IESE alumni are gathering in Mexico City today for a breakfast session focusing on reaping the benefits of social media analytics. Prof. Sandra Sieber of the Department of Information Technology will discuss and contrast the behavior of today's wired consumers and the actual business practices of organizations.

The presentation, titled "Digital Society and Digital Business: Are You Ready?," is part of IESE's Insight Sessions series, which brings together school graduates, IESE faculty members and invited guests to discuss key business trends and other topics. Hosting the event will be PayBack, an American Express company and leader in loyalty programs.

PayBack CEO Rodrigo F. Gutierrez will provide opening remarks at the session, followed by a welcome from Luis Casas, IESE's director for the Mexico and Central America Region. Following Prof. Sandra Sieber's address, insights will be provided by representatives from Facebook and Google.

The aim of the session is to help companies manage and take advantage of new dynamics sparked by revolutions taking place in the area of mobile, social media and analytics.

IESE will be hosting Insight sessions throughout 2013 in North and South America. Delivered in partnership with firms considered pioneers in their respective sectors, the sessions provide opportunities to gain the latest insights on issues relevant to a specific industry.

"The biggest risk is not to take any risks," Marc Puig, chairman and CEO of the family-run firm Puig, told a session in the MBA Global Leadership Series in Barcelona today titled "Key Success Factors in Building a Global Company."

After an introduction by Dean Jordi Canals, Puig, recounted something of the history of the company founded by his grandfather in 1914. Spain was isolated and impoverished for decades after the end of the Civil War and so Marc Puig’s father and uncle started marketing their own brands of perfume internationally. They then teamed up with Paco Rabanne in 1968 and this was true beginning of the firm’s internationalization.

Outside of Spain Puig doesn’t sell under its own brand but markets other luxury brands such as Carolina Herrera, Nina Ricci, Paco Rabanne, Jean Paul Gaultier, Prada and Valentino. When it acquires fashion houses, Puig said, it doesn’t interfere in the creative side of the business. "We try to sell not just products but experiences," he said. "We try to tell stories."

After a period of steady growth in the 1990s things began to flatten out at the start of this century. "We had to ask ourselves if there was something we could do better than others that would justify our existence," Puig said. "We are at our best at marketing fashion and fragrance. We had become distracted by doing too many things. We needed to focus on our strengths."

At Puig, he said, the emphasis is on passion, teamwork and treating people with respect. The company tries to hire people who engage with its value system and the focus on efficiency and excellence. Puig said he was particularly proud of the rise in market share, given that they are small player compared to their competitors that include giants such Procter & Gamble and l’Oréal. Market share is currently 8.1% and the goal is to reach 10%.

Asked if Puig would they sacrifice family ownership in order to raise capital he said there was no plan to do so but that nothing was ruled out. The idea has always been to build the business and pass it on to next generation, he said. "As long as we’re perceived as an innovative company people will be attracted to us."

In commemoration of International Women's Day on March 8, we present these IESE interviews with top women leaders in which they touch on topics of importance and relevance to women today.

Shelly Lazarus: Women's Journey to the Top

Speaking at IESE's New York Center, Ogilvy & Mather ad exec Shelly Lazarus recalls that when she joined her agency in the 1960s, there were no women executives who had not started out as secretaries. She opted to get an MBA in an effort to avoid getting typecast. Commenting on the tendency of some women to leave business because they don't believe they can juggle it all, she urges them to stay in the game and work for change instead. Women can advance to positions of influence once they understand the power they actually have and ask for what they need. Watch video.

Patricia Francis: How the Economy Impacts Women

Patricia Francis, Executive Director of the International Trade Centre, considers the impact that the global economic crisis is having on women, and highlights the positive effect that the presence of more women on boards can have on corporate governance. In order to reduce poverty in the world today, she says that we need to study how the economy affects women, as it is often women who feel the effects of poverty most. Watch video.

"Greater political and economic integration is needed if Europe is going to survive the challenges of globalization," the ambassador of the Federal German Republic in Spain, Reinhard Silberberg, told EMBA students at a session in the Global Leadership Series titled "The Future of Political and Economic Integration in Europe." The meeting, which was held on the Barcelona campus, was presided over by Dean Jordi Canals and presented by Prof. Franz Heukamp.

Silberberg’s talk focused on the insufficient rules and mechanisms in the Union as it stands. "The Maastricht treaty has not allowed us to avoid imbalances in the euro, nor the problems of public and private debt in many member states," he said. "A lack of competitiveness, regulation and control have played a key role in all of these processes." He added that "the crisis has shown us how we are interlinked as a continent and how the financial situation in one country influences decisions taken in another, and with the current imbalances this can only be corrected with greater integration."

The Four Pillars of a New EU

Ambassador Silberberg listed four axes around which integration needs to revolve in order to create a more united Europe. The first is a common economic policy. "We need a lot more supervision and control at the European level in order to deal with the current debt problems. The financial markets cannot be an issue for member states but must be regulated in an integrated manner by the EU with a European mechanism for banking supervision."

The second is a common fiscal policy. "We need the right to intervene in budgets and all members have to play by the same rules if we are to avoid another crisis like this one in the future," he said.

The third axis is linked economic coordination, which currently doesn’t exist, Silberberg said. "It’s essential to create new linked norms and mechanisms for intervention for those countries that don’t meet their objectives, with the aim of achieving a more sustainable level of competitiveness. Furthermore, business needs to be more focused towards emerging economies which consume an increasing amount of those products of which the EU is a pioneering and also a competitive producer, such as technology."

Finally, if these three pillars are to function well, it is essential "to strengthen the democratic legitimacy of European decisions." Silberberg added that "the future EU has to have a much stronger parliament, capable of legislating, and a government that is capable of carrying out decisions. We have to strengthen the coherence and impact of decisions, strategic relationships and even consider the possibility of a common defense and security system."

In the final analysis, the ambassador said, the EU is an institution that was created by all of us to bring peace and prosperity to the continent and for this reason "we have to take good care of it and demand personal commitment from all Europeans."

With sales of nearly 5 billion euros a year, Spain's soft drink industry is a strong contributor to the economy, providing direct or indirect employment for more than 63,000 people, and creating 350,000 other jobs associated with suppliers and distributors in the retail and hospitality industry generally.

For the first time, a report coordinated by IESE's José Ramón Pin, and coauthored by Prof. Rolf Campos and Gonzalo Gómez Bengoechea, quantifies the true size and socioeconomic impact of this industry on the Spanish economy. The study was carried out in collaboration with the National Association of Non-Alcoholic Soft Drink Manufacturers (Anfabra).

Read full article on the IESE Insight website.

While women business leaders still face work/life balance hurdles, "the world is moving forward" toward a more meritocratic business model, said Leslie Rubio, managing director of Global Banking at Citibank.

Rubio was one of four senior women business leaders who participated in the session, "Redefining Ambition: Different Paths to Success, Top Business leaders Share their Views," organized by the MBA Women in Business Club on March 8, International Women’s Day.

"It’s an evolution, not a revolution," said Rubio, who was joined by Carme Miquel, strategy and business development director at Sanofi Aventis; Karine Heckmann, cofounder of 3PGallery and executive advisor at KHE Consulting; and Inge Geerdens, founder of Executive Research, CVWarehouse and Your Next Move.

The event opened with a presentation by IESE Prof. Nuria Chinchilla, director of the International Center for Work and Family. She described how leading a family can provide women with competencies that can be applied in the workplace such as customer orientation, leadership, integrity, initiative, teamwork and communication skills.

To succeed, however, women must develop a "personal mission" - in order "to have one life, not parts of a life," Chinchilla said. She encouraged women to avoid addiction to work, maintain a balanced lifestyle and learn to delegate.

During the panel discussion, moderated by IESE Prof. Julia Prats of the Entrepreneurship Department, women leaders discussed personal and professional challenges they had faced and how they had tackled these.

Miquel said that International Women’s Day needs to be viewed "positively," as a means of driving positive change in society. Many women start out highly motivated in their careers, but then lose momentum due to work/life balance constraints – something that needs to be changed.

Geerdens described her "up-and-down" entrepreneurial trajectory, pointing out that that adversity is a great teacher and when seemingly bad things happen, often "it can be good."

Unlike men, women tend to focus on their current jobs, rather than on their next career step, said Heckmann, who worked for more than two decades in the corporate world for companies such as Morgan Stanley and Deloitte before launching her own company.

The good news is that business is becoming "more and more about results," said Rubio, "and not about whether you are a man or a woman."

IESE Dean Jordi Canals will be visiting four key cities in Asia starting today through March 15, to forge new ties with companies and universities in the region. The trip will also serve to strengthen contact with school alumni in Asia and promote IESE's activities on a global level.

At his first stop, in Tokyo, Dean Canals will lead a Continuous Education session titled, "How the Financial Crisis Is Changing the Future of Capitalism." During the session, he will analyze how companies and governments in Asia can learn from management mistakes made in the West during the financial crisis.

His second meeting will be in Hong Kong on March 12, when he will lead the conference "The European Union after the Crisis and the Global Economy," also within the framework of the Continuous Education Program. The event will highlight lessons that the European Union has learned from the economic crisis, which began to unfold in 2008 and put the future of the euro at risk. These sessions will also be held in Shanghai on Wednesday, March 13 and in Singapore on Friday, March 15.

During his visit to Asia, Dean Canals will also be visiting institutions and firms such as the Institute for International Monetary Affairs, Nomura Securities, Mizuho Financial Group, Mitsubishi Corporation and NTT Docomo.

IESE's activities in Asia

Asia has played an increasingly central role in IESE's activities in recent years. The school has continued to expand its initiatives in the region through modules of programs such as the Global CEO Program, the full-time MBA and the Global Executive MBA. An important partner for the school in many of these endeavors is the China Europe International Business School (CEIBS), which is located in Shanghai.

With all eyes on the development of Asia, led by the unstoppable activity in China, IESE MBAs have recently produced the first blog in Chinese in order to reach a wider public and to spread IESE’s ideas, methods of teachings to potential students, many of whom – given the current development of Asia – may soon be leading some of the most significant companies and institutions in the world.

The initiative emerged a year ago from the MBA program’s admissions office in order to meet the need to focus the MBA towards new geographical areas and, in principle, to create a project shared by all of the MBA community in China. A number of Chinese alumni have been involved in the preparation and translation of the blog’s content and continue to be involved in the development, maintenance and the updating of the platform while they continue their studies.

As Chenghan Yang, associate director of MBA admissions with responsibility for Asia, says the blog’s content "brings together, on the one hand, useful information about the MBA such as the content of modules, the admissions process or the advantages of studying in Barcelona. On the other hand, we also want to reflect the day-to-day experiences and activities of IESE in a more informal and less institutional manner."

Allen Zheng (MBA ‘14), says the idea is that the blog will provide really useful information for all of those Chinese alumni who are thinking of coming to study at IESE, as well as for their families. "For example, we recently added a post about how to get a visa to enter Spain because this is really useful information for future alumni."

Since the blog was launched, the main objective of the five Chinese MBA alumni involved in writing and editing it is to keep it up to date and post significant news items. In the future, they hope to promote the blog on some of the most popular social networks in Asia and to raise IESE’s profile in China. All of this contributes to increasing global awareness of the school.

IESE professor and former member of the Executive Committee of the European Central Bank, José Manuel González-Páramo, was recently appointed chairman of the European DataWarehouse, which is responsible for responding to the need for transparency and disclosure in asset-backed securities (ABS).
 
"The subprime crisis spread to the whole securitization market, which is vital for the European banking system since the possibility of securitizing assets provides liquidity and can extend more credit," said González-Páramo. He said he was "happy to continue working in the development of this entity, " which he helped establish and that "ensures the highest standards of transparency, while this market revives."
 
"The European DataWarehouse is a truly European initiative, in which the ECB acted as a catalyst when it was created (2010), which has joined the Bank of England, and which has successfully taken on a life of its own life as a company that is 100 percent private," he said. 
 
Last September, González-Páramo joined the faculty of IESE, where he will continue his academic work. From June 2004 until May 2012, he served as a member of the Executive Committee of the European Central Bank, a position he held after being part of the Governing Council and the Executive Committee of the Bank of Spain.
 
Previously, Gonzalez Paramo served as an economic advisor to Spain's Ministry of Economy and Finance and to the Bank of Spain, as well as a research consultant at the World Bank in Washington DC, Inter-American Development Bank in Argentina, the European Commission, European Academy of Arts and Sciences; Observatoire de l'Epargne Européenne in Paris; the BBVA Foundation Center for Public Economy Studies; the FIES-CECA Foundation; and the Institute for Fiscal Studies.

The problem in many big organizations is that people who want to innovate don't really know how or they feel their efforts won't be rewarded. In his new book, "Innovation as Usual", IESE Prof. Paddy Miller explains the processes that leaders can employ, such as "stealthstorming," to release the innovative capacity of their organizations.

“Operations are nothing more than a mix of activities necessary for delivering a product or service to a client with the best guarantee. But in the world of art and entertainment, this process means starting from a single idea and giving it form until you have outlined all the details,” said Lleonard Garuz, former technical director of the Gran Teatre del Liceu.

Garuz spoke to IESE Business School alumni recently about the processes that allow an internationally-renowned opera house to work perfectly and at a frenetic pace. His presentation formed part of the Continuous Education Program and was held on March 12 on IESE’s Barcelona campus. To understand the level of management complexity of operations at the Gran Teatre del Liceu between 1999 and 2010 – the period when Garuz held his position – the context needs to be clearly described.

According to Garuz, the decade he spent as head of operations was marked by intense competition among theaters of similar caliber, as well as economic growth. “It was not a about having bigger audiences than others, but to have more prestige and excellence. This is what made us work to have a high level of activity,” he said. “Other important factors were that our budget was smaller than the average for these types of institutions, despite the economic situation at the time. Also the Liceu had just been rebuilt, after burning down in 1994, so we had to show the world all its splendor.”

Organization and commitment

Following a rigorous plan of objectives – which each year defined the number and type of works and stage set ups needed to compete with the world’s best theaters – and taking into account the opportunities the newly-reconstructed building offered, the management defined a personnel structure, an organogram and a system of process planning.

“We adapted personnel and the budget each season to meet certain standards and work in the way we wanted to. But in reality, it was only possible because people in the theater world loved their work above all else. Without this level of dedication from everyone, the success we experienced would not have been possible,” he said.

On an operational level, the most interesting and complicated process was integrating daily activities with preparations, rehearsals and new performances, he said. And because there is only one stage at the Liceu, bottlenecks were inevitable and had to be perfectly managed.

“There was no time for delays. To be able to manage everything, we had to start planning projects two years in advance, going through each and every one of the required processes until the day of the opening performance and transforming the initial project into a plan that included all the theater’s activities - day after day, hour after hour - so we could fit new stage set ups into an endless schedule.”

INEO – Initiative for Excellence in Operations

The Continuous Education session “Opera and Operations in a Large Theater: Competitiveness and Productivity” was moderated by IESE Prof. Josep Riverola, who also presented a new project, the Initiative for Excellence in Operations (INEO). Within the framework of IESE’s International Center for Logistics Research, the INEO seeks to generate new knowledge on operations management and technology in business through the exchange of experiences and dialogue among academics and business leaders.

Greek philosophy tells us that everything is in a state of flux, of continuous change. At the beginning of the 21st century this statement applies to business more than ever. Companies around the globe are constantly re-evaluating their sales propositions and modifying their value chains, striving for a more international profile of their employees as well as trying to find ways to reduce the effect of continued high levels of uncertainty in the financial markets. All these initiatives require companies to engage in projects of organizational change.

Most people, however, have a pronounced affinity for the status quo and prefer things to stay the same. And many managers fail to understand the importance of driving change successfully and the role it plays in ensuring the lasting success of initiatives. Managers fail to see the importance because they believe that a well thought out project plan is all it takes and that their staff will execute it accordingly. They assume that every stakeholder will be aware of the objectives and outcomes of these new initiatives, the impact on their roles and responsibilities and on the culture of the organization, as well as on the structures and processes. Critically, they also believe that every stakeholder agrees with the prescribed outcomes of the new initiative and that he or she will emotionally tune in and engage in the process. After all, the project plan is a result of rational thought and logical in its conclusions.

Change Management

Unfortunately, this coherence between management and organization is seldom the case. And even if it were the case, why take the risk of misalignment? Why not ensure that a project plan always includes the pertinent change management milestones and activities? Based on our years of experience in the field of management training and change management we believe the answer can be found in the fact that many managers seldom find the time to develop the abilities required to drive change successfully. While being experts in developing strategies to reduce costs, increase sales or enter new markets, they often struggle to successfully implement sustainable major organizational initiatives.

Why is this so? Successfully implementing a new initiative – be it growth, operational excellence, diversification or innovation - will involve the need to mobilize the workforce, to engage multiple internal and external stakeholder groups, to examine the existing culture and sub-cultures, to alter existing operating models and organizational structures as well as re-evaluating the organization’s core processes along the value chain.

Projects of such complexity are indeed daunting and generate a certain degree of fear or apprehension in everyone involved. The complexity is driven by the number of stakeholders engaged, the influence they exert during the project life-cycle, the expected benefits to be derived from the agreed investment and the undoubted pressure that will be placed on management and project teams involved to deliver on time and within budget. As a result, people involved in such projects often perceive them as something negative rather than positive. Thus it is no surprise that company-wide initiatives often fail for the wrong reasons: not because they are wrong, but because they are poorly managed.

To develop sensitivity to this problem, managers need to reflect on a number of basic issues. The first of these is "understanding": the need to understand the rationale for the changes that the organization wants to make. A second one is "impact": the need to assess the impact of the changes on the organization - and hence the level of change required. Finally, they need to be able to drive "execution": the need to determine the type of change required and how it will be rolled out throughout the organization.

Developing and navigating change in today’s business environment is without doubt difficult to master. However, by understanding the type of change necessary (e.g., developmental, transitional or transformational), backed by the selection of the appropriate change strategies, the journey becomes infinitely less complex - and perhaps even enjoyable!

The Change Agent

A crucial element in achieving this more positive and harmonious attitude towards change is a thorough understanding of the role of the change agent. What are the necessary skills to implement change and execute strategy? What behavioral patterns support this process? While answering these questions generates some insights, it is only the first step.

Developing and implementing the desired level of change within an organization is fraught with problems and, in many cases, leaders and managers will be entering terra incognita. It is therefore safe to say that without some sort of roadmap in place, the initiative is at an immediate disadvantage.

Roadmaps, however, are always subject to change, driven by today’s dynamic business environment. One of the often underestimated drivers of these dynamics is the fact that today’s mid-size and large companies are multicultural organizations. And while finance, marketing and operations are well reflected in today’s curricula of leading business schools, the topic of multi-cultural management receives academic treatment, at best.

The best leaders are those who have a strong sense of self-awareness, retain a sense of authenticity and resonate positive emotions while not losing the focus on the task at hand. They work towards a strategic goal by making things happen in the organization, both along the analytical and the behavioral dimension.

With the aim of providing an environment where managers can learn about and test their abilities in developing and implementing strategic initiatives in the service sector, IESE has devised the short focused program "Driving Change Successfully", runs from March 19-22 in Barcelona.

Article by Prof. Marc Sachon and Anthony Benitez, CEO and Partner at Ascension Management Consulting, published in the IESE Alumni Magazine #128.

On March 14-15, IESE Business School will host the 15th Annual Luxury Goods Industry Meeting on the Barcelona campus, under the theme "The Perfect Storm?"

The event, which brings together CEOs, experts and academics, will focus on a range of disruptive factors which may converge in the near future, potentially leading to a perfect storm for the industry. Among these factors is the prolonged stagnation of the global economy, and the resulting socio-political environmental changes that might affect both consumption and the fiscal environment.

Technological disruption and new business models are also emerging at different stages of the value chain, with unclear consequences for the industry. Finally, consumer trends, both in demographic and geographic terms, will require increasing marketing sophistication, raising the uncertainty faced by managers.

Led by IESE professors Pedro Nueno and Fabrizio Ferraro, the meeting will include the participation of senior industry leaders from firms such as Gucci, Tous and Luvanis, among many others.

With roughly 3.7 million inhabitants, the coastal city of Yokohama ranks as Japan's second most populous metropolis after Tokyo. Despite its size, however, Yokohama - which won the World Smart City Award in 2011 - stands out today as one of the world's most innovative cities.

New knowledge and technologies contributed by leading Japanese companies have helped the city develop successfully, said Shiro Hamano, Executive Director of Climate Change Policy Headquarters, who addressed members of the MBA Energy Club at a special presentation on IESE's Barcelona campus.

"It (the award) was recognition for our efforts of implementing the Smart City concept to a developed megacity, which is far harder than applying it to a new city," he said.

Established in 1859, Yokohama is relatively young. Yet its role as an international gateway to Japan and the rapid urbanization of the municipality has led to a flexible city, with active citizens willing to pursue new approaches to improving standards of living.

"Yokohama has been leveraging its active citizens to experiment with the Smart City concept and relevant technologies," said Hamano.

Prior to the creation of the Smart City concept, Yokohama had already launched an initiative to reduce city waste by 30 percent. Officials "had to have over 10,000 informative sessions with citizens every year" to gain their cooperation, which resulted in reaching the city's target in 2005, five years ahead of plan, he said.

Building on this experience, the city began advocating the benefits of the Smart City concept in a way that was understandable to citizens. City officials stressed the potential drop in households’ electricity payments, since the initiative's primary objective - a reduction of CO2 gas emission - was not a top priority for average citizens.

Other projects, which are led by a strong project team, have also started bearing fruit, he said. The introduction of the Home Energy Management System (HEMS) to some 1,000 households has led to an 8 percent reduction of electricity use through visualized usage data. This reduction could be increased to 20 percent, he said, by sending consumers Demand Responses, which are requests to save electricity usage in a certain period of time with an incentive.

Moreover, the city has been introducing electric vehicles for several purposes including car-sharing in shopping areas and visiting medical care by doctors.

Hamano said the biggest challenge the project faces is regulation related to electricity, which is complicated in Japan. Once, for example, the city came up with the idea of using solar panels already installed on a factory roof to transmit electricity during non-peak times to an adjacent hospital. However, the city faced not only the challenge of implementing the required infrastructure, but battling those who claimed the transmission was illegal. Due to existing regulations, the city has had to limit the transmission agreement to cases of emergency.

"We face a lot of challenges through the project. But we are committed to overcoming them to create value for all stakeholders - environmentally, economically and socially - and to solve urban problems the world is now facing, as a leading model of Smart City," he said.

Hamano's visit underscored IESE Business School's ties with Japan, as well as commitment to the Smart City initiative. Japan plays a key role in the school's global activities, through IESE's local Alumni Chapter in Japan and ongoing executive education initiatives carried out there.

"The 21st-century is going to be one of huge changes. Over the next few years we will see an immense transformation of the world economy, with an impact similar to that which occurred during the first Industrial Revolution." This was the view expressed by the IESE economics Prof. Pedro Videla at a meeting held at the Telefónica District auditorium in Madrid. The speech, which was titled "Key Factors of the 21st-century economy," was part of the series of the e-KISS Universitas conferences jointly organized by IESE and Telefónica.

Videla highlighted various aspects of the current economic situation. He pointed out, for example, that world GDP had been growing constantly since 1975, until 2009. "In 2010, the global economy was once again growing positively, which shows that the world recovered quickly from the recession," he said. That said, this growth was led by emerging countries (China, Brazil and India, among others). Western countries, above all the United States, Canada and large parts of the European Union, have serious problems.

If this trend continues, in 2050 Asia will generate 50% of the world’s GDP while Western Europe will only produce 7%. This growth in world GDP will have various effects. On the one hand, it suggests a significant decline in wealth. "Some 500 million people have ceased to be poor since 1970," he said. Another effect is more negative in that the difference between the rich and poor has increased and inequality and associated tensions are growing.

"The new axes of world economic growth are Asia, Africa and Latin America," he said. And he produced some data. Between 2012 and 2022 Asia, with the exception of Japan, will grow by 56%. Latin America will grow by around 7.5% and the North American countries by around 10%. Western Europe will not achieve more than 6.4%. "This suggests a convergence in the world economy that we’ve never seen before," he said.

"Countries Don’t Compete, They Become More Commercial,"

Nevertheless, the professor is optimistic. "Countries don’t compete, they become more commercial. When countries interact they generate wealth. And so if Asia is doing well, we will also do well," he said. "We are going through a fundamental change in the way the world produces. Asia, Latin America and Africa are going to have a major impact on the economy of the 21st century." The big multinationals are aware of this and have increased their direct investment in China, Brazil, Mexico, India, Russia and Korea.

At the same time Videla said that developed countries are suffering particularly at the moment, given, among other reasons, the fiscal imbalance created by large amount of public debt which is "something that is very difficult to balance." This has led to the so-called "socialization of losses" on the part of states. To stop the bloodletting, the European Central Bank and the Federal Reserve of the United States are printing more money and that’s creating a large amount of liquidity in much of the world. "But when this money, which at the moment is in the banks, once more reaches the street were going to have another bubble," he warned.

Faced with this, what might happen? According to the data, a variety of things: taxes might rise, there may be new property bubbles and more extensive cuts to the welfare state. "The problem with this crisis is who is going to save those who tried to save us," Videla said.

Facebook is too open for corporate social networks but companies are buying into new networks in readiness for social networks becoming part of their product roster. The time has come for leaders to think how they want to connect employees with their boss, their team and their peers. IESE Professor Sandra Sieber discusses the main advantages of corporate social networks: breaking down communication silos, facilitating teamwork and supporting a process view.

Watch video.

The 15th Annual Luxury Goods Industry Meeting, which was held on IESE’s Barcelona campus on March 14-15, took as its theme "The Perfect Storm." After an introduction by professors Fabrizio Ferraro and Pedro Nueno, the first session was led by Carlos Falcó, the Marqués de Griñon, who is executive chairman of Círculo Fortuny, a not for profit association established to promote Spanish cultural and prestigious products and to improve the image of Spain as a luxury brand. Its 52 members cover a range of sectors including gastronomy, jewelry, cosmetics and fashion.

Culture and creativity are key drivers for creating jobs in the EU, Falcó said. Furthermore, Europe dominates the luxury brands market with a 70 percent share of the market. The sector is forecast to grow 7-9 percent per year, he said.

Falcó was followed by Luca Solca, managing director luxury goods at Exane BNP Paribas, who said that the idea of there being a perfect storm for the sector was only true from the point of view of the European market. The biggest threat comes from the anti-corruption drive in China which may affect the "gifting" culture. China accounts for 26 percent of the €55 billion world luxury market. Wealthy Chinese spend more on personal luxury goods than their Western peers, Solca said. He added that rising income inequality and social envy is on the rise in the West and that this may affect sales, but globally the outlook for growth is positive.

The next session, "Old Wine in New Bottles? The Art and Science of Luxury Goods Brands Revival," was moderated by the journalist Hannah Elliott, who writes on luxury for Forbes magazine. Arnaud de Lummen, CEO of Luvanis, looked at 10 brands that he called "sleeping beauties," brands that had a great history but had become "dormant." One example he gave was Balenciaga, which was established San Sebastián in 1919 and moved to Paris in 1936 but closed in 1968. It was successfully revived in 1986 and purchased by the Gucci Group in 2001 and in 2012 had a turnover of €300 million. On the other hand, the shoemaker Herbert Levine, whose shoes were worn by Marilyn Monroe and Jackie Kennedy, has been dormant since 1975. Its revival is imminent.

Pierre Mallevays, founder and managing partner Savigny Partners, said that every luxury brand is a mixture of heritage and creativity. Part of reviving the brand lies in associating it with its heritage but this is not enough if you don’t get the creativity and financing right, he said.

The next session was about capturing the jet set market and was titled "Consumers Without Frontiers" and was moderated by Pedro Nueno.

José María Palencia, CEO of the World Duty Free Group, said people spend €750 billion on what could be called lifestyle products and 40 percent of this is spent by people on the move. Travel and tourism is the world’s fourth biggest industry and travel is becoming cheaper. Airports are a more important luxury outlet in Asia than in Europe, Palencia said. There is a risk that some brands are becoming too dependent on the Chinese market with some selling more than 50 percent of their products there.

The next speaker was Eduardo Rivero, founding partner in the consulting company Ascana which helps French and Spanish fashion brands to find suitable real estate in other countries. All luxury brands are based on family firms and like families are all different and have grown in different ways, he said. "We have focused on Europe because there are a lot of undeveloped markets in places where there is a lot of money," he said.

Entrepreneurship and brands

In a separate session, moderated by Prof. Ferraro, Oliver Ike spoke about the challenges of launching a new company in the luxury sector. "One of the problems is distribution: convincing salespeople that your product is the same or better than another," he said. Another frequent obstacle is supply, since items are manufactured in small quantities.

His brand of Swiss watches A. Manzoni & Fils doesn’t seek to compete with major brands, which invest a lot more money in production and advertising. Instead, the firm focuses on quality craftsmanship. They have also sought to bring a touch of Lugano to their products, which makes them difficult to copy.

Currently, the company has four business units: wristwatches, table clocks, movement and renovation of the original A. Mazoni & Fils factory in Lugano. He believes that the brand will generate profits in three years.

One of the company’s missteps was to move too quickly in some markets, he said. "There are markets that generate trends: if you are not in these markets, it’s difficult to move into others." In the case of watches in Europe, Italy is the "trending" market, followed by France. He cautioned against entering too many markets and instead "enter a few and enter them well."

Online strategy

Watches that cost around 25,000 euros are not sold online since customers want to touch and see them. The online strategy, therefore, is to transform potential clients into buyers, he said. Regarding copyright and copying, it has become difficult to maintain an original design. You have to take more risks and create products that are difficult to copy.

Shelley Tichborne – who founded MOU, a shoe and specialized boot company – concurred that avoiding replication is a key problem in the fashion industry. In 2007, she discovered that one of her boot designs was very popular in Japan because she was receiving emails from Japanese girls congratulating her. Yet she did not distribute in Japan. Later she found out the her brand had been registered in Japan and China and copies of her products were being sold in those markets. She decided to buy rights to these "pseudo-brands." "In my industry, it is practically impossible to keep your product from being copied."

In another case, she found out that one of her suppliers had taken one of her boot designs, registered a new company and was the product during New Zealand’s fashion week. A legal conflict ensued, with MOU finding itself forced to work with the company that had copied the design, Tichborne said. Her company controls online sales carefully, making sure that retailers do not sell online without her permission through a signed contract.

The session with Tichborne was followed by the Investment Forum for luxury brands, moderated by Victoria Velázquez, Start up Business Coach. The event was organized together with the Private Investor Network and IESE’s Entrepreneurship and Innovation Center, providing an exceptional opportunity for entrepreneurs to present their projects to private investors and venture capital funds.

Emerging markets

On Friday, the meeting began with a panel discussion, moderated by Paulo Feferbaum of Clarity Partners Europe, focused on internationalization through emerging markets and factors that affect doing business in Brazil and India.

Rosa Tous, director of corporate relations for Tous, described how her company has expanded globally from its home base in Manresa, Spain to more than 417 stores around the world. The jewelry and accessories company currently boasts 55 stores in Mexico, its second largest market after Spain. Forty new stores will open their doors in different markets in 2013. Social media plays a central role in the how the company engages with customers, said Tous, since "it allows you to create links quickly in any part of the world."

Sergio Costa, managing director of Brazil Business Consulting, explained how complex and constantly-changing tax laws in Brazil continue to hamper doing business in the country. And while the Brazilian market is massive, luxury brand companies should keep in mind when setting strategy that most wealth is concentrated in the southern region of the country. Meanwhile, Rahul Prasad, managing director of the Asia-Pacific and Middle East for Pike Preston Partners, described the intricacies of India’s diverse marketplace. Over the last two years, there has been an important influx of flagship luxury brand stores in India, although there are signs that the luxury sector is slowing now. He explained that tastes differ markedly in India, with consumers in the south preferring a more restrained aesthetic, and those in the north engaging in more "conspicuous spending." A population of 1.2 billion consumers and a long tradition of purchasing luxury products make India an attractive market for many brands, he said.

A session with Martí Torres, director of marketing for Barcelona’s opera house, the Gran Teatre del Liceo, followed. He described the important synergies that can be developed between luxury brands and cultural entities such as the opera house. Benefits for companies include brand positioning, an increase in customer loyalty and access to key markets.

In the final session of the meeting, Micaela Le Divelec, vice president and CFO of Gucci shared the story behind the iconic fashion firm and insights on what has led to its success. Throughout its 90-year history, the Italian company has continued to focus on high-quality craftsmanship and strong links to art. With a turnover of 3.6 billion euros in 2012, the company has 429 directly operated stores distributed fairly evenly across the world’s key markets. Japan remains one of the firm’s biggest markets, where 11 percent of Gucci stores are located. As the company has grown, it has kept production in Italy, while maintaining "a deep respect for the culture of local markets," she said.

“When undertaking any marketing strategy, you have to focus on quality and adapt the theme to the brand’s territory,” said Rafael Esteve, president of Vinicius Young and Rubicam, who took part in the IESE Continuous Education session, “Brand, Creativity and Content,” held on the Barcelona campus March 14. The event was part of the Sales-Digital Marketing Management Series.

Following opening remarks by IESE Prof. Carlos García Pont, Esteve outlined steps for embarking on a content marketing campaign: choosing a theme that adapts to the brand’s territory; editorial planning, that allows content to be shared on social networks; conversation control, and above all, impact measurement.

He also provided examples of content marketing campaigns that have had remarkable results, such as Red Bull Stratos, a strategy that he described as “historic” for its relevance and telling a unique story.

Esteve also stressed the capacity for conversation about companies on social networks, which often do not require many resources. He cited the campaign for the U.S. blender brand Blendtec, which went viral though a series of homemade videos that cost less than $100. The videos, which feature the grinding down of objects including an iPad, have boosted sales by 700 percent.

Santi Mier (PDG ’12), vice president of marketing for Danone Dairy, highlighted several recent successful campaigns. He described how a basic product – yogurt - gained differential value through the campaign, “The Ranchers,” as well as the case of Yolado, an innovative product that generated viral momentum all on its own. He also discussed the Evian campaign “Live Young,” which generated buzz around both an experience and status.

Finally, Xavier Mas (PDG ‘00), marketing director of the bank “la Caixa”, described various loyalty programs within his company, which offer products for distinct age groups through a combination of online and offline channels. Thanks to the initiative LKXA (text message short-hand for the bank’s name), “la Caixa” has gained more clients between the ages of 14 and 25 than any other bank in Spain, offering financial, social and entertainment benefits among others.

The campaign for the program clubAhora, aimed at seniors, has a strong offline focus. Yet it has managed to develop a community in which clients interact, while allowing the bank to promote discounts, identify customers’ interests, generate feedback and implement improvements. At the same time, clubAhora has fostered a feeling of belonging among its members, he said.

News in the March edition of "Eye on IESE": IESE's U.S. Advisory Council, 10th Doing Good and Doing Well conference and European Award for the case study Voltium, Inc. Don't miss: Innovation as Usual, with Prof. Paddy Miller and the IESE Entrepreneurial Forum in San Francisco.

The latest issue of the IESE Insight Review makes important contributions to the debate about how we can avoid the mistakes of the crisis and usher in a new, more sustainable age of capitalism, where human development becomes the No. 1 priority again.

José M. Campa analyzes where the finance function went wrong, while Juan Almandoz shows how banking lost its way. Both concur on a key point: If you don't start with the right set of principles or guiding logic, you'll end up in a place you don't want to be.

Principles are also behind responsible investment, a movement that Fabrizio Ferraro describes in his article, and then elaborates on in an exclusive interview with James Gifford of the U.N. Principles for Responsible Investment. The crisis, he says, has stirred more people to question the dominant discourse that would make quarterly returns the sole measure of value.

Mireia Giné confirms that the trend is decidedly toward greater scrutiny of corporate behavior, transparency, disclosure, shareholder empowerment and accountability. As such, Pablo Sagnier and Luis Baón, of the international executive search firm Egon Zehnder, highlight how the CFO role will have to change to deal with these future challenges.

We also feature material from the new book, Innovation as Usual, by Paddy Miller and Thomas Wedell-Wedellsborg, in which they share "The 5 plus 1 Framework" - a diagnostic tool to identify the biggest behavioral bottlenecks to innovation in your own business, and how to fix them.

Other articles reveal how to leverage global business opportunities: Pankaj Ghemawat interviews Daniel Servitje, CEO of Grupo Bimbo, about how this Mexican family business has managed to become the largest baking company in the world; and Erran Carmel, of Kogod School of Business, presents strategies to turn the problems of geographically dispersed teams and time zone differences into a source of competitive advantage.

IESE Insight is a quarterly research-based magazine, published in separate English and Spanish editions. Its premium content is linked to articles from the IESE Insight knowledge portal, which contains research and teaching materials, opinion articles, business indices, audiovisual materials and an extensive database of more than 20,000 scholarly references.

Read more at the IESE Insight Review website.