“Changes - not tweaks - in the rules of the game” are needed in Spain today, said IESE Prof. Antonio Argandoña, discussing reforms required for the country to adapt to the current social and economic environment.

IESE José Manuel González-Páramo said the reforms have become urgent because Spain did not implement the necessary measures for adjusting to a single currency, while other countries – such as Germany – did so.

Another reason for the urgency is the sheer complexity of the world as compared with a few decades ago, he said. Emerging countries currently produce 50 percent of the world’s GDP, and in 2050, four out of five of the most powerful countries in the world will be BRICs (Brazil, Russia, India and China).

The two IESE faculty members analyzed reforms and the role of companies in this context during a Continuous Education session titled, “Reconverting the Economy and Society: What Role Should Companies Play?,” organized by IESE’s Alumni Association on April 24 on the school’s Barcelona campus.

“The best way to carry out reforms is to generate an awareness of their necessity,” said Prof. González-Páramo.

Prof. Argandoña outlined various measures he views essential such as public sector austerity, reform of the financial sector and the application of taxes that are “equitable, fair, clear, simple and easy to apply.” The measures should also bolster efficiency, sustainability and transparency.
 
In the private sector, government policies should support competition and the reform of specific industries, as well as stimulate credit flows in order to strengthen the financial system, he said.

Also discussed was the importance of a healthy legal system that guarantees efficient and reliable regulating agencies, a separation of powers and legal safety.

“Technical competency is needed for the reforms; not only to identify problems, but also to be creative in finding alternatives for their solutions,” said González-Páramo, citing several obstacles that stand in the way, such as powerful special interest groups and poor government communication practices.

“In a crisis such as the current one, we need leaders who have the clarity to see what is happening and make necessary decisions; who know how to stand up to special interest groups and maintain a commitment to society and Europe,” he said. Anyone who wants to succeed in business should “understand that the situation is challenging, but also offers many opportunities.”

Prof. Argandoña concluded the session by recommending that business leaders “look after communication policies, identify alliances inside and outside the company, avoid overreacting, but also avoid losing time, and understand the changes that they will undergo,” not only in their own sectors, but in those that they may depend upon.

In recent years, firms have been increasingly scrutinized for wrongdoing concerning the environment.

Investors discount share prices of polluting companies, governments introduce policies that place a cost on emissions, and consumers consider a company's environmental philosophy when purchasing products and services.

A possible response to these mounting pressures is environmental innovation - the development of products, processes and services aimed at reducing environmental harm.

In comparison with other practices, environmental innovation is riskier and requires greater financial commitment. But in the long term it usually accrues returns.

IESE Professor Pascual Berrone, along with Andrea Fosfuri, Liliana Gelabert and Luis R. Gomez-Mejia, studied the impact of institutional pressures on firms' environmental innovation in the paper "Necessity as the Mother of 'Green' Inventions: Institutional Pressures and Environmental Innovations," which was published in the Strategic Management Journal.

Read full article on the IESE Insight website.

“Insurance is a fundamental economic pillar and has come through the crisis well. That said, in five years the sector will be very different from today and there will be both winners and losers along the way,” José Miguel Andrés, president of Ernst&Young, told the 3rd Insurance Sector Meeting held last week on IESE’s Madrid campus. The event, coordinated by Prof. Jorge Soley, was jointly organized by the CIF-Center for International Finance del IESE and Ernst&Young.

The fall in household spending has had a direct effect on the insurance sector, in spite of which “it got through 2012 pretty well” according to the secretary general of UNESPA, María Aránzazu del Valle. “This is a crucial moment. In general the sector is doing well and making money but it has had to make some significant adjustments of its margins,” she said. Looking ahead to 2013, she said that most insurance companies expected business to grow by around 3% thanks, above all, to the increase in life insurance. This branch, along with health insurance, has weathered the storm better than others.

Challenges for the Sector

For IESE Prof. Jorge Soley  the sector faces three challenges: the aging population, low interest rates and the need for efficient management.

“The current state pension system is not viable. It is necessary to take some unpopular measures which will have a significant social cost, but there’s no alternative,” he said.

Prof. Javier Díaz Giménez said that minimum  and contributor pensions need to be completely separated. “We should see minimum pensions as an expression of our solidarity with the elderly. They must be funded out of the state budget and should be fixed according to the income and wealth of those receiving them,” he said.

He said that the Spanish pension system had been reformed six times in the past 27 years, each time “with the aim of reducing this size of public pensions.” He added that not even hypothetical economic growth would be a solution to this question.

Taking Care of the Insured 

Miguel Ángel Zarandona, director of management of risks and insurance at El Corte Inglés,  said that “we’re not going to get what we’re looking for unless we offer quality, confidence, stability and continuity.” He said that it is a moment of truth in the relationship between the insured and the insurer.

“We have to manage risks without forgetting that we have to offer the client value.  We have to offer solutions faced with the demand for guaranteed returns. We have to bring our experience to bear in the management of commitment to long-term profitability and be able to offer to supplement state pensions,” said Jordi Arenillas, the deputy director of economics and finance at the VidaCaixa Grupo.

The Challenges for Companies

Antonio Huertas, the president of Mapfre,  commented that internationalization had strengthened his company’s growth, with foreign operations now representing 63% of business. “The business is 10 times bigger than it was 20 years ago,” he said.

He believes that Mapfre’s success is based on their investments in Latin America, diversifying the business, flexibility in adapting to local markets and improving efficiency, among other aspects.
 
The CEO of Zurich España, Julián López Zaballos,  said that “Zurich’s mission is to help clients to understand the risks and to protect them.” The company manages risk through integrated management to protect its capital base, strengthen value creation and defend its reputation and the brand.

The president of Pelayo Mutua, José Boada, said that “in recent years the sector has become more concentrated. The 10 big insurance companies cover 76% and 63% of life and non-life insurance respectively.” Furthermore, these 10 groups were the ones that had grown the most and were most profitable. “Companies that are more specialized in particular activities are performing better than the rest,” he insisted.

In his opinion, the trend is for insurance companies to make larger investments “but the risk is that the mistakes they make will also be bigger.” “What really matters is the ability to offer the client something different, regardless of size. This value differential is key,” he concluded.
 
Iñaki Ereño, CEO of Grupo Sanitas, admitted that being a big company helped them do business. “Size allows Sanitas to offer a business model that is unique in the world with healthcare. As a result we have managed to grow in an adverse climate,” he said.

Jaime Kirkpatrick, CEO of AEGON, said that “specialization and the ability to adapt” are more important than the size of the company. Kirkpatrick gave the example of his own company which specializes exclusively in life insurance and which has had to reinvent itself twice in less than 10 years because of, among other things, the disappearance of the savings bank model. “We’re a small but dynamic company when it comes to generating business,” he said.

 There will also contributions from the Spanish Minister of pensions, María Flavia Rodríguez-Ponga; the director-general of CASER, Ignacio Eyries; the director-general of the Consorcio de Compensación de Seguros, Sergio Álvarez Camiña; the director of Riesgos Patrimoniales at ENDESA, Juan Rincón; the manager of Riesgos Corporativos at Ferrovial, Daniel San Millán; and IESE professors José Luis Suárez and Juan José Toribio.

Five years ago the mobile app market didn’t exist but by 2015 it will be worth $60 billion, says Prof. Javier Zamora. Mobile software exploits the contextual information the mobile can access, making it possible for employees or clients to make decisions in real time. Soon there will be 10 billion smart devices connected to the Internet and everything will get faster and more streamlined.

Watch video.

In the context of the crisis of Western economies, healthcare, a fundamental part of the welfare state, is coming under scrutiny. The healthcare system has become a key question for developed countries, especially now, when they face deep economic, budgetary and social changes. Is the current system sustainable? In 30 years time will the national healthcare system be like the one we’ve known up to now?

The Continuous Education Program session “What can we learn from international experience?” took this as its theme at the meeting organized by the Alumni Association and addressed by IESE Prof. Núria Mas on April 25 on the Madrid campus.

“How are we going to be able to offer quality healthcare to a growing population at a cost that we can’t afford now?” she asked. In her view, patching up the system and partial solutions were of no use when what we face is a “structural challenge” under enormous “financial pressures.”

“As GDP per capita rises in a country, its inhabitants want to spend more on healthcare,” the professor said. This can be extrapolated to all the countries in the world, including emerging countries, which are leading world economic growth. But what is happening in Western countries, including Spain? Available resources will have to compete with pensions, and to this we have to take into account an aging population which is living longer all the time.

Join the Debate

In spite of the difficulties, the professor is in no doubt. “Healthcare is a great asset in Spain. It’s a sector in which we excel and which we could export.” However, she believes the only possible solution is to “rethink the healthcare system.” “We have to have this debate and accept that we have to talk about it,” she insists.

She doesn’t believe that spending cuts, copayment and revising the services offered by the public system can resolve this structural challenge. “The first thing we must do is look for ways to improve and from there understand what functions and why. It’s not a question of cuts. It’s fundamental to understand the process and we need to begin as soon as possible,” she said.

Her conclusion is clear: the only way to move forward and to improve is to have as much information as possible. “We can’t improve if we don’t know why it’s not working,” she pointed out. During the session, she produced a revealing fact. A report from the United States Institute of Medicine showed that 30% of health spending did not result in improved health.

Once areas for improvement have been identified, she said we should start to act “where it is most important,” such as in chronic patient care. This group of patients accounts for 80% of total health spending in the United States and Europe. Other essential factors are transparency and information as well as involving patients in prevention and self-management of their illness. “We all have to be involved in this debate: citizens, doctors, pharmaceutical companies and politicians. That is the only way we can find sustainable solutions for the system,” she said.

Is the board an asset or a liability? Shareholders would like the board to be an asset. But this requires that it is established in the right way. The objective of a company is to create value in a sustained way. Shareholders have invested their resources in the company and expect the value of these resources to grow, and they would like to be able to recover the profits on their investment when they need them.

To create value a company needs continuous innovation, growth, correct investments, international deployment and to be able to benefit from opportunities that may appear (acquisitions, diversifications). All these things should happen within a solid financial framework that generates and uses cash while maintaining a solid financial structure. In turn, this means that the company has to be capable of making good use of all the options available in capital markets with all their alternatives (equity, venture capital, private equity, short-term debt, long-term debt, bonds, listing on the stock exchange).

The objective of a board is to make sure that all these things happen in the company in a sustained, balanced strategic way. The board may be under less day-to-day pressure than the management and can help to apply the necessary pressure on different areas at different times with a long-term perspective. The board can also assess the extent to which the management performs well and if at some point there is a need to develop, add or improve specific management skills.

Shareholders’ varied perspectives

There are different types of shareholders, however. The minority shareholders of  listed companies, for instance, want total and immediate liquidity. If they need their money for another investment, for example, if they feel at a given moment that it may be better to invest in real estate, they want to be able to convert their shares into cash instantly. Other investors may have a longer-term perspective and may prefer to invest in funds that contain a basket of shares from listed companies. They trust the evolution of the basket in the medium term. But there are also shareholders of family-owned companies who may have a much longer time perspective, trusting in the accumulated value in the company that becomes the repository of the family’s wealth.

The bigger the shareholder’s commitment to the company, the greater the pressure on the company’s board. The members of the board of family-owned companies may have to answer detailed questions from the family and may need to adapt their decisions to the specific regulations established by the family with regard to access of family members to the company; to its management or governance; their succession, and distributing the wealth created or accumulated versus using it for business diversification. Compliance with family-specific expectations is not easy and some outstanding board members of listed companies have not performed so ably in well-known family-owned companies, and have had to leave the board.

For successful governance the board should include people with a variety of perspectives (industrial, international, family-owned companies, listed companies, entrepreneurial ventures, financial markets, understanding of the economy). It’s not necessary for all the board members to know everything. What’s important is the overall content of the board. As the company evolves, the board can be enriched as necessary through board member rotation. Experience has shown that a certain renovation of the board is required, but to carry this out may entail a regular professional assessment of the board and its members.

Fortunately, today we have a lot of knowledge about how to form a board, and its operation and assessment. The correct application of this knowledge can positively affect the board’s performance and, as a result, that of the corporation.

You can read the complete article by Prof. Pedro Nueno in the IESE Alumni Magazine, issue no. 129.

Is the board an asset or a liability? Shareholders would like the board to be an asset. But this requires that it is established in the right way. The objective of a company is to create value in a sustained way. Shareholders have invested their resources in the company and expect the value of these resources to grow, and they would like to be able to recover the profits on their investment when they need them.

To create value a company needs continuous innovation, growth, correct investments, international deployment and to be able to benefit from opportunities that may appear (acquisitions, diversifications). All these things should happen within a solid financial framework that generates and uses cash while maintaining a solid financial structure. In turn, this means that the company has to be capable of making good use of all the options available in capital markets with all their alternatives (equity, venture capital, private equity, short-term debt, long-term debt, bonds, listing on the stock exchange).

The objective of a board is to make sure that all these things happen in the company in a sustained, balanced strategic way. The board may be under less day-to-day pressure than the management and can help to apply the necessary pressure on different areas at different times with a long-term perspective. The board can also assess the extent to which the management performs well and if at some point there is a need to develop, add or improve specific management skills.

Shareholders’ varied perspectives

There are different types of shareholders, however. The minority shareholders of  listed companies, for instance, want total and immediate liquidity. If they need their money for another investment, for example, if they feel at a given moment that it may be better to invest in real estate, they want to be able to convert their shares into cash instantly. Other investors may have a longer-term perspective and may prefer to invest in funds that contain a basket of shares from listed companies. They trust the evolution of the basket in the medium term. But there are also shareholders of family-owned companies who may have a much longer time perspective, trusting in the accumulated value in the company that becomes the repository of the family’s wealth.

The bigger the shareholder’s commitment to the company, the greater the pressure on the company’s board. The members of the board of family-owned companies may have to answer detailed questions from the family and may need to adapt their decisions to the specific regulations established by the family with regard to access of family members to the company; to its management or governance; their succession, and distributing the wealth created or accumulated versus using it for business diversification. Compliance with family-specific expectations is not easy and some outstanding board members of listed companies have not performed so ably in well-known family-owned companies, and have had to leave the board.

For successful governance the board should include people with a variety of perspectives (industrial, international, family-owned companies, listed companies, entrepreneurial ventures, financial markets, understanding of the economy). It’s not necessary for all the board members to know everything. What’s important is the overall content of the board. As the company evolves, the board can be enriched as necessary through board member rotation. Experience has shown that a certain renovation of the board is required, but to carry this out may entail a regular professional assessment of the board and its members.

Fortunately, today we have a lot of knowledge about how to form a board, and its operation and assessment. The correct application of this knowledge can positively affect the board’s performance and, as a result, that of the corporation.

You can read the complete article by Prof. Pedro Nueno in the IESE Alumni Magazine, issue no. 129.

For more information, visit the Short Focused Program Maximize Your Board's Potential.

The proportion of long-term unemployed is rising and this may have implications that will persist long after the economy recovers, says Prof. Núria Mas. Older workers may effectively drop out of the labour market while younger ones may emigrate or join the shadow economy. In Spain the long-term unemployed make up 40% of the total whereas in Germany they have mitigated the worst effects by reducing working hours rather than opt for wholesale redundancies.

International Economic Overview is an exclusive publication for members of the IESE Alumni Association.

“Social networks are not shop windows where you hang a product; they are telephones you can use to communicate and interact,” said Fernando Polo, CEO of Territorio Creativo, a speaker during the Continuous Education session “Social Networks,” organized by IESE’s Alumni Association and moderated by IESE Prof. Carlos García Pont.

Social networks will play a key role in the future of companies, panelists said during the event, which was widely followed on Twitter at #IESELive.

In the 21st century, open collaborative networks – as opposed to patents – will give companies the most leverage, said Polo.

He outlined four elements that should be a part of SMEs’ social business plans: collaboration, content, connections and social heart.
“Look for contexts, learn to develop content, work connections and think openly,” he advised.

Polo said that while social networks can offer opportunities for SMEs, they can be a headache for large companies.

José María Palomare, manager of Communication and Marketing at Telefónica, responded with this Tweet: “I very much agree about SMEs, but I think that they are also a great opportunity for large companies.”

Palomares described Telefónica’s digital strategy, which is “based in online and offline integration, differentiation and relevant content.” He added that “in line with the objectives of the company, we have to be capable of building a digital identity that will allow us to be a knowledge leader in the technology sector. The best way to create differential value is by using internal resources: our employees.”

The goals of the company are now to shift to a 2.0 organization in two aspects: “in the cultural sense, and also with the goal of expanding the communication strategy from a single department to the entire organization.”

“Social networks give you a level of closeness that was not imaginable before,” said Raimon Casals, consumer relationship manager at Gallina Blanca. He stressed the positive results that can come from “active and inspired” communication.

While Twitter initiatives have been successful, the firm has not been able to generate the desired conversation on Facebook “in spite of using basic strategies,” he said. However, the firm is not giving up: “a critical mass is lacking, among other things, but we have to keep working.”

One of his slides summed up the objective of social networks: “The great brands of the future will not just be those who tell the best stories about themselves, but those that tell the best stories.”

Perfectly turned out in their gowns and mortarboards in the bright spring sunshine, on May 3 the Class of 2013 of the IESE Executive MBA Barcelona put an end to two years of hard work that have changed their lives. On the one hand, they have learned concepts that will help them to develop their careers. On the other, the experience and IESE’s humane approach to business affairs have made it clear that they have a responsibility to be aware of their impact on society.

The keynote speech was given by Rafael Villaseca (MBA '76), CEO of Gas Natural Fenosa and a member of the executive committee of the IESE Alumni Association, who looked back nostalgically at his time at the school almost 40 years ago.

“It’s inevitable that I would look back to how 37 years ago I was sitting here in a gown, in one of those first rows of seats, graduating in a similar ceremony. Nor can I help but look back over the adventures of these almost 40 years. Many things have happened, many have changed and many clearly have not.”

After congratulating graduates on the hard work of the past two years, Vilaseca discussed what are, in his view, the keys to studying at IESE. “Without any doubt we chose well by studying IESE; me 37 years ago and you now. Without what I learnt then, without some fundamentals, I would never have been able to fully develop my professional career. Ignoring from fashion and confusion, in spite of crises and bubbles, our profession can and must be based on solid and consistent foundations. This doesn’t mean that change is unnecessary, but the fundamentals of doing our job well have not changed and only need to be modified and adapted to our times.” 
 
Villaseca also talked about risk.  He said that for an executive “there are two factors for assessing whether we are doing the right thing: profit and risk. The first is justified by the second. We mustn’t lose sight of this: we make profits because we take and manage risks.” And he added that “it is essential to  know how to correctly manage the professional and also personal risks that life presents you with.”

The CEO of Gas Natural Fenosa said, “You must be rigorous and professional but not optimistic when it comes to taking on a challenge. In time, you will see what is the best way to move forward and devise an action plan. That is the moment for confidence and optimism! After rigorous and realistic planning, you have to go into action without hesitating, optimistically and confidently, with resolution and the desire for success. Do it professionally and intelligently, and don’t look for the easy way.”

“After the time you have spent at IESE there is one thing that you understand for sure: running companies requires intense and important work and dedication.”

IESE Dean Jordi Canals congratulated the graduates and then went on to say “Today, companies in the West are experiencing a new situation. They’re no longer the main players in economic growth, a position they held for many decades; instead they’re being held responsible for the negative effects of globalization and are unable to assist with the economic recovery. In such a context, what can a manager or business person do? Well, both of them can have an impact on other people and on the company as a whole. The question is: what kind of impact do they – do we – want to have? IESE’s mission encourages managers and business people to try and achieve a positive, profound and long-lasting impact on people, companies and society.”

Canals insisted that “only those who dream of the impossible and work towards it will be able to achieve what, a priori, seemed impossible. Managers who conduct themselves in this way, who always trust “the better angels of our nature” (as Abraham Lincoln reminded the people of the United States while the country was in the midst of a civil war), are managers with direction and purpose, managers who help others find direction in their work too. This is the kind of impact I encourage you to dream of.”

Prof. Julia Prats, Academic Director of the Executive MBA program, reminded graduates that now was the time to respond. “Now it's time to continue with your commitments to your family, job and country, but now with even more responsibility,” she said. “In this new phase in your career, there will be times when you will have to respond (which is precisely the root of the word "responsibility"), report and contribute. And there will be more pressure to do so, given that you have received a great deal and therefore a great deal will be expected of you. In this new phase, I would like to offer you two pieces of advice. The first is that you should not lose perspective. The second piece of advice is this: be passionate about whatever you do.”

José Narbón and Lluis Quintana, presidents of the Executive MBA Class of 2013, ended proceedings with a review of their time at IESE. Narbón said that the graduates were leaving “with a feeling of having accomplished something important at this stage in our lives. However, receiving the excellent human and academic training offered by the Executive MBA also presents us with a great deal of responsibility to our loved ones and society, which is currently under such stress because of the crisis and the lack of values.”
 
Quintana said that “the blows of adversity can be very bitter, but we can't let them come to nothing. It is up to us to fight against them, possibly much more than we imagine. But we can only change things if we first change ourselves, and the EMBA we have completed today is certainly one more step in this direction.”

IESE Prof. Josep Tàpies has been named a Fellow of the Inernational Family Enterprise Research Academy (IFERA). He was was nominated for his many years of significant contributions to the family business field in general and to IFERA in particular. IFERA is an organization dedicated to fostering a network of academics, business owners and practitioners committed to supporting the family business field.

Prof. Tàpies is a full professor in the Department of Strategic Management and holder of the Family-Owned Business Chair at IESE. He has taught general management in a number of different business schools in both Europe and Latin America, including AESE in Portugal, IDE in Ecuador, PAD-University of Piura in Peru, ISE in Brazil, IAE in Argentina, ESE in Chile, and INALDE in Colombia. He has also been a member of the academic board of IPADE in Mexico and ESE in Santiago, Chile.

Prof. Tàpies has worked as a consultant with individual businesses, many of them family-owned, as well as with international banking institutions. He is a member of the board of directors at several companies, the International Family Enterprise Research Academy (IFERA), the Spanish Association of Family-Owned Business Consultants and Academics (CAEF) and the international center for financial research (CIIF). He is also a Fellow at the International Academy of Management.

He blogs (in Spanish) at http://blog.iese.edu/empresafamiliar/.

IESE and the elBulli Foundation formally announced their joint venture today at a breakfast held on the school’s Barcelona campus which was catered by renowned pastry chef Cristian Escribà. The first batch of MBA students recently completed their stint working with former elBulli chef Ferran Adrià and his creative team.

Opening the discussion, Associate Dean Eric Weber described the joint venture as "a magnificent example of collaboration between a business school and a company. It is in elBulli’s DNA to be entrepreneurial and innovative."

After it was voted best restaurant in the world three years running, Adrià served the last dinner at elBulli in July 2009 and six months later announced that he planned to establish the elBulli Foundation. "We will officially present the foundation in November," he said this morning. "We are transforming what was the restaurant into a creative space. It is still taking shape and we plan to open in March 2015, but we’re not in a hurry. It will be a place to reflect and think. We want everyone, even small children, to think about cooking in the context of creativity."

In 2012 Adrià launched the Global Ideas Challenge in which 31 business schools competed to draft ideas of what the elBulli foundation would be. IESE was chosen as the partner to help to develop the creativity center on the site of the restaurant at Cala Montjoi on Spain’s Costa Brava. The project is part of the entrepreneurship course run by Prof. Julia Prats.

As the foundation is very much a work in progress and Adrià is famously mercurial, the project represented something of a departure for the MBA students. "It’s so dynamic, you don’t know what to expect from one session to the next," says Patricia Cabrera (USA), who says it has helped her free herself from a more rigidly structured approach to problem solving. "The team is constantly brainstorming and the aim is always to break the mould and create something new. It’s a way of thinking that could be applied to many fields," says Spaniard Oriol Chimenos.

"It’s the kind of practical experience you crave when you’re in the classroom," says Belkis Boyacigiller (USA), speaking of her three months stint at the Foundation. "It’s not always by the book, which is what makes it so exciting. I’ve learnt a lot about ambiguity and coming up with a concrete solution."

Adrià says he didn’t look on them as students. "I saw myself as a sort of CEO, and they were part of the team," he said, adding that "being creative means breaking the rules."

Watch video.

In most Western economies, health-care systems are facing significant challenges. Scientific and technological innovation in patient treatment has steadily increased life expectancy and quality of life. However, health-care systems have not evolved toward models that are able to incorporate such innovation within the context of current economic conditions, requiring a balancing of limited resources while trying to maintain existing levels of service.

To address this, Jaume Ribera, Magda Rosenmöller and Pablo Borrás of IESE's Center for Research in Healthcare Innovation Management, in collaboration with Accenture, have produced a conceptual framework to help evaluate health-care innovation, in order to optimize the use of health resources when treating patients.

Their framework consists of three key components, which they describe in detail.

Read full article on the IESE Insight website.

A company's "vital patrimony" is a set of memories and/or possessions that a family identifies as testimony or symbolic of its existence. This concept was the focus on the Continuous Education session, "The Incorporation of Vital Patrimony in the Family Business," held on May 7 on IESE's Madrid Campus.

The session organized by IESE's Alumni Association focused on the idea of vital patrimony as a tool that, in the service of business families and their companies, serves different purposes. Among these uses is the transferrence of a legacy from one generation to another.

IESE Professor and holder of IESE's Chair of Family BusinessJosep Tàpies discussed three elements that comprise the foundation of this idea: beliefs, values and myths.

"What has to be done to preserve and develop the patrimony of business families over time? Many families often commit the error of focusing on the management of financial capital. But the real goal should be managing human and intellectual capital, since that's the only way to ensure the longevity of a family business. The key to endurance lies in managing talent," he said.

A Pioneering Initiative

Felipe Gómez-Pallete, partner and founder of Casa Da Qiao, analyzed discussed how the new field of vital patrimony builds upon IESE's family business research activities. "This is a pioneering initiative and a merit for IESE. But what is it and what purpose does it serve? It is an asset and a way to represent the company."

For practical purposes, vital patrimony is a set of ordered elements (music, manuscripts, testimonials, photographs, objects and documents) that make up the legacy of the business family. The opportunity to have clear and organized access to this history is an asset for the future of any company, he said.

"A deep knowledge of the company's past is one of the most powerful tools for preparing for the future," said Gómez-Pallete.

Once traced and defined, vital patrimony serves to "prepare for the future in a proactive way." It also serves to "capture the present" and "give value to the past."

This is because the history of a company shapes its culture, bringing family members together around common ideals. It can also help to reflect on the organization's origins, resolve conflicts and manage changes that may be necessary.

Survival of the Business

The ultimate objective of the business family is survival of the business in the long term. To carry this out, the family should integrate its goals, aspirtations, ideas and expectations with those of the firm, the speakers said.

At the same time, the continuation of the family itself must be a primary goal. Companies should seek a continuation of the culture and the family's values within the philosophy of the firm. Tools such as family meetings, work session and board meetings can help accomplish this.

Once the business family has reflected and analyzed key issues involving vital patrimony, the most important challenge remains: family members have to agree on what they want to represent. They must decide upon what values, traditions and experiences that they want to preserve so that future generations will also feel compelled to join the business.

The food and beverage sector today is increasingly impacted by consumers’ circumstances and behaviors. Due to the crisis, customers have become more prudent, selective, demanding and informed. More than ever, the consumer has become the center of the entire value chain, with his or her opinions and perceptions determining the success or failure of brands. Succeeding as a company in this environment involves three elements: innovation, differentiation and internationalization.

On May 7 on IESE’s Barcelona campus, the IESE Alumni Association organized a Continuous Education event, "Food and Beverage: Current Situation, Aims and Opportunities for the Industry. " Experts analyzed key issues during the session, which was led by IESE Prof. Jaume Llopis and José María Bonmatí, general director of AECOC.

More Frequently, More Closely

Prof. Llopis, who is also the academic director of IESE’s upcoming 17th Annual Food and Beverage Industry Meeting, reviewed current trends and compared them with previous years. He noted that "consumption has dropped outside the home, while at-home consumption has risen slightly, although values are very similar to those of last year. And the consumer has turned to cheaper products, which have lower margins."

In terms of retailers, he pointed to a rise of discount stores and mid-size supermarkets, which has coincided with a drop in the number of megastores and traditional stores." "People are buying more frequently, closer to where they live and for the short term, reducing stocks they have at home," he said. "They are only buying what they need."

Product and Customer at the Center

In a mature industry, which has to adapt to new circumstances and trends and which retail brands have increasing power, the key is to recover margins through innovation, differentiation and exports, Llopis said.

"To innovate does not mean to launch a new product, since this involves a very complicated process. But a lot can be done in design, creating emotional links with the customer, production efficiency and finding niches in the market. For example, we actually see that luxury products are working very well and also those aimed at consumers with low incomes. Price wars are not the answer; you have to be unique," he said.

Along these lines, Bonmatí, said that today companies that triumph are those "centered on the consumer. The perception of value has changed and it is the client who decides what to buy. They connect with brands through different channels and will pay attention to other customers before advertisements. That’s why it is critical to avoid trivializing products and develop emotional links, which cannot be copied easily by the competition."

Also important is productivity and competitiveness to create the most efficient supply chain possible. "The value chain has changed and so have the functions within the chain. It starts with the client and goes backwards. All the tasks are becoming increasingly integrated, with retailers who innovate in commodities or industries that sell directly to the client," he said. "It is also important to be careful with the selection you offer, since excessive variety can scare the consumer."

Pack your Suitcase, be Fearless

Finally, the speakers agreed that exportation will be another factor in the future success of companies in the sector. Exports "generate economies of scale, boost production output, diversify risks, help react to new competitors and compensate for saturation of the domestic market, Llopis said. Emerging markets, including the BRICs and the Next Eleven, are destinations that can provide opportunities.

Bonmatí said that "it is fundamental to look for and define the competitive advantage that a product can offer before exploring a new territory" and that "you must constantly rethink strategies to adapt to the evolution of each market."

For more information:
Estilos de dirección
Internacionalización empresarial: argumentos y estrategias para el directivo

Catalina Parra (MBA ’96) enjoyed a successful consulting career until one trip, which required that she spend four months in Calcutta, changed her world view. Since then, she has launched three projects aimed at creating greater equality in the world and her vision is clear: "My number one priority is to change the world."

The foundation Hazloposible works to foster greater interaction and participation in society in charitable projects using new technologies. The second project, UEIA, is "the first accelerator of social companies based on new technologies," while the last project Philanthropic Intelligence, advises philanthropists, investors and large institutions.

"Social entrepreneurship strikes a balance between business experience and social commitment," she said during the IESE Continuous Education session, "Social and Environmental Entrepreneurship: Experiences," which was part of series of Finaves events. The session was moderated by IESE Prof. Alberto Fernández Terricabras.

The event, organized by IESE’s Alumni Association, took place on May 9 on the Barcelona campus. During the presentation, Parra described the ideal profile for a social entrepreneur, noting that "there should be a strong motivation, beyond that of just a volunteer."

Supporting local projects

Dídac Ferrer spoke about the co-op which he founded, Tarpuna Coop, where he currently serves as director of innovation. Tarpuna promotes small-scale local projects to generate stable changes. He also works through a cooperative human network, which does not reject technological platforms but maintains a critical view.

He went on to describe several initiatives, such as the creation of urban vegetable gardens and the employment of unused land and other urban spaces for community vegetable gardens, where unemployed people can train and work, while maintaining a small plot for cultivating their own food.

Another project is Infinit Loop, which focuses on reusable "smart" that promote social inclusion. An application allows the user to access information on the life, path and benefits of the "infinitloop" of the gift.

Integral support

Francesc Ventura, director of the Palau Macaya - Obra Social "la Caixa", described the social entrepreneurship program at "la Caixa", its objectives and public. The initiative focuses on fledgling social companies, less than three years old, or a new line of business within an existing social entity. "For the social entrepreneur, the company is a means for making an impact," he said.

Ventura also discussed the "integral support" offered by "la Caixa", which includes executive programs led by IESE. The basic criteria for the selection of projects include: social impact, economic viability, entrepreneurial potential, innovation and project coherence.

“I think the best role model is the servant leader,” Brian Duperrault, president & CEO of Marsh & McLennan Companies, told graduates of the 2013 class of IESE’s MBA Program, on May 10.

“The servant leader recognizes that the team and the team’s success are primary. In order for the team to be put first, the leader needs to be put him or herself second,” said Duperrault, adding that a leader must diminish himself or herself so that the team’s power can grow.

“Extracting the best from the team requires you to care more about them than you care about yourself. You have to be concerned about their work life and their home life. You have to listen to them.”

He also advised them to allow team members to answer questions first. “Even if you think you know the right decision, you must let them offer alternatives,” he said. “This doesn’t mean anarchy. You are still controlling the process. This doesn’t mean indecision. Ultimately, you will make the call. But you will have benefited from their input. You will have done it together and they will support it and work hard to see that it gets done. By the way, you may not always know the answer. That’s okay and it is okay for the team to know that. You are in search of the truth together. That is very powerful.”

Duperrault’s speech was preceded by words from Lola Puerta, representative of the Class of 2013, who thanked IESE’s faculty, Career Services team and MBA Affairs team for their dedication and support.

“It is time for us to give back. We have a responsibility. We need to transform all the lessons learned into results, results that drive and change the world,” she said.

IESE’s Dean Prof. Jordi Canals and Prof. Franz Heukamp, Director of the MBA Program, also spoke during the ceremony.

“Let me highlight one aspect of our MBA program that I consider especially important: personal feedback and mentoring,” said Heukamp. “Nowadays, you can watch video lectures on pretty much any academic topic for free, wherever and whenever you want. But in the educational process it is more difficult to obtain extremely valuable personal conversation with a mentor, faculty member or staff member who knows you and cares about you.”

Dean Canals urged the graduates to keep in mind the true meaning of character, as they set out on future career paths. “Character is sometimes associated with tough decision-making or an aggressive approach, but that is not what it really is,” said Dean Canals. “Character is revealed in the drive to be rigorous, in seeking sound solutions to complex problems, in the quality of our values and the way we consistently maintain them under all circumstances, and in the resolve to do what needs to be done at all times, without thinking about the sacrifice that might be demanded of us.”
 
Final words of advice came from Alfonso Sánchez-Tabernero, President of the University of Navarra. He encouraged the graduates to continue learning throughout their lives.

“If we accept the core value of people, we have no choice but to cast our eye on focus on education, that collective undertaking in which people and the government make an effort to offer the best to new generations of young people.”

The Financial Times has ranked IESE Business School executive education programs second in the world in its recently-released annual survey. The school climbed two places in the overall results this year.

The 2013 FT executive education ranking evaluated 50 top business schools worldwide. IESE earned particularly high marks for participant and client follow-up, faculty, global partner schools and international facilities.

The school was ranked 2nd in the world in the category of open enrollment programs and held its position as 3rd in the world in custom programs. Recent IESE custom program partners include BMW, Abbott, Airbus, BBVA, Henkel, Nestlé, Novartis, Oracle, Santander, SAP and Telefónica, among other leading firms.

The FT survey is based on a mix of customer feedback and data provided by business schools on open and custom programs. It takes into consideration criteria such as program preparation, course design, international participants and location, faculty, follow-up and aims achieved.

"An important part of our mission here at IESE is to put people at the center of how companies face up to their challenges," said Prof. Josep Valor, IESE’s Dean of Executive Education. "We apply this principle when planning and executing each one of our programs. We think carefully about our clients’ needs and the best way to provide them with the most adequate response."

For more information, visit IESE Executive Education Programs.

Businesses need to ask themselves if they have the digital leaders capable of meeting their customers' changing demands. These leaders need to be able to translate technology into business impacts and business strategy and they have to understand that digital is a dimension that permeates the entire organization and all the phases of the value chain.

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Travel and tourism industry experts from Europe and North America will gather at IESE Business School in Barcelona on May 17 for the 3rd Annual Tourism Summit, organized jointly by IESE and the Cornell University School of Hotel Administration.

The summit, which has the theme "Emerging Trends in the Tourism Industry," will delve into key issues such as polarized economic growth between developed and emerging markets; the impact of digital technologies on brands; and new creative business models opened up by social media and online channels.

Academics leading the event will be IESE Prof. Juan Roure, academic director of the summit; Prof. Steven Carvell, associate dean for academic affairs, Cornell School of Hotel Administration; and Prof. Rohit Verma of the Cornell School of Hotel Administration.

Among the industry leaders taking part will be Isabel Hill, Director, Office of Travel and Tourism Industries, U.S. Department of Commerce; Christian A. Boyens, general manager, Ritz Paris; Alison Copus, vice president marketing, TripAdvisor; Heather Leisman, managing director EMEA, Hotel Tonight; and Miquel Moyà, travel industry head, Google.

Organizations providing support for the summit are BCG, Exceltur, La Vanguardia, THR and IESE's Balearic Islands Alumni Chapter.

For more information.