak whose “poor timing” led to missed opportunities to exploit trends and grow. Nokia, he said, had missed out on the mobile to smartphone trend.

Keeping apace with trends is vital, says Schurkus. New EU regulations for carbon emissions for instance, will change the manufacturing landscape, he said. By 2025, emissions are expected to be 60-70 grams per kilometer. Manufacturers will need to factor this into their strategy and produce more sustainable cars.

Another trend he highlighting is the decrease in car ownership – and in drivers.

“Although individual mobility remains a priority, the number of drivers in countries like Japan, the U.S. and Germany is shrinking. You have to have maximum customer orientation and maximum flexibility because customer behavior continuously changes.”


Embracing Connectedness and Sharing

In response to trends in mobility and connectivity, BMW has recently introduced DriveNow, a car-sharing program that connects 300 customers in international cities to BMW cars – an innovation that was viewed with skepticism by others in the industry.

With innovation you can’t be sure everything will work, but if you have to capitalize on the trends you see in good time. The music industry has changed from buying to using, leaving stragglers behind. The world changes with or without us, so you have to be proactive.”


Making a Real Commitment to Innovation

The “megatrend” in 2007 was sustainability, said Schurkus. BMW’s electric i3 car was released in response to the demand for cleaner automobiles. But the decision was not “knee-jerk,” he explains.

“The i3 was conceived as a series car, not just a box-ticker to be shown at the Geneva Auto Show. It required us to think outside the box. It was an opportunity to produce a 100 percent emission-free vehicle, manufactured with sustainable material and 95 percent recyclable. It was a real opportunity for BMW to become a pioneer in electro-mobility.”

When NGOs scrutinized the i3, says Schurkus, they understood that car represented a genuine part of BMW’s strategy and commitment.

“We don’t produce sustainable cars to be politically correct, or color your company green. We really want to define the future, and that’s the difference.”


The People That Make the Difference

Key to BMW’s success in innovation is its people, says Schurkus. “Without the talent, you cannot innovate.”

The BMW culture of trend recognition and flexibility, he says, is tied to the skills of its workforce. Regardless of what does or does not happen in technology, it is people who develop strategies, build the cars and inspire customers to buy them.

“You have to find the right people, the right mindset, and the right passion to lead in the future.”

With Great Risks Come Great Rewards

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Doing business in emerging markets like Africa or Latin America can be hugely challenging. But with great risks come great rewards. Furthermore, learning to manage in riskier environments, more prone to instability, is creating a new generation of agile business leaders with an edge in the global marketplace. These were amongst the key ideas shared this week by global business leaders, members of IESE’s U.S. Advisory Council.


Access to the Inside Track on Africa and LatAm

On March 13, MBA students had a chance to hear the personal insights, opinions and advice of four leaders whose collective experience spans both continents and several decades.

The panel consisted of Jay Ireland, president and CEO of GE Africa, Tom Castro managing director of IMB Development Corporation, Carlos Padula managing director at Stelac Advisory Services LLC and Juan Pujadas, vice chairman and global leader of advisory services for PwC. The focus of the debate was global business models in Africa and Latin America.


Headwinds Blowing South

African growth represents an exciting opportunity, according to Jay Ireland. Seven of the world’s 10 fastest growing economies are located in sub-Saharan Africa, he said.

But opportunity must be balanced against challenge. Doing successful business in Africa hinges on corporate governance and solid financing, which can be a "confidence issue," he said. You should also be aware of hidden costs stemming from infrastructure problems.

"It costs three and a half times more to get a shipping container from Nairobi to Mombasa than to get the same cargo from China to Mombasa. It takes three times as long, too."

This kind of insight comes from solid hands-on experience in the country. "You need your boots on the ground," said Ireland. "Trying to run an African operation from London or New York is just not practical. To do business here successfully you need to live the issues that people are living."


Growing Despite Domestic Volatility

Across the globe in Latin America there are also opportunities for big rewards in a continent that came out of the global crisis better than any other region in the world economy, said Tom Castro. Increasing political and social stability are yielding results across the continent.

He cited the example of the Mexican economy, which is currently growing at between three and four percent. This, in spite of ongoing problems relating to lawlessness, drugs and violence.

And despite uncertainties over Argentina's political system, that nation has managed to develop world-class wine, tourist and textile industries in the last 20 years or so. "Imagine what could be achieved if these problems were resolved," he remarked.


Survival Skills for a Global Marketplace

Latin America also produces more than its fair share of CEOs – a point made by Carlos Padula, himself a Venezuelan. Coming from a risky business environment where as a manager you are constantly in "survival mode" helps make you a more agile business leaders, better at negotiating uncertainty and change. These leadership competencies can be seen in examples like Carlos Slim, he said – a homegrown LatAm success story that is in the process of going global.

Padula highlighted an emerging pattern of growth that is reproducing across the continent: "Business start off by dominating a local market, go national and then look for opportunity in other parts of the continent. After succeeding across Latin America, the organization will look to overseas for new goals."


The Challenge From China

Whoever is planning on doing business in African or Latin American markets needs to factor in competition coming from state-owned corporations coming out of China. As demand slows at home, entities like the China Railway Corporation are proactively looking for foreign investment opportunities in new markets – many of these in Africa and LatAm.

The aggressive approach of Chinese businesses, said Juan Pujadas, which can provide everything from financing to workers and security for a project means that they are increasingly the competition to beat in these developing markets.


It’s Time for Africa and Latin America

Tremendous issues still face African and Latin countries. Corruption, volatility, violence, political upheaval are challenges that continue to dog both continents. Pujadas called for business and NGOs to do their part to "address the recent dark past that remains very real in countries like the Dominican Republic, and help bring that bottom 10 percent of populations into their economies."

The panelists were unanimous in the need for global business play a role in investing in local talent and infrastructure and in creating sustainable business models. To do so, you need to think local, said Carlos Padula. The diverse countries of Latin America and Africa are "very different beasts," he said, although the vast majority of these countries face similar challenges such as nation-building and bringing people out of the poverty trap.

For all that, the opportunities are "fabulous."

"Work in your countries," Castro said to Latin American students in the audience. "You will find companies there who are targeting the world. You’ve already made a smart move by taking a global MBA at IESE. Now make another smart decision – go out there and get a global career."

US Economic Recovery: Positives versus Pitfalls

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"It’s not a time to be triumphant; it’s a time to be thoughtful," John Schmitz told an audience of IESE MBA students in Barcelona. "I’m optimistic. Growth is OK. But the economic situation is complicated. Deeper analysis of the labor market and wage stagnation raises troubling questions."

Schmitz was one of four members of IESE’s U.S Advisory Council introduced by Associate Dean Eric Weber in a discussion held on the Barcelona campus on March 13. The council advises and supports the school in its activities in the US, and the panel of members had been invited to share their thoughts on the state of the US economic recovery, and take questions from MBAs.

A former White House lawyer specializing in regulatory and anti-trust issues for Ronald Reagan and George Bush Sr., Schmitz is co-founder of B29 Investments, and currently splits his time between Berlin and Washington D.C. advising transatlantic companies. His experiences, he explained, gives him a vantage point of the economy from both a European perspective and a US government policy one.


New Metrics for Economic Health

Wages are not rising in real terms for 99 percent of the US population, said Schmitz, and income distribution is a "profound and troubling issue that both Republicans and Democrats are following closely."

The Fed, he said, is finding the official unemployment rate – the number of people who have looked for work within the last four weeks – "increasingly less useful" as a gauge of the economy’s health. Instead, it is following Germany’s example and starting to look at the labor force participation rate – the ratio between the number of people available for work and the overall size of the population in their age range.

This point was picked up by Edward T. Reily, who as president and CEO of the American Management Association oversees the professional training of 100 million people a year. "Some 12 to 15 million people in the last five years have dropped out of the labor market; they’ve given up looking for jobs, and the jobs that are available are not of the same quality in terms of pay or security."


A Tale of Three Cities

Claire Huang, chief marketing officer at JPMorgan Chase, said that this very low-income group inhabits one of what she called three "cities" that provide a snapshot of the recovery in terms of spending. The population of this city, she said, is growing in size by nine percent a year – much faster than US GDP. They aren’t spending and, as such, can’t help the economy to recover.

The second city – of middle income Americans – is "shell-shocked" and won’t start spending until their incomes start to rise. Only the third city, the "super-wealthy one percent," is spending freely. The evidence for this, said Huang, is the "very active" market in New York City for houses that are worth over $5 million.


Technology: The Solution or the Problem?

This situation is not good for the economy in the long term, said Reily, as it is creating and will continue to create social problems. The working and middle classes are not doing well, he said, and things are set to get worse as the Internet of Things replaces jobs in the same way that information technology had. Education is key to finding a solution, but it won’t be easy.

"Driverless cars will make all drivers obsolete within 25 years. What will happen to people who drive for a living? They aren’t all going to go Silicon Valley and re-train."

As general manager of industry affairs for Microsoft, panel member Kate O’Sullivan has plenty of experience of Silicon Valley. But even the world’s tech hub, she said, isn’t immune to income inequality problems.

"People who work in libraries, schools and restaurants can’t afford to live in San Francisco any more. They have to travel an hour-and-a-half to get to work. There are a lot of success stories there but also a lot of cautionary tales about pricing ‘normal’ wage earners out of the area."

The panel were still optimistic that technology would continue to be a positive force for growth. "Cities that incorporate tech have done well," said Schmitz, singling out Austin, Texas; and Washington D.C. as examples to follow.

Eric Weber observed that a lesson could be learned from emerging economies, where entrepreneurs used technology to solve specific problems, rather than using it to "create new needs."

He pointed to the example of secure and accessible payment system developed in Kenya that repurposes cheap, "non-smart" Nokia phones. The system, he said, is much more relevant to existing needs than a more expensive, higher-tech system like Apple Pay.


A Booming Future?

The panel agreed that future economic growth might be on the horizon as the "baby boomers" reach retirement. The US birth rate doubled in the prosperous two decades following World War II, creating a sizeable cohort of sixty- and seventy-somethings, now reaching the end of their working lives. And unlike previous generations, said Reily, whose pensions were held and administered by third-party financial institutions, boomers were more in control of their own funds.

Claire Huang added: "As of five years ago, baby boomers had $20 trillion in investible assets. That’s more than the US GDP. If we can market a new wave of services to them and get them spending, they’ll generate jobs."

Never Assume You’re Right

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"Can constant drastic changes in strategies be compatible with sustained growth?"

This was the question put to an audience of more than 100 IESE MBA students at the IESE Entrepreneur’s Club last week by Josemaria Siota, research assistant with the IESE Entrepreneurship Department.

Siota, a former Deloitte consultant, has recently co-authored the book Revenue Growth: Four Proven Strategies, with Luiz Zorzella who joined the presentation by live video link.

His prime argument centered on the shift in strategizing from long to shorter-term. "The days where you had to closely follow a long-term strategy are long gone. Today’s shifting business environment means you have to adapt to rapid and ongoing change."

To research the book, the authors spoke with 780 entrepreneurs and executives in 77 leading companies with included WhatsApp, Google, PayPal and Groupalia. Many of these business leaders joined the session via Skype to debate the principal findings of the book.


Three Tips for Sustaining Growth Amid Shifting Strategies

Roberto Croci, sales manager in the south of Europe for Google Analytics, and Alejandro Navarro, Groupalia’s international development director, noted that most tech startups die around 20 months after the last funding round. The reason? Entrepreneurs don’t have the time or money to validate their business models.

The key learning here: maximize learning speed and minimize testing costs.


You Can’t Predict the Future

Patty Cox, a former Linkedin executive, joined Zorzella to discuss projections and what she described as the "impossibility of perfect foresight." No financial analyst ever predicted there would be 1.7 billion smartphones in circulation today, they said. Nor that smartphone usage would be growing at 20 percent. It’s not just down to analytical thinking, they concluded.

Key learning: Be creative in your thinking.


Why do Startups Fail?

The third and final issue in the session was explored by WhatsApp Business Development Executive Elies Campo and Raimundo Sala, head of sales in Spain and Portugal for PayPal. Empirically, they noted, three of every four start-ups fail. A solid 42 percent of those failures result from a gap between what entrepreneurs assume the market wants. And what it really wants.

The conclusion: Never assume you are right; always ask the customers.

The presentation was arranged by IESE’s Entrepreneur’s Club, which organizes a range of events where students can network with successful entrepreneurs and learn from their experiences.

Net Neutrality Agreed, But What’s Next for Media Sector?

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Two big concepts are set to shake up the media industry over the next few years. "Net neutrality" and "over the top" consumption of content will be dominant forces affecting the sector, according to members of the IESE U.S. Council who shared thoughts with MBA students on campus in Barcelona last week.

President Emeritus of Educational Broadcasting Corporation, Bill Baker, Christopher Vollmer, partner at Strategy&, Alan Glazen formerly of Glazen Creative and Carmen Di Rienzo, founding president and CEO of V-Me Network shared insight and took questions from more than 100 students.

In particular, they focused on video content – where is it coming from, how is it consumed and how can it create value tomorrow?


Over the Top

We’re seeing increasing "over the top" consumption of media, thanks to video services from Netflix, YouTube, Hulu, Amazon and others. The new media players are referred to as over the top (OTT) because they use broadband Internet to bypass the traditional media channels. They don’t have to pay for licenses to reach global audiences; they just send their content on top of the Internet infrastructure in place.

OTT is disrupting the traditional media business models profoundly, the panelists explained. Licenses are no longer needed, competition is no longer limited, and audiences are no longer gathered around television sets. Bill Baker explained that "cord cutters" are an increasing reality, as people consume video via the Internet, often on mobile devices, cancelling their $100-per-month subscriptions to cable TV. V-Me’s Carmen Di Rienzo pointed out that we are even seeing "cord nevers" enter the picture -- young people who have never relied on traditional media.

Baker cautioned that, thanks to these disruptions, what happened to the music industry could happen in media. "Selling entire albums would bring in money, even if people only wanted one song. With digital, the music industry has been destroyed. And the video world with the cord cut could end up like that. We don’t want that," Baker emphasized.

But with OTT disruption also comes opportunity. "There’s the potential for an enormous audience, a global audience," noted Di Rienzo. "And after that, there’s the long tail, with smaller players. I see innovation happening in the long tail," she said.


New Net Neutrality Rules to Combat "Two Speed Internet"

Just two services – Netflix and YouTube – now account for half of all U.S. Internet traffic. Online video offerings are challenging and changing the nature of the Internet today. Big telecom and cable providers, such as AT&T, Verizon and Comcast, have been in favor of charging the largest bandwidth users more for a "fast lane" on the Internet to help them recoup their sizeable investments in expanding broadband capacity.

Opposition to this has been significant. Critics argue that it creates a "two-speed Internet," with smaller players and entrepreneurs left in the "slow lane."

The United States recently ruled in favor of "net neutrality," a measure that aims to bind Internet service providers to the concept of a free and open Internet for all users.

"The Internet should be regulated like a utility. This is what the Federal Communications Commission [FCC, which regulates communications in the U.S.] is saying," explained Bill Baker, President Emeritus of Educational Broadcasting Corporation. "This is new and it is not clear how it is going to work."


Content Is King But Who Will Pay For It?

Christopher Vollmer, who is Global Managing Director at PwC network’s Strategy &, offered three key insights on business models that have the best potential to survive.

First, "with video on devices [besides the TV] you have to care more about the user experience. This means there’s a need for new skills in the media industry," he said.

Second, analytics have grown especially important, especially to advertising-supported media. Increasingly sophisticated measurements should be being used to deliver ad-supported video content to individual profiles, demographics, consumption preferences and more, Vollmer explained.

Vollmer noted that advertising-supported video is currently a $70-billion business and that its subscription model – Pay-per-view and Netflix among others -- brings another $50-70 billion in value.

Third, Vollmer sees the most growth for the next three to five years, not in ad-based but in subscription-based video offerings. Netflix stands out in this area now, and one of Netflix’s secrets to success is its original content.

With 35 to 40 million subscribers in US and another 10-plus million in Europe and the rest of the world, Netflix is investing heavily on original series and exclusive content to keep growing its subscription base. Competitors are following suit. "I predict there will be a shakeout soon."

Vollmer also described what he sees as a land grab for the elusive youth audience. Companies are trying new things. "Disney bought Maker Studios, which sits outside the traditional video ecosystem," he said. With tens of thousands of producers making short-form videos, Maker generates 11 billion views each month, Vollmer noted. Elsewhere, a new platform, SnapChat, popular with an under-25 audience, launched SnapChat Discover to "tell stories."


New Opportunities on All Levels

Alan Glazen, whose career spans advertising, video production and entrepreneurship, gave a sardonic take on this evolving environment. Wherever there is a vacuum, he said, "criminal elements" are there to fill it.

Organized crime is an estimated $600 billion business, Glazen told MBAs and called on them to put their education to work to find better ways to use the Internet as a media platform.

Di Rienzo reminded the audience of the "very global nature" of media today. The old rules about sharing a piece of the media pie have gone, she said: "Today we have the potential to have big, even enormous audience. Really, it’s an unlimited pie."

As the market grows, new players are entering the arena, and there are new opportunities on all levels. "This business is so exciting – and that’s not going to change."

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